AU : Elders - Expecting a strong 1H21 but then…

ELD will report its 1H21 result on 17 May. We expect ELD to beat consensus and note that our forecast is well ahead of them. We forecast a strong result (+35% EBIT growth) underpinned by a much improved summer cropping season, high livestock prices, buoyant real estate market, full six months of the AIRR acquisition and recent bolt-ons. We have upgraded our forecasts for higher than expected livestock prices. While we rate the ELD business model and management team highly, trading on an FY21F EV/EBITDA multiple of 10.9x, we maintain a Hold rating. We are also cognisant that earnings growth will moderate post the 1H21 and cattle prices will eventually fall from these record high levels.

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