Duxton Farms Limited · ASX:DBF
Duxton Farms — Duxton Broadacre Farms — Investor Presentation (June 2019)
25 slides from Duxton Farms's investor presentation, Jun 28, 2019
Slide 1: Duxton Broadacre Farms Investor Presentation June 2019
DUXTONBROADACREFARMS June 2019 INVESTORPRESENTATION
Slide 2: Disclaimer
DISCLAIMER This presentation was prepared by Duxton Capital (Australia) Pty Ltd [ACN Acceptance 164 225 647; AFSL no. 450218] (“DC Australia”) as the Investment Manager of Duxton Broadacre Farms Limited [ACN 129 249 243] (“Duxton Broadacre”). To the extent permitted by applicable law, none of DC Aus
Slide 3: Take Home Message
TAKE HOME MESSAGE 1 Direct exposure to Australian agriculture 2 Geographically diversified portfolio of farming operations 3 Diversified commodity exposure and dynamic annual production 4 Best in class approach with highly qualified and experienced teams 5 Underpinned by strong macro-economic trends
Slide 4: Broadacre farming with economies of scale, diversification, and flexibility
Broadacre farming with economies of scale, diversification, and flexibility AUSTRALIAN BROADACRE DUXTON BROADACRE FARMS (“DBF” or “the Company”) The Company owns and operates an aggregation of broadacre farms in Australia. Risk is mitigated and returns are optimised through mixed commodity productio
Slide 5: Duxton Broadacre Farms – Property summary
Duxton Broadacre Farms – Property summary AUSTRALIAN BROADACRE OUR PROPERTIES The Company’s objective is to create a diversified portfolio of high-quality, efficient broadacre aggregations. Our objective is to provide shareholders with both ongoing annual operational yield and long term capital grow
Slide 6: Duxton Broadacre Farms – Commodity production cycle
Duxton Broadacre Farms – Commodity production cycle AUSTRALIAN BROADACRE OPERATIONAL TIMELINE • Duxton Broadacre Farm’s financial year ends 30 June. Each commodity has a cycle unique to the variety, geographic location and season. • Summer cropping includes cotton, which is sown September-October. T
Slide 7: Operational update (May 2019)
Operational update (May 2019) AUSTRALIAN BROADACRE OPERATIONAL UPDATE IRRIGATION The ongoing rollout of the irrigation development program continued over May. The infrastructure development projects are aligned with the Company’s broader risk mitigation strategy by seeking to increase water security
Slide 8: Market update (May 2019)
Market update (May 2019) AUSTRALIAN BROADACRE COMMODITIES WHEAT AND BARLEY CROP CURRENT PRICE 12 % Domestic barley prices have remained at a similar level to April. The potential for greater supply may dampen prices. If PRICE MONTHS CHANGE rainfall is lower than expected or it is highly variable, ma
Slide 9: Risk mitigation and long-term developments
Risk mitigation and long-term developments AUSTRALIAN BROADACRE WATER SECURITY & RISK MITIGATION – IRRIGATION DEVELOPMENT • DBF’s risk mitigation strategy includes irrigation development to increase water security. DBF currently owns and leases a combined 15,371ML of water entitlements (May 2019). W
Slide 10: An experienced operational management team
An experienced operational management team OPERATIONAL TEAM KEY MANAGEMENT TEAM Duxton Broadacre is managed by a highly qualified on-farm team with extensive experience in the Australian broadacre farming industry. The key management team is comprised of: Bryan Goldsmith Martin Flower Andrew Garland
Slide 11: An experienced Investment Management team
An experienced Investment Management team ABOUT MANAGER ED PETER – Group Chairman Ed Peter is the Group Chairman of Duxton Asset Management ("Duxton"). Prior to forming Duxton in 2009, Ed was Head of Deutsche Asset Management Asia Pacific ("DeAM Asia"), Middle East & North Africa. He was also a memb
Slide 12: An experienced Investment Manager
An experienced Investment Manager ABOUT DUXTON GROUP Duxton Capital (Australia) is part of the Duxton Group, as a wholly owned subsidiary of Duxton Capital Pte Ltd. The Group manages and advises over A$1.4 billion in assets (at 31 May 2019). Collectively, the Duxton Group manages a range of differen
Slide 13: Historic Demand
Historic Demand AUSTRALIAN BROADACRE DEMAND GROWTH Duxton Broadacre Farms has recognised the opportunity in Australian broadacre farming, largely driven by the potential for land value uplift, commodity price recovery, and best-in-class execution of operational strategy. Inflation-Adjusted Wheat Pri
Slide 14: Australia is a net exporter and expects growing global demand for broadacre production
Australia is a net exporter and expects growing global demand for broadacre production AUSTRALIAN BROADACRE EMERGING MIDDLE CLASS • One of the possible catalysts for the potential retracement of price is the growing demand from Australia’s neighbours in the Asia-Pacific region, primarily Indonesia.
Slide 15: Indonesia growing population and middle class
Australia is a net exporter and expects growing global demand for broadacre production AUSTRALIAN BROADACRE INDONESIA GROWING POPULATION AND MIDDLE CLASS • As nations become wealthier, typically red meat consumption increases. GDP and food consumption 4000 • It is likely this will cause increased de
Slide 16: Land degradation should influence demand of Australian broadacre production
Land degradation should influence demand of Australian broadacre production AUSTRALIAN BROADACRE WORLD 0.26 ha 1980 ARABLE LAND PER CAPITA 0.19 ha 2015 EU NORTH AMERICA 0.26 ha 1980 0.17 ha 2050 0.93 ha 1980 0.55 ha 2015 0.21 ha 2015 LATIN AMERICA MIDDLE EAST & NORTH AFRICA 0.33 ha 1980 0.28 ha 1980
Slide 17: Australia has low sovereign risk and currently mis-priced land
Australia has low sovereign risk and currently mis-priced land AUSTRALIAN BROADACRE WHY AUSTRALIA • The maps show the world’s 10 largest wheat producers, in aggregate accounting for ~520 million tonnes of wheat. • Of the 520 million tonnes of wheat, ~67% was produced in countries scoring below 45% o
Slide 18: Australia has low sovereign risk and currently mis-priced land
Australia has low sovereign risk and currently mis-priced land AUSTRALIAN BROADACRE WHY AUSTRALIA • The capital investment required to farm in these low-sovereign risk countries was then compared, using the Savill’s Global Farmland Index. • Example: US$100 million invested would buy you; • 9,895 hec
Slide 19: Australia has low sovereign risk and mis-priced land
Australia has low sovereign risk and mis-priced land AUSTRALIAN BROADACRE If US$100m was invested Australia Germany New Zealand UK US • By comparison of these low- sovereign risk countries, Average Land Price ($USD/ha) $2,117 $24,680 $23,340 $25,404 $10,106 Australia’s land prices are significantly
Slide 20: Australian farmland valuations
Australian farmland valuations AUSTRALIAN BROADACRE STRENGTHENING OF THE AUSTRALIAN DOLLAR • Between 2001 and 2012 the Australian dollar doubled in value. USD/AUD • As a major exporter of wheat and grain commodities, and given contracts are 1.05 defined in terms of $USD, Australian farms profits hav
Slide 21: Australian farmland is now undervalued due to drought conditions and a strengthening of the AUD
Australian farmland is now undervalued due to drought conditions and a strengthening of the AUD AUSTRALIAN BROADACRE WHY AUSTRALIA DRY WET DROUGHT WET DRY • Australia has a variable climate and 300 can experience periods of flood and drought. 250 • Broadacre cropping is largely dryland so relies on
Slide 22: Countries with mature agricultural industries are largest investors in Australian Agribusiness
Countries with mature agricultural industries are largest investors in Australian Agribusiness AUSTRALIAN BROADACRE FOREIGN INVESTMENT • In 2018, the largest source countries of investment by value in the Australian Agriculture sector were Canada, China and the U.S. Annual Investment in Australian A
Slide 23: Australian agricultural performance
Australian agricultural performance AUSTRALIAN BROADACRE AUSTRALIAN PERFORMANCE TO DATE Historical Inflation-Adjusted Annual Profit from a $10,000 (1992) AVERAGE ANNUAL MEDIAN PRICE GROWTH OF Investment in Farms FARMLAND PRICES $70,000 SA NSW $60,000 2017 17.1% 8.8% $50,000 5 years 2.8% 6.4% 10 year
Slide 24: Take Home Message
TAKE HOME MESSAGE 1 Direct exposure to Australian agriculture 2 Geographically diversified portfolio of farming operations 3 Diversified commodity exposure and dynamic annual production 4 Best in class approach with highly qualified and experienced teams 5 Underpinned by strong macro-economic trends
Slide 25: Key Contacts
KEY CONTACTS Will Brennan Duxton Capital (Australia) Portfolio Manager will.Brennan@duxtonam.com +61 450 160 005 +61 8 8130 9500 Lauren Thiel Duxton Capital (Australia) Business Development lauren.thiel@duxtonam.com +61 417 834 549 +61 8 8130 9500 25
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