Why is the Graincorp share price sprouting on Tuesday?

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The Graincorp Ltd (ASX: GNC) share price is firmly in the green after releasing an investor presentation.

In early trading, shares in the integrated grains company are getting a boost. At the time of writing, the share price is 3.3% higher at $9.39. For context, the S&P/ASX 200 Index (ASX: XJO) is also up a lively 1.11% this morning.

Benefitting from a positive reaction to the contents of its latest presentation, Graincorp is leading the consumer staples sector out of the gates on Tuesday.

What’s growing the Graincorp share price today?

The grain logistics and storage company is getting extra attention on the ASX today. Typically, an investor presentation covers information already known by the market. However, today’s presentation has been marked as price-sensitive, indicating there are likely some important details hidden within it.

Before we dive deeper, here are a few main points that could be influencing the Graincorp share price:

  • Reaffirmed prior FY22 full-year guidance of $590 million to $670 million in underlying EBITDA
  • Dividend payout ratio target of 50% to 70% with “optionality to pay special dividends in years” ahead
  • Well-positioned amid global supply chain disruptions
  • Potential for third consecutive bumper crop across Australian east coast

Possibly the biggest takeaway from Graincorp’s presentation to shareholders is its insulation from some of the strongest pressures faced by other companies at the moment. For example, it touted its end-to-end supply chain along the east coast. This includes seven bulk grain port terminals and approximately 160 storage sites.

At a time when grain prices are at multi-year highs, the ability to deliver the product to ports and get it shipped is enabling the company to capitalise on the situation.

What else?

Importantly, the retained EBITDA guidance indicates Graincorp remains largely unaffected by the conflict in Ukraine. This is despite Europe and Ukraine exports making up 85 million tonnes of global exports.

Notably, the company highlighted its global footprint which has given the company some optionality. For example, Graincorp earmarked Canada as a “key part” of its multi-origin strategy.

More than anything, the presentation has likely provided reassurance to the Graincorp share price today. The company currently holds a market capitalisation of $2.14 billion.

The post Why is the Graincorp share price sprouting on Tuesday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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