ELDs result in November exceeded many expectations; hence, the battered stock’s had plenty of room to bounce, so far well over 60% – an attractive part franked 5% yield has helped the move. Management delivered a strong bent on the result: “This year was met with challenging market and cost conditions, and despite this, Elders achieved its second-highest EBIT result in the last decade”. After its strong recovery, we believe ELD is now trading around fair value, considering the business’s inherent risks.
- We cannot get excited towards ELD at current levels, but a 10-15% dip would deliver a more interesting buffer.
MM is neutral ELD around $9
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