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NAM - Namoi Cotton Co-Operative

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ta2693

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Namoi Cotton Co-Operative Limited (NAM) is one of Australia's largest cotton organisations with an extensive network of ginning, marketing and logistics operations. NAM operates fourteen cotton gins throughout NSW and QLD and has three warehouse complexes. Approximately 90% of the cotton purchased by NAM is sold to overseas markets, primarily to Asian spinning mills.
P/E 5.34 div 8.9%

As you know the oil price keep on going up as well as the price for oil company like WPL, STO. The cotton is one of major materials for fabric and Clothes industry.The other is chemical fiber. they can be alternative for each other.
chemical fiber is made from Oil. as the oil price doubled in this year,the Chemical faber price also increased. The spinning mill will use more cotton to replace Chemical fiber. which will push the cotton price to new high in medium future. 1 to 3 years.


NAM is buying back its shares on market, which shows the good quality of this company. It also could be a potential acquisition target for QCH.
 
As the market leader in cotton industry, it is a very promising company in current high oil price time. with the oil price goes up, the artificial fiber's price has to go up. the only alternative fiber for artificial fiber is natural fiber.(cotton) so the cotton price is very like to double in the future as the oil price doubled.

The profit figure is not good as previous year due to reducing in planting. but I can see its potential. China needs cottons a lot. with the economy of China grows, the needs will increase. China is short of land suitable for cotton growth.
Its xijiang province is at its high producing limit at this time. Australian could be very competitive in the market as USA (main competitor in Cotton market but it is more distant than Australia)
NAM's ginning share in market is also increasing from 30.4% to 36.8%. Nam's market share is growing from 26.5% to 36%.
Not to mention its very strong financial position, not many companies can continuously buy back shares as NAM does. BHP maybe another. It is very likely to trigger a M&A.
That is what I like to see and put them in my long term holding portfolio.


I am going to hold this for 5 years as long as its market share are going up.
in addition 9% dividend return is also very attractive.
 
And on the down side
Cotton is a very high water user and 100% dependant on irrigation
(darling system) we are in the worst drought in prob 100 years, climate change will impact heavily on growing areas
and river flows....production and costs.
 
I used to hold NAM shares, but now, seeing the impact of unsustainable crops in arid areas of Australia, I sold them on the basis of this being environmentally unethical. For the same reason I refuse to buy Australian rice when we can purchase it cheaply from overseas.
 
Well true that however how many ethical businesses can you see listed on ASX? And how many of those make for a sound investment?

With all due respect, if your signature holds any true regarding your areas of investing than I'd humbly suggest a little recalibration of your ethical investment yardstick. :)

I would go as far as to say that business and ethics very often struggle to coexist within same vicinity.
 
Hey jkool, at least those commodities always existed, even if the means of extraction are man made. And there are ethical mining companies, who give more to the community than extract from it. There are, of course, unethical mining companies but again they are not on my radar.

But rice and cotton are introduced exotic species that simply do not belong in arid lands.

My signature - well I guess as soon as you invest in LIC's then you cant avoid the main miners, can you!
 
You are absolutely right. If you want to make money on the markets today than you cant avoid the miners. Same could have been probably said about cotton growers in the past, tobacco companies etc etc.

I mean once we are out there making money investing/trading shares than, unfortunately, there is only limited weight we can put on ethics. I am not saying I like that but that is the reality of the day.

If you want your undoubtedly high moral standards dictate your investing decisions than investing/trading shares may not be the best suitable platform. Others may not agree.
 
So_Cynical said:
And on the down side
Cotton is a very high water user and 100% dependant on irrigation
(darling system) we are in the worst drought in prob 100 years, climate change will impact heavily on growing areas
and river flows....production and costs.
Click to expand...

I do not worry about the rainfall very much, ELNINO is just temporary effect which reduces the rainfall. It hits every 2 to 7 years. 5 times PE ratio is good enough for me to take this risk.
 

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It isn't all about the rainfall, but how much irrigators suck out of the river. Once the Govt gets its act together I am hoping that for the good of Australia, people will realise that you cannot keep sucking this river dry and expect all to be good downstream. So I hope that the River License system will be reviewed in accordance with proper environmental management. In which case crops that cannot survive on rainfall and moderate irrigation will no longer survive.
 
I understand your position on environment issue. but sucking the river dry is definitely an overstatement. Cotton growing as other agriculture industry exists on the plant for hundreds years. It will not cause big environment problem.
for Nam, it is not very related to ASX index. you can see its performance in latest correction. It just set back 2c. It is related to the weather. If the rainfall is better than the previous year ( the solid likelihood is there) , we will have some big windfall profit.
I think it is good candidate to add into the portfolio to reduce the volatility of portfolio.
 
Its kind of easy to say that irrigators in Qld, New South Wales and Victoria are not damaging the river system when they don't see and really, don't care, what is happening downstream. Of course we have not been growing cotton for hundreds of years! Nor vines, nor rice for pete's sake!

The River Murray is being sucked dry! We were at the River Mouth last week, and areas that used to have water say, 6 feet deep, are now dry and cracking mud. The feet of the Hindmarsh Island bridge, just near the mouth, are almost completely out of the water!

We have a property just upstream from the mouth; our only water supply is from the river which is fed through an aquifer and then piped to our community. Last week we received a letter saying that we were not allowed to drink the water anymore as it is unfit for human consumption due to salinity. So we have to cart water from Adelaide, (100 kilometres away) just to drink and shower in.

We can no longer lavish water on crops in arid lands, when we can no longer provide water for people to drink!
 
jkool said:
If you want your undoubtedly high moral standards dictate your investing decisions than investing/trading shares may not be the best suitable platform. Others may not agree.
Click to expand...

I don't agree. There is an ethical investing thread here somewhere...

You can't say all miners are unethical. Look at LGL for instance. They use hot rocks for their power and have a lot of community programmes. There are heaps of other "ethical" stocks out there as well.
 
ta2693 said:
I do not worry about the rainfall very much, ELNINO is just temporary effect which reduces the rainfall. It hits every 2 to 7 years. 5 times PE ratio is good enough for me to take this risk.
Click to expand...

Ok ta2693 u have clearly made your decision and have a positive attitude.

Just want to point out a couple of things.

1 That rainfall2 PDF is a joke...as in laughable..theres only 4 places
in Australia with dependable high rainfall, and cotton don't grow
in any of those areas.

2 climate change HAS fundamentally changed things.

3 the darling river stopped flowing a while back and has
only just started again and is pretty much saline.

4 total area growing cotton will decrease over time.

5 as a continent Australia has the most variable annual
rainfall in the world.
 
NAM

Anyone know how the cotton harvest is going this year? NAM started share buy back again .maybe worth a look
 
Not much written about cotton over the past few years, probably not helped by drought.
Looking at the areas where cotton is grown using irrigation, one can see that this year, and probably next year should be pretty goos for cotton and other irrigated crops.
Burrinjuck dam one of the storages on the MIA is at 100%.
Water users on the MIA system have already got 100% of high security allocation for the 20/21 season.
NSW irrigators have got 97% and 95% high security from the Murray Valley and Murrumbidgee Valley respectively, and 100% from the lower Darling.
There are also sales available to general security irrigators.
Hume Dam is nudging 80% and Dartmouth 70%.
So should be plenty of water around for thirsty crops like cotton and rice.
Mick
 
NAM hitting 52 week high.
With cotton prices surging 20% in the last fortnight, we are seeing cotton prices at levels not seen in ten years.
From ABC Land line
Cotton Australia chief executive Adam Kay said growers had now forward-sold around 50 per cent of next season's crop, with some growers locking in prices of $670 a bale.

"We are seeing a situation where the supply is less than demand — that is really driving prices," Mr Kay said.

"The word on the street is that the Chinese crop might not be as good as they thought, the Indian crop might not be as good as hoped, and next season there's talk that the Brazilian crop might be down by 10 or 20 per cent."
Click to expand...
So, with high prices, and plenty of water for irrigation, OZ farmers should be looking forward to a bumper crop.
I should have bought more back in July rather than the token parcel I have, but thats life.
Mick
 
mullokintyre said:
Not much written about cotton over the past few years, probably not helped by drought.
Looking at the areas where cotton is grown using irrigation, one can see that this year, and probably next year should be pretty goos for cotton and other irrigated crops.
Burrinjuck dam one of the storages on the MIA is at 100%.
Water users on the MIA system have already got 100% of high security allocation for the 20/21 season.
NSW irrigators have got 97% and 95% high security from the Murray Valley and Murrumbidgee Valley respectively, and 100% from the lower Darling.
There are also sales available to general security irrigators.
Hume Dam is nudging 80% and Dartmouth 70%.
So should be plenty of water around for thirsty crops like cotton and rice.
Mick
Click to expand...
Dartmouth now 81%, Hume so full they are putting 27megs a day over the spillway, and Eildon 82%.
With Menindee lakes now full for the first time in six years, and the darling still getting flood pulses coming down , there should be abundant water for all who want it, including the environment.
I went for a fly with a mate yesterday and snuck into the NSW airspsace to have a look at the Lachlan River wetlands.
I don't think I have seen it look that full and green since the 2013 floods.
The bird life was so abundant we were reluctant to get below 2500 feet in case we encountered a few.
Coming back along the Murray, there is water everywhere.
Farm dams full to overflowing, canola fields so bright yellow you needed sunglasses to look.
Should be a good couple of years for agriculture and regional areas of NSW and Vic.
Mick
 
Nam hitting another 52 week high.
Now into my usual 10 to 15% take the money and run area, but I think this has still a way to run as more investors look at the cotton production possibilities.
Mick
 
NAM released its interim half yearly that finished August 31.
Some very good numbers, Revenue up 159% NPAT up 209%, net operating cash flow up 164% though NTA was down after the Cap raising in May.
Think most of this information is priced into the SP.
2022 forecast is for the ginning volume to above average, after a number of years below average.
Expecting a 30% drop in debt over the next six months.
ABARE is forecasting a further 170% increase in new cotton plantings, so things should be rosy should this forecast be close to accurate.
Certainly, this year will not have a water shortage problem, and possibly no problem next yeat either given the carry over figures of water that will be available.
Happy to keep holding, may even get a dividend at the end of the full year!
\Mick
 
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