ArborGen Holdings (NZX: ARB)

Last close As at 24/02/2024

NZD0.16

0.00 (0.00%)

Market capitalisation

NZD87m

ArborGen Holdings is a New Zealand-listed investment company and is the world’s largest integrated developer, commercial manufacturer and supplier of advanced forestry seedlings with operations in the United States and Brazil.

Prior to the COVID-19 outbreak, the economic growth outlook in each of its core countries, the United States and Brazil, was either good or improving, according to OECD data. At this point the primary end-markets served by ArborGen’s plantation forestry customer base were in a positive cyclical phase.

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forestry04

Sector

Industrials

Equity Analyst

Andy Murphy

Andy Murphy

Director, Financials & Industrials

Max Hayes

Max Hayes

Associate Analyst

Key Management

  • Alex Brown

    CFO

  • Dave Knott, Jr

    Chairman

  • Justin Birch

    President and CEO

  • Sharon Ludher-Chandra

    Business Development Executive

Balance Sheet

Forecast net debt (US$m)

N/A

Forecast gearing ratio (%)

N/A

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (0.6) (6.3) (21.4)
Relative (2.3) (11.6) (17.7)
52 week high/low 0.2/0.2

Financials

ArborGen’s H124 results highlighted contrasting trading conditions, with challenges in the US offset by a strong performance from Brazil. However, despite the short-term issues, ArborGen remains in prime position to address increasing demand for its seedlings and to continue investment in genetic improvement to drive the switch to sales of higher-value, higher-margin seedlings in both markets. While this process plays out, underlying EBIT is set to increase fivefold in the next two years as we expect gross margins to return to and then exceed historical levels. However, the recent US weakness has led us to trim our DCF valuation from NZ$0.49/share to NZ$0.44, still implying material upside.

Y/E Mar Revenue (US$m) EBITDA (US$m) PBT (US$m) EPS (fd) (c) P/E (x) P/CF (x)
2022A 47.6 10.1 1.0 1.1 9.5 4.9
2023A 56.1 9.2 0.3 (0.6) N/A 23.9
2024E 64.8 12.0 3.0 0.6 17.5 17.0
2025E 71.3 16.1 7.2 1.0 10.5 5.0

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