Australia's Graincorp extends gains; analysts see long-term earnings taking a hit
11/08/2022 05:36
(Updates with comments from UBS and share price)
** Shares of Australian agribusiness firm Graincorp GNC.AX
extends gains, jumping as much as 3.7% to A$8.33
** GNC on Wednesday raised its fiscal 2022 profit forecast
for the second time as it benefits from strong demand for grains
and vegetable oils urn:newsml:reuters.com:*:nL4N2ZL4H8
** Morningstar says good times are rolling for co ,but warns
longer-term crop handling will be less profitable
** UBS says outlook for FY23 may be last year for the
current upcycle, before a possible drought
** GNC is commanding "historically high supply-chain
margins", driven by back-to-back bumper crops in Australia and
supply shortages in the Northern Hemisphere, says Morningstar
** Morningstar raises its fiscal 2022 EBITDA forecast by 6%
** "We do not expect such favourable conditions to persist
... over the long run, Graincorp's value hinges on a normalised
crop-growing year - which won't be as lucrative," Hewitt warns
** believe GNC offers the quality of an 'inflation hedge' in
the current market - UBS
** UBS cuts PT to A$8.50 from A$10.00, maintains rating at
"neutral"
** Three of 11 brokerages rate the stock "buy" or higher,
seven "hold" and one "sell"; median PT is A$9.20
** Up to Wednesday's close, stock down 1.5% this year
(Reporting by Shashwat Awasthi and Navya Mittal)
((Shashwat.Awasthi@tr.com
mailto:Shashwat.Awasthi@thomsonreuters.com))