Obtala Limited Align Research Obtala Ltd note release
May 10 2017 - 2:54AM
RNS Non-Regulatory
TIDMOBT
Obtala Limited
10 May 2017
Obtala Ltd - Conviction Buy price target 30.52p
Undervalued African forestry and agriculture business fully
funded to unlock the deep value embedded within its asset base
Obtala Limited is an Africa focussed forestry and agriculture
company with a goal of becoming one of East Africa's largest
sustainable food and timber producers.
New management streamline strategy and raise funds for
expansion
Since the appointment of a new senior management team in April
2016 Obtala has streamlined its strategy to focus on developing its
latent forestry and agriculture assets. The sterling equivalent of
c.GBP18.3 million has been raised since December last year to
invest in building towards meaningful and sustainable levels of
production in both divisions.
Forestry
In Mozambique Obtala has an effective 58% stake in Argento
Limited, which owns 312,465 hectares of natural forestry
concessions on 50-year licences. Funds from a recent preference
share issue position the division to rapidly expand its operations
towards full production in the coming years.
Agriculture
In Tanzania Obtala owns 1,735 hectares of farmland on long-term
leases. The operations have so far had $10 million of investment
spent upon clearing land, developing infrastructure and planting
initial crops. Revenues are now being earned, with Obtala planning
to significantly increase the amount of planted hectares and focus
on high value orchards and exports.
Shares undervalued on a number of metrics
Obtala shares now trade at only a small premium to the value of
the stake in Argento alone, priced per the recent fundraise. This
implies the agriculture business, net cash & potential for
expanding the timber business are being valued at just GBP1.2
million.
Our DCF model suggests fair value of 30.52p, hence we initiate
coverage with a Conviction Buy stance.
To download the full note visit the following link
http://www.alignresearch.co.uk/cpt-company/obtala/
This information is provided by RNS
The company news service from the London Stock Exchange
END
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