Despite a Record First Half, GrainCorp Remains Expensive

Shares in no-moat GrainCorp remain expensive compared with our unchanged AUD 6.50 fair value estimate following the release of interim fiscal 2022 earnings. While GrainCorp continues to bask in exceptional conditions, we expect longer-term cropping to be less profitable. Underlying EBITDA of AUD 427 million was a threefold increase on the prior corresponding period, or pcp, tracking our unchanged fiscal 2022 forecast of AUD 659 million--toward the top of AUD 590 million to AUD 670 million guidance. GrainCorp declared fully franked interim and special dividends totalling AUD 24 cents per share. We continue to forecast total fully franked dividends of AUD 45 cents per share in fiscal 2022.