ProGreen US Inc. (fka PGUS)

[Davis_Elite]

ANOTHER ONE

PGUS Valuation & Oceanfront Land Development

I see the current value PGUS as follows, based on numbers provided and the basis given further below.

DIRECT VALUE CONTRIBUTION FROM 1st LAND TRACT = $21.4M / 349M (shares O/S) = $0.061 pps
+
Very high intangible value of JV (incl. pennies-on-the-dollar land owner relationships) & contract assets (e.g. ~14,000 acres of land under control), and the strategic business entities formed in Baja
+
Speculative value of further business development within this year (including increased ag land use, acquisition of the oceanfront land)

I believe the intangible and speculative values are multiplicative and raise the direct value from the initially expected revenue stream by a factor of 2. As an emerging growth company that is only just beginning to generate revenue, this is a very reasonable adjustment, IMHO. So the value of PGUS at this moment is arguably in the range of $0.12 pps. PGUS is significantly undervalued with today's price being far less than a dime.

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I see the minimum value of PGUS upon closing the oceanfront land deal as follows, based on numbers provided and the basis given further below.

DIRECT VALUE CONTRIBUTION FROM 1st LAND TRACT = $21.4M / 349M (shares O/S) = $0.061 pps
+
Very high intangible value of JV (incl. pennies-on-the-dollar land owner relationships) & contract assets (e.g. ~14,000 acres of land under control), and the strategic business entities formed in Baja
+
LAND ASSET VALUE UPON CLOSING (resale/market value), CONSERVATIVE ESTIMATE: $7.2M (ProGreen's portion)
CONTRIBUTION TO VALUATION = $7.2M / 349M (shares O/S) = $0.021 pps
+
Speculative value of further business development within this year (including increased ag land use, oceanfront land development moving to the next level)

I believe the intangible and speculative values are multiplicative and raise the direct value from the initially expected revenue stream plus resale value of the oceanfront land by a factor of 2. As an emerging growth company that is only just beginning to generate revenue, this is a very reasonable adjustment, IMHO. So the minimum value of PGUS upon closing on the oceanfront land is arguably in the range of $0.16 pps - when including only the direct resale value of the property. However, much more is expected from this property, and this is where the valuation can be much higher and will be based entirely on the vision and speculation time horizon of investors. This is because in possibly a very short time - within a few short months - ProGreen could begin monetizing the oceanfront land, which could easily double the business value. And within perhaps this year even, we could see permits issued and the business could be valued 10x higher than that!

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Oceanfront Land Development (ProGreen Village) Valuation in PPS (see further below for the basis)

LAND ASSET VALUE UPON CLOSING (resale/market value), CONSERVATIVE ESTIMATE: $7.2M (ProGreen's portion)
CONTRIBUTION TO VALUATION = $7.2M / 349M (shares O/S) = $0.021 pps

LAND ASSET VALUE UPON COMPLETION OF THE INITIAL MASTER PLAN DRAWINGS & INITIAL MARKET OFFERING: (10% x $921M) / 2 = $46M (ProGreen's portion)
CONTRIBUTION TO VALUATION = $46M / 349M (shares O/S) = $0.132 pps

LAND ASSET VALUE UPON COMPLETION OF DETAILED MASTER PLAN AND PERMITS ISSUED: $921M / 2 = $460M (ProGreen's portion)
CONTRIBUTION TO VALUATION = $460M / 349M (shares O/S) = $1.32 pps

Agriculture Land Valuation in PPS Considering only the farmable portion, ~1/3 of the land

Revenue for growing / supply direct to US importers is on the order of 10 TIMES what we were expecting for leasing the land!

As an example, Contel could produce 2 cycles in a year, first cycle for garlic at $6,000 per acre PLUS the second cycle for onion at $4,000 per acre (I'm using the MIDRANGE values here). That's $10,000 per acre per year for growing, compared to the $800-$1,200 per acre per year for leasing!!

Using these MIDRANGE numbers, we see $10,000 per farmable acre - that's $10,000 x 150 acres = $1,500,000 revenue PER YEAR just from growing on HALF of THIS tract! If the farming operation costs are ~$300K (2 cycles x $150K/cycle), this gives a profit of $1.2M. ProGreen's portion is then $600K. Using the Stern "Current" P/E ratio of 35.65 for the farming/agriculture sector, this contributes a valuation of 35.65 x $600K = $21.4M.

With nothing else accomplished this entire year but utilization of the prepared 150 acres from the 1st 300 acre land tract:

PPS VALUATION (1st tract) = $21.4M / 349M (shares O/S) = $0.061 pps

Now consider "As more buyers are coming online, we are likely to accelerate further preparation of additional land for the growing operations in order to satisfy the increasing commitments, starting with the 760 HA* (1,900 acres) tract for which we have made the access road, referred to in the previous announcement in May."

Extending the growing operation to 400-600 (estimate - say 500) farmable acres on the 1,900 acre tract could yield $10,000 x 500 acres = $5M additional revenue. If farming operation costs are ~$1M ([500/150] x $150K/cycle x 2 cycles), this gives a profit of $4M. ProGreen's portion is then $2M. Using the "Forward" P/E ratio of 24.78 for the farming/agriculture sector, this contributes a valuation of 24.78 x $2M = $49.5M

PPS VALUATION (1,900 acre tract) = $49.5M / 349M (shares O/S) = $0.142 pps

And we have much more land under our control for further growth. If the growing operation were extended to, say 3,000 (estimate) farmable acres on the remaining ~11,100 acres (3-year option), we see additional revenue of $10,000 x 3,000 = $30M. If costs are ~$6M ([3,000/150] x $150K/cycle x 2 cycles), this gives a profit of $24M. ProGreen's portion is then $12M. Using the P/E ratio of 24.78 for the farming/agriculture sector, this contributes a valuation of 24.78 x $12M = $297M

PPS VALUATION (3-year option land under control) = $297M / 349M (shares O/S) = $0.851

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Basis for LAND ASSET VALUE

We are looking at 1842 hectares (4550 acres) PLUS whatever the additional 1.6 miles of oceanfront lands adds to this: 1842 hectares + 1.6 miles "linear" (for a total of 4.0 miles of oceanfront).

Since we don't know the added land size for the "+1.6 miles of oceanfront" I will just be conservative and use the 1842 hectares (and we can just KNOW that the value will be substantially higher due to the additional 1.6 miles of premium oceanfront land).

The following value estimation uses a piece of land that is currently on the market in Baja California:

https://cancun.estate/investment-opportunity-land-in-baja-california-bids-are-accepted

I am quite confident that this is not the land that we are acquiring, as I believe Jan when he states that we are acquiring land with 4.0 miles of oceanfront - he is describing land that can be developed on the 4 miles of oceanfront for residential/commercial construction. However, it is very applicable here for valuing the oceanfront land that we will be acquiring.

Using the link below, it can be seen that this land is fairly close to the region in Baja where ProGreen currently controls the 14,000 acres of land targeted initially for agricultural use. Though this land example is on the Gulf side, I expect that the land that we are acquiring is on the Pacific side. The Baja Peninsula is characterized by a mountain and hill range that more or less divides the two coastlines much like the Rockies divide the US. Since everything Jan has done to-date has been on the Pacific side, and his experience and connections seem to be on this side, it follows that the oceanfront property is likely to be on the Pacific side and, more to this point, is likely to be in the general latitudinal region of El Rosario (my opinion only). This link will open a Google map to the land, and zooming/panning can be used to see where the land is situated:

https://www.google.com/maps/place/29%C2%B028'02.7%22N+114%C2%B010'12.0%22W/@29.3362926,-114.4544302,105830m/data=!3m1!1e3!4m5!3m4!1s0x0:0x0!8m2!3d29.46742!4d-114.170002?hl=en