Rural Funds dismisses critical report from Bucephalus Research

Rural Funds dismisses critical report from Bucephalus Research

The Australian farmland owner at the centre of a controversial short selling campaign is now in the sights of another overseas analyst.

Shortly after launching a lawsuit against Texas-based Bonitas Research over its allegations about the company, Rural Funds Group (ASX: RFF) is now under attack from Bucephalus Research in Hong Kong.

In a tweet last week, Bucephalus - which goes by the motto 'exposing creative accounting' - indicated it believed RFF's fair value was between $0.80 and zero, and that a report was on its way.

That document was published on Monday, giving RFF a fair value of $1.20 per share based on a "generous appraisal" of accounting profits, or $0.73 based on reported cash flow.

"Unfortunately, these numbers could still be too high, if the assets get revalued and the covenants are breached," the Bucephalus report said. 

"We note that at RFF distributions exceed recurring profits, even ignoring cost capitalisation and capital raising continues.

RFF's responsible entity Rural Funds Management Limited (RFM) informed the ASX it had become aware of the document critical of RFF, but dismissed its criticisms. 

"In RFM's opinion, the document's criticisms are substantially similar to those made in the recent documents selectively released by short seller Bonitas," RFM said. 

In response, RFF advised investors to refer to and rely on its full year statutory accounts, the presentation of its full year results for FY19 and the Ernst & Young report in response to the Bonitas document.

However, Bucephalus Research managing partner Robert Medd begs to differ. Click here for the full story.  

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