Verde Agritech Ltd (NPK)

[kahlua]

There is certainly some excellent potential with this company but I believe it’s best viewed through a very long term lens. Share structure is very good. Management is very aligned with shareholders. YOY growth was good albeit this year projections are only for half last year’s growth, which begs the question is Kforte and the newly developed baks product just a niche offering? They’ve barely tapped the potential market in Brazil and have expanded the sales/marketing team and grown the customer base and yet already growth is expected to decelerate? All the while not yet achieving scale and therefore showing bottomline erosion of the improved margin profile due to increased delivery and marketing costs.

It also bears mentioning that the bonus for the ceo was as much as 2020 net income. The ceo has been shareholder friendly (a rare occurrence in junior mining), not completely diluting the share base; however, his compensation and annual share incentivizes are egregious and frankly a far higher standard or company achievement base should be set for him to be profiting as he is currently doing. My hope is this unchecked behavior gets reigned in and only exceptional bottom line improvements merit such compensation.

Still I like the potential a lot, which is why I hold. BAKS could prove disruptive if pricing and effectiveness both prove a better option than the tried and true alternatives. Only the farmers can prove this out though so it’s just a rather slow season to season word of mouth type growth trajectory (ie slower than most investors like). That’s just my take.