Tasty in­vest­ment

Shepparton News - Country News - - MAN’S BEST FRIEND -

Find­ing a way to in­vest in the food sec­tor is look­ing pretty ap­petis­ing, es­pe­cially at a time when global fi­nan­cial mar­kets are go­ing pear-shaped.

The Aus­tralian Bureau of Agri­cul­tural and Re­source Eco­nom­ics and Sciences ex­pects farm ex­ports to grow six per cent to a record $34.5 bil­lion in the 2011-12 sea­son, thanks to a bumper har­vest and ris­ing de­mand.

Many in­vestors see the na­tion’s only listed ma­jor grain trader, GrainCorp, as a way to buy into the growth for meat de­mand in Asia, given Aus­tralia’s agri­cul­tural po­ten­tial and prox­im­ity to rapidly-de­vel­op­ing coun­tries like China.

GrainCorp last month re­ported a full-year net profit of $172 mil­lion, more than dou­ble the pre­vi­ous fis­cal year.

Vol­umes of grain ex­ported by the com­pany, which spe­cialises in grain stor­age and han­dling, jumped 131 per cent to 8.1 mil­lion tonnes.

GrainCorp spokesman David Ginns said much of the rise in ex­ports last year came from ship­ping feed wheat to live­stock pro­duc­ers in des­ti­na­tions like the Philip­pines and South Korea.

‘‘Given that there’s some sim­i­lar har­vest con­di­tions this year to last year, there's go­ing to be a sim­i­lar ex­port pro­gram,’’ Mr Ginns said.

What makes the com­pany par­tic­u­larly at­trac­tive is its position as one of the only re­main­ing buy­out tar­gets in a sec­tor that has seen a surge in for­eign in­vest­ment in re­cent years.

UBS an­a­lyst Lach­lan Parker main­tained GrainCorp as a buy rat­ing af­ter it re­ported its 2010-11 fi­nan­cial results, and said it re­mained a likely po­ten­tial takeover tar­get as a ‘‘sec­ond year of very strong cash­flow looks highly prob­a­ble’’.

He said GrainCorp’s share price was up about 30 per cent com­pared to the same time last year, at $7.87, and could reach $9 over the next 12 months.

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