• Australian (ASX) Stock Market Forum

GNC - Graincorp Limited

Discussion in 'Stocks 0-H' started by 3 veiws of a secret, Oct 13, 2006.

  1. skc

    skc Goldmember

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    No idea why GNC is trading so strong this morning... they reported pretty poorly last month and there's plenty of event hedge fund (40% of register apparently) looking to unwind, yet it's all one way traffic from the open.

    Time to short me thinks.
     
  2. rcm617

    rcm617

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    Maybe investors think that if ADM saw value at $12.20 plus another $2 per share in commitments to extra capital expenditure, the shares might be worth a bit more in the long run than the $8.70 they traded at before the bid.
    Management may try and screw a bit more profit out of operations.
     
  3. notting

    notting

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    Maybe ADM are buying it on market, increasing their stake, as newly permitted to, to hold till labour gets back in!
    That's what I'd do if I thought it was worth the price!
     
  4. piggybank

    piggybank

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    We will have to wait and see what Monday brings...

    GNCs.gif
     
  5. So_Cynical

    So_Cynical The Contrarian Averager

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    In with the superfund today at $7.59 ~ time will tell of course but the chart below explains my thinking, ignoring the take over share price and the lead up to it, with rumours and insiders buying and consider that at today's 24 month low the price would seem to be on the cheap side.

    3 year chart shows Graincorp averaging at around the 7.50 mark in 2011, now consider that the global economy has picked up considerably and that Graincorp is a considerably better business than 2/3 years ago, Total liability's and debt are up a little (around 15%) while revenue has increased by around 60% and revenue streams have diversified further.

    On a simple like for like comparison i reckon GNC looks cheap, have to wonder just how much the removal of any TO premium will subdue the SP.
    ~
     

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  6. DrapSnagon

    DrapSnagon

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    Agree.

    I like this and have done for a while. I bought into a parcel in July 2012 at 919c, and was somewhat gutted to have to sell into the ADM bid at 1224c in October that year. On the face of it, that was a good trade, but I didn't buy it for a trade:- I expected it to form a cornerstone of my exposure to agri-business for many years. Very annoyed.

    At the time [and even now] there are precious few opportunities for exposure to this sector on the ASX. I don't like Ridley or AAC or Nufarm, so I ended up taking a position in BGA. Then that ran away before I could build it into something meaningful, so another door closed. TGR is still on watch but it has never fallen far enough to be attractive. I finally ended up with IPL, but that took another 12 months and I still wasn't pleased with the outcome.

    So I was a happy camper when Graincorp came back on the radar recently at 820c and happier still to stake out an initial buy at 796c. Completed the holding today at 754c and I'm now at two-thirds of my planned exposure to the sector.

    Everything I see values GNC at $8+ {consensus is closer to $9}, even with the drop in FY14 EPS which the experts say is transient. The need for capex is a worry (ADM would have taken care of that) because they might tap the market at some stage, but I can live with that. The overhang of ADM is also probably concerning people, but I can live with that too:- they've demonstrated they don't abandon equity positions just because a bid failed, and certainly not at firesale prices.


    Another downside is the loss of Alison Watkins, who imho is a very capable lady. The idea of her having to deal with Federal Government intervention [or the lack of it] in two different companies for two totally different reasons in the space of a few months is just bizarre. No way would I swap jobs with her. What other CEO in recent memory had to put up with that?

    But I digress ...

    Around $7 ½ GNC is in the money for me at a grossed-up yield of 7% and plenty of headroom in growth to consensus targets.

    I'm with you on this - I guess we sink or swim together :)

    Snap
     
  7. Zedd

    Zedd

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    ^ +1

    I took the short term profits during the takeover bid, but quite happy to see it knocked back as this is one of my favourite core holdings. I can't see the current situation lasting though and it's a matter of time before GNC is involved in a large M&A. I'd rather see it look to expand its international operations with a large acquisition, but it's more likely IMO that the board will look to run a tight ship to continue to maximise takeover attractiveness and simply wait out / lobby the government.
     
  8. So_Cynical

    So_Cynical The Contrarian Averager

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    A little over 3 months later and today Graincorp touched $9 per share on the back of the HY2014 results, 15c per share dividend and full year guidance confirmation.

    http://www.graincorp.com.au/_literature_165247/HY14_Results_Presentation
     
  9. So_Cynical

    So_Cynical The Contrarian Averager

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    Over 2 and a half years later im still holding, price retreated all the way back down to $7.50 and now its gone all the way back up to $9.70, top of the range again...probably should sell as the dividend isn't worth it, not sure why i didn't sell last time...
    ~
    GNC5.JPG
     
  10. sptrawler

    sptrawler

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    Maybe you're holding for a Chinese buy out. lol
    For that to happen, there would have to be some strategic upside, which eludes me.
    But as with a lot of our transport companies, having a large footprint, interests overseas companies.
     

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