Notwithstanding some previous posters' comment re: agri related risks I believe there is tonnes to like about this company. Whilst they have been clearly skewed toward organic dried grapes etc the latest acquisitions brings some pretty attractive diversification into nuts, seeds, grains etc.
My partner is right into organic eating - she is basically 100% - and I spend a bloody fortune on organic nuts, seeds etc. Organic Coconut sugar is the only sweetener allowed in our households. Anyway, long story short I thing there is a long runway of growth here. The organics market is going to continue expanding with absolute certainty. It's only a matter of a company being positioned appropriately to capitalise on this and said company sales will grow also. A forward PE of ~17 for FY17 is already reasonably factoring in a level risk imo. I would be surprised if the goal wasn't to continually expand their product offerings. Recent awards as Organic farmer of the year etc are positives that I think benefit by providing confidence than something that will drive short-term share price moves. Put another way, I'd rather be a sales rep in a position to promote that fact than not.
Considering the potential export market - the appointment of sales reps into Europe and Asia seems like a good first step - all it would take is a bit of interest and this could well take a run. I've seen many an IPO hold a few good announcements for the early days of listing. This is speculation only of course but anything which shows upside to the prospectus forecast NPAT would suddenly make this stock relatively cheap - i'd say <15 would qualify here.
One point I disagree with that has been made here is the notion that we are buying 'someone's' exit strategy. I don't see that. Public markets are wealth generating tools. That is the point of any commercial enterprise. The founders of this business remain in senior positions and the fact they have monetised some of their interest is both typical and prudent business practice. Shareholders future wealth is linked to their own from - they are still major shareholders.
MRG Price at posting:
$1.20 Sentiment: Buy Disclosure: Held
