Rubicon

NZ: RBC

NZD$95.9m market cap

NZD$0.19 last close

Rubicon is an NZX-listed investment company whose ArborGen subsidiary is the world’s largest integrated developer, commercial manufacturer and supplier of advanced forestry seedlings with operations in the US, Brazil and Australasia.

Investment summary

FY19 represented Rubicon/ArborGen’s first full year as a unified company under single parent ownership. Overall, revenue and gross profit were slightly below our expectations but group EBITDA, PBT and EPS were in line. Some restructuring activity and extreme weather events held back in-year sales performance. US hurricane events and wet conditions affected forestry customers’ planting activities in some areas while sales volumes grew in Australasia but were constrained by local market conditions in Brazil. Hurricane damage will restrict Rubicon’s ability to grow volumes of advanced seedlings in the US for the next couple of years. We reduced our FY20 and FY21 PBT and EPS estimates by between 20–25%. While this is disappointing, our three-year EPS CAGR (to FY23) is still over 30%. ArborGen’s market positions remain strong and we believe that this will translate to good growth.

Y/E Mar
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2018A 35.4 6.0 3.6 1.3 9.6 17.4
2019A 49.1 4.6 4.7 1.1 11.3 15.1
2020E 58.2 7.7 7.7 1.6 7.8 9.6
2021E 64.4 9.5 9.6 1.9 6.6 5.9
Last updated on 11/07/2019
Industry outlook

The economic growth outlook in each of its core countries being the USA, Brazil, New Zealand and Australia is either good or improving, according to OECD data. Consequently, the primary end-markets served by its plantation forestry customer base (being construction, and the pulp and paper industries) are in a positive cyclical phase.

Last updated on 11/07/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (US$m) 22.8
Forecast gearing ratio (%) 15
Price performance
%
1m
3m
12m
Actual 1.6 (1.5) (33.5)
Relative* (3.5) (9.5) (42.0)
52-week high/low NZ$0.3/NZ$0.2
*% relative to local index
Key management
Luke Moriarty CEO
Alex Brown IT
Mark Taylor Chief Financial Officer and Company Secretary
Sharon Ludher-Chandra Business Development Executive