Rural Funds Group (ASX: RFF)
Share price -$1.845
Annual dividend yield - 6.25%
Dividend Pay date - 31 january 2025
Dividend amount per share $0.029
Franking - 0
Dividend ex date - 30 December 2024
Market cap $730.73M
As of 4 December 2024
Rural Funds Group (ASX: RFF) delivered a robust financial performance in FY24, driven primarily by the ongoing development and leasing of its macadamia orchards to a global institutional investor. The 40-year lease agreement was the key factor behind an 8.0% rise in property revenue to $88.4m, contributing nearly 20% of total revenue and expected to grow further as rent from additional capital expenditure is realized. The Fund reported earnings of $117.2m (30.3 cents per unit, cpu), boosted by independent valuations conducted on 69% of assets. This also supported a 7.2% increase in adjusted net asset value (NAV) to $3.14 per unit. Adjusted funds from operations (AFFO) came in at 11.0 cpu, enabling distributions of 11.73 cpu, in line with forecasts.
A standout achievement was progress on the 3,000 ha macadamia orchard developments, concentrated in Maryborough and Rockhampton. These developments, which began in 2021, are expected to be substantially completed by the end of 2024, representing $287m in total capital investment and 7% of Australia’s planted area. Precision farming techniques and integration of advanced data and farm management technology—backed by RFF’s $7m investment in a tech company—aim to create high-yielding, cost-efficient orchards. In addition to macadamias, RFF executed significant property transactions, including the lease and partial sale of cropping properties valued at $76m to a global institutional investor, and a $26m cattle property lease to a local lessee. These moves enhance earnings stability by reducing operational exposure, while proceeds from partial sales contribute to deleveraging.
Notably, RFF operates two cattle properties, Kaiuroo and Yarra, to generate income during their development phase. These properties, equipped with substantial water entitlements, are being transformed to support irrigated cropping, enhancing long-term productivity and leasing potential. Similarly, four mature macadamia orchards under Fund management are undergoing yield-improvement initiatives to capitalize on a potential price recovery. RFF’s financing position remains solid following the refinancing of its syndicated debt facilities, which expanded from $795m to $867m to support macadamia development. As of June 30, 2024, the Fund had $98m in pro forma headroom, with 70% of its debt fixed at an average hedge rate of 2.8% for FY25.
Looking ahead, management forecasts FY25 AFFO growth of 3.6% to 11.4 cpu and maintains distributions at 11.73 cpu. Efforts to improve earnings quality and risk profiles will continue, supported by strategic transactions across macadamia, cropping, and cattle assets. RFF's strategy of leveraging precision agriculture, scaling its asset base, and ensuring disciplined capital management positions it well for sustained growth and shareholder value creation.
Metcash Limited (ASX: MTS)
Share price -$3.35
Annual dividend yield - 4.95%
Dividend Pay date - 29 January 2025
Dividend amount per share $0.085
Franking 1005
Dividend ex date - 13 December 2024
Market cap $3.76B
As of 4 December 2024
Metcash Limited (ASX: MTS) delivered strong financial results for the first half of FY25, with group revenue increasing by 6.3% to $9.6 billion. Despite facing a challenging economic environment, the company maintained its earnings with underlying EBIT remaining flat at $246.1 million. The interim dividend of 8.5 cents per share was declared, in line with the company’s target payout ratio of around 70%. This dividend, which reflects the group’s continued commitment to returning value to shareholders, has an ex-dividend date of 13 December 2024 and a payment date of 29 January 2025.
Metcash performed well in its food segment through solid growth of supermarket sales and the company's independent grocers network by increasing sales and store numbers despite inflationary pressures. The company also continued to expand its footprint with new contract wins and increased private label sales. However, the growth rate for some areas, like wholesale price inflation, moderated compared to the previous year. In liquor, sales were strong, led by the independent retail network (IBA), though EBIT was slightly down due to higher cost inflation and labor pressures. The hardware division, meanwhile, experienced a decline in EBIT due to reduced trade activity, intense price competition, and cost inflation, although the impact was partly mitigated by strategic acquisitions.
Metcash is optimistic about the second half of FY25 and is expecting solid performance in all its business segments. Food division is also performing better now following the acquisition of Superior Foods, while independent supermarkets continue their growth trajectory. In liquor, independents are continuing to capture market share with their localized offers. However, the hardware division is still facing challenges due to weaker trade activity, although cost-saving measures and growth initiatives are expected to drive improved earnings in the second half. Overall, Metcash is well-positioned for future growth, supported by its diverse business portfolio and robust operational strategies.
Source: Company’s Report
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