Original-Research: Agrios Global Holdings Ltd. (von GBC AG): BUY
Freitag, 06.09.2019 17:31 von EQS Research Channel
Original-Research: Agrios Global Holdings Ltd. - von GBC AG Einstufung von GBC AG zu Agrios Global Holdings Ltd. Unternehmen: Agrios Global Holdings Ltd. ISIN: CA00856K1003 Anlass der Studie: Research Note Empfehlung: BUY Kursziel: 1.38 CAD Kursziel auf Sicht von: 31.03.2021 Letzte Ratingänderung: Analyst: Matthias Greiffenberger, Julien Desrosiers Sales are growing - Q1 results show promising development The company continues to invest in its Shelton facility as it approaches completion. Additionally, the company's focusing on growth has led to important increases in their expenses in the last quarter. We believe these investments will lead to new income lines in the near future. Agrios Holdings has posted strong revenues in line with our projection. The company's rental and IP revenues reached USD 0.652M and the products-and-service revenues USD 0.354M. Even if the total sum of revenues for the 2nd Quarter 2019 is lower than Q1 of this year, we believe them to be in line with the Q3 and Q4 2018. The company's account receivables have grown from USD 4.249M to USD 5.003M from Q1 2019 to Q2 2019. The rise of receivables is the main driver for lower revenues in Q2 2019 since an approximate additional USD 0.800M has not yet been received from their client. As discussed in our initial coverage we forecast that once the high amount of receivables is reduced, we will be seeing more stability in the company's revenue stream and we will be able to establish more accurately the quarter-to-quarter revenue comparison. As discussed earlier, we believe that Agrios' client will benefit from the positive market winds blowing in the industry to increase the sales price of their products for minimal additional expenses. This should result in higher net profits that could be partly used to pay their open bills with Agrios. The company total expenses have risen this quarter, in line with our projections. Since the company realised gross profit margins of 25%, the company was able to limit the net losses to USD 0.727M for the Q2 period, which is a small increase from Q2 2018 USD 0.654M. The new personnel hiring costs, increased publicity budgets, salaries and consulting fees are the main driver for this increase in expenses. It is important to note that the shared-base payments have been reduced. The company's cash balance is just over USD 1M, stable from the last quarter and having taken into consideration the proceeds of USD 0.754M from convertible debentures. The company's cash reserve remains low. With the company growing its expense rate, it will have to focus on further increasing its net revenues in the next quarters. Agrios is in line to meet our total revenues and EBITDA projections for FY 2019/2020. We expect the total revenues to rise significantly during the year to reach USD 8.40M by FY 2019/2020. Since the company has injected a massive amount of capital (over USD 1M) into its facility, hired new employees and deployed a publicity budget of USD 0.170M this quarter, we expect to see these investments turn into an important increase in revenues in the short term. Therefore, we remain confident that Agrios Holding should reach our projected financials for FY 2019/2020. The company revenues and EBITDA margin year-to-year results have seen important improvement. One of the keys for the company's long-term success is that the EBITDA margin reach a value of over 20% in the next few years. For Q2 2018, the EBITDA margin was -148.50% which can be expected from the company's development stage. Now that the company is starting to post more important revenues, we see the EBITDA margin improving to -66.70%. We believe the company will achieve positive EBITDA margins by FY 2019-2020. Agrios is a company in the take-off phase. Its major strategy is now to focus on growing their revenue streams. The company has the potential to decisively raise their earnings in the next few years, through the acquisition of additional clients and the addition of new lines of revenue with little additional capital expenditure. Through the deployment of their data-driven technology, Agrios wants to enable producers to maximize their yield of premium quality end-product and, consequently, increase their margins. The company's revenues are dependent on the producers' success as higher production and margins results lead Agrios to grow their client base. Moreover, as the company is improving its technology, it is raising confidence in the economics of their growing solutions services and equipment. Moreover, we are pleased to see that the company is continuing to massively invest in their facility as it is near completion and will, we believe, help the company concentrate their working capital on acquiring/building a new facility and continuing its growth phase. The adoption of accounting new standards, IFRS 9, IFRS 15 and IFRS 16 on April 1rst 2019, had a negligible impact on Agrios' financials. We confirm our target price of 1.38 CAD and our BUY recommendation. Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/18945.pdf Kontakt für Rückfragen Jörg Grunwald Vorstand GBC AG Halderstraße 27 86150 Augsburg 0821 / 241133 0 research@gbc-ag.de ++++++++++++++++ Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,5b,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter: http://www.gbc-ag.de/de/Offenlegung.htm +++++++++++++++ Date and time of completion of this research: 05/09/2019 (17:50) Date and time of first distribution: 06/09/2019 (10:00) Target price valid until: max. 31/03/2021 -------------------übermittelt durch die EQS Group AG.------------------- Für den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw. Ersteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.=