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Original-Research: Agrios Global Holdings Ltd. (von GBC AG): BUY

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. 
 
 

(END) Dow Jones Newswires

September 06, 2019 11:31 ET (15:31 GMT)

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