Why the Australian Agricultural Company Ltd share price is BOOMING

The Australian Agricultural Company Ltd (ASX:AAC) share price has jumped more than 3% higher following a solid half-year report.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Australian Agricultural Company Ltd (ASX: AAC) share price has jumped more than 3% higher following a solid half-year report.

Shares of the beef and cattle company rose on the back of an ASX announcement which showed a 467% rise in net profit, to $49.8 million, for the period ended 30 September 2015. The result was driven by an 88% increase in meat sales and 29% jump in cattle sales.

Meanwhile, administration costs fell 34%, and the carrying value of all livestock on its balance sheet rose from $265 million to $295 million.

"Our traditional pastoral business has performed as you would expect in a rising cattle market but I'm really pleased with the performance of the group as a whole," AACo Managing Director, Jason Strong, said. "We have a lot more to do, plenty of challenges to meet in the second half and we are now firmly focused on delivering our branding and innovation programs as we move to the next stage of the transformation phase."

Mr. Strong's goal for the company is to become an internationally trusted producer of the finest Australian beef — so far so good.

"Our Wagyu brands have won numerous national and international awards in the past six months and there is growing demand for the quality beef we produce," Mr. Strong said. "Sales of boxed beef increased by $103 million half-on-half and now account for almost 85 per cent of total revenue. These sales are predominantly to the same customers, who are buying more beef."

Buy, Hold or Sell?

AACo is trying to tread down a similar path to the likes of Bellamy's Australia Ltd (ASX: BAL) and Blackmores Limited (ASX: BKL) and push quality brands into booming Asian markets.

It makes perfect sense from a long-term perspective too, since the world's consumption of beef is expected to jump 120% over the next 50 years, and land suitable for agriculture is shrinking. While the potential is massive; the risks are equally large. And AACo is exposed to many risks that are outside its control (weather, disease, regulation, etc.).

Nonetheless, I think if you have an ultra-long-term view, considering buying a small parcel of AACo in the dips mightn't be such a bad idea.

Motley Fool contributor Owen Raskiewicz owns shares of Bellamy's Australia. Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »