I gotta throw my 2 cents in on this... to give some background I...

I gotta throw my 2 cents in on this... to give some background I have been following NUF for a few months now. I think the drought should provide some good buying opportunities, hence my interest in the sector. My sentiment is to buy but only at the right rice. Personally, I think NUF is not near cheap enough to justify the risk involved. Its trading circa 10x EBITDA (LTM).

I would want a margin of safety with a buy in of circa 6.5x EBITDA for the following reasons:

High Debt Levels - Debt is circa 3.5x LTM EBITDA at the moment. That is a very high amount for a cyclical company such as NUF. However I am confident that the working capital position will improve and reduce the leverage figure and relevant ratios. I note that the EBITDA is forecast to increase significantly to circa $450m in FY19 due to the recent acquisitions. Risk is if this doesn't get achieved and/or ongoing drought problems, I would expect a capital raise to occur to pay down debt levels thereby diluting equity holders.

Forecast Profitability Risk 1 - Integration problems with the new acquisition of product lines. This is not an easy fix as far as I can see, particularity given its a China based problem.

Forecast Profitability Risk 2 - The Australian drought is ongoing, its unclear whether it is temporary or permanent due to global warming. Obviously this is one part of the portfolio geography but still significant.

Thoughts? What are the upsides at this price?