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Backs up TU this week, good connection to our main distributor COPLACANA
Antonio Carlos is a sales executive in the agro segment with extensive experience in input companies and cooperatives, having worked at COPLACANA - Orgulho do Agro Pride of Agribusiness for 7 years.
https://www.linkedin.com/posts/plant-health-care-brasil_rompendoasbarreirasdaprodutividade-agro-agronegaejcio-activity-7194637340349267968-Xb4g/
If its just a case of short term cash flow caused by lumpy orders, perhaps an invoice discounting facility would be sufficient.
Taking the year end of December for example, PHC would be showing receivables in excess of $1.5m before being paid.
This was also highlighted during last years IMC presentation, when I think Jeff H remarked on a large payment outstanding expected the month, he also commented their customer profile being high profile long established businesses.
There’s a new online LinkedIn poster with the strap line ‘PHC ESG’.
I can see them issuing sustainability bonds which would be a non- dilutive way of raising cash.
Wouldn’t be a bad idea to use that LSE Green Economy mark. I’ve suggested it to CR previously.
Cavendish summarise their note today with:
“Valuation does not reflect underlying performance and how close the company is to funding self-
sufficiency. With a proven and growing product portfolio showing its resilience in a tough market, and
the company on the verge of profitability, we continue to see the company as highly undervalued”
Good day today and nice rise
Sales have clearly got off to a good start this year which I imagine has put a strain on cash, Cavendish allude to this in their morning note - it would be good to see what the receivables now stand at.
The note also mentions $1.5m being received in January, it sounds like payments from key distributors are pretty lumpy.
Management often quote on-ground sales (below quote) as a guide to overall demand, this would be sales from the distributor direct to end user (farmer, at which point they may need to re-order to replenish stocks.
My interpretation of the below is inventory build up has now cleared with on-ground sales necessitating new orders rather than to work through overstock.
I think ag companies in general have a good overview of what's happening at the farmer end due to their involvement with agronomist support.
' In the US, on-ground sales have started the year strongly, with sales of Employ® (Harpinab) through Wilbur-Ellis current ly up more than 75% against the same period in 2023; distributor inventory now appears to be rebalancing and to be well matched to on-ground sales, following a period of destocking in the second half of 2023.'
Ok, I understand your point now.
Presumably PHC sell to the distributors who then are responsible for selling to the end users. It doesn't appear to work like consignment stock. So it's difficult to work out selling trends, beyond what the company advise............which ties in with the de-stocking impact seen.
Perhaps PHC can provide greater granularity on this in their next Investor Meet
The revenue seems to be almost equal to the cash receipts. That doesn't tell us anything about how the customer is consuming the product and when they are likely to reorder
Can you elaborate on your point bigpunt?
DD, it's no surprise the announcement is rosey if there is a raise around the corner. However I am trying to be more balanced. Using comparatives that are poor presents a one-sided view
As others have indicated, PHC's revenue recognition leaves more questions than answers
I suspect most peoples SP average is a lot higher than current levels (mine is 13.2p), including the directors, so an opportunistic takeover bid at these levels, or even a premium to this would absolutely not be welcome. I would suspect the Directors believe they've turned a corner and things are looking far rosier, just some near term funding to address.
Any company I've been invested in which has a solid base but require short term funding has ended up being dilutive in the current market, so I do expect this unfortunately. I just hope it's minimal. The outlook looks far better now and the SP is finally reacting positively. A long way to go, but green shoots finally
Equity stake similar to Eden maybe palatable for shareholders if it could add value, i.e market and scale PHC's product line, whilst dilutive the benefits may outweigh the downside.
Either that, or an outright takeover - this video is a bit old, but have a listed to what Wilbur Ellis have to say about products and Plant healthcare in early 2022.
https://www.youtube.com/watch?v=2WN60HJoKP4&t=7s
The cost savings by going private are huge, when you consider overlay of staff PHC would likely be profitable from day one to any acquirer.
Yes, will need cash is what really stands out. And if they don't get the non-dilutive short-term financing needs, then it's a dilutive one I presume. Also anyone providing short term non dilutive cash will likely want a risk premium priced in, whether high interest cost or even potentially a conversion to equity option at a later date which defeats the non dilutive option, should this be the case.
But the market moves in advance so one has to climb the wall of fear here, should this company finally deliver for it's shareholders which is what we would all like.
Finaly Breached 4,
Things maybe looking up
That will do, market seems happy enough.
I wouldn't be surprised if AMVAC makes a move now that's out of the way, the path is now open.
Directors share purchases would help restore confidence!
Agree, not out of the woods yet but some encouraging signs.
My main focus has always been cash burn rather than the business potential, its down to $.2.8m for 2023, still too high but a decent improvement given destocking evolved throughout 2023.
Overall better than expected, still need those two registrations to come in for 2025 or if California is approved next few weeks could be included in 2024.
Main take away is they have strong and improving business, with a little help from a strategic partner it could be a highly profitable company.
This is an absolute nugget for anyone on the acquisitions trail, existing partner or not imo.
US ag companies has a good day yesterday, FMC finished the day up 10%.
Nomlungu
‘Not out of the woods yet’ Yes it’s a good point but we are close.
The word ‘short term’ suggests they anticipate profitability soon. Moreover they are thinking of stockholders and avoiding dilution, I like that.
Getting to profitability ASAP is key.
But, all seems positive until: " With increased sales in the first four months of 2024, the Company is assessing potential non-dilutive short-term financing options to ensure it is able to maintain sufficient working capital and financial flexibility through its typical order cycle."
That could equally be written that 'we will need cash soon and hope to be able to borrow but may need to do a placing if required'.
Not out of the woods yet...
Well considering that PHC have just been through a period of unprecedented destocking in the sector; scarcely touched them beyond applying the brakes temporarily to their growth ambitions. I had feared much worse!
Good to see that destocking in the sector is resolving,
It seems that profitability may be close with cash burn reducing and revenue increasing in the first few months of 2024. I also note short term non-dilutive financing solution being considered; so no fund raise (something I feared).
I still think 2024 will be a recovery year following the sector destocking, but with new product approvals and distribution deals next year ought to see excellent growth in 2025.
Still experiencing de-stocking issues but holding guidance for 2024 with modest increase.
Market likes it, currently up 7.5%
https://finance.yahoo.com/news/fmc-corporation-delivers-first-quarter-203000016.html
No worries, last year we had the consultation process brought about by a perceived undervaluation of PHC, at the time share price was around 10/11p mark.
It will be interesting to hear commentary on this now we are at a third of that, plus AMVAC/additional registrations.
Some nice research there 1pencil
Plant Healthcare have few direct UK peers but one cannot help but notice the striking difference in valuation between Eden and PHC.
Roughly speaking it has just over a quarter of PHC's annual revenue for y/e 2023 but market cap is almost double.
Cash position, loss reported is better overall but even so, still quite a gap.
https://www.londonstockexchange.com/news-article/EDEN/preliminary-results-for-the-year-ended-31-dec-2023/16456037
PHC should also have results fairly soon, outlook is key here together with cost savings.