Proactive Spotlight:
Broker VSA Capital has started coverage on revamped African agriculture and forestry business Obtala Ltd (LON:OBT) with a ‘buy’ rating and a 28p price target, a day after the firm unveiled a fund-raising by a new investor.
In a 29-page note to clients, VSA’s analysts pointed out that Obtala “ has experienced a significant change in investor perception under new Chairman Miles Pelham, which has been evidenced by a share price increase of more than 140% since his appointment last April”.
The analysts noted that a 2014 assessment by Honour Capital had valued 11 of Obtala’s forestry concessions at £107.9m ln, using a 12% discount rate, well above the firm’s current market cap of around £50mln.
WATCH: Obtala chairman delighted with Hong Kong investment …
They added; “Since then, OBT has secured a further concession covering an additional 35,000ha, which has the potential to widen this mismatch even further.”
The analysts noted that their target price offers around 50% upside potential from Obtala’s current share price of 19.25p, which was 0.25p higher on the day.
VSA’s initiation comes a day after Obtala revealed it has raised £4mln through a share issue to a Hong Kong-based high net worth investor.
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