Tribeca Global Natural Resources Ltd. · ASX:TGF
Tribeca Global Natural Resources — Investor Day (November 2019)
94 slides from Tribeca Global Natural Resources's investor day presentation, Nov 20, 2019
Slide 1: Tribeca Global Natural Resources Ltd Investor Day
For personal use only Tribeca Global Natural Resources Ltd (ASX:TGF) Investor Day, 20 November 2019
Slide 2: Investor Day Agenda
Investor Day Agenda For personal use only Time Agenda Presenter 2:00 - 2:15 Welcome Remarks Bruce Loveday, Chairman 2:15 - 2:35 Portfolio Overview & Update Ben Cleary, Portfolio Manager 2:35 - 2:55 Private Debt Investing in Natural Resources Craig Evans, Portfolio Manager 2:55 - 3:10 Break 3:10 - 3:
Slide 3: Legal Disclaimer
Legal Disclaimer This presentation has been prepared for Tribeca Global Natural Resources Limited (ABN 16 627 596 418) (“TGF”) by its investment manager, Tribeca Global Resources Pty Ltd (ABN 11 606 707 662) (“Tribeca”) under AFS License 239070 (Tribeca Investment Partners Pty Ltd). The information
Slide 4: Investor Day Update
For personal use only Tribeca Global Natural Resources Ltd (ASX:TGF) Investor Day Update Ben Cleary, Portfolio Manager November 2019
Slide 5: Tribeca Global Natural Resources Team
Tribeca Global Natural Resources Team For personal use only Investment Team Operations and Finance Ben Cleary Craig Evans Haydn Smith Guy Keller James Howes Kylie Osgood Ken Liu Portfolio Manager Portfolio Manager Head of Credit Head of Commodity Trading Chief Operating Officer Chief Financial Offic
Slide 6: TGF Board of Directors
Who / What we are TGF Board of Directors Ben has had an extensive career in the natural resources sector having worked in a For personal use only Bruce has extensive experience in the financial services industry both in Australia and overseas. He has been CEO of several funds management businesses i
Slide 7: TGF Share Price vs NTA
TGF Share Price vs NTA TGF NTA vs Share Price Since Listing For personal use only $2.70 Key Details (as at 13 November 2019) ASX Code TGF $2.50 Listing Share Price $2.50 Fund NTA Share Price $1.89 -5.6% $2.30 Shares on Issue 63 million Market Capitalisation $120.9 million Discount Listing Date 12 Oc
Slide 8: TGF Performance vs MSCI Commodity Producers Index
TGF Performance vs MSCI Commodity Producers Index For personal use only TGF vs MSCI ACWI Commodity Producers Index 10.0% • Since listing, TGF has demonstrated TGF NTA (LHS) MSCI Commodity Producers Index (LHS) the ability to protect capital during a 8.0% period characterized by heightened 6.0% volat
Slide 9: Strategy Comparative Returns
Tribeca Global Natural Resources Strategy Comparative Returns For personal use only MSCI ACWI Tribeca Global Natural HFRX Global Hedge Fin Year Commodity Resources Strategy Fund Index Producers Index The key to generating long term performance in 2015 4.31% -2.04% -10.91% natural resources investing
Slide 10: Dislocation in the Resources Space
Dislocation in the Resources Space For personal use only • The natural resources sector has been “ For investors with a long-term ‘through the characterized by sentiment-driven de-rating, trade cycle’ approach, the current dislocation in wars and global growth concerns in 2019. natural resources rep
Slide 11: LIC/LIT Sector Discount
LIC/LIT Sector Discount For personal use only 2% 0% -2% -4% -6% -8% Equal Weighted Average 6 Month Moving Average (Equal Weighted Average) -10% Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Source: Bell Potter Research (based in LIC/LITs under coverage), IRESS, Company
Slide 12: Addressing the Discount to NTA
Addressing the Discount to NTA For personal use only • On 1 July 2019, the Manager of TGF, Tribeca Global Natural Resources Pty Ltd, announced its intention to acquire TGF shares on market*. Specifically designed to address the material discount between the share price and NTA. Reflects the value se
Slide 13: Shareholder-Friendly Terms
Shareholder-Friendly Terms For personal use only Focus on Corporate Governance • Majority independent board and independent Chairman Costs borne by the Manager, not Shareholders • IPO costs fully reimbursed by the Manager • Manager pays for ongoing operating costs Long-Term Alignment • Manager has c
Slide 14: Investment Process Overview
For personal use only Investment Process Overview
Slide 15: Investment Approach
Investment Investment Approach Approach For personal use only Actively Managed • Aim to deliver absolute returns of 15% p.a. through the cycle. Specialist • Actively managed, specialised long short strategy with a focus on the global natural resources sectors. High Conviction • Employ a high convict
Slide 16: Investment Process
Investment Process For personal use only Commodity Ranking Quantitative Screening Fundamental Research Long Short Ideas Investment Global commodity demand and Quantitative screening across Sector and stock specific Investments expressed based High conviction, detailed bottom supply modelling. the in
Slide 17: Investing Across the Value Chain
Investing Across the Value Chain For personal use only A flexible, long short, mandate and deep knowledge of value chains from project to end-user allows for the capture of different payoff profiles at different points in the cycle. Exploration & Engineering Transport Infrastructure Production Custo
Slide 18: Investment Universe
Investment Universe For personal use only Investment Universe by Sector and Asset Class Leveraging deep domain knowledge to exploit opportunity across the global natural resources Specialty Base complex. Metals Metals • The Company’s investment universe is broken down into eight Bulks Diversified in
Slide 19: Positioning & Investment Themes
For personal use only Positioning & Investment Themes
Slide 20: Exposures
Exposures Long and Short Exposures 80% 60% Long % Short % For personal use only 40% Current Portfolio Net Exposure 20% Uranium 0% Soft Commodities -20% Oct 18 Nov 18 Dec 18 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Services Oil & Gas Dual Listed Companies Net and Gross Ex
Slide 21: An Attractive Point in the Cycle for Resources
An Attractive Point in the Cycle for Resources For personal use only S&P Goldman Sachs Commodity Index vs S&P 500 Index 10.0 9.0 Gulf Crisis Global Financial 1990 Crisis 2008 8.0 Oil Crisis 1973/74 Resources Represent a Significant Opportunity 7.0 6.0 • When viewed in a historical context, natural r
Slide 22: Relative Valuations for Resources Are At Extremes
22 For personal use only Cyclically Adjusted PE (CAPE) 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 Jan-80 Sep-80 May-81 Jan-82 Source: Bernstein Research 1980s recession Sep-82 May-83 Jan-84 Sep-84 May-85 Jan-86 Market (S&P) Sep-86 May-87 Jan-88 Sep-88 May-89 Mining Jan-90 Relative Valuatio
Slide 23: Only Sectors Cheap in Australia vs Long Term Valuations
Only Sectors Cheap in Australia vs Long Term Valuations For personal use only ASX Sector Valuations Relative to the Last 10 Years 100% 80% 77% 60% 48% 40% 37% 29% 30% 26% 24% 20% 20% 16% 13% 0% -20% -22% -12% -40% Info Tech Utilities Comms Industrials Health Care ASX 200 Energy Real Estate Discretio
Slide 24: Apple vs Energy
Apple vs Energy Apple now has a greater market cap than the entire U.S. energy sector. For personal use only 2.5 Current Market Cap AAPL S&P 500 Energy Sector GICS Level 1 Index S&P 500 Energy Sector GICS Level 1 Index 2 1.5 1 0.5 0 24
Slide 25: Smart Money Taking Advantage of the Discounts on Offer
Smart Money Taking Advantage of the Discounts on Offer For personal use only 25
Slide 26: Value on Value
“Value on Value” For personal use only TGF discount to NTA on sectors that are already trading at a significant discount. Sector Metric Overlay with current TGF discount (as 19 Nov) Freeport McMoran US$0.24/lb EV/Reserves US$0.20/lb EV/Reserves Base Metal Miners 6.9x EV/EBITDA 5.5x EV/EBITDA Shippin
Slide 27: Investing in Private Credit in the Natural Resources Sector
For personal use only Investing in Private Credit in the Natural Resources Sector Craig Evans Portfolio Manager
Slide 28: Significant Bank Pullback from Natural Resources Financing
Significant Bank Pullback from Natural Resources Financing For personal use only An Acute Funding Gap Which Can Be Addressed by Specialist Capital Providers • Traditional lenders pulling back materially from the natural resources sector due to: • Regulatory developments • Higher cost of capital • Be
Slide 29: Resources: Equity Market Financing Difficulties
Resources: Equity Market Financing Difficulties For personal use only BofA Merrill Lynch Global Fund Manager Survey REITs Discretionary US Staples Banks Commod Healtcare Tech Eurozone EM Japan Bonds Cash Equities UK Industrials Materials Energy -1.6 -1.2 -0.8 -0.4 0 0.4 0.8 1.2 Source: BofA Merrill
Slide 30: Investment Universe
Investment Universe Investment Universe Market Capitalization by Country (USD) For personal use only Other 2% • Approximately US$6.5tr market Asia 19% Industry Sub-Sectors cap includes several sectors United North across the natural resources Kingdom America 12% 50% complex Specialty Metals Base Met
Slide 31: Extensive Experience in Financing Natural Resource Projects
Extensive Experience in Financing Natural Resource Projects For personal use only Specialized & Hard to Replicate • Team members each have 20+ years experience globally in financing natural resources projects • High barriers to entry for generalist credit investors • ‘One firm’ approach to sector an
Slide 32: TGF's Access to Private Credit
TGF’s Access to Private Credit For personal use only Tribeca Global Natural Credit via Credit via Resources Limited TGF TGNRC (ASX:TGF) (unlisted fund) Zero fee Cash Coupon share class Equity Warrants / Tribeca Global Natural Royalties or Streams Invest Directly Into Resources Credit Fund Transactio
Slide 33: Structural Opportunities in Natural Resources Credit
Structural Opportunities in Natural Resources Credit For personal use only Private Credit Return Profile 30.0% Features of TGF Private Debt Structures 27.5% 25.0% • Investors receive origination fees on top of 22.5% coupon income • Self-originated and structured by Tribeca • Potential for: 20.0% • F
Slide 34: Natural Resources Lending Topology
Natural Resources Lending Topology For personal use only Operating in a segment of the market with very little competition from traditional market participants. Streaming Royalty Debt Senior and mezzanine loans with Tax effective investment structure Focus on gross revenue Deal Size equity for both
Slide 35: Investment Process Overview
Investment Process Overview For personal use only Negotiation Origination Due Diligence Portfolio Construction Risk Management and Structuring Tribeca is a leading specialist investor Corporate and project due diligence All structures rank above the The portfolio is built around The investment team
Slide 36: Risk Management Framework
Risk Management Framework Key Risks: For personal use only • Production Risk • Resource and Geology Risk • Commodity Price • A variety of structural mitigants at • Operating Costs initiation of deal structures in order to hedge against key risks Mitigants: • Investment discipline focused on: • The t
Slide 37: Portfolio Summary and Pipeline
For personal use only Portfolio Summary and Pipeline
Slide 38: Current Portfolio
Current Portfolio For personal use only The private credit part of the TGF portfolio has a current income yield of ~10.0%, with material upside potential through options and convertibility features attached to the loans. Portfolio Breakdown by Sector (% long exposures) Portfolio Breakdown by Region
Slide 39: Current Portfolio
Current Portfolio For personal use only Company Fees Participation Status Sector Country Type Term Coupon Target IRR Type Y/N Features Senior Secured Term 24 23.9% Exited Battery Metals Aust Listed 20.0% Y None Loan Months (realized) Secured Convertible 26 18% Exited Gas Aust Listed 15.0% Y Converti
Slide 40: Credit Team Onsite in North America
Credit Team Onsite in North America For personal use only 40
Slide 41: Commodity Outlook
For personal use only Commodity Outlook Guy Keller, Head of Commodity Trading
Slide 42: Global Macro
Global Macro Global Manufacturing Indices For personal use only 63 61 59 57 55 53 51 • Global manufacturing measures have continued 49 JPM Global Manu PMI SA to deteriorate as President Trump’s trade US Manu ISM China Manu PMI SA policies have impacted sentiment. However, we 47 Markit Eurozone Manu
Slide 43: Base Metals
Base Metals For personal use only LME Base Metals Prices 120 London Metal Exchange (LME) base 115 metals (with exception of nickel) have suffered due to the somewhat forced 110 slow down in global sentiment Copper Aluminium Zinc Nickel 105 100 Macro catalysts for base metal price 95 recovery: 90 • U
Slide 44: Copper
Copper China Copper Concentrate Treatment Charges For personal use only LME Copper vs MSCI EM Index US$/MT US$/MT 1400 8000 95 1300 7500 90 1200 7000 85 1100 6500 80 6000 75 1000 5500 900 70 5000 800 65 4500 700 60 4000 600 3500 55 MSCI EM Index LME Copper Price (RHS) CU Conc Spot TC Cu Conc 2019 Be
Slide 45: Copper: Bullish in 2020
Copper: Bullish in 2020 • Continued draw in global copper stocks, • China no longer the world’s dumping ground for historically low For personal use only scrap. • Supply disruptions from continued unrest in South • Copper scrap imports have historically been ~10% America and parts of Africa. of Chin
Slide 46: Crude Oil
Crude Oil BofA Merrill Lynch Global Fund Manager Survey For personal use only REITs Discretionary • Speculative positioning in US WTI Crude has decreased US significantly over 2019 Staples Banks • Current WTI $57 USD/ barrel is also the YTD average price Commod Healtcare • Weak sentiment, global gro
Slide 47: Crude Oil: 2019 Headwinds
Crude Oil: 2019 Headwinds For personal use only • In parts of 2019, mild weather lowered heating oil demand in Europe, Asia and the Americas • In central USA, wild weather and floods hurt diesel demand • Trade war estimated to have hurt crude demand by 500k bpd • IMO2020 changes hurt crude demand as
Slide 48: Crude Oil: Positives Ahead
Crude Oil: Positives Ahead US DOE Crude Oil - Total Inventory Data 550,000 For personal use only 500,000 450,000 • Despite the apparent sentiment weakness, US crude oil stockpiles have pushed below 400,000 the 5-year average from high levels. 350,000 • Supply continues to be hampered by 300,000 Jan
Slide 49: Uranium: Are We There Yet?
Uranium: Are We There Yet? For personal use only Fundamentals are structurally bullish Historical Uranium Price 160 2007: Uranium price hits US$140/lb The uranium price is too low to incentivise supply to meet 140 future known demand 120 2005: Cigar Lake • Uranium price needs to be in the mid-$40s U
Slide 50: Uranium: Releasing the Hand Brake
Uranium: Releasing the Hand Brake Spot conversion prices are now higher than the long “Noise” has hindered the more closely watched spot For personal use only term prices. Spot SWU prices have almost matched price… long term prices • Section 232: US Department of Commerce investigation into Spot Nuc
Slide 51: Uranium: Demand is Coming
Uranium: Demand is Coming For personal use only Uranium supply cuts at the same time we are witnessing the busiest global reactor build program in decades (%) Thermal Coal +206% U3O8 (lbs) required per annum for reactors 2% cut under construction • 450 reactors in operation 20,000,000 200% Met Coal
Slide 52: Core Position: Yellow Cake plc
Core Position: Yellow Cake plc (LON:YCA) For personal use only Yellow Cake plc is a uranium focused company offering direct exposure to the spot uranium price. Conducted IPO on the LSE in July 2018. • Strategy of buying and holding physical U3O8 • No operating risks associated with development, perm
Slide 53: Core Position – Yellow Cake plc
TGF owns some of the lowest cost Core Position – Yellow Cake plc YCA Discount to NAV implies much lower spot uranium price which pounds in the is even larger factoring in TGF is also at a discount to NAV market 2021 Priargunsky, Russia China Various For personal use only $70 2020 Uranium Production
Slide 54: Panel Discussion
For personal use only Panel Discussion James Eginton, Energy Analyst Simon Brown, Soft Commodities Analyst Michael Orphanides, Metals & Mining Analyst David Bridge, Head of Investor Relations (Moderator)
Slide 55: How to Invest in Shipping Equities
How to Invest in Shipping Equities For personal use only Tribeca’s current structural view: BUY when stocks are trading at a > 30% discount to NAV • High capital commitment to new orders of fleet is unlikely within an uncertain regulatory environment (IMO2020 & IMO2030) • Geopolitical factors are im
Slide 56: Fleet Utilisation Driving Earnings
Fleet Utilisation Driving Earnings For personal use only • Minor improvements in utilisation rates leads to large % moves in day rates which drops straight Where are we now….? to bottom line for these corporates • Utilisation of fleet is rising • Chart shows the $ delta in day rates against 2% incre
Slide 57: Australian East Coast Gas Market
Australian East Coast Gas Market For personal use only Australian East Coast Gas Crisis Only Worsening: Bass Strait Production to Halve in 10yrs Forecast of S.E. Australian Gas Production, Demand and Supply • 30% of the East Coast supply set to halve over 10yrs - BHP is pulling back investment & Exx
Slide 58: Core Position – Cooper Energy
Core Position – Cooper Energy (ASX:COE) For personal use only Growing Proportion of Uncontracted Gas into Tightening East Coast Market Manta (subject to appraisal well and FID) • Cooper set to ramp up supply to east coast market with Sole Sole, in development for start-up in December quarter 2019 18
Slide 59: Core Position – Encana Corporation
Core Position – Encana Corporation (TSE:ECA) For personal use only Deeply discounted North American large cap E&P generating sector leading free cashflow and return on capital employed • Penalised for Anadarko Basin acquisition in 2018 • 1/3 of the market cap prior to the acquisition despite a 2018-
Slide 60: Oil & Gas Capex Outlook
Oil & Gas Capex Outlook Engineering Services – energy and commodity capex troughing…. For personal use only 60
Slide 61: Customers Have Been Cautious
Customers Have Been Cautious For personal use only Recovery has been subdued…. Despite oil & gas FCF generation at historically elevated levels Offshore Rig Recovery 61
Slide 62: Worley: Ideally Placed
Worley (ASX:WOR): Ideally Placed For personal use only 62
Slide 63: Worley: Expectations Undemanding
Worley (ASX:WOR): Expectations Undemanding For personal use only 63
Slide 64: Worley: Expectations Undemanding
Worley (ASX:WOR): Expectations Undemanding For personal use only WOR is well placed in current market environment 64
Slide 65: Freeport-McMoRan – Deep Value Buy Thesis
Freeport-McMoRan (NYSE:FCX) – Deep Value Buy Thesis For personal use only • $16.2bn market cap • $7.9bn net debt • $32.2bn enterprise value • 3 operating centres (production equally split across all 3 in 2018) • North America – 7 mines (+2 molybdenum mines) • South America – 2 mines • Indonesia – 1
Slide 66: Location of Assets
Location of Assets For personal use only Freeport operates a large, long-lived geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. Freeport’s portfolio of assets includes the North America Grasberg minerals district in Indonesia, one of the wor
Slide 67: Freeport's Top-Tier Assets
Freeport’s Top-Tier Assets For personal use only 67 Source: Wood MacKenzie, Freeport McMoRan
Slide 68: Grasberg: An Impressive Mine
Grasberg: An Impressive Mine For personal use only Significant Reserves 36Mlbs copper in reserve + 29Moz gold (mined to date 33Mlbs and 53Moz) Competitive Cost Structure By 2021, cash costs expected to be back to 30c/lb with production of 1.4Bn pounds. Will help push group costs down to low 1s Mine
Slide 69: Cerro Verde & Morenci
Cerro Verde & Morenci For personal use only Morenci (Arizona, USA) (72% Ownership Interest) • Top 10 copper mine (~450kt pa) • Long life • EBIT Margins high 30s Cerro Verde (Peru) (53.56% Ownership Interest) • Top 10 copper mine (>450kt pa) • Very long life • EBIT Margins mid 20s 69 Picture: Morenci
Slide 70: Why Freeport is Well-Placed
Why Freeport is Well-Placed For personal use only • EBITDA should double over the next 2 years (2021 vs 2019) all else being equal, as production grows. • Largest listed copper producer in the world trading at depressed levels in terms of EV per pound of reserves. • Material operating leverage to hi
Slide 71: Material Underperformance vs Copper
Material Underperformance vs Copper For personal use only • Relative to copper, Freeport has Freeport vs Copper Price dramatically underperformed, 500 LHS Copper (c/lb) RHS Freeport ($/share) 70 particularly if you look back to 2008 450 60 400 • Since 2008, Freeport stock is down 350 50 78% while th
Slide 72: Doubling of EBITDA & Operating Cash Flow
Doubling of EBITDA & Operating Cash Flow For personal use only Cash Flow 8,000 • Freeport expects EBITDA to double over the next two 7,000 years to 2021 to ~US$5.4bn as copper and gold production increases while unit costs come down. 6,000 • Our analysis shows a similar doubling in EBITDA and 5,000
Slide 73: Reduction in Gearing
Reduction in Gearing For personal use only 25,000 7.0 6.0 20,000 5.0 Net Debt Multiple (x) 15,000 4.0 Net Debt 3.0 10,000 2.0 5,000 1.0 0 0.0 2015A 2016A 2017A 2018A 2019E 2020E 2021E 2022E Net Debt (US$m) ND/EBITDA Source: Tribeca estimates, Freeport McMoRan 73
Slide 74: Trading On Depressed Metrics of EV Per Pound Of Reserves
Trading On Depressed Metrics of EV Per Pound Of Reserves For personal use only EV Per Pound Of Copper Reserves $0.70 $0.60 • On a reserves basis, Freeport is trading at the most depressed levels since the GFC at the end of 2008. $0.50 • On a per-pound of copper reserves basis, the stock is trading o
Slide 75: Replacement Value Shows Material Uplift
Replacement Value Shows Material Uplift For personal use only • Freeport estimates to replace the production capacity of its assets would cost in the order of $36 to $45 billion. • Given Freeport’s Enterprise Value is currently ~$32bn and its market capitalisation is $16bn, the see-through value of
Slide 76: Potential M&A Target
Potential M&A Target For personal use only • There has been a lot made by the majors of the • There are other large copper companies, though lack of copper assets and copper projects. not of the same size, however they either have large family interests, like Antofagasta and • Being the largest list
Slide 77: Core Position – Nickel Mines
Core Position – Nickel Mines (ASX:NIC) For personal use only • Right partner in Tsingshan, the world’s largest stainless steel producer and significant nickel consumer • Tsingshan produce around 12 million tonnes of stainless steel Industrialising low-cost nickel production through partnership with
Slide 78: Core Position – Nickel Mines
Core Position – Nickel Mines (ASX:NIC) For personal use only 78
Slide 79: Core Position – Nickel Mines
Core Position – Nickel Mines (ASX:NIC) For personal use only 79
Slide 80: Nickel Ore Mining Operations
Nickel Ore Mining Operations For personal use only 80
Slide 81: Nickel Ore Barge Transportation
The site is supported by a vast port from Nickel Ore Barge Transportation which materials get shipped in and out For personal use only 81
Slide 82: Ore Furnaces
Ore Furnaces For personal use only The ore gets roasted and smelted in furnaces 19 82
Slide 83: Steel Furnace
Then gets mixed in with other ingredients and Steel Furnace turned into stainless steel For personal use only 83
Slide 84: Vast Facilities to Produce Stainless
Vast Facilities to Produce Stainless For personal use only 84
Slide 85: Final Product: Stainless Steel Coil
Final Product: Stainless Steel Coil For personal use only 85
Slide 86: Expansion Plans: New Facility Development
Expansion Plans: New Facility Development For personal use only 19 86
Slide 87: Elders
Elders (ASX:ELD) For personal use only • Has not been immune to the East Coast drought. • Driest period on record for NSW and parts of Victoria • Generally conditions second only to Federation drought of 1900-02. 87
Slide 88: Elders
Elders (ASX:ELD) Australian Winter Crop Production (kt) 20,000 For personal use only 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 New South Wales Victoria Queensland South Australia Western Australia Source: ABARE 88
Slide 89: Livestock De-stocking as a Result of Dry Conditions
Livestock De-stocking as a Result of Dry Conditions For personal use only Source: MLA estimates Source: ABS, MLA 89
Slide 90: Elders: Not Immune But Still Profitable
Elders: Not Immune But Still Profitable For personal use only Rural Products and Agency Services >75% of Margin Source: Wilson HTM Source: Elders Company Report 90
Slide 91: Strong Demand for Protein and Low Inventories
Strong Demand for Protein and Low Inventories For personal use only China Beef Imports: January - August Source: USDA-NASS Source: MLA • Strong US demand for beef • Swine flu has decimated pig population forcing affected countries to source alternative sources of protein • Drought in Australia 91
Slide 92: Pricing to the US has Skyrocketed
Pricing to the US has Skyrocketed For personal use only Source: Bell Potter Source: Bell Potter • US90CL is the export meat price to the USA • EYCI has observed a modest discount to US90CL through time • More recently has been volatile, however we anticipate a closing of the discount via a material
Slide 93: Rain Event in 2014/15 Led to Major Restock
Rain Event in 2014/15 Led to Major Restock For personal use only Total Rainfall in December 2014 Decile Rank of Total Rainfall in December 2014 Source: BOM • Prices rallied materially • Turnover also lifts initially • Elders has material leverage to price and volumes 93
Slide 94: Potential Tailwinds from Industry Consolidation
Potential Tailwinds from Industry Consolidation Nutrien takeover of Ruralco raises the potential for disaffected members to join For personal use only ELD/AIRR network Retail Chain & Wholesalers – Number of Stores (National) ELD share price has a loose historical correlation to EYCI EYCI * ELD * Sou
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