Here you are Bell’s report on AAC AU in respect of 1H21 Results :

AAC reported a strong 1H21 YOY uplift in Operating EBITDA to $23.5m, well ahead of our expectations. Key operating statistics of the result included:

Operating results: Revenue of $140.8m was down 22% YOY (vs. BPe $136.0m). Operating EBITDA of $23.5m compared to an Operating EBITDA of $6.3m in 1H21 (vs. BPe loss of a $10.6m). Operating EBITDA includes $6.7m in government subsidies, suggesting underlying operating EBITDA of $16.8m (up +167% YOY). Reported EBITDA of $15.0m, includes an $8.5m unfavourable SGARA movement.

Cashflow and balance sheet: Post lease operating cash flow of $19.2m compares to an inflow of $8.2m in 1H20. Net debt exited the period at $345.1m and compares to net debt of $361.6m in FY20. NTA exited at $1.52ps compares to $1.51ps at FY20.

Supply chain: We tend to focus on supply chain returns and we note EBITDA per Kg lifted in excess of four fold. This has been achieved despite lower effective overhead recoveries on a per Kg basis and driven by better outcomes on price and cost.

Outlook: Lower liveweight production (down 25% YOY) will flow to lower sales of meat and live cattle in 2H21e relative to 1H21.

Our operating EBITDA forecasts are materially upwardly revised in FY21e, but down 11% in FY22e and 17% in FY23e. The largest driver being a reduction in volumes sold, due to ongoing COVID disruptions and a smaller herd. Our target price which is based on group NAV ex-Livingstone lifts to $1.45ps (prev. $1.40ps) following a lower than anticipated equity drain in 1H21.

Investment view: retain Buy rating

Our Buy rating remains unchanged. AAC has always been about whether it can add value in excess of NAV to the carcass. The clear highlight in this result was the four fold uplift in EBITDA per kilogram on liveweight sold. AAC in 1H20 generated an operating EBITDA result similar to 1H19 on ~45% of the equivalent volume and this in our view is a sign that the initiatives to date around supply chain and go to market are beginning to deliver tangible returns.