Rubicon

[t.rexjr]

Absolutely it is. Worded like pea soup it be though, meaning hard to be found. Much reading, yes.

Pea soup indeed. Perhaps those note 15 valuations are more poignant if relating it to the touted future IPO. But yes, if I read the tea leaves correctly, they see it valued at 80c - $1 per share - and hint thats conservatively.

[Leftfield]

I'm not sure they were talking about doubling revenue, rather EBITDA wasn't it? All this prose is getting me a bit confused.
Will be holding for the next half yearly update at this stage.

IMO Note 15 is about Operating Revenue not EBITDA (but welcome others interpretation)

Operating Revenue of $6 mill for 15 months ended Sep 17, grew to $35 Mill for 6 months to Mar 18.

So can we expect revenue of around $70 Mill in FY 19?

I agree, patience needed for the next 6 months....but still a HOLD to me.

[iceman]

The report sounds encouraging and they definitely seem on the right track. I think there is little doubt that we have a very good upside potential IF ArborGen can achieve what they are setting out to do.
One thing is clear from the report, as has been canvassed on this thread recently, reading any historical financials for Rubicon is now a total waste of time. Us shareholders are now invested in what is basically a technology (IP) start up business that has already done most of the research and development and is already marketing the products in several countries. And it has reached this point well funded for the near future.
I bought a few more yesterday after reading the report.

But, one thing bugs me a little or maybe I'm misunderstanding something. The valuation report they mention estimates seedling sales in the US to reach 1 Billion in 10 years time, of which ArborGen is expected to have a 40% market share or 400 million seedlings. But they sold 273 million seedlings in the US last year (347 million worldwide) so growing that to 400 million doesn't seem to be a spectacular growth rate, only 50% over 10 years. Or am I missing something ?

[minimoke]

Or am I missing something ?

Yes - more on this later

[minimoke]

Right. I like the report enough to buy some more and someone has come to play and taken up my bid. Bought more at .26 after previous buy at .25 so I'm not buying the dip instead taking a measured punt on the 12 month future. heres where I see it - though not a full analysis.

The report had a lot of words. A heck of a lot of words. So I have taken the approach they must mean something - a bit of divining the tea leaves on my part.

Does the US GAAP reasoning need to be detailed to such an extent. I dont think so especially if company already knows that is what shareholders already want. So reading a report "in a US listing situation" gets my attention.

Then there's the "waffle" in note 15 about amounts owing to partners if Rubicon sell down Aborgen by 30 June 2018 and the bit about Celfor warrants and again we see IPO mentioned. So I am left wondering if one way of maximising a return to shareholders is selling Arborgen or a part thereof.

Then there is the numbers - they all look like they are heading in the right direction. Especially for a company that appears to be undervalued.

The overall sense I get is a wordy but conservative outlook. They want to see a 10% increase sales off last years hurricane affected sales. If it was me I would want to see 10% on top of total potential sales - weather risks should be mitigated. So I reckon target will be easily achieved (weather risk aside)

As for US market share growth over 10 years may not seem overly ambitious. But it is higher value stock. Add to that 30m (potential per annum additional in NZ) plus 10% per year growth in existing markets plus growth into new markets which much be on agenda then 10 years time these figures will show much more spectacular growth.

I like their debts figures and funding opportunities and debt to equity ratio on a low share price.

Also Directors had a Plan and they appear to have delivered on that plan without obvious manipulation of figures (the tricky reporting periods aside) so that gets a tick from me.

RBC is my one real "speculator" in my higher risk portfolio. Through my rose tinted glasses and overly optimistic genes I see a positive report. Given that, I figured it would be worth throwing more skin in the game. At the moment I am 2% up and its 10% of my portfolio. I think RBC has a better chance of doubling in value in the near term than any other holding. Equally it could go tits up. But my overall portfolio profit means I can loose 100% of any one holding and still be in the positive.

Edit - bugger now someone has come in at .25 so I am loosing already!

[Leftfield]

Appreciate your view Minimoke. So many words to wade through. Interesting thought re potential USA listing. Speculative at this stage, but a nice possibility. Like you I suspect the projected sales figs are conservative. I also like that some key the directors have a lot of 'skin in the game.'

RBC is currently 6% of my portfolio, and on today's SP I'm up 14%. I rate it a hold until the next report, but will watch carefully. I rate RBC as having minimal downside, but HUGE upside.... we just need patience.

I wouldn't be in a hurry to buy more, as there is a chance that the SP may drift lower over the next 6 months 'cos a lot can happen between now and the next announcement.

[blackcap]

Just a word of warning, what I heard at the AGM was pretty much indicative that a US listing is not going to happen. Well not in the near term.... (well that is what I got out of it, others that were maybe there can help out here)

[iceman]

Thanks mini and others for the comments. At least we all agree with the Directors that the Annual Report is "both unusual and unhelpful".
I do agree minimoke that the growth forecast in future years cover ANZ, Brasil and hopefully new markets in addition to the mainstay US market. But I am still a little surprised that they are not forecasting more growth in the US for the next 10 years and sadly we can not rely on Shane Jones being much of a driver of growth for us :-)
RBC actually sold less seedlings in the FY18 year than they did in FY17, mainly due to a bad hurricane season in the US which they blame for a loss of sales of 20m seedlings. But one has to wonder whether we should accept that we will be affected more frequently due to climate related issues and I point out that they said January this year was very cold and February unseasonally hot, which lead to very short pollination window which may/will impact future seedlings sales. So maybe this year wasn't that unusual.

blackcap thanks for the titbit from the AGM. If they are not expecting a US listing, which I don't have any problems with, I wonder whether there is any point in keeping RBC and ArborGen as separate entities. Why not just merge them, simplify the operation and cut costs ?

Overall though, I am quite pleased with the way RBC is travelling but the proof will be in the pudding.

Discl: Holder and accumulating

[blackcap]

blackcap thanks for the titbit from the AGM. If they are not expecting a US listing, which I don't have any problems with, I wonder whether there is any point in keeping RBC and ArborGen as separate entities. Why not just merge them, simplify the operation and cut costs ?



Discl: Holder and accumulating

That question was put to the AGM. Its not that simple. Who would be the shareholders in the new entity? Under what jurisdiction is this new entity?

But basically a US listing would be problematic. With 1 shareholder Arborgen would not be able to list on the Nasdaq.....
Conversely, would all NZ shareholders really want to hold US scrip instead of a CSN company?
So many headaches in US listing.
As for merging, I did ask about the double dipping of directors execs etc, they said they were working on that.

[minimoke]

That question was put to the AGM. Its not that simple. Who would be the shareholders in the new entity? Under what jurisdiction is this new entity?

But basically a US listing would be problematic. With 1 shareholder Arborgen would not be able to list on the Nasdaq.....
Conversely, would all NZ shareholders really want to hold US scrip instead of a CSN company?
So many headaches in US listing.
As for merging, I did ask about the double dipping of directors execs etc, they said they were working on that.

I'm not sure I understand.

Shareholders of merged entity would surely be current shareholders in RBC. There is no one else.

What jurisdiction is RBC. There is your answer for the merged company jurisdiction - unless it is beneficial to have an alternative jurisdiction.

There wouldn't be one shareholder in a merged company listing on nasdax - there would be all the RBC shareholders. But they alone may not meet NASDAQ requirements.

I don't care about headaches. There are pills for those and director pay helps pay for those pills.. Take the line that offers best value to shareholders is a good pill.

(Thanks for the report back!)