FYI | Sep 19 2019
An Innovative Nutraceutical Company
By Pitt Street Research
Abundant Produce Ltd ((ABT)) is a Sydney-based life sciences company focused on the Abundant Natural Health brand, a range of scientifically validated, Over-The-Counter nutraceutical products utilising 100% natural biologics and minerals to provide relief from pain and inflammation.
Abundant Produce's foundational business was Abundant Seeds, which uses cutting edge science to breed novel vegetable varieties for sale to the horticulture industry. This business is now considered non-core.
The market opportunities are significant
Abundant is currently gathering clinical data for two key indications, one in pain and one in psoriasis. Should the data be favourable there is substantial potential for OTC sales, as well as potentially moving to more prescription-type indications. Abundant Natural Health continues to develop its distribution channels, with; growing Australian pharmacy uptake; US warehousing to service Amazon sales, a US retail strategy in development; and a multi-channel China cross-border strategy including mainland bonded warehousing. All ease the path to consumers.
There is potential to extract value from Abundant Seeds
There is potential to extract value from Abundant Seeds, with the business now selling cucumber seeds, and growers trialing tomato seeds, followed by eggplant, zucchini and capsicum in the product pipeline. In 2019 management has taken the strategic decision to investigate selling this business, taking advantage of international industry appetite for intellectual property related to vegetable plants.
Abundant is funded for the next stage of its growth
A recent SPP at 6 cents per share raised $1.3m, with all directors participating, and Executive Director and General Manager Tony Crimmins taking his holding to 19.9%.
Valuation range of $0.13–0.23 per share
We value Abundant at 13 cents per share base case and 23 cents per share optimistic case using a DCF-based valuation approach. We see Abundant potentially re-rating towards our valuation range as trial data emerges confirming the effectiveness of new Abundant Natural Health products, and as sales commence for those new products.
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Earlier today the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:
https://www.fnarena.com/index.php/pitt-street-research/ABT/
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