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Ruralco Holdings Ltd book share price gains on bumper results

Shares in Ruralco Holdings Ltd (ASX: RHL) are up 3.2% to $3.19 at the time of writing as the company handed down its results for the six months to March 31, 2018.

Ruralco Holdings is an agribusiness company operating under its own brands, providing agency services to real estate, livestock, wool, grain, water, fertiliser and financial services industries.

First-half results showed double digit underlying and reported earnings growth, with underlying NPAT up 21% to $16.7 million and statutory NPAT attributable to shareholders up 30% to $16.1 million.

Ruralco reported a 7% rise in revenue to $919.9 million with underlying EBITDA up 11% to $37.1 million with an interim fully-franked dividend of 9c per share declared.

Ruralco booked its best performance in its rural services division, with growth in sales of fertiliser, animal health products, stock feed and fencing supplies and its water division the next best performer – with water now comprising 21% of total gross profit.

The company’s live export division battled through slower Indonesian demand by directing 48% of sales to Vietnam with two shipments to China as the sector suffered through an overall loss in trading margin due to domestic cattle prices vs international price ceilings.

Ruralco’s future strategy includes leveraging on its market-leading position in water as the most fundamental farming input, with two new points of presence in Central West NSW and South Australia.

Overall risks for the second half include the unavoidable offender – seasonal conditions – with a delayed Autumn break likely to put pressure on crop protection sales.

Agricultural stocks on the ASX have attracted plenty of attention of late off the back of the Chinese-led dining boom, but such investments are usually highly-dependent on weather conditions which is far too risky for many investors, especially those who want short-term gains.

Integrated grain business Graincorp Ltd (ASX: GNC) have been hovering in buy territory of late, with its share price down 1.9% to $7.71 at the time of writing – down from $9.94 at this time last year.

Graincorp’s recent release of half-year results to March 31, 2018 saw the company maintain full year guidance while underlying NPAT of $36 million was down from $100 million in the previous corresponding period and underlying EBITDA was down to $119 million from $236 million for the same period last year.

Agribusiness all-rounder Elders Ltd (ASX: ELD) shares have been rallying of late, at $8.30 at the time of writing – a rise of 86% from $4.46 at this time last year.

Crop protection company Nufarm Limited (ASX: NUF) has also seen some share price rises of late after a volatile 12-months sitting up 0.4% to $9.32 at the time of writing.

A more speculative option in the sector includes small cap almond producer Select Harvests Limited (ASX: SHV) which announced a cracker 2018 crop recently and solid share price rises through February to May to land at $6.50 at the time of writing.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. 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 Scott Phillips.

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