Obtala Limited#: H1 2017 Results
African forestry and agriculture business Obtala Limited (LON:OBT)# has released its interim results for the six months to 30 June 2017 (H1 2017).
• Revenue: US$0.2m (H1 2016: US$0.4m); VSA FY 2017 forecast US$13.7m
• Operating loss: US$3.8m (H1 2016: US$2.5m); VSA FY 2017 forecast US$2.0m
• Net assets: US$152.5m (H1 2016: US$120.2m)
• Cash and cash equivalents as of 30 June 2017: US$1.9m (31 December 2016: US$3.4m)
VSA Comment
Having carried out its transformational acquisition of WoodBois International at the end of the period, H1 2017 looks set to be the last period of minimal financial performance for the company, given WoodBois generated US$9.2m in revenues in H1 and OBT has near-term plans to rapidly scale up the trading side of this business through additional trade finance facilities.
The biological assets of WoodBois have been assessed by the same valuer used on its existing concessions and a value of US$53m has been provided. This provides a significant non-cash ‘gain from bargain purchase’ contribution to OBT’s P&L for the H1 period and adds to the already significant biological assets on its balance sheet, which now total US$228m.
OBT has also announced this morning that it will be creating individual Board of Directors’ for each of its forestry (Argento) and Agriculture (Montara) divisions. This additional separation of the business should make it easier for the company to attract new investors and partners into the specific areas of the OBT business that are most relevant in each case. It will also assist in the potential sale or IPO of its agriculture division if such an opportunity arises in the future.
The company has also announced the appointment of Martin Collins as Deputy Chairman of the OBT board as well as Chairman and CEO of the agriculture business, replacing COO Warren Deats, who has resigned from the company.
We maintain our BUY recommendation and target price of 36p.
Zambeef: Crop Damage Not as Bad as Feared
Following its announcement on 6 September, African agribusiness Zambeef (ZAM LN) has announced that crop damage to its winter wheat crop from the Septoria fungal disease has not been as bad as originally feared. It now expects crop yields to be c10% lower than original expectations, rather than a fall of 20%. The company therefore now expects to report a small profit for the year to 30 September 2017.
NWF Group: In-Line AGM Statement
Ahead of its AGM later today, UK agricultural input business NWF Group (NWF LN) has announced trading in its first quarter (June-August, traditionally its quietest period) has been ahead of last year and in-line with expectations.
Summer feed volumes are reported as robust with margins in-line with expectations. DEFRA data shows that the overall UK ruminant feed market increased by a significant 12% YoY over June and July (no data yet available for August). However, it must be remembered that these months are the quietest in terms of feed demand, so YoY changes can be quite volatile.
Its food division is also in-line with expectations with three new customers adding an additional 4,000 pallets at its Wardle site, leaving 4000 pallets of spare capacity left to fill (of c100,000 total capacity).
Its fuel division has experienced increased commercial business, with lower margin road diesel the main contributor to this growth.