It is with more than the usual sense of irritation that the Punter finally decided to dump his shares in Abundant Produce at a thumping loss. Abundant (ASX code ABT) came to the stock market a couple of years ago as a spin-off from Sydney University’s Plant Breeding Institute, promising to produce improved vegetable seeds selected in particular for growing in relatively harsh and low-tech environments. It sounded like a feel-good project, with a potentially vast overseas market, and the full backing of some serious science. Commercial seed sales had already begun. The shares, offered at 20c each, were a roaring success, rocketing to almost a dollar each in less than a month.
The Punter didn’t apply for shares in the initial offer at 20c. But what really irritates him is that the company has effectively transformed itself into a cosmetics company, pinning its fortunes largely to potential sales in China. True, the cosmetics arm uses ABT’s tomatoes and cucumbers as raw material, but the business is a totally different animal to that which was sold to the public. The prospectus, issued in November 2015, declared: “Abundant Produce is driven by an ethical commitment to enhancing the sustainability of global farming practices and improving the livelihoods of some of the world’s most impoverished people.” There was no mention of face cream or magnesium rubs for athletes’ muscles.
Although it has been selling seeds for at least three years, total receipts from customers in the latest quarter were only $156,000, and that includes unspecified initial sales of its “natural products”. Cash flow would have been a negative $525,000 if the company had not received $672,000 in state and federal grants, subsidies and rebates. Last week, in a market where almost nobody wanted to buy ABT shares, the price fell below 30c, a fall of 50 per cent since November. Time to go.
• 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.