ARB-ArborGen Holdings Ltd

[ari]

Hard to say but I struggle to see why you would sell right before MCP volumes finally increase. This is the opportunity for mgmt to finally walk their talk from the last few years.

I see it as good timing for a US listing.

Yep, all the factors that were against attempted IPO back in 2011 have certainly turned....

[TheHunter]

Yep, all the factors that were against attempted IPO back in 2011 have certainly turned....

Perhaps "the last few years" was an understatement...

[ari]

[QUOTE=TheHunter;
I see it as good timing for a US listing.[/QUOTE]

Dow Jones Industrial Average closes above 35,000 for the first time.....timing lookin good!

[nztx]

N Z 0.315 or equivalent USD 0.22 roughly for the whole can of worms is looking darn cheap for major in it's field, in comparison
to what US Share prices look like ..

Perhaps ARB should list on one of the US exchanges or float off some of it's American operations
upstairs instead..

It's no wonder there are vultures sniffing around after a good meal, at ARB stakeholder's expense ..

[Thistle72]

I’m new to the board but have been following Arborgen for a while. Like others, a patient investor who sees value here.

Has anyone tried to forecast a future share price based on the hints we have been getting from management? Valuation upside lies in ARB’s ability to continue “stepping-up” customers to the higher value seedlings, sold at much higher prices and significantly higher margin. (see June 2018 presentation) Lots of assumptions to make on volumes, but the trajectory is clear.

Ultimately, ARB is a biotech company and not just a grower of nursery stock. To unlock the value in the platform, the company has to pursue a US listing and market itself strongly on this basis. Biotech is very hot in the US right now, particularly genetics companies with R&D to transform industries. ARB has this. In the US, the sector trades at an average of 14x EV/EBITDA multiple. ARB’s current valuation is less than 10x. We are just at the start of the inflection to higher margin sales that will drive EBITDA far higher.

ARB should also focus new R&D spend on carbon-sequestering tree species. Imagine tweaking the genetics of commercial forests so they sequester 2x, 5x, 10x the carbon. As the price of carbon offsets goes up, “carbon capture seedlings” could be hugely profitable. ARB also falls in the category of ESG investments. Very popular among institutional investors trying to prove green bonafides.

Bottom line, ARB remains undervalued and off the radar. I will continue to hold and will vote my shares against any takeout that does not reflect the hidden value here. We need a US listing to bring volume to the shares and broader institutional interest.

[Thistle72]

Someone on the shareholder's conference call raised the complaint about Directors' fees, which are as much as $150k NZD in the case of PR Smart, and totaled 1.1% of ARB revenue. I have similar concerns. There's no question the Directors are highly qualified and should be compensated fairly, but is this level of world-class expertise really required for a company as small as Arborgen? Product demand is not an issue, only the supply of seedlings is. So simple execution in the nurseries should keep things on track and not require a brain trust to achieve.

To address shareholder concern, the company should explain specifically what the Directors are working on and how they are contributing to the bottom line. If a strategic re-think is underway that is changing the company trajectory meaningfully, we should know about it.

I do congratulate Mr Knott Jr on taking just a $1 Director fee. His interests are properly aligned with shareholders.

[TheHunter]

Someone on the shareholder's conference call raised the complaint about Directors' fees, which are as much as $150k NZD in the case of PR Smart, and totaled 1.1% of ARB revenue. I have similar concerns. There's no question the Directors are highly qualified and should be compensated fairly, but is this level of world-class expertise really required for a company as small as Arborgen? Product demand is not an issue, only the supply of seedlings is. So simple execution in the nurseries should keep things on track and not require a brain trust to achieve.

To address shareholder concern, the company should explain specifically what the Directors are working on and how they are contributing to the bottom line. If a strategic re-think is underway that is changing the company trajectory meaningfully, we should know about it.

I do congratulate Mr Knott Jr on taking just a $1 Director fee. His interests are properly aligned with shareholders.

100% agree Thistle, albeit these concerns have played out like a broken record year after year

[TheHunter]

I’m new to the board but have been following Arborgen for a while. Like others, a patient investor who sees value here.

Has anyone tried to forecast a future share price based on the hints we have been getting from management? Valuation upside lies in ARB’s ability to continue “stepping-up” customers to the higher value seedlings, sold at much higher prices and significantly higher margin. (see June 2018 presentation) Lots of assumptions to make on volumes, but the trajectory is clear.

Ultimately, ARB is a biotech company and not just a grower of nursery stock. To unlock the value in the platform, the company has to pursue a US listing and market itself strongly on this basis. Biotech is very hot in the US right now, particularly genetics companies with R&D to transform industries. ARB has this. In the US, the sector trades at an average of 14x EV/EBITDA multiple. ARB’s current valuation is less than 10x. We are just at the start of the inflection to higher margin sales that will drive EBITDA far higher.

ARB should also focus new R&D spend on carbon-sequestering tree species. Imagine tweaking the genetics of commercial forests so they sequester 2x, 5x, 10x the carbon. As the price of carbon offsets goes up, “carbon capture seedlings” could be hugely profitable. ARB also falls in the category of ESG investments. Very popular among institutional investors trying to prove green bonafides.

Bottom line, ARB remains undervalued and off the radar. I will continue to hold and will vote my shares against any takeout that does not reflect the hidden value here. We need a US listing to bring volume to the shares and broader institutional interest.

Welcome Thistle

Nice post, and again I 100% agree - upside opportunity definitely exists if MCP supply increases are delivered, even before applying US / growth multiples.

I have modeled potential EBITDA based on the available information - this is why in some of my earlier posts I was very pleased that they final disclosed MCP seedling margin vs. OP as this allowed for margins to finally be back solved and then applied to the provided supply forecasts.

I like what I see.

[LoungeLizzard]

https://www.edisongroup.com/publicat...of-risk/29647/

Good analysis. On all metrics - production, margins, EBITDA, EPS and hopefully SP - Arborgen look to be on a cusp of a breakthrough year. Might not be flying under the radar for too much longer....

[Biscuit]

https://www.edisongroup.com/publicat...of-risk/29647/

Good analysis. On all metrics - production, margins, EBITDA, EPS and hopefully SP - Arborgen look to be on a cusp of a breakthrough year. Might not be flying under the radar for too much longer....

"General disclaimer and copyright


This report has been commissioned by ArborGen Holdings and prepared and issued by Edison, in consideration of a fee payable by ArborGen Holdings. .........


........Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified."

I can't remember ever reading a report by Edison where the company in question wasn't on the cusp of greatness...