It is now two years since Abundant Produce (ASX code ABT) floated onto the stock market, assuring investors that it was all about breeding the world’s best vegetable seeds.
It was promising ethical, non-GM exposure to the large, high-growth global market for food crop seeds. Moreover, it was aiming to supply seeds that would perform well in harsh, arid or infertile areas with extreme weather, a large market largely ignored by the big multinationals which dominate the world’s seed trade.
It sounded like a feel-good and potentially highly profitable investment – how could one resist? The share price soared from the initial offer at 20c to almost a dollar in the first month.
In the six months to the end of December total seed sales were less than $31,000, and losses after tax doubled to $1.1 million.
The Punter bought ABT in February last year and is now wondering whether to dig them out of his portfolio and harvest a 37 per cent loss, or just leave them there and hope they bloom in the spring.
At the time of writing, sellers were offering some 682,000 ABT shares at various prices, while a handful of investors were prepared to buy a total of only 79,000 shares, between 34c and 37c. Not a good sign.
ABT had to raise another $3.1m in October, only 18 months after the initial public offer. The company only appointed an experienced operations and sales manager, Sarah Pearson, in October last year.
The big potential positive is that the company’s new natural cosmetics business seems to have been well received in China. The Punter has reluctantly decided to see how the cosmetics go and to give Pearson a chance to make an impact on the seeds side. But he will be taking a critical look at ABT’s next quarterly report. If it shows little improvement, he will cut his losses.
- 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.