The broker has initiated coverage of Graincorp ((GNC)) spin-off United Malt Group, the world’s fourth-largest commercial malster, with a Hold rating and $4.65 target. While there is much to like about the company the broker does not believe virus downside risk is being fully priced in.
Stay at home restrictions are impacting on United’s traditional growth market, in particular craft beer. Despite strong cash flow, gearing is a bit higher than the broker would like.
Sector: Food, Beverage & Tobacco.
Target price is $4.65.Current Price is $4.36. Difference: $0.29 – (brackets indicate current price is over target). If UMG meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
