Minbos is my largest investment, I don’t invest in anything without carrying out what I consider thorough research. I suppose that’s my thing, I enjoy doing that research and of course seeing the rewards.
Compared to many other companies on my watch list, a few things stand out with Minbos:
Management have a large holding in the company, much of it self bought, IMO vested performance shares etc mean nothing compared to Management/Directors putting their hands in their own pockets.
The Top 20 continue to buy and have been very stable for quite some time.
The company has been sold down to very low levels due to a few factors (I wouldn’t buy it if it was expensive).
1) A very bad Cap Raising highly discounted, probably due to them exploring the Andrew Forrest option - hopefully they’ve learnt from this
2) Minbos has just not lived up to its rhetoric. Missed targets, schedules etc.
3) In Africa things just happen slower than we’re use to here
These are all very valid reasons for the market to sell it down, however if you dig a little deeper, with Africa being Africa, I don’t think it’s the time taken to get to the position we’re now at, I think it’s more management (Lindsay) being overly optimistic with time frames. Enthusiasm is great, by all means have optimistic targets internally, maybe have more realistic targets for the market, because the market punishes missed targets - rewards targets reached on or ahead of schedule.
IMO the SWF investing in Minbos means all the other pieces will fall into place.
Africa is very different to Australia, whilst they take time to get things done, once the Government decides to go down a path (eg Agriculture) all the public & private institutions fall in behind the Government to get it done. Maybe it’s powerful coercion such as the Government decree requiring Banks to loan appprox half a billion USD annually primarily to Agriculture at a discounted 7.5%
It’s been a long wait, however I believe we’re on the cusp of those other 2 CPs being ticked off and the start of construction. Once that happens it will be a clear path to profitability, the market likes certainty and it will have that. Funding a USD40m project was never going to be an easy task for a small company like Minbos, but we are very close, management will certainly go up a few notches in my estimation when they pull this off.
