GrainCorp Ltd (ASX: GNC, OTC: GRCLF), Australia’s largest publicly traded agriculture company, reported sharply lower fiscal 2014 revenue and earnings compared to fiscal 2013, as dry weather and smaller grain harvests on Australia’s east coast and lower grain volumes hurt the top and bottom lines.

GrainCorp reported an 8.2 percent decline in revenue for the 12-month period ended Sept. 30, 2014, to AUD4.1 billion. Earnings before interest, taxation, depreciation and amortization (EBITDA) were down 25.8 percent AUD293 million, while underlying net profit after tax (NPAT) slid 45.7 percent to AUD95 million.

Statutory NPAT, including AUD44 million of one-off items, was down 64.3 percent to AUD50 million.

Earnings were down across all of GrainCorp’s businesses except for its Malt division, where earnings grew 23.8 percent to AUD125 million. Storage & Logistics EBITDA were off by 59.8 percent to AUD72 million. Oils was down 2.7 percent to AUD73 million, while Marketing earnings were down 33.3 percent to AUD36 million.

Management declared a final dividend of AUD0.05 per share. That’s down 75 percent from AUD0.20 for the prior corresponding period. The full-year payout of AUD0.20 is down from AUD0.45 for fiscal 2013, which included a special cash dividend of AUD0.05 per share.

The payout ratio for fiscal 2014 was 48 percent of underlying NPAT, within management’s 40 percent-to-60 percent policy range.

Last year’s winter crop harvest was the second-largest on record at 44 million metric tons, but most of the bumper production was focused on Western Australia and South Australia, where GrainCorp isn’t the dominant grain-handling company.

In New South Wales and Queensland, production of wheat, barley and canola declined sharply in 2013, reflecting the impact of the severe drought on major northern NSW grain bowls such as Moree, while Victoria saw only a modest 2 percent increase in crop harvest to 7.1 million metric tons.

GrainCorp received just 8 million metric tons of grain, 23 percent less than in fiscal 2013, at its 250 country silos and receival depots in eastern Australia during fiscal 2014. Exports from its seven ports fell 47 percent to 4.4 million metric tons.

GrainCorp posted slow but steady gains from Sept. 26, 2011, when it made its debut as an original member of the AE Portfolio, through late 2012 and then spiked higher on news of its proposed acquisition by global agribusiness giant Archer Daniels Midland Co (NYSE: ADM).

By April 2013 our total return in US dollar terms exceed 100 percent, making the company one of the best performers in the Portfolio–and on the Australian Securities Exchange (ASX).

But in November 2013 the Australian government rejected the deal with ADM, and the share price fell back below AUD9. It’s been trading on grain market fundamentals over the past year, and fundamentals have been challenging.

This is not about the poor performance of the company. GrainCorp’s core business is storage and logistics, and lower harvests and weather have dramatic impacts on results.

That’s why it’s an Aggressive Holding.

CEO Mark Palmquist, who took over in October 2014, noted that, based on early results of the harvest now under way in Queensland, NSW and Victoria, challenging conditions will persist in fiscal 2015.

Severe drought has devastated winter crops in northern NSW and Queensland for a second year in a row, while the dry conditions have also spread south this year into southern NSW and the Victorian Mallee.

In addition, large parts of South Australia and Victoria’s Wim­mera experienced bad winter frosts that hit canola crops particularly hard.

The current eastern Australian harvest is expected to be below average. And this year’s carry-in is a near record-low of 1.9 million metric tons. There’s a smaller exportable surplus, and there will again be competition for grain.

Mr. Palmquist did note that although the crop is smaller it is of good quality.

And decent rainfall in the next few weeks in northern regions would set the stage well for summer crop plantings.

Management’s focus amid these trying circumstances will be on controlling costs. Mr. Palmquist also said present conditions provide a good opportunity to focus on new strategic initiatives and directions for the company to make it more resilient.

We’re going to stick with GrainCorp at least until we hear about Mr. Palmquist’s plan to adapt the company to reduce the impact of smaller harvests and the volatility associated with being an agriculture-focused, weather-dependent company.

Diversification and expansion of the business into areas such as vegetable oils and malting will likely be a big part of this strategy, as management lines up the key commodities it handles, including wheat, barley, canola and sorghum, with processing opportunities to develop a more diversified, value-adding supply chain.

GrainCorp remains well positioned to grow in the context of maturing appetites among emerging Asian economies. Articulation and then execution of a strategy that takes account of market risks is critical.

But the balance sheet is strong, and cash generation is solid. We look forward to hearing how Mr. Palmquist will stabilize financial performance.

GrainCorp remains a buy for aggressive investors up to USD10.

Aggressive Update

Amalgamated Holdings Ltd (ASX: AHD) reported a fiscal 2015 first-quarter earnings before interest, taxation, depreciation and amortization (EBITDA) of AUD46.8 million versus AUD27.9 million during the first three months of fiscal 2014.

This 67.7 percent increase compared to the prior corresponding period reflects an outstanding 2014 ski season at Amalgamated’s Thredbo resort, improved box office in Germany and ongoing growth in its hotel segment.

Management noted that movie theater performance in Australia and New Zealand was generally soft during the first quarter, through October and into November.

But the opening of The Hunger Games: Mockingjay Part I, the latest entry in a popular series, in late November and The Hobbit: The Battle of the Five Armies, the last installment in a beloved franchise, and The Walt Disney Co’s (NYSE: DIS) well-reviewed animated feature Big Hero 6 in December should drive strong ticket sales during the holiday season.

The second half of the year is also quite promising, with Fifty Shades of Grey, Cinderella and Inside Out as well as hotly anticipated sequels Avengers: Age of Ultron, Fast and Furious 7, Ted 2, Mad Max: Fury Road, Minions, Jurassic World and The Second Best Exotic Marigold Hotel leading the film slate.

On the development side, Amalgamated’s QT Residences Bondi is on track to open in August 2015, while the conversion of the former cinema at 131 Russell Street in Melbourne to a QT hotel is underway, with completion expected in 2016.

Amalgamated continues to grow its asset base via acquisition as well as development and redevelopment, with the portfolio now worth approximately AUD1.5 billion.

The company remains relatively debt-free and has current liquidity of approximately AUD360 million, which positions it well to explore additional growth opportunities on the cinema and hotel/resort sides of the business.

That’s a solid foundation for an invest-to-grow business model that we identified as a “best buy” opportunity in the October 2014 issue of AE. Investors who acted are already sitting on a pretty capital gain of 13 percent.

Amalgamated’s share price spiked in the aftermath of management’s first-quarter update at the Oct. 24, 2014, annual general meeting, hitting a new all-time high of AUD10.68 on the ASX on Nov. 12.

As of this writing, it’s trading at AUD10.61, which is approximately USD9.24 based on the prevailing Australian dollar-US dollar exchange rate.

Wait for a pullback to AUD10.34, or USD9 based on the prevailing exchange rate, to buy Amalgamated Holdings.

JB Hi-Fi Ltd (ASX: JBH) reported a 0.5 percent increase in total sales for the first quarter of fiscal 2015. Same-store sales were down 2.1 percent.

But this marks a significant improvement on JB Hi-Fi’s performance in July, when total sales fell 3.2 percent and same-store sales plunged 5.5 percent, dragged down by weak demand for tablet computers.

Total sales in September and October rose by approximately 4 percent and same-store sales were up 1.2 percent. Both are below growth rates posted in 2014 but are the strongest momentum for about nine months.

And JB Hi-Fi continues to gain market share across all categories.

Week-to-week trading remained volatile, highlighting fragile consumer confidence, and competition remained intense. But management expressed confidence in meeting its fiscal 2015 sales guidance of AUD3.6 billion.

If present trends persist, JB Hi-Fi could exceed its 3.3 percent growth guidance.

The rebound in sales was fueled by new product releases, including Apple Inc’s (NSDQ: AAPL) iPhone 6 and Microsoft Corp’s (NSDQ: MSFT) Surface 3. Improved stock availability and consumer demand for Sony Corp’s (Japan: 6758, NYSE: SNE) PS4 and Microsoft’s Xbox One gaming consoles also helped.

JB Hi-Fi plans to boost capital expenditure by more than 30 percent to around AUD50 million, driven by the opening of eight new stores and conversion of 26 existing stores to the JB Hi-Fi HOME concept.

The number of JB Hi-Fi HOME stores was expected to reach 75 by the end of 2016, taking appliance sales to AUD1 billion.

JB Hi-Fi is a buy under USD18.

Conservative Update

Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY) reported a fifth straight record annual profit, driven by growth in the Australian market and another decline in provisions for bad debts.

Statutory net profit after tax (NPAT) was up 15 percent to AUD7.27 billion, while cash profit grew by 10 percent to AUD7.12 billion, as ANZ posted solid results in all of its key markets.

The result also saw continued momentum from ANZ’s international business in Asia Pacific, Europe and America, which now accounts for 24 percent of total revenue.

ANZ’s charge for bad debts was down 17 percent year over year to AUD989 million, including a 13 percent decline between the first and second halves.

Cash earnings in its Australia division rose 7 percent to AUD3.05 billion, while earnings at its international and institutional banking arm, its second-largest profit driver, climbed 11 percent to AUD2.69 billion.

Earnings outside Australia and New Zealand jumped 20 percent to AUD1.22 billion. And with the high-investment phase in Asia largely complete, ANZ is seeing a greater share of revenue growth in the region translate to profit.

ANZ’s plan is to derive up to 30 percent of its earnings from outside Australia and New Zealand by 2017.

Net interest margin–the difference between the interest income generated and the amount of interest paid out to lenders, on deposits, for example–contracted to 2.13 percent from 2.22 percent for fiscal 2013.

ANZ will pay a final dividend of AUD0.95 per share, up 4.4 percent from the final dividend for fiscal 2013. The full-year payout of AUD1.78 per share is up 8.5 percent.

Australia & New Zealand Banking Group is a buy under USD34 on the ASX using the symbol ANZ and on the US OTC market using the symbol ANEWF.

ANZ also trades on the US OTC market as a Level I, sponsored American Depositary Receipt (ADR) under the symbol ANZBY. ANZ’s US OTC-traded ADR represents one ordinary, ASX-listed share. ANZ’s ADR is a buy under USD34.

Cardno Ltd (ASX: CDD, OTC: COLDF) generated 22 percent of fiscal 2014 fee revenue from the oil and gas market, with another 12 percent from the broader “resources” category.

This oil and gas/resources exposure is why Cardno’s share price is down 25.6 percent since Sept 9, 2014.

A significant backlog of work–AUD935 million as of Sept. 30, 2014, up from AUD855 million as of June 30–represents approximately 11 months of fee revenue and supports a return to organic growth.

Cardno generates more than 50 percent of revenue in US dollar terms; weakness in the Australian dollar-US dollar exchange rate will support improved Australian dollar earnings.

According to management, NPAT improves by AUD650,000 for every USD0.01 full-year change in the average US dollar-Australian dollar exchange rate.

US economic activity is improving, and Cardno is well exposed to growth markets in oil and gas, infrastructure and private development spanning its core services of environmental and engineering.

The contribution from its recently acquired oil and gas business Cardno PPI has been lower than anticipated but is expected to improve.

Australia and New Zealand remain difficult for Cardno, as the reduction in investment in the resources sector hasn’t been met with increased spending on government infrastructure and private sector development.

Cardno does expect International Development Assistance and foreign direct investment by strategic clients into markets across Africa, Asia and South and Central America to continue to grow, which will support work in those regions.

Management recently noted that while conditions appear more favorable than during fiscal 2014, improved performance will likely not show up until the second half of fiscal 2015, due in part to volatile commodity prices, exacerbated by geopolitical tensions and lingering uncertainty in some key markets.

And Cardno has a healthy balance sheet that should support continued organic and acquisition-driven growth.

Cardno is a buy under USD8.05.