Ann: Kobe Auction Result and Sales Update, page-67

Of course I could be wrong, but I don't think we are even close to fair value.

Even if H2'24 proves to be the same as H2'23, which I suspect is a very conservative estimate, full year profit could come in at over $20m, or a P/E of 3.65. Show me another company on the ASX with such explosive growth/potential, flush with cash, with a ridiculously low P/E, and insanely good margins - if it exists, I haven't found it. The company will have options at its disposal that it has not had for a long time, if ever i.e. payout a large special dividend, buy-back stock, acquire a competitor, rapid expansion into new farms, etc.

There are obviously many risks associated with the company which can change the picture in an instant, the most likely being a complete collapse of the pearl market, however, the following factors give me some comfort in the short/medium-term (caveat: I am definitely not a pearl expert):
- The pearl jewelry market is projected to grow at an estimated 13% CAGR until 2031
- South Sea pearls are incredibly prized given their quality and rarity i.e. it take 4-5 years to harvest one pearl in one oyster
- In the incredibly inflationary environment that we all see ourselves, pearls, like gold, are seen as somewhat of a safe haven hard asset, especially in China
- Fashion by nature is everchanging, but the trend right now seems to be towards this "timeless and traditional" jewelry. There also seems to a trend towards men wearing pearls, which has the potential for rapid growth.
- The kind of customers that are likely to spend lots on pearl jewelry are unlikely to change their spending behaviour if a recession hits

Another key risk is that the company has further poor harvests i.e. both poor pearl quality and size. One can only hope that management have found a solution to this issue and the longer grow times leading up to the April auction, will see substantially larger and higher quality pearls.

There are obviously various other risks, including foreign exchange, geopolitical, etc., but assuming the market continues as is, there is no supply glut or collapse in demand, and the company can resolve the pearl quality-size issue, then we could see a lot more blue sky from here.