Equity Analysis /

AU : GrainCorp - FY22 as good as it gets?

    Belina Moore
    Belina Moore

    Senior Analyst - Agriculture & Travel

    10 August 2022
    Published byCGS-CIMB

    GNC has again upgraded guidance with the midpoint 5.3% ahead of consensus, reflecting a strong 4Q given increased grain coming into its system as growers sold on-farm stocks in preparation for harvesting another bumper winter crop in FY23. The near perfect conditions which FY22 benefitted from have reverted in recent weeks with global wheat/canola prices largely back to pre-War levels. This happened quicker than we expected, resulting in downgrades to our FY23 forecast. While these ideal FY22 conditions will see GNC produce strong cashflow, result in it having a strong core cash position and likely see further capital management, earnings now look set to decline over FY23/24/25. Hold maintained.