ELD - Elders Limited

[Dona Ferentes]

 

[InsvestoBoy]

My pick for the comp this month.

Don't hold, don't know anything about the company fundamentals, just noticed it held up well in the March dump when I was scrolling some charts.

 

[Dona Ferentes]

and .....
- Elders kept its interim dividend payout steady at 9¢ per share as it announced a net profit after tax of $52 million for the six months ended March 31, up from $27.4 million a year ago.
- Elders expects full-year net profit to be between the broad range of analysts' forecasts of $85.8 million to $102.9 million
- Solid rains on the east coast has lifted confidence among farmers and demand rose for products used on farms.

CEO Mark Allison said it was important that Australia became more diversified in the end markets it was selling to, but it also needed to have a large exposure to countries such as China where there was growing demand. "We do need to be where the growth populations are,'' he said.

The company would remain highly disciplined and only pursue acquisitions which added value and were earnings per share accretive, but there would be more to choose from as some players hit hard times because they had too much debt. "We're actively assessing distressed assets and we're actively assessing the economic fallout and the opportunities that will bring,'' he said.

up 40% since lows of 23 March

 

[Dona Ferentes]

and still lifting. The news probably priced in, though


Elders FY20 statutory profit jumped 80 per cent on the prior year to $124.2 million (pre-AASB 16) with higher earnings from its branch network and wholesale business driving the result.

Management declare a fully-franked final dividend of 13¢, up from 9¢ last year.

The company generated revenue of $2.092 billion in the year to September 30, up 29 per cent on the prior year. Underlying EBIT swelled 62 per cent year-on-year to $119.4 million.

The acquisition of Australian Independent Rural Retailers was implemented just over one month into FY20, which saw Elder's wholesale segment add $22 million in earnings (EBIT).

"Our FY20 results highlight the resilience of our business, the benefits of our diversification across both geographies and products, and our acquisition strategy," said chief executive Mark Allison.

The company did not provide financial performance guidance for FY21 but did offer commentary on the drivers expected to feature over the year ahead, which included the following:

• "High levels of demand for farmland is expected to continue while potential farmland sellers are deferring selling decisions due to uncertainty created by COVID-19; this is expected to deliver ongoing strong farmland values in FY21."
• "Significant growth opportunities exist to gain market share by serving new customers, in new geographies with our multiple product and service portfolios. Elders will remain adaptable as the on-going impacts of COVID-19 continue to minimally disrupt key inputs across the industry."

 

[Dona Ferentes]

and a 12 month high, up 8% on early trade

Elders says it expects in underlying EBIT for the 2022 financial year to be 20 to 30 per cent above 2021 financial year levels.

“After finalisation of the February trading numbers, which continue improved earnings for the first quarter, we now believe we will exceed analysts’ consensus for the full year to 30 September 2022 and produce an Underlying EBIT result in the range - which is necessarily broad given we are only five months into our financial year - set out above.

“We have seen improvement in our Retail and Wholesale segments compared with the same time last financial year due to increased sales and favourable seasonal conditions in most parts of Australia. While we believe some of these sales are forward purchasing by primary producers seeking to mitigate the risk of instability in supply chains, we consider the majority of sales are a result of increased activity.

“Our Agency business continues to perform strongly as a result of high prices in both sheep and cattle, offset to some extent by lower volumes due to restocking and the good availability of feed on farm. Real Estate is also exceeding expectations due to increased turnover and high demand. The increase in activity is due to a combination of market and seasonal factors, acquisition growth and organic growth."

 

[Dona Ferentes]

and a 12 month high, up 8% on early trade
Elders says it expects in underlying EBIT for the 2022 financial year to be 20 to 30 per cent above 2021 financial year levels.

ELD pushing to a 10 year high yesterday and was above $15 by the end of the day, with a strong result for the six months to the end of March which also saw a lift to its full year earnings guidance.

• Revenue jumped 38% to $1.514.8 billion as the company rode the breaking of the drought and the vastly improved outlook for rural commodities.
• That saw Elders deliver an 80% jump in EBIT to $132.8 million
• A 34% increase in net profit after tax to $91.2 million.
• The strong profit growth allowed the Elders board to declare a 30% franked 28 cents a share interim dividend, which is up 40% year on year.

Elders said it saw growth across all product areas and geographies. The best was its Rural Products business, which reported a 47% jump in sales to $312.9 million. This reflects strong demand for fertiliser and crop protection products following favourable seasonal conditions across major cropping regions.

CEO Mark Allison is confident the good times can continue. He said on Monday he sees the buoyant conditions in the agricultural sector for the next 18 months to two years, with demand for fertilisers and cropping chemicals strong, and cattle and sheep prices staying high.

He also said he thought Elders estate division which he says is unlikely to be curtailed by rising interest rates.

In light of the company’s improved first half performance during the first half and strong start to the current second half, Elders management upgraded its earnings guidance for the year to September.

“The strong first half performance has continued in April and we now expect to deliver full year 2022 Underlying EBIT in the range of 30% to 40% above full year 2021 Underlying EBIT. This expectation replaces the guidance we gave to the market on 14 March 2022.”

But as usual Elders warned that this guidance was subject to caveats such as potential supply chain disruptions as a result of COVID-19 and geopolitical events, unexpected changes to seasonal conditions and severe weather events, and unexpected changes in commodity prices.

 

[eskys]

Was this stock overdone yesterday? I didn't read the sensitive announcement. Will be interesting to see what it'll do tomorrow

 

[peter2]

A chart reminder that no matter how we're trading we're going to get some unexpected upsets.
ELD shows a nice weekly pull-back entry that started well and continued higher until ...

Don't fall into the trap of thinking that can't get any worse. Yes, it can.

 

[eskys]

Thank you, Peter. Mick and divs aren't keen on it either. I don't hold anymore........only quick day trades. (Looking at the depth, it was inviting, but I got out) Couldn't help myself, did a quick trade and got away with it. Good luck with your trades, Peter.

 

[divs4ever]

on the plus side ( for Elders ) they have a reasonably well-run real estate arm/office in this area , but that wasn't enough to reverse my biases

 

[So_Cynical]

2 and a half year low last week around $9.32, buy low sell high - looks to be an opportunity.

Big business, consistently profitable, market leader, revenue growth in all states, exposure to Aussie agriculture growth - exports.

 

[arco]

No signal, but might be good bottom picking
Not holding this one atm.

Long term chart

Potential for reversal on the support line?

 

[eskys]

No signal, but might be good bottom picking
Not holding this one atm.

Long term chart
View attachment 152691

Potential for reversal on the support line?
View attachment 152692

I've only just seen this chart after logging in today. You weren't wrong going by the second chart. ELD dropped to some where indicated on the graph.

There was an ASX enquiry about the price drop yesterday. Reply was that there were no reason they were aware of. However, had a meeting a day or two prior but none discussed was market sensitive (there's the message I got) Today's price up, nice to see

 

[arco]

I've only just seen this chart after logging in today. You weren't wrong going by the second chart. ELD dropped to some where indicated on the graph.

There was an ASX enquiry about the price drop yesterday. Reply was that there were no reason they were aware of. However, had a meeting a day or two prior but none discussed was market sensitive (there's the message I got) Today's price up, nice to see

Current situation.
Action has formed a Harami in the target yellow box.
Magnified view
Not holding

 

[So_Cynical]

Investor presentation out today, followed by a 2% rally then a 3% fall - go figure.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02629599-2A1429849?access_token=83ff96335c2d45a094df02a206a39ff4

 

[Dona Ferentes]

Investor presentation out today, followed by a 2% rally then a 3% fall - go figure.

Elders dropped 3.2 per cent on the back of a big fall yesterday after its full-year profit result missed the market’s expectations.

.
And seems to happen frequently. I thought things were looking good on the blocks?

 

[eskys]

This elderly one is behaving like a cripple

 

[finicky]

ELD @ $7.17

Don't know what smashed this in the distant past such that it has never recovered. Don't know what struck it down in November 2022 although I can safely assume it was one or more of many things out of the control of any business involved in commodities.
Nonetheless I am suggesting that the low is likely in. Mostly based on the monthly chart showing exceptionally high negative 'capitulation' volume in May followed by a repudiatory very high volume indecisive 'spinning top' candle in June and a progressing candle so far this month. The bounce off $6 occurred at the same level of most support during the the sideways accumulation in 2019 that preceded a bull run.

On the fundamentals, superficially taken from Commsec stats, ELD is well undervalued going by my crude methods - certainly against historical performance anyway. The lowest ROE for the past 5 years is circa 17%. Debt is modest so paying 3x book value seems conservative fair value on that basis. Their FY22 (fin year ends Sept) book value is figured as 5.46 on CommSec suggesting a $16 -17 intrinsic value - i.e more than double the current share price.
However, if you take notice of the anonymous analysts putting in on CommSec the next 3 years from and including fy23 will see lower eps (but steady across the 3 years). My rough calc based on that is a descent to a ROE of 13% in FY23 - still worth 2x book value, or about $10 -11.

Not Held
I won't be buying as I hate 'animal husbandry', being an animal myself (as are you)

DECADE MONTHLY

 

[greggles]

ELD issues a substantial earnings guidance downgrade this morning, lowering expectations from $180-$200 million to $165-$175 million. Share price hammered as a result, down over 10% as a write this. It's been a shocker of a 2023 for ELD and I expect that the eventual bottom is still some way off.

It isn't helping matters that 7.3% of its shares are held short. Not much enthusiasm out there for ELD at the moment.

 

[finicky]

ELD down 8% @ 6.54 intraday, up from 6.13 intraday low.
Profit (EBIT) guidance downgrade: lower sales and tighter margin in rural products. Lower prices and volumes in sheep and cattle trading.
Drop in predicted EBIT of 25% at low end of range ($165m - 175m) compared to last year ($220m).
Still a decent ROE - maybe 11-12%? And FY2023/09 book value of say $6?

Not Held