Agricultural Companies listed on ASX

[gwydir]

Mr Corish bought a property at Emerald last year for $19mil with water rights, he is now selling it to Prime Ag for $26mil without water rights.

 

Think I will pass.

 

DOYR

[Omnibust]

Spoke to the issuing brokers last week who said the float was heavily oversubscribed and the chap I spoke to said for what it's worth, that he was only able to obtain a very small allocation.

 

The absence of water rights is not a huge issue for non rice grain growers, other than agistment during summer, but the odd dam remedies that. No water in dam means no agistment that year.

Channel water is usually of such poor quality (it is in the Wimmera anyway), it neutralises glyphosate herbicides so can't be used for spraying.

 

National Climate Centre uses natural lake sediments correlated to the few native trees that have readable trunk rings to measure rainfall history well before white settlement. Their studies show alternating wet/dry cycles of no less than7 and no more than 13 years, for a handy average of 10 . This dry spell is about 11 years. Notwithstanding that flooding or late rain can be just as devastating, a more favourable cycle is likely soon.

 

Even if climate change alarmists are right, one would expect this cycle to persist within larger cycles.

 

Lists on 17/12.

[arms38]

Omnibust

 

I think gwdir post had little to do with water and water rights and a lot more to do with the price being paid for the assets being presented to potential investors.

 

Seems like a very large price differential on one property alone, any reasons why?

 

Arms

 

[gwydir]

In reply to: arms38 on Tuesday 04/12/07 08:11am

It was a cotton farm. Large amounts of water required.

Research who Mr Corish is and his relation to Prime Ag........

 

 

[Omnibust]

The Business Spectator article of 16/11/07 states Corish bought the property in 2004.

 

If American trends translate here, there will be increased demand for large properties for corporate farming. Whether these guys have the ability to make a go of it is another matter.

[krk004]

QUOTE (Omnibust @ Tuesday 04/12/07 09:03am)

Looks to me that PrimeAg is the 'grains' equivalent of AAC.

 

Initial thoughts, from brief eye over website, was that it was a farm property trust, but the emphasis is on the production side i.e. soft commodities.

 

With ~$80 mill for seeded & optioned properties & a further ~$160 mill for further acquisitions, they would be sitting on an asset base of ~$240 mill (let's conservatively say $220 mill.).

 

At initial assumed market cap of 300k, it would be sitting above NTA.

 

The fact Roger Corbett is involved gives a bit of heartening, considering the 'contacts' he has probably accumulated over time.

 

Jury still out for me on whether to have a nibble? May wait till after it opens and see how (and in which way) the trend develops.

 

On the issue/broker talk of over-subscription at this point - Robert Cialdini, in his book "Influence - The Psychology of Persuasion", talks about 'scarcity' as a powerful tool to be ale to get other people to do what you want. (i.e. Store advert - special offer on Plasma TV's - only 1 left in store!, Don't miss out, customer walks out thinking - 'why did I just buy that?'). My point being that talk of being oversubscribed is probably a good play on the 'scarcity' theory. I say this as I assumed that getting CommSec involved in offer was to try and 'move' some of the offer (bit like ERO??). (another example is 'social proof' as a persuasion tool - 'everyone else is getting into it - must be a good thing - think I will too!') - Who knows??......

 

DYOR & KYOIS.

[triage]

In reply to: krk004 on Wednesday 05/12/07 07:09am

How about the comparison that PrimeAg is trying to be the Monarch Gold of mixed farming, in that it is trying to be a consolidator.

 

What Michael Kiernan of Monarch is trying to put together is a portfolio of mines that by themselves are non-economic or at best marginal but through the sharing of mining infrastructure become productive and profitable. The fact that the individual mines were struggling at best should have meant that Monarch could pick them on the cheap. On top of that upfront advantage Kiernan is backing his team to make marginal improvements to how each of the mines are run and to find new mines on the tenaments.

 

What Corish of PrimeAg is doing is a bit the same but the big difference is that they are buying good quality fully operational farms at top dollar. Why do I know this? Well PrimeAg are buying some farms from Corish are they not? and if Corish is any good as a farmer then he has the farms already running in good order and will expect to receive top dollar for them. It seems to me that the benefits of Corish's plan are only at the margin.

 

I have seen some posters question Kiernan, and Corish apparently comes with a big reputation. But I like Kiernan's thinking better in this case.

[krk004]

QUOTE (triage @ Wednesday 05/12/07 10:20am)

'Hub' concept seems a bit high tech - Probably 'Economies of Scale' may be a more apt way to look at it.

 

Concept on surface seems sound - 'if we spread ourselves far & wide enough, some of our dirt will get some rain (if not requiring irrigation) and we'll get some crop off!

 

Not sure how others see it, but projected earnings of $7mill to justify an anticipated market cap of $300 mill. seems a bit of a high PE ratio (40x??). - happy to stand corrected if I am viewing this wrong though.

 

Might wait for the dust to settle on this one!

 

DYOR & KYOIS.

[triage]

Hi krk004

 

I see Robin Bromby in his "Pure Speculation" column in the Oz today is asking for suggestions for soft commodity stocks. Its at the end of the article.

 

http://www.theaustralian.news.com.au/story...6-18261,00.html

 

Sounds like he wants to get an agribusiness angle going in his column so may be worth keeping an eye on what he comes up with.

 

I would have thought that he would have been beating away with a big stick promoters of any type of junior stock - getting a mention in his column must be a free kick for any junior (?). That he actually has to ask for info about soft commodity stocks probably shows that this sector still is asleep. Another good sign of the times ahead in my opinion.

[greenbah]

In reply to: krk004 on Wednesday 05/12/07 07:09am

Dont touch PrimeAG Corish buys Braylands for $19 with water 3.5 years ago now tips into company with NO waqter fot $26.350m the only cotton farm in Australia not to go down in value. By all accounts the some of the other properties at Crooble are very ordinary and they are paying $250/acre at least too much. One very good farmer only makes 4.5% return on land he has in the books at $800?acre. This crowd will lose money imho. At least Corish gets out of huge debt