Agria (GRO) will rise by a minimum of 20% this week, and could rally 40%-80% this week! GRO is a Chinese company traded on the NYSE that has a controlling stake in New Zealand's largest agriculture company. The IMF is projecting 2014 NZ unemployment to fall to only 5.3% vs. 12.2% in Euro zone countries, 7.4% in the U.S., and 6% in Australia. NZ's economy is expected to grow 45% faster than the average developed economy in 2014. NZ's deficit is only 0.4% of GDP, compared to 3.5% for advanced economies as a whole. NZ will be the biggest boom economy in 2014! GRO could capitalize the most and become the largest gainer on the NYSE!
80.4% of GRO's USD$960.7mm in 2013 revenues came from its NZ businesses. GRO's 80.81% owned Agria Asia subsidiary owns 379.1 million shares of PGG Wrightson (PGW.NZ), trading on the New Zealand Exchange for NZ$0.39. The market value of these shares is NZ$147.85 million or USD$125.67 million. GRO's 80.81% stake in these shares is worth $101.56mm. GRO has only 55.38mm shares outstanding, meaning GRO's PGW.NZ stake is worth $1.83 per share.
GRO deserves to trade well above $2 with its wholly owned China seeds business that was profitable in fiscal 2013 with revenue growth of over 98%! Depending on if we value GRO's China seeds business at 1X, 2X, or 3X its $17mm in fiscal 2013 revenues, GRO deserves to be trading for either $2.14, $2.44, or $2.75 per share!
GRO in July paid off $10.1mm of its debt left from its PGW.NZ share purchase, reducing its total debt to $75mm of which $32mm doesn't mature until May 2018. Of GRO's $43 million in short-term debt, $26.8mm is backed by pledged restricted cash deposits that can be used for repayment, leaving $16.2mm in unbacked short-term debt. GRO has $42.5mm in unrestricted cash and can pay off its short-term debt and have $26.3mm in cash remaining. PGW.NZ paid NZ$0.032 in dividends last year, netting GRO USD$8.33 million! Disclaimer: We own 550,000 GRO shares and intend to sell them at higher prices.