Property

S. Kidman to sell four extensive northern properties, as portfolio re-shaping continues

Jon Condon, 19/11/2022

Grass steers on Kidman’s Naryilco in the Channel Country

 

NORTHERN pastoral giant S. Kidman & Co is well advanced in a sale process to divest another four of its large northern grazing properties, with a total land-area of more than 24,000sq km.

The company received an unsolicited approach to sell the holdings, Beef Central understands, which Kidman has accepted. There may in fact be two parties involved, but in a single transaction.

When asked about the process, Kidman issued Beef Central with a brief statement (see details below) describing the sale process as ‘advanced.’ No indication was given whether the interest was from an Australian pastoral company, investment vehicle or individuals, or whether it had come from overseas.

The current sale process involves three of Kidman’s historic Channel Country backgrounding and grass finishing holdings – Naryilco, Glengyle and Durrie, in southwest Queensland, together with Brunchilly Station, just below Helen Springs in the Northern Territory’s Barkly Tableland region. To avoid any confusion, Kidman is retaining Durham Downs in the Channel Country, and breeding property Helen Springs on the Barkly.

Queensland’s Channel Country holdings are notoriously tightly-held by their predominantly pastoral company owners, with many operated by the original owners for a century or more. The area is highly prized for its ability as a ‘grass feedlot’ during times of beneficial flooding out of the Cooper Creek and Diamantina and Georgina Rivers, all flowing towards Lake Eyre.

Carton lid for the 100-day grainfed Kidman Santa Gertrudis Beef brand.

The total land area involved in the latest Kidman sale process of some 24,800sq km will make this one of the biggest pastoral land deals in Australia in the past year. Thirteen months ago, Kidman sold a similar area of country around 25,000sq km in Central Australia, but that was much lesser quality country in lower carrying capacity regions. It also sold Ruby Plains and Nerrima Statiuons in the Kimberley in September last year in a deal worth around $100 million.

The location and purpose of each holding involved in the current sale process suggests Kidman is moving sharply away from its historic origins as a large-scale, low-cost grassfed bullock producer, into a future supply chain built more strongly around grainfed beef production fed into the company-owned brand programs. The company also takes great pride in its value-added pre-prepared beef pie program.

Further asset purchases to better fit that grainfed model cannot be ruled out, Beef Central understands.

Here’s a brief breakdown on each holding involved in the latest sale process:

Glengyle Station covers 5500sq km on the Georgina River. The property plays an important role in Kidman’s overall cattle flow, linking northern breeding properties with southern markets. Fed by the Georgina River system, flooding channel country waterways flow through the majority of the property, which has a carrying capacity around 8500 head.

Durrie Station 6600sq km to the southeast of Glengyle on the Diamantina was acquired by Sidney Kidman himself in 1913. Located in the Diamantina channel country, is considered some of the best grazing country in Queensland, traditionally used as a grass bullock depot. The property runs up to 9000 head at any given time, using extensive flood-out areas.

Naryilco Station, covering 7510sq km, is located on the southern end of Queensland’s channel country, near the border with NSW and South Australia. It has a carrying capacity of 12,000 head. Producing excellent grass bullocks, Naryilco is semi-arid country consisting mainly of soft sandhills, open gibber plains and an area of fertile floodplains thanks to Cooper Creek, Warri Warri and the Wilson River.

Brunchilly Station 4572sq km is situated on the Barkly Tablelands of the Northern Territory, northeast of Tennant Creek. It sits to the southeast of Kidaman’s other large Barkly breeding operation Helen Springs, which is not involved in this sale process. Brunchilly has an average carrying capacity of 24,000 head, mostly used for breeding, run on a mix of fertile black soil downs and softwood scrub country. The property turns off weaner steers annually to the channel country properties, whilst females are retained as replacements for the breeding herd.

Cattle on Kidman’s Channel Country properties

S. Kidman is owned and operated by a joint venture comprising WA mining billionaire Gina Rinehart (67pc), and her Chinese business partner Shanghai Cred (33pc). Kidman is run in parallel with Mrs Rinehart’s other large pastoral entity, Hancock Agriculture, with some management extending across both entities. There is no suggestion that Kidman is embracing Wagyu beef production to the same degree that the Hancock Agriculture business is – except for some limited F1 programs, apparently.

The Rinehart/Shanghai CRED joint venture won the Kidman purchase deal after a bitter battle with other contenders, both Australian and offshore. Preserving the Kidman assets was a key plank in the buyers’ platform at the time.

Mrs Rinehart’s Hancock Agriculture already controls two mid-sized commercial feedlots – 10,000 head Maydan, near Warwick in southern Queensland, which she bought in 2017, and Gunnee feedlot, NSW bought as part of the Sundown Valley aggregation purchase in 2018.  Gunnee, which at the time of Beef Central’s most recent Top 25 Lotfeeders report had an operating capacity of 10,000 head was previously owned and operated by Mort & Co. Neither Gunnee nor Maydan have been used to capacity recently by Kidman or Hancock, Beef Central understands.

Kidman in turn sold its small Tungali feedlot in South Australia in August.

The latest activity continuers a sell-down of S. Kidman assets over the past three years, that will see the only remaining holdings being Helen Springs (5700sq km) in the NT, Morney Plains (6230sq km) and Morney Plains in the Channel Country, and the company’s bull breeding depot, Rockybank near Roma in the Maranoa region. The company as it now exists is a mere shell of what it once was, raising questions about its future, or whether it simply gets rolled into the Hancock Ag business.

A Kidman senior management meeting, including station managers, was held in Brisbane yesterday.

 

After an approach on Friday by Beef Central, S. Kidman issued us with the following statement this morning:

Consistent with the recent redirection of the agricultural portfolio within S. Kidman & Co and Hancock Agriculture, the companies have the intention to divest Brunchilly on the Barky Tablelands in the NT as well as Glengyle, Durrie and Naryilco in south-west of Queensland.

Following recent rainfall and substantial flooding, all stations are enjoying excellent seasonal conditions.

Since acquisition, the stations have benefited from an extensive capital improvement program including a digital communications system, shading yards, troughs and parts of paddocks, as well as new yards, fences, solar panels and watering systems. Animal welfare continues to be a major company-wide priority, “happy cattle are healthy cattle” and the stock have accordingly benefitted from this dedicated approach. 

The Kidman stations retained have been identified to allow the continuation of the Kidman supply chain model, breeding cattle in the north for backgrounding in the Channels and supplementing the channel country breeder herd.  Suitable cattle will then be delivered into feedlots for preparation for sale in the Kidman boxed beef brand. 

Other cattle will visit feedlots and or be sold directly into the east coast market. We remain committed to retaining and continuing to support the iconic history of S. Kidman & Co and its legacy, and to expanding our fine 2GR Wagyu herd.

 

Valuation

So what are the Kidman properties worth, bare of stock (no indication has yet been provided on stock numbers)?

Applying a land valuation of $2500 per adult equivalent for the Channel Country properties, and $2000/AE for Brunchilly, it suggests a rough bare value around $120-$150 million, one property source suggested.

 

 

 

 

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Comments

  1. Michael Vail, 20/11/2022

    I note suggested carrying-capacities are mentioned as a ‘maximum likelihood’. Pricing-in Risk, and looking through the forward cycle, I calculate value for the 4 x properties listed, as follows …

    Land Only: $76.9532-Million.

    LiveStock Value: $77.9584-Million.

    WIWO: $154.9116-Million.

    … and an expected likely maximum Revenue stream of around $43.0-Million per Annum (Avg.) … around $2,700 per Head (Avg.) on an expected maximum Weaning-Rate of around 70%: and an expected Profit before-tax of around $2.4-Million. IMO

    Of course, I may be incorrect.

    The market is always correct on the day!

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