Elders Limited

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Elders Limited (ASX: ELD) is an Australia-based agribusiness company that is involved in the feed and processing business, and it also markets and sells seeds, greasy wool, animal health products, agricultural chemicals, fertilizers, and general rural merchandise.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~27.01% of the total shareholding. The Vanguard Group, Inc. and Vinva Investment Management Limited hold a maximum stake in the company at ~5.01% and ~4.99%, respectively.

1.4 Key Metrics: The company reported a gross profit in FY22 of around AUD 639.9mn, which increased from 518.4mn in FY21, while receipts from customers were around AUD 12,885.38mn in FY22, which rose from AUD 10,638.81mn in FY21. Below is captured the trend of sales revenue and net profit before tax:

Section 2: Business Updates and Financial Highlights

2.1 Business Updates:

2.2 Results Highlights of FY22: During FY22, the company paid a total dividend of AU 56 cents per share, recording a growth of 33% on a YoY basis.  

2.3 Future Update: The company anticipates favourable trading conditions during 1HFY23 due to the high demand for agricultural commodities. However, recent extreme rainfall events in the eastern states have caused some uncertainty in the affected cropping regions and raised concerns about achieving the full harvest potential for both summer and winter crops.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 14, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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