ArborGen Holdings Limited (ex Rubicon) is a New Zealand-based company listed on the main board of the New Zealand Stock Exchange (NZX:ARB). Only diff is that it is nearer the top of board...lets hope it gets noticed for the right reasons....
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ArborGen Holdings Limited (ex Rubicon) is a New Zealand-based company listed on the main board of the New Zealand Stock Exchange (NZX:ARB). Only diff is that it is nearer the top of board...lets hope it gets noticed for the right reasons....
Lets hope with the new share code ARB can turn over a new leaf put the last 20 odd years behind it and provide income for share holders instead of for directors ?
"earnings increasing materially each year in line with our projected MCP seed supply growth.”
This is the one to keep an eye on. Supply constraint has been a big hurdle. The supply chain is there. The demand is there. Convert the low margin garden variety seedling sales to MCP and suddenly there's a worthwhile business. Everything else is in place. The continual weather issues have somewhat masked the progress here. Watching and waiting. One day maybe...
http://nzx-prod-s7fsd7f98s.s3-websit...953/312743.pdf
Certainly appear to have turned the corner.....onwards and upwards??
ARB, definitely off the bottom now, one to watch imho.
https://edition.cnn.com/2020/02/06/o...ter/index.html
Chris Liddell probably mentioned NZ's billion trees...just got trumped!
Edison is paid to publish once or twice a year a report stating that Rubicon / Arbogen are undervalued (that's what they are doing anyway).
Just look at this potential:
https://www.edisoninvestmentresearch...ID=10407&LANG=
6 years later - nothing but the company name has changed:
https://www.edisongroup.com/company/...holdings/1685/
Problem is just - market does not believe them :D
But lets face it, while Arbogen's "product" is not particularly environmentally friendly (their seedlings don't fit into the ecosystems they are planted in and are destroying native landscapes), their biggest problem is in my view a quite self serving board. Directors find always reasons to pay themselves a bonus, but Arbogen / Rubicon manged to refine this discipline to its upmost extreme and provides some outstanding examples of the finest troughers money can buy.
‘We’re not going to under-deliver any more,’ Rubicon chair says.....think that was mid '19
Today’s essential reading for the believers
Valuation 72 cents
https://www.edisongroup.com/publicat...progress/26307
They did some serious financial acrobatics to bring the forecasted EPS into the black ... just wondering whether they did their DCF valuation as well "excluding amortisation and exceptional items"?
But anyway - Edison (for some funny reason referred to as "experts" by the NZ Herald)
https://www.nzherald.co.nz/business/...ectid=11185247
always said they are a bargain. Looks like they are consistent ... I suppose as long as Arbogen is able to pay the bribes, oops - fees for their annual analysis.
Some good news but didn't exactly fireup the market...https://www.directbroking.co.nz/Dire...spx?id=5334135
Yes, good news for an extremely slow burner.
I’m still holding this stock and happier to do so now more than ever at the current share price. Market cap just $NZ75 Mil.
It’s going to take a lot more than this latest news to ignite the market but I thinks it’s increasingly becoming a good industry to be invested in.
I’m happy to keep holding.
Don’t generate much cash do they .....and a negative free cash flow
And some punters think it’s worth at least 50 cents a share
http://nzx-prod-s7fsd7f98s.s3-websit...791/323395.pdf
Problem is - cash is not as easy made up than the numbers for their DCF calculation which "values" their IP. Can't really see customers queuing up and paying a premium for their blue gum and pine trees. Well, so far they don't.
But one thing is certain - Edison will write them again another (paid for) glowing report and come up with a nice big number they think the share is worth. They are doing that now for at least a decade or so ... who knows, maybe at some stage we see a miracle and it even turns true. They say the hope dies last ...
But than - hope is not a good investment strategy, isn't it?
Sep 2018 Annual Meeting (share price 27c): CEO "there is no argument that the current share price is not where we would like it to be".
Sep 2019 Annual Meeting (share price 19c): Chairman "While current share price performance is unquestionably disappointing, we are confident that as ArborGen continues to demonstrate improved earnings and cash flows, share price growth will follow. As Chairman, and a major shareholder, I am incredibly focused on share price appreciation".
Aug 2020 Annual Meeting (share price 15c): CEO or Chairman (insert similar comment here)
Curious story this one. If I recall Fletcher challenge was broken up into 3 entities I think around 2000?? One of them was Fletcher Forests which became TENON, languished for years delivering little value for patient shareholders. Sold off TENON which left Arborgen. I bailed out 2 years ago. I know some shares are long term holds and patience is often required but this sad story is ridiculous.
Board still got paid though.
Yes - it certainly is & was -- Fletcher Challenge got split three ways -- Paper Mill etc which got taken over Norwegian/Swedish Buyer (from memory) ; what is now listed FBU and the bits along with Rubicon along the way, this is what remains of Forestry - the Taupo Timber Mill (one of the last mills they had) got closed / sold (I forget which) the bulk of Forests got taken over / privatised into a Foreign/NZ joint owned Forestry Partnership and so was the demise & large scale dividing up of what was once one of our largest companies.. which started out I suspect as an attempt by Fletcher Challenge to have the Market recognise individual sector values on each of it's major operational components in the group..
How badly that went wrong, and then the operandi changed to extracting as much fast value out of the core bits by disposing of them (The former listed CHH unit was taken over by Hart's Rank Group and probably followed a very similar path)
I still ponder likely future successes of basically a stand-alone NZ listed Forestry Nursery company -- mostly operating up in the US Of A, if I'm not wrong..
Past news has suggested seedlings for Brazil etc etc , but then these sort of initiatives are dependent on genuine efforts of
Political Leaders to go that way & not strip the land further for fast resources gains.
Brazil also currently ranks highly up the Covid-19 Infection & Death rate charts, next to the US of A ..
that is likely to be around for quite some time until contained or infections rates diminish
The natural process which may or may not follow in due course with ARB may well be to grow the operation for a while & look for a buyer - perhaps North American / Canadian - and then liquidate / repay Capital or reduce to a Listed NZ Shell, but who knows how long this stray listing of a basically US trading operation may linger on on NZX before something further happens
Listened in to the AGM recently. I heard something quite interesting
Someone put the question why don’t they look at growing cannabis? The response was they were actively investigating growing hemp. Something the media has completely ignored from what I can see.
If the referendum legalises it then the drug could be a viable business as well, not to mention medicinal....
Interesting product that hemp:
Hemp, by every measure, makes more fuel, fiber, food and medicine than any other plant. An acre of hemp, on an annual basis, produces 300 gallons of seed oil (for fuel, plastics and food), 3 tons of high protein hempseed meal, 10 tons of bast fiber for canvas, rope lace and linen, 25 tons of hurd fiber for paper and building materials, and, from its leaves and biomass, ethanol for fuel too.
Hemp produces more fiber than any other plant. There are two types of fiber in a marijuana stalk or stem, the bast fiber, which is the outer bark, and the hurd fiber, or the inner woody core. According to the US Department of Agriculture’s Bulletin 404, a waste product from making canvas, rope,lace and linen from hemp bast fiber, this hemp hurd fiber alone, makes over 4 times more paper than trees. Hemp paper is acid free, for a long shelf life, and produced without toxic chemicals. According to Washington State University’s Wood Sciences Lab, hemp fiber board is stronger than steel. When we start using hemp instead of wood fiber for paper and building materials, deforestation may well cease.
I imagine if this pans out it would eventually set the market alight.
There is somewhat more international infrastructure in place in ArborGen than Cannasouth.
I am editing this post to say I’m not ramping ARB or wanting to give anyone false hope.
I hold far too many of these and after the comment at the AGM I am simply sharing my wishful thinking
Maybe they should just have a chat with their tenant...:
https://www.postandcourier.com/busin...0782a4fa9.html
Below is a quote from Brian Gaynor in Business Desk last week but he goes on in the article to say that the cannabis business is ’not all wine and roses’ ( my words)
“Meanwhile, forestry company ArborGen, formerly known as Rubicon, was asked at this week’s annual meeting whether it had any cannabis plans. Chief executive Andrew Baum enthusiastically replied “yes”.
He said the company was looking to grow hemp in South Carolina and NZ and emphasised that cannabis was an “active area” as far as ArborGen was concerned.
Cannabis is clearly a hot topic in NZ, even for companies that haven’t had an exposure to the product.”
Looks like substantial holder Perry Corp has given up on Arborgen in the last couple of months. They have sold down from 7% to 5% since July and I wouldn't be surprised if they keep on selling down.
It's not like the SP is going anywhere in a hurry after all this time but it's definitely not going anywhere while all this selling is going on.
https://www.nzx.com/announcements/360062
Must be another update soon
Wouldn’t surprise me if share price drifted sub 10 cents next year
Results today, does not get any better imo.
I think ARB has been forgotten about after years of disappointment... but think this finally a decent result with cash flow continuing to improve. Full year should look even better with sales weighted to the second half. FY22 even better with MCP margins coming in.
You could argue this stock is in growth (via gross margin expansion) and with full year sales in main markets already 90% committed it seems very promising (finally). If mgmt. is right about a large seller holding down the SP, perhaps we could see 30c again soon.
Their nice new reporting formatting may just be in time for the turnaround of their performance.
Happily accumulating at these prices, DYOR :t_up:
Someone keeps selling it down!
Modus operandi of the management is highly questionable..
Hi sb9 and Others, always enjoy reading various comments, but not a big contributor so please forgive.
sb9 could you please expand your comment as I also am at a loss as to why major shareholders would want to see their investment decrease in value, and yet continue to talk it up with no apparent action on their behalf.
You may want to visit few pages back on this thread to get a handle on what members opinion is on management and also their announcements on NZX platform. They seem to have on offer so much potential but never really delivered on any of those.
Decrease in value of investment is a concern for people like you and me depending on entry price but not for management when they got their options for free. And the last sentence in your quote sums it all up about future prospects of this company.
Looks like someone is building a decent holding per https://www.nzx.com/announcements/364538
Shareprice is strong today
I wouldn't be suprised to see a Takeover soon. Company has allot of potential when they have more high value seeds to sell in coming years.
Going to go against the crowd here and say I'm actually quite excited for ARB's prospects over the next few years. Key reasons below:
Macro:
- Forestry arguably an important part of the ‘green recovery’
- Lumber prices at all-time highs
Company Specific:
- High barriers to entry (proprietary genetics)
- Supply constrained (a good problem to have) with a large portion of sales for the remainder of the year already committed
- Near term earnings growth via gross margin expansion (significant increase of MCP volumes from FY22)
- Share price seems to have been suppressed by a large seller (suspect Perry Corp) & a historic negative SP sentiment (for good reason) but in my opinion believe this has been overdone
Disclaimer: Holding & may buy more, DYOR
Share price climbing nicely on tiny volume. Good to see few willing sellers.
ooop's a profit downgrade today. https://www.nzx.com/announcements/366162
Disc - don't hold (once bitten....)
But 10m to 11m is greater than 9.3m and they said a month or so 'greater than 9.3m'
So could be a profit upgrade even though they tell a sad story
Nothing has really changed with this outfit eh ...ot will never reach the great heights they make out what's possible. Texans have phrase for that.
If only ARB could get on the green band wagon and be perceived as helping save the planet.
The market does occasionally go crazy for these types of stocks, eg Black Rock buying ‘green energy’ shares.
Sold my CEN for $11 and MEL 9.46. - crazy high prices for utilities.
With the talent/shareholding of the board, I’m hoping they’ll branch out ( pun intended) into something much more profitable.
I live in hope.
Don't they have heaps of accumulated tax losses?
May come in handy one day?
But money grows on trees doesn't it?
I was almost going to pull the trigger on these a month or so ago and sell @ 13
Obviously glad I didn't because now up about 50% since then to 19.2
Volumes not particularly high, but at least going in the right direction.
I went to a Rubicon shareholders meeting 3 years ago. Food was good btw.
The gist of the questions from the floor and answers to them, I reported on the Rubicon thread.
They were:
1. No dividends for 2 to 3 years as cash needed for capital requirements.
2. Name will probably be changed from Rubicon to Arborgen.
3. Listing on the US market is the appropriate path forward. (With listing remaining on NZ board)
So far two out of three :mellow:
I think listing on the US market is still the appropriate path going forward.
Uplift in FY21 Guidance
https://announcements.nzx.com/detail/371942
In my view, not really. Covid subsidies increase $1.1m and the forecast range goes from$10-$11 to $11-$11.5. Unless at the bottom of the forecast range, the increase in EBITDA is less than the increase in covid subsidies. Existing activities have gone backwards but oneoff support payments have increased.
I've held since day one and not startling news. Certainly not sufficient to cover my $50k+ loss. I concur with dubya's sentiments that listing on the US market is still the appropriate path going forward.
It's been along time between drinks but finally something positive....https://www.directbroking.co.nz/Dire...spx?id=5695251
It has always been hard to gauge how much margin expansion MCP will actually drive, I was pleasantly surprised with the following statement:
"The margin growth potential for ArborGen is substantial as MCP margins are 6-8 times higher than OP margins on an absolute basis."
I don't believe the market has fully acknowledged the potential impact on earnings growth here, particularly looking at the MCP supply forecast for FY23 (almost 2x FY22).
If delivered, I wouldn't be surprised to see EBITDA in the mid 20's for CY23.
I agree.
Their extensive genetic database built up over many years must be extremely valuable as intellectual property.
So when I see them say "Excellent progress was made on ArborGen's core strategy to grow supply and sale of its proprietary advanced genetic products (MCP seedlings) in its llargest market, the US, where it is the unparalleled leader" I can only think of the MOAT they have in comparison to any competitors.
Yelp dubya 10.5% today time to sell me thinks
Opposing views to what the hunter ! ,that may require explanation first.
Don't seem to be opposing anyone .
Mr Ralph, I'm curious as to why you think it's time to sell (the opposite view from myself). Always good to challenge one's own logic and hear the opposing side.
I think that over the last two decades they talk about, of any time, now is actually the best time to buy not sell.
Hindsight is seductive but I have a lot of these and have had for far too long. Wish I was buying now, not many years ago.
Certainly not selling with current performance and prospects. At last we are getting a whiff of more sustainable and growing earnings.
imho
All depends on your motives if your profits are up 50% as some will be it may be time sell & reinvest elsewhere and see higher growth over the short term .
I am not opposing the potential positive's for arborgen I think its happy days for the shareholders , just looking at maximizing the potential it may well go from 50% up to 100% & who knows what's around the corner do you!
A long time since we’ve seen a positive article like that. Thanks Percy.
Paper-thin volume but good to see 20c again.
Looks like the last announcement lit the boiler and created enough steam to at least start to move the train out of the station. Buyers ( and sellers) at .235 this morning.
Not holding my breath but the best optics for quite a while.
Seems like our big pay day / get out of jail card is just around the corner
Hope directors don’t stuff it up
ArborGen Announces Strategic Review
30/6/2021, 9:15 am MKTUPDTE
30 June 2021 - Global advanced genetics seedling company, ArborGen Holdings Limited (NZX:ARB) (ArborGen or the Company) advises that the Company has received a confidential, non‐binding, indicative, incomplete and highly conditional proposal from a credible third party to acquire all of the shares in, or assets of, ArborGen by way of a scheme of arrangement or other alternative acquisition structure (the Proposal). A sub-committee of independent directors of ArborGen was appointed to assess the Proposal (the Sub-Committee) and has concluded that, based on the information currently before the Sub-Committee, the Proposal materially undervalues the Company. In light of this, the Board has decided to commence a strategic review. The objective of the strategic review is to consider all options to unlock value for the benefit of all shareholders. These options could include (but are not limited to) a potential sale of all of the shares in, or all or some of the assets of the Company, or a US listing.
ArborGen is the largest commercial global seedling supplier and a leading provider of advanced genetics, for the forest industry. Employing state-of-the-art technology, ArborGen is developing high-value products that significantly improve the productivity of a given acre of land by enabling our customers to grow trees that yield more wood per acre with greater consistency and quality in a shorter period of time.
It specialises in loblolly pine (US and Brazil), radiata pine (New Zealand and Australia) and eucalyptus (Brazil and Australia) plantation forestry species. It has 18 seedling nurseries, 12 seed producing orchards and overall production capacity of 540 million seedlings annually globally.
As set out in the 27 May 2021 market announcement (https://www.nzx.com/announcements/372976), ArborGen’s 2021 financial results outlined a significantly improved outlook for the company driven primarily by increased availability of its proprietary MCP seedlings in the US.
With increased availability of proprietary advanced genetic products (MCP seedlings) in the US, improving markets in all regions, and increased demand for proprietary genetics, ArborGen believes that it is now well positioned for accelerated growth.
PwC has been engaged to assist ArborGen in undertaking the strategic review.
There is no certainty that any transaction or other change will result from the strategic review.
ENDS
Double post
ArborGen Announces Strategic Review
30/6/2021, 9:15 am MKTUPDTE
30 June 2021 - Global advanced genetics seedling company, ArborGen Holdings Limited (NZX:ARB) (ArborGen or the Company) advises that the Company has received a confidential, non‐binding, indicative, incomplete and highly conditional proposal from a credible third party to acquire all of the shares in, or assets of, ArborGen by way of a scheme of arrangement or other alternative acquisition structure (the Proposal). A sub-committee of independent directors of ArborGen was appointed to assess the Proposal (the Sub-Committee) and has concluded that, based on the information currently before the Sub-Committee, the Proposal materially undervalues the Company. In light of this, the Board has decided to commence a strategic review. The objective of the strategic review is to consider all options to unlock value for the benefit of all shareholders. These options could include (but are not limited to) a potential sale of all of the shares in, or all or some of the assets of the Company, or a US listing.
ArborGen is the largest commercial global seedling supplier and a leading provider of advanced genetics, for the forest industry. Employing state-of-the-art technology, ArborGen is developing high-value products that significantly improve the productivity of a given acre of land by enabling our customers to grow trees that yield more wood per acre with greater consistency and quality in a shorter period of time.
It specialises in loblolly pine (US and Brazil), radiata pine (New Zealand and Australia) and eucalyptus (Brazil and Australia) plantation forestry species. It has 18 seedling nurseries, 12 seed producing orchards and overall production capacity of 540 million seedlings annually globally.
As set out in the 27 May 2021 market announcement (https://www.nzx.com/announcements/372976), ArborGen’s 2021 financial results outlined a significantly improved outlook for the company driven primarily by increased availability of its proprietary MCP seedlings in the US.
With increased availability of proprietary advanced genetic products (MCP seedlings) in the US, improving markets in all regions, and increased demand for proprietary genetics, ArborGen believes that it is now well positioned for accelerated growth.
PwC has been engaged to assist ArborGen in undertaking the strategic review.
There is no certainty that any transaction or other change will result from the strategic review.
ENDS
US listing to hopefully unlock true value.....
Great news but I would be extremely disappointed with a take over, an odd thing i find myself saying but remember these things only occur when a buyer sees value.
If anyone actually bothers to take the time to back solve for MCP margins and figure out the earnings potential of ARB you'll quickly realise that those old edison research valuations aren't as crazy as they once seemed.
I would happily hold to see the potential earnings come into fruition in 2023 and beyond. ARB still has massive upside potential.
Fingers crossed this results in a US listing rather than a full take over.
How things have changed (from 2011)......Rubicon's stake in the biotechnology firm ArborGen could be diluted if ArborGen succeeds in raising up to $US92 million through an initial public offering in the United States.
ArborGen has operations in New Zealand, and is a third-owned by the New Zealand listed forestry investor Rubicon, which also has a 58% stake in Tenon. It was once part of Fletcher Challenge.
ArborGen has filed a registration statement with the US Securities and Exchange Commission detailing its plans to offer 5.12 million shares at between $US16 and $US18 each, with the aim of raising between $US82 million and $US92 million.
That would dilute Rubicon's ownership in ArborGen to 27.24%.
Goldman Sachs and Citi will manage the proposed offering.
Rubicon's share price is unchanged at $1.20.
So, they've been given an offer so terrible that they've been startled into a strategic review...
I do think that this story has finally reached an inflection point as far a sales of MCP varieties go. My question has always been is the product itself profitable... & will there ever be a return on capital outlay. All they've proved thus far is standard variety seedlings are not a great wealth creator for a listed company
I do hope there's a silver lining at the end of this tedious journey. Best of luck to holders
Up 30% today to 28c. Off a low base but at least some better volume. Interest at last?
Probably not a lot of volume for sale until the share price gets out of the 20’s and 30’s
and into the 40’s and 50’s cps
Remember ArboGen's business model is based on proprietary genetics and R&D. They have acquired nurseries, developed their MCP genetics and are now converting supply to MCP. OP has never been the main strategy to grow earnings; MCP has 6-8x higher gross margin on an absolute basis and indeed, 2023 is the major inflection point for MCP supply as shown below. An additional ~100m MCP seedlings at these margins creates significant earnings growth.
In my opinion, this potential growth is not fully understood by the market and I suspect this third party buyer has figured this out.
Attachment 12693
ARB have been promoting their growth in coming years. Is it that the growth isn't understood by the market or just that the market is wary of over promising and under delivering, as they have done for many many years.
ARB is saying that this time is different but understandably the market doesn't yet believe the promises.
Completely agree there is negative sentiment based on historic performance but here lies the opportunity.
The data gives me confidence that this time is different. Two key points:
#1 it is only until very recently you have been able to derive from the announcements how profitable MCP actually is compared to OP.
#2 The seedling growth cycle takes around three years, meaning the 2021 pollination activity which makes up the seedling supply for 2023 is already taking place. As per the results announcement, the activity saw an unprecedented number of flowers, giving a significant boost to 2023 volumes. This is of course subject to inherent weather risk but does provide confidence that MCP supply is indeed increasing and this is the key driver of earnings.
Take the time to put some numbers behind these two points and their impact on earnings, I think you'll be pleasantly surprised.
I like the quote below, from the annual report. Who knows where this will lead.
The previous Rubicon CEO, (still a related top 20 shareholder as is the previous company secretary) had the vision (or fantasy?) of ArboGen becoming the next Monsanto. Hopefully there are parties looking more closely at the potential.
“Outside of forestry, our somatic embryo capabilities, genomics and tissue culture expertise create a number of opportunities for us in other crop species. We have already deployed our technology in sugar cane, developed tissue culture protocols for cannabis and are evaluating other opportunities including coffee and cocoa production. We are also evaluating opportunities to license elements of our technology platform in areas that are not competitive with us.”
Double post
https://www.odt.co.nz/business/share...Vv9ynJYuHfPFrE looks like a big move indeed
Require a crystal ball on this one....will Arborgen hold>sell>or list? From history shareholders have been sold out on most occasions...Fletcher Challenge>Fletcher Paper>Fletcher Energy>Capstone etc