Weekly musings from The Punter:
BORN in New Zealand, monitoring potatoes in the US Pacific north-west, and hoping to disrupt the agronomy market around the world, CropLogic came a-knocking on the ASX on Friday last week, asking for at least five million Aussie dollars.
CropLogic (ASX code CLI) is one of those companies that will stick instruments into your paddocks so that you can sit at home and see how wet they are, without having to put your boots on.
Combining temperature and moisture with weather forecasts, their smart electronics also look at plant variety and soil models to predict what the plants will need. Research is continuing to extend the scope of data and analysis.
They don’t sell direct to farmers: they aim to buy existing agronomy firms, and make money – about $25 to $35 an acre – by making those firms more efficient and effective.
At the moment they are focusing only on potatoes, and only on irrigated farms of 1,000 acres (416 ha) or more.
CropLogic is based on 30 years of research by the NZ government’s Institute for Plant and Food Research, and over the past five years the company has conducted a total of 684 field trials in the US, China, NZ and Australia.
But it is still a young and relatively untested company. It only bought its first agronomy company, Professional Ag Services of Washington State on the US, early this year.
The issue is not underwritten. The company has an impressive set of directors, but they have declined to make a profit forecast.
CropLogic’s revenue fell in the year ended in March, cost of sales rose and gross profit dropped sharply.
The biggest risk, perhaps, is that they will not get the $5m to $8m they want, especially in this falling market.
CropLogic’s cash is very tight. Net cash outflow from operations rose to over a million last year, up from $917,000. Despite raising a net $975,000 from sales of shares and convertible notes, cash at the end of the year was down to $80,000.
The Initial Public Office is of shares at 20 cents, minimum application $2,000.
The offer closes on August 11.
The Punter has put CLI on his watchlist, but won’t be taking up the initial offer.
• The Punter has no financial qualifications and no links to the financial services industry.
The biggest risk, perhaps, is that they will not get the $5m to $8m they want, especially in this falling market.
