We’ve written extensively about AE Portfolio Aggressive Holding GrainCorp Ltd (ASX: GNC, OTC: GRCLF) in recent issues, primarily with regard to its aborted acquisition by US-based global agribusiness giant Archer Daniels Midland Co (NYSE: ADM).

The denial by the Australian government of ADM’s attempt at owning the largest grain handler on Australia’s East Coast and a key player in the satisfaction of China’s and the rest of emerging Asia’s maturing appetites sent GrainCorp shares sliding from a takeover-premium-infused closing high of AUD12.83 on the Australian Securities Exchange (ASX) on April 29, 2013, to a low of AUD8.01 as of the close of trading Down Under on Jan. 15, 2014.

GrainCorp closed at AUD8.12 on the ASX on Jan. 17 and is yielding 5.5 percent.

The recent steep selloff presents a new opportunity to own a company strategically placed to help Australia serve the growing appetites of Chinese and other Asian consumers.

GrainCorp is a charter member of the Australian Edge Portfolio, one of the original “Eight Income Wonders from Down Under.” We identified it in the early days of preparation to launch AE because it’s a high-quality company with easily identifiable cash flows.

On Nov. 29, 2013, Australian Treasurer Joe Hockey decided against allowing ADM to acquire GrainCorp on the basis that it “would not be in our national interest.” The Australian Treasurer also noted his belief that competition in the Australian grain market is not sufficiently robust.

GrainCorp controls seven of the 11 grain port terminals on the east coast of Australia and handles about 85 percent of eastern Australia’s bulk grain exports.

But this decision was more about domestic politics than international concerns or competition.

What’s done is done, and we’re left now to evaluate GrainCorp’s underlying fundamentals. Things appear a bit more complicated than they otherwise would be, what with the steep decline from lofty levels as well as the resignation of CEO Alison Watkins to take the managing director’s role at Coca-Cola Amatil Ltd (ASX: CCL, OTC: CCLAF, ADR: CCLAY).

What remains in place is GrainCorp’s portfolio of grain storage and logistics assets, global exposure to the grain industry and its proximity to Asia.

And despite the controversial end to its recent effort, there is a possibility that ADM will make another attempt to acquire what is still a key asset in a vital global market.

GrainCorp should also benefit from depreciation in the value of the Australian dollar versus the US dollar, which will make Australian grain more competitive and subsequently drive stronger port volumes. A weaker aussie also provides a translation benefit in for GrainCorp’s Malt division.

Stronger global economic growth will also drive global beer demand, a positive for malt margins.

China is on track to become the biggest buyer of Australia’s wheat, surpassing Indonesia and South Korea. More than 2 million metric tons from the current year’s yet-to-be-harvested crop had already been sold to Chinese buyers.

Before her departure Ms. Watkins noted that growing Chinese demand is an early sign of the “huge demand: to come from Asian customers but has also warned that Australia needs to invest to ensure it remains cost-competitive. The key for GrainCorp’s long-run ability to prosper from this vast export potential is the improvement of domestic infrastructure, particularly rail.

Over the next five years demand from Southeast Asia–not just China–is forecast to increase by 11 million metric tons. The question is, where is that wheat going to come from?

GrainCorp estimates Australia’s proximity to Asia delivers it a freight advantage worth about USD10 per metric ton of grain. Australia has a significant ocean freight advantage to service Asia, but it’s critical that investment is made to keep the costs of other parts of the supply chain down. The risk of inaction is that the cost advantage disappears.

Under-investment in railways is already forcing more grain to be transported to ports by truck. Australian rail productivity substantially lags that of Canada and other major competitor nations. It takes 18 trains to load the average export vessel compared to about 900 truck trips.

The Australian government, after rejecting an offer from ADM that included significant commitments to improve transport infrastructure, now must listen to entreaties from GrainCorp regarding upgrades to and expansion of the state-owned rail networks that will facilitate GrainCorp’s and Australian farmers’ trade with China and Greater Asia.

GrainCorp’s dominant eastern Australian grain network includes 280 sites with about 21 million metric tons of storage capacity, seven of 11 bulk ports with 16 million metric tons of elevation capacity, two packing facilities handling containerized grain exports and up to 20 grain trains with more than 5 million metric tons of freight capacity, including four company-owned trains.

This infrastructure network can’t be easily replicated, and its replacement value is significantly higher than the current carrying book value.

GrainCorp and Australia are also well positioned vis-à-vis import-dependent growth markets for grain and processed products, including malt and canola oil, such as the Middle East, Africa and Asia, giving it some freight advantage. These areas account for about 85 percent of the 110 million metric ton increase in the global wheat trade expected through 2050.

Over the next five years demand from Southeast Asia–not just China–is forecast to increase by 11 million metric tons. The question is, where is that wheat going to come from?

GrainCorp estimates Australia’s proximity to Asia delivers it a freight advantage worth about USD10 per metric ton of grain. Australia has a significant ocean freight advantage to service Asia, but it’s critical that investment is made to keep the costs of other parts of the supply chain down. The risk of inaction is that the cost advantage disappears.

The Australian government is likely to help fill this infrastructure gap in the aftermath of its decision to deny ADM the opportunity to acquire GrainCorp and invest its capital in the business.

GrainCorp management reported on Nov. 14 that fiscal 2013 net profit declined 31.2 percent to AUD140.9 million from AUD204.9 million for fiscal 2012, as one-time items took a AUD33.6 million bit out of the bottom line.

These items included AUD12.8 million of advisory costs related to ADM’s takeover proposal, AUD18.4 million for acquisition and integration costs related to GrainCorp Oils and AUD2.4 million related to the acquisition of GrainCorp Malt.

Revenue for the year was up 34 percent to AUD4.46 billion from AUD3.33 billion for fiscal 2012. CEO Alison Watkins noted strong grain volumes with above-average grain exports and carry-in of 4.3 million metric tons.

GrainCorp paid dividends for fiscal 2013 of AUD0.45 per share, including a special dividend of AUD0.05 per share. GrainCorp has paid six special dividends since December 2010, boosting its overall payout by a total of AUD0.65 per share.

GrainCorp’s gain over the past year-plus has been wiped out by Mr. Hockey’s decision. Selling pressure may well persist in the short term until all “event-driven” money has cleared out and fundamental investors, such as we were in Sept. 26, 2011, revisit the stock based on its merits.

When we included GrainCorp in the original “Eight Income Wonders from Down Under” it was trading at AUD6.82 on the ASX. We were intrigued by its dominant market position, diversified earnings profile and dividend growth potential.

The possibility that it might be a candidate for takeover by a larger company did cross our minds, but we were in it for the long haul.

The takeover premium is gone. GrainCorp’s dominant market position and diversified earnings profile are still very much in place, as is its dividend growth potential.

GrainCorp is a buy for long-term growth and income under USD10 on the ASX using the symbol GNC and on the US over-the-counter (OTC) market using the symbol GRCLF.

GrainCorp’s fiscal year runs from Oct. 1 to Sept. 30.

The company reports full financial and operating results twice a year; it typically posts first-half results in mid-May, with full fiscal year numbers out in mid-November.

Interim dividends are usually declared in May, along with financial and operating results for the first half of the fiscal year, with payment typically made in late July. Final dividends are usually declared in November, along with fiscal year results, with payment made in mid-December.

GrainCorp’s final dividend in respect of fiscal 2013 of AUD0.20 was declared on Nov. 14, 2013, and paid on Dec. 16, 2013, to shareholders of record as of Dec. 2. Shares traded ex-dividend on this declaration as of Nov. 26.

The most recent interim dividend of AUD0.20 per share was declared May 16, 2013. It was paid July 19, 2013, to shareholders of record as of July 5. Shares traded ex-dividend on this declaration as of July 1.

Management will declare the interim dividend for fiscal 2014 on or about May 15, 2014, when it reports financial and operating results for the first six months of the financial year.

Dividends paid by GrainCorp are “qualified” for US tax purposes. Based on the “fiscal cliff” compromise reached in Washington, DC, in early January 2013 dividends will be taxed at Bush-era rates of 5 percent to 15 percent for investors’ first USD450,000 a year of income for couples and USD400,000 for single filers. Above that the maximum tax rate is 20 percent.

The Australian government withholds 5 percent to 15 percent, based on the US-Australia tax treaty on double taxation. The two countries have not taken the step of eliminating withholding from dividends paid in respect of shares held in a US IRA, as have the US and Canada.

Among the analysts who cover the stock two rate it a “buy” according to Bloomberg’s standardization of brokerage house recommendation terminology, while eight rate it a “hold.” Three brokerages that cover GrainCorp rate the stock a “sell.”