GrainCorp: What to do with all this cash?

About the author:

Belinda Moore
Author name:
By Belinda Moore
Job title:
Senior Analyst
Date posted:
17 November 2023, 8:00 AM
Sectors Covered:
Agriculture, Food & Beverage, Travel and Chemicals

  • GrainCorp's (ASX:GNC) FY23 result was down on the record pcp however it still posted a commendable result with strong operating cashflow and a large core cash position the key highlights. This allowed it to reward shareholders with a large dividend and A$50m share buyback.
  • With ABARES forecasting a ~29% decline for the 2023/24 east coast winter grain crop (FY24 earnings), moderating grain marketing and oil crush margins and no more UMG revaluations, earnings are likely to materially decline in FY24.
  • While GNC is worth materially more than the current share price, with earnings declining in FY24 and the potential for the company to utilise most of its core cash position in a new oilseed crush facility, we maintain a Hold rating.

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