GRAINCORP chief Alison Watkins has urged shareholders to take a long-term view, saying the company is ideally positioned to take advantage of the rising global demand for food, reports The Australian Financial Review
Eastern Australia's largest grains handler rebuffed a $2.7 billion takeover approach from US agribusiness giant Archer Daniels Midland (ADM) last Thursday, using a third consecutive record profit to mount a strong defence that centred on significant earnings potential for the group.
Speaking on the ABC's Inside Business program yesterday on Sunday, Ms Watkins said GrainCorp's storage, ports and processing assets would be around for decades to come, positioning the company to benefit from rising global demand for food.
It was important for shareholders to view agriculture as a long-term investment, she said.
About 30 per cent of GrainCorp's register has changed hands since ADM's $11.75 a share offer became public.
Ms Watkins met shareholders on Friday and will meet more this week.
The board is understood to think the company is worth more than $13 a share as it benefits from its vertical integration, including improving the earnings potential of new acquisitions. Agricultural forecasters predict global agricultural output needs to rise by 60 per cent by 2050 to meet demand from population increases and changing diets, particularly in Asia.
Expanding crop production benefits GrainCorp, which charges farmers to store, handle and export grain.
Drought years can hurt its earnings but GrainCorp insists its earnings will be less volatile as it makes more money from downstream processing and benefits from an increasing global footprint.
GrainCorp's strong result last Thursday triggered a number of analysts to increase fiscal 2013 earnings and price targets. UBS lifted its price target from $13 to $13.40. "In our view, GrainCorp looks set to deliver another strong result in FY13, with the focus on operational efficiency gains an attractive story," UBS analyst Lachlan Parker told clients.