Quality socks at discount? Will Nufarm be acquired?

NUF 2017 macquarie report.pdf

I have included Macquarie analyst report on report back in 2017 in the attachment, which provide useful insights into the industry M&A activity and competitors.

After watching Nufarm's share price decline over the past year significantly as a result of mixed factors such as climate, political and health-related issues, I wondered if Nufarm is a falling knight with eroding profit or the hidden gem that is misjudged by the market.

There are two questions that I constantly ask myself, when investing, value and price.

On the topic of value, usually the biggest challenge for industry is competition. In the case of crop protection industry, there are two major types of products, off-patent products which can be manufacturer by many producers and offered at cheap price; patented products which are owned and manufacturer by certain firms. While for many low price agriculture products, off-patent products are sufficient, as reflected in its increasing share of the market, I believe the needs for specialized product will still continue to grow on the back of harder environment and more stringent health/safety standard in crop-protection use. Nufarm has exposure to both markets. It should be able to compete in both low-price (low profit margin) and specialized categories. On weather-factor, its portfolio is global with ANZ/NZ being less than 15%, I don't see how dry weather in Australia will be a serious issue for Nufarm. On the topic of health and lawsuit, such as Glyphosate, I think science will prevail and tell the market and the government the truth. Whether it's harmful or not, I think it will significantly benefit specialized crop-protection products, as government and consumers place more emphasis on the safety, health and ingredients of herbicides. Long-term, as long as Nufarm continue to invest in R&D and (given its history to collaborate with CSIRO and develop new products such as seed technology area), it should be able to differentiate itself, and should do fine.

On the topic of price, quick ratio from Yahoo as of 04.Jun.2019 is
Price/sales (ttm): 0.41
Price/book (mrq): 0.71
Enterprise value/revenue: 0.97
Enterprise value/EBITDA: 9.67

To me, Nufarm looks like hidden gem. At $1.4b, there are probably plenty of buyers around to buy out this great firm.