Chilled Beef - The numbers don't lie, page-37

Hello Billy. Interesting to find you here.

AAC is an iconic Oz company - enormous pastoral leases turning off cattle with minimal human intervention. This is a cornucopia in good seasons and a de-stock/re-stock battle in drought. Exciting initiatives like wagyu, feedlotting to finish cattle, and the Livingstone abattoir to turn cull cattle into lean burger mince for the world. All very value-add.

Except it isn't.

AAC hasn't paid a dividend since 2008. This would be fine if compelling company-changing reinvestment was delivering growth instead. Sadly, the SP is languishing at 10 year lows and on a Price/Book of 0.59.

[I use ASX charts for long-term looks as it consistently adjusts for dividends, CRs and splits]

So, is AAC a screaming bargain or a value destroyer going nowhere?

Livingstone abattoir should be highly productive after 3 years of operation. I suspect NT workers are not particularly interested in spending their days on this hot and dirty task. The wages necessary must be high and developing an enterprise culture difficult.

100 years plus of land trading means AAC has the land holdings it wants and the capacity to refine and adjust strategically. But given the volatility in cattle prices and turn-off numbers, AAC cannot support big debt through the cycle.

A look at the chart suggests a floor at 1.03 or 1.04. Sure, hop in at that price if desired. My inclination is to wait for confirmation, the old double bottom, and ride this bronco from there.

Ash