When Abundant Produce (ASX code ABT) finally started trading on the ASX on April 26, the shares opened at 45 cents each, more than double the issue price of 20c.
The Punter, somewhat surprised by the warmth of the reception for the fledging seed company, took a quick look and decided not to buy any at that price. Such an immediate jump in the price was bound to bring out the profit-takers, surely?
It did, but they were swamped by eager buyers. The Punter, silly boy, was left way behind, as the price roared ahead to almost a dollar each. At that level, the market is valuing Abundant Produce at around $45 million, which is an awful lot of cucumber and tomato seeds.
This would seem to be anticipating a great deal of growth. Abundant is still a very young company, with total sales of just over $500,000 in the year ended last June. It really has only two products – cucumber and tomato seeds – on the shelves at this stage, though eggplant, zucchini, pumpkin and capsicum are in the pipeline.
The company only expects the results from its cucumber trials in the current quarter, and final results of its tomato trials are not due until the second quarter of next year. The results of its eggplant, capsicum and zucchini ventures are even further down the track.
The world vegetable seed market is worth around $A8.5 billion, and growing by an estimated 12.8 per cent a year. It is dominated by a handful of big players, such as Monsanto and Du Pont, but they tend to focus on the large-scale, commercial greenhouse industry.
Abundant is targeting the other 75pc of the seed market, aiming to produce high quality, non-genetically modified seed bred specifically for harsh, arid and infertile environments like India and Southern Australia.
In an exciting move, Abundant has now employed one of Australia’s top plant breeders, Dr Matthew Turner, as a research scientist, and is accelerating the expansion of its greenhouses at the University of Sydney.
But it will be years before the company is making enough profit to pay a decent dividend, so The Punter can’t see the share price going much higher in a hurry. Reluctantly, he is looking elsewhere for a quick hit.
The obvious, but highly risky place to look is among the would-be-miners, all scrambling to get in on the lithium game. Argosy (AGY) and Capital Mining (CMY) are just the latest to acquire new or additional projects.
The Punter has decided to take a deep breath and a hard look at some of them over the next week.
• The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.