AUSTRALIA'S largest private landholder, S. Kidman & Co, has made a $50 million net profit for the year ended June following a huge uplift in cattle sales and values and the divestment of a major equities portfolio.
The privately owned company, which booked a $1.3 million loss last year, is up for sale and firmly in the sights of cashed-up Chinese agricultural giants desperately seeking food security and diversification.
It is expected the business, which owns 11 million hectares of land across Australia, could sell for more than $325 million with second-round bids due at the end of October.
S. Kidman & Co managing director Greg Campbell confirmed the results for The Australian Financial Review and said the value of the land and the company's herd had risen further since the last financial results and that potential bidders for the business would have to weigh up very favourable projections on prices.
"The typical thing is that the real estate gets dragged up by the rising commodity prices but there is a lag effect, so how long those prices for cattle stay high will determine how much the land values will rise," Mr Campbell said.
"This is is obviously an area where buyers will need to put their minds to forecasting. Since Kidman closed its books in June we have had even higher prices and there has been a further increase in values."
Unlike many other rural land holders, the company does not regularly revalue its land holdings, which the directors consider to be worth more than $197 million, based on the most recent market appraisal in May.
However, the company regularly values its cattle herd, which saw a $26.3 million rise in value over the 12 months to June.
"We believe cattle prices will be supported for some years to come; whether that's three years or five years depends on different people's forecasts."
Following substantial destocking of the company's Queensland cattle stations faced with drought, S. Kidman & Co recorded $62 million in livestock sales up from $56 million last year.
The cattle herd now numbers 156,000 down from 190,000.
Separately, the family-owned S. Kidman & Co booked $25 million of the total profit from the sale of 13 blue chip ASX-listed stocks, including $6 million in BHP Billiton shares and more than $16 million of shares in Australia's big four banks.
"To clear the decks for the sale of the business we decided to sell the share portfolio," Mr Campbell said.
"It was sold down in three tranches from January through to March."
The company sold just under $1 million worth of stock in the listed Australian Agricultural Company, which is Australia's largest beef producer.
