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From the RNS
· 8,872 tonnes of KP Fértil® sold in Q1 2021:
o more than 10% higher than management budget of 8,000 tonnes
o represents a 166% increase in total tonnage compared to Q1 2020
· Q1 sales performance keeps Company on track to meet 2021 sales target
o In 2020, 82% of the total sales were placed in the second half of the year, which has stronger sales seasonality
Q1 = 8872 tonnes sold.
If you assume Q2 will be the same then the first half of the year (H1) will be a calculated value of: 8872 * 2 = 17744
The RNS states: 82% of sales were in H2.
Then 2021 H1 calculated value of 17744 tonnes equates to only 18% of the predicted annual sales for 2021.
In the RNS released last year:
o Q1 CY2020 sold 3,334 tonnes, representing an increase on the 3,000 tonnes target
o Q2 CY2020 sold 6,525 tonnes compared to the 14,400 tonnes target
This means Q2 2020 was roughly double Q1 2020.
Therefore, using the above simple extrapolation, using the value of roughly double for Q2 2020 sales compare to Q1 2020:
Q1 2021 = 8872 tonnes sold.
Q2 2021 calculated: = 8872 *2 = 17744
Therefore: H1 2020 is estimated to be: 8872+17744=26616 tonnes sold.
Again, assuming the sales seasonality remains constant then 26616 tonnes is only 18% of 2021 sales.
18% percent of calculated annual sales is 26616 tonnes. 100% works out to be a rather nice number!
I'm looking forward to having this chat in 12 months from now. :)
If youre new on here just filter smallanus to have a decent conversation.
Thanks 1995. I had 1.5million USD as a worst case cash in the bank. That was without the cash in from Q4. So no need to raise. Today’s RNS makes for positive reading. Hopefully they’ll now exceed their 80KT target for this year. If they get 100KT and set a target for let’s say 130kt (to aim for 150) then this will be 20p plus and rising rapidly.
I look forward to it.
Further reading: https://en.wikipedia.org/wiki/International_Coffee_Day
A date for your diary:- 1st October International coffee day :0)
30th September rns – “Following cost saving initiatives, the recurring overall cost of operations is the equivalent of sales of approximately 40,000 tonnes / annum of KPFértil” - now we previously worked out ruffly that we expect harvest make around 30 dollars profit per tonne of kp fertil. So, 30 x 40,000 = gives us a breakeven of 1.2 million dollars a year. So from the recent cost savings and most probably depreciation in the real I calculate our monthly cash burn without sales to be 1.2 million divided by 12 = 100k usd a month. Also in 30th September RNS “As at 30 September 2020, the unaudited cash balance was AUD$3,723,397 with a positive working capital position of approximately AUD$4,861,723” this equates to 2.86 million dollars cash. We also completed all capex expansion work on the 3rd November 2020 – “Expansion work concluded and now operating on a 24-hour, three-shift production scale to meet peak demand
o Product Storage capacity expanded by 300% or 30,000 tonnes of product over a 6,000m2 total storage covered area
o Mining Area increased four-fold to 78.8km2 to provide greater production flexibility according to demand
· Agreement signed with Banco do Brasil, Brazil's largest rural credit provider, allowing Harvest's clients to access to the bank's line of credit to fund orders of KPFértil product”
This work above would not make up part of the 1.2 million breakeven and would be a one off extra. This expansion started in April 2020 and completed in November 3rd. Now let’s assume we spent 1 million dollars; I doubt we even spent half that to complete the final months’ worth of expansion but I want to air on the side of worst-case scenario. So, if we add the monthly cash burn of 100k x 6 months =600k usd plus the 1 million usd worst case scenario for capex expansion in October and first 3 days of November we get to a 1.6 million usd deduction from that September 30th 2.86 million usd cash figure = 1.26 million dollars. Now we haven’t added in the 16,719 tonnes of kp fertil sold in q4. 30 usd x 16,719 = 501570 usd = 1.26 million + 501,570 usd = 1.75 million usd. Now this doesn’t include any product we have sold q1 (this is likely to be no more than maybe 5 or 6 thousand tonnes because of the buying cycle). This also does not include the difference in the working capital 3.75 million (converted from 30th Septembers rns of 4.86 million AUD) and the 2.86 cash pile. So, this means we were owed just shy of 1 million usd which I hope we may have been able to recoup at least some of. Finally the 500,00 usd made from kp fertil sales sold in q4 may not have been paid and made its way to the cash pile yet but it would definitely owed in the next few months and with the companies rns regarding the agreement with the banco do brasil i would hope payments would flow through alot more smoothly. This is just my go at trying to understand the numbers, please DYOR and also let me know if you think I've missed something. Its all good chat. Cheers
To meet 100k a year I think they're going to have to clear further storage space to store product as on a 30k per month output and current storage think they'll have to stockpile more for later in the year.
I'm not expecting to see any large capital expenditure in the next report (hopefully soon). I suspect running costs will have either dropped or increased with a low probability of costs staying the same. Like you, I'm also struggling to work out their cash position with any degree of certainty. I think the next report out, which will cover the previous sales period, will show an increase in tons sold, hitting target. Going by their PR I think more farmers are trying the product and are getting good results. If their stated trend of 'once they try it the farmers come back for repeat orders' holds true then my bet is on a sales increase in the previous period.
Covid-19 is becoming a larger and larger factor in Brazil. I'm hopeful rural areas in Brazil will follow the same trend as other countries with a lower incidence of infection than in the densely populated urban areas. bopd, a local farmer, has previously reported farmers are taking the initiative and are locking down their own farms. I'm therefore hopeful the local, rural, infrastructure will continue to operate. Brazil does have a covid-19 problem, no one can deny that. This year will be a major test. Farms will need to continue to operate and to do so they need to look after their crops. I do think the system as a whole will adapt. There remains a strong export market for their products and where there is a will there is a way. While I do see covid-19 changing sales rates in the short term I do see sales growth happening, on average, over 2021.
Me too. However, no more CAPEX required and opex is minimal. Cash flow will be coming in from previous sales so if the board have done what they said, no need to raise, ever
Struggling to work out where the cash will be right now. Hope we'll get an update soon on cash and orders.
Never understood the de rampers on here.
Bit of a blunder smalleyus telling us you ve been lurking here for years but nobody is surprised. Clearly as quisad the net was closing on your wretched neck and it was time to invent a new vehicle for manufacturing ****storms for the benefit of your employers
Mines still 1p, unless they've taken a Covid 19 80% Government back loan, then it's 0.1p.
AQSE after that IMO.
I see some folk are reducing their holdings, a wise move considering the HMI BoD continues to treat its PIs like the fools they are.
Yet, there are still some on this BB that use to brag and post their profit numbers when the share price was 23p/24p.
Hurting are we!
I think your last post is spot on.
I see the risk profile for this company in a very similar way.
The decisions from management in the last few years have progressed the company with a long term goal for a sustainable business in mind.
We are now at the sweet spot and I think the market will slowly waken up. It is clear that we are not a hyped up stock. All you need to do is look at the daily share transactions. Not many investors realise the great potential.
I bought into this company after watching the Crux Interview last year and have not been disappointed with what the company has done since then. In fact I've been impressed.
Clearly COVID has been an issue. However, despite this serious problem we have never been in a better position in terms of upside potential based on steadily increasing sales.
Going back to the Crux interview. Mark Heyhoe was probably most criticised for his omission of a sales target.
I like the interviewer very much (Matt). However on this occasion, I thought Mark Heyhoe was correct to keep the internal targets to himself. He explained that this was based on independent advice, and it would be wrong to speculate.
This makes the improving targets for sales more credible now. I am very happy to hold for a long time and believe we are going to go from strength to strength and the trends support this.
Have reduced my holdings here past week.
As you say T1995, I am also hopeful of the huge potential here going forwards, especially when it reaches a point where dividends will be paid.
However there are 3 things that i'm not happy with:
1. Cash in bank + dodgy accounting by management
2. Company based in Brazil - I have struggled to do proper research due to access + language barrier.
3. Not reporting (quarterly/full year results) in a timely manner.
"Harvest has previously stated that in broad terms, "breakeven" is represented by sales of approximately 40,000 tonnes of KP Fértil®, accordingly, having sold 54,000 tonnes represents Harvest achieving its maiden profit on a cash accounting basis. However, due to IFRS accounting rules, this profit won't be recorded in the audited financial statements until this financial year is completed."
Will be interesting to see how the company progresses, and I will be following here for the now reduced holding I have.
Yep I'm going on the basis these guys are spreading the stuff ahead of the sugarcane growing season, and that March is when they'd buy it for putting on the ground.
All great points. 10kt for q1 would be amazing. 10p in short order. No down side and Snowballing shares and a CEO who has stated several times dividends are planned.
Just my two cents, I think its prudent to think about finding companies where its hard to loose money on, not just about the huge upside potential. I've found if you start by looking for companies where the downside is very limited then everything takes care of itself after. To me at £5.5m valuation HMI is exactly this. I'm struggling to see the downside with £2m cash (as of Sep 30th), the vast majority of capex costs have been and gone, breakeven in their first full year selling the brand new product, and looking to target 80kt this year making a healthy profit. We should have organic growth going forward hopefully keeping the same number of shares in issue. Each year the product should become easier to sell in my opinion and sales should snowball as farmers see the great results of kp fertil and the environmental impacts. The only negative I see at the moment is the covid situation in brazil but I don't think that will stop us selling. As I've said before I'm here for the long term and dividends. Would be good to know anyone else's thoughts.
I hope that your calculation is simply not 80kt divided by four ! I would be amazed in the quiet season if they did anything more than 10kt to be honest, and that would be a threefold increase on last year. Your figures would imply total sales of 120 to 150kt this current year, which I can't see happening under the current climate in Brazil. Would love to see 10p again, gives credibility to the company and would attract new investors - preferably ones that don't whinge every day!
Well I'm expecting 20000 tonnes first qtr so should kick the share price up over 10p in quick time.
John... it’s just maths. The thread is “valuations please” si I’d love to hear yours and any others.
Can't believe you seriously believe that swingy. You're seeing dollar signs but no dollars
Yep I agree. I'm holding for $$$$
400,000ton at $40 profit. That’s $16M per year. For 100 year’s ..... obviously you need to take inflation into account. Let’s say in 5 years they’re selling at $70 a tonne to returning customers. $28M per year. So, in 5 years time, with a p:e of 12 thats a 45 bag. Lol. I’ll hold for that.