New Global’s Fish Harvest Dwarfs Current Market Capitalization
- 120 Acres of Premium Aqua Farming Assets
- $2.4 million Loan Accelerates Growth
- On Verge of Current Reporting Status
- Liquidation Value of Company worth multiple of Current Stock Price
- Nearly Two Thirds of All Consumed Fish Will Be Farmed Raised by 2030
New Global Energy (NGEY) is essentially a holding company focused on aqua farming through its subsidiary Aqua Farming Tech. The company has two fish farms, a 79 acre farm in Mecca and a 39 acre farm in Thermal California. Both farms are relatively close to each other located in the Palm Desert near Coachella Valley and the Salton Sea. Coachella Valley recently approved Marijuana dispensaries and growers in the city. There have been very few updates over the past year and as a consequence the value of the stock has dropped through lack of transparency. The most recent update was in a filing indicating a change of auditor. Before that a lender gave them $2.4 million secured by the collateral of the fish farm itself. When you put these two things together the only conclusion that you can draw is that the company is in the process of rebooting and coming current very soon and with a lot of assets with a liquidation value at multiples of the current stock price. At the currently price of .05525 the market capitalization weighs in at $779,000. NOTE: Share structure 14.1 mil O/S and tiny 3.4 mil Float.
Return to Current Reporting Status
With the cash from the financing of the farm it’s very evident that they have funds to pay their auditor and that some of the proceeds were used to bring the company current and expand operations. The last filing included the appointment of PKF LLP in January and it’s reasonable to think that financials will be out in the coming weeks to a month. A return to reporting status and regular updates could be quite exciting as investors learn the plans from the proceeds of the loan and if they bore any fruit.
Under Appreciated Assets
The last balance sheet showed that there were $4,414,260 in property plant and equipment as of Jun 30, 2016 with only inventory of $189,866. Back in June there were about 4 million fingerlings but they cannot be counted on the balance sheet until they are in the mature tank and over 1 pound in size. Real Estate comparables from Zillow indicated that these farms excluding all the equipment like the tanks, tractors, netting, and pumps come in at $2.5 million and $1.5 million just for the land. This is also validated by the balance sheet. In order to qualify for a loan, the company MUST have shown positive cash flow in a sufficient amount to service the debt and operations. In all likelihood the company has 4 million fish coming to market over the next year and could be selling upwards of 10,000 pounds of fish per week. At $3/live Tilapia the company could be seeing revenue of $120,000/month generating $1.44 million annually. These numbers are very realistic and also correspond with the 2 year timing of the note.
One asset not mentioned is that the company also has a .5MW solar array on the facility that cost about $2.0 million to build and only uses about 30% of the output and actually sells electric back to the grid. With a cheap source of surplus energy Investors can only speculate if the company will use some of the cash flow to develop a Marijuana business or perhaps use the excess energy to set up a bitcoin mining operation.
High Likelihood of Growing Revenue
As of the last filing the company just started to report sales of Tilapia. Since then we have got announcements that they have had begun selling live fish. Some of the revenue was from deferred revenue contracts known as cash forward contract. This totaled $834,168 in potential future revenue as the fish reach maturity and are sold. These cash forward contract were used to help finance the company and help feed the fish until they reached term and then the proceeds would go to the investor. The ramp up in the business was just starting when the company mysteriously stopped filing. Based on the recent loan activity in Sept 2017 it’s easy to read between the lines that the company was very much alive feeding the fish and maintaining operations until harvest.
Real Business – Tour the Farm
All investors have to do is look at the website, pictures, marketing material, and the videos and compare them to google earth. The only conclusion that can be reached is that the farm is very much a real operation that produces non-gmo quality tilapia that sells for a premium price. The company has its own solar array and water source that can pump up to 3000 gal per minute. These assets are undeniable and worth much more than the current market capitalization.
The Growing Demand For Seafood
According to the company website, nearly 90% of all seafood is imported in the US, up from 62% just a decade ago. The health benefits from eating fish in an ever-growing health conscious society has fueled the need for fish farming and NGEY is perfectly positioned. The World Bank stated that nearly two thirds of the world’s consumption of fish will be farm raised by the year 2030.
Tilapia Skin Being Used For Alternative Medicine
Tilapia, the fish of choice at New Global, has recently made mainstream US television on ABC’s new hit series The Good Doctor, which focuses around a young autistic surgeon. In season 1 episode 6, the young doctor requests Tilapia skin (sterilized) in which the skin is used as bandages so the burn victims skin can heal on its own. In real life, doctors are trying an unorthodox approach to treat burn victims — using fish skin. Brazilian doctors are taking an experimental approach to treating burns: using tilapia skin. Traditionally burns are treated using pig and human tissue, which transfer collagen, a healing protein, to the victims’ skin.
Moringa aka “The Miracle Tree”
The company is utilizing its agricultural land to grow Moringa which is also known as the miracle tree. Moringa gets its reputation from the vast range of nutritional and medicinal properties it contains. Many hail Moringa tree as a super food, a tool for the fight against world hunger, because virtually every part of Moringa, from its leaves to its bark and root, can be harvested for human use.
NGE has planted 8,000 Moringa trees on its sustainable farm in Thermal, California and is preparing to plant 1.2 million trees in several acres of specially constructed greenhouses so that production can run uninterrupted year round.
Moringa leaves will be delivered to Asian food markets in the greater Los Angeles area at a wholesale price of $3 per pound and the Company will develop national distribution to serve this ethnic niche market. A significant portion of the farm’s initial production is being used as a key ingredient in the Company’s self-manufactured fish feed, which saves money while improving feed nutrition. Going forward, the Company will gain new revenue streams by producing moringa to be sold to the health and wellness market.
Investment Summary
A fully reporting shell is worth about $750,000 with no assets. When you factor in about $1.6 million in net equity and about $1.0 million in property plant and equipment and then add at least $1.4 million in cash flow from fish sales you get $4.75 million as the liquidation value of the company. Therefore the target price is $.40 just to be at liquidation value. If investors factor in extremely conservative earnings of $1.4 million. That translates to $.10 of earnings/ share. With a multiple of 5 that puts an enterprise value of $.50 on the company. Couple the asset value of $.40 + the enterprise value of $.50 this stock as the potential to reach $.90. Now if they pursue any high growth businesses in marijuana or bitcoin mining there could even be further upside to $2.00. The assets are so robust in this business the best use of the company’s cash flow is to buy the company stock back and in past filings they have mentioned that was actually a strategy they were willing to employ. This stock has no potential threat of dilution, has substantial assets, and will likely report substantial revenue. The stock only has one direction to go once they go current. Investors can wait for that triggering event or connect the dots NOW using the morsels of information presented in this article.
Disclosure: PSInvestor is LONG in the company NGEY. We have taken a recent position and have had a position at much higher prices. We reserve the right to trade in and out of these shares as we see fit. PSInvestor was NOT compensated by the company or any third party shareholder. Information was attained from the company website, filings or off articles on the internet and are biased and opinionated. For our FULL DISCLAIMER, please Click here.