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It sounds like it could be argued that the 1AG self proclaimed...

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6 Posts.

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05/05/21

09:33

Post #: 52944676
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Originally posted by LightOnTheHill: ↑

ZacFlash, your post is very misleading and contradicts the stated objectives of Alterra (1AG). It assumes you can sell something you won’t have, and something you don’t own, to somebody that isn’t buying.

1. Something you won’t have: the yields in Oct 2022 are NOT going to be 28T/Ha. Those are the yields that French’s group are supposedly achieving on a portion of their orchard that is fully matured. I don’t see that 1AG have claimed anywhere they will have yields of 28T/Ha on 2 year old trees. More likely they will have 28kg/Ha that the CEO and BOD will pick one sunny Sunday afternoon while posing for some photo’s for a glossy investment brochure. So, revenue from the roadside stand selling the entire 2022 crop = $5.50 x 28 x 5Ha = $770. Doesn’t even cover the cost of the photographer. But it does have the magical 7’s that should form part of every investment decision.

2. Something you don’t own: You overlook the $33.8m (or $40.6m if you include mgt fees) capital shortfall to plant the remaining 98.3% (295Ha) of the orchard, and how 1AG intend to raise those funds. Don’t count your chickens when you aren’t even going to own the eggs. Many recent announcements state that 1AG will end up with a “substantial minority interest” in Carpenters. As a SH, you should be asking what percentage that is and at what cost it is retained.

3. What makes you think 1AG can “lock in decent export prices” for a crop that isn’t even planted or producing yet? The buyers of those non-existent avocados that you don’t own aren’t signing purchase contracts years in advance. I’m not sure where you got the $9.50kg from, but avocados are effectively sold by piece, not by weight. So if you are converting trays to kg and presuming that all fruit grown is ideal size and quality then you are very optimistic.

Finally, in relation to your post; your sentiment is buy but you admit that “share price may fall to 2-3c and this will be the time to buy in”. Shouldn’t your sentiment be ‘sell’ or at least ‘hold’?

Some concerns that I see:
- what are the chances of 1AG successfully staying at the head of the Carpenters table (collecting management and performance fees) when they are a minority owner? Could 1AG compete with someone like Neil Delroy if he established an unlisted orchard management company, or if AustOn make an offer to manage it, especially if they become one of the investors.
- what conflicts of interest exist between the advisers and the continuation of this project? I would want to see that French’s group are taking the majority of their advisory fee in shares, not cash, to ensure they have skin in the game.
- board instability and in-fighting. I don’t know the characters but the board changes and agm voting indicate there is some conflict, at least between some major shareholders. What was the real reason the CEO stepped down from the board? I don’t buy the ‘focus’ line.
- dam funding. Why is the land owner suddenly willing to stump up cash to take on the liability of the dam development? The permit expiration was known well in advance. It suggests that perhaps it would be unlikely to be renewed, in which case, why? Is there an environmental or legal issue on the horizon?
- sub surface drainage has been recently listed as a requirement. I didn’t see it in earlier announcements. This is a concern for 3 reasons: why it wasn’t picked up earlier in site selection and soil testing, the potential cost to remedy, and most importantly, the production implications due to nature of root diseases in avocado. A fourth reason might also be the issues for harvest machinery if harvest is in the wet season.

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It sounds like it could be argued that the 1AG self proclaimed Chairman of good governance, the rest of the board and the CEO, all with zero agricultural experience, do not fully comprehend all the issues in this industry.

I’m not sure how this is good governance, although, I think 1AG could assert that being so inexperienced means they’re ‘green’ and being so green in the agricultural industry must be a great ESG strategy? I’m surprised there isn’t a glossy brochure to this effect - “1AG the greenest board and executive in the industry”. I think I’ve seen a lot less accurate statements made.

1AG Price at posting: 4.1¢ Sentiment: None Disclosure: Held
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