Pro-Gest - What a difference a plant makes - Positioning
All,
Please refer to our unchanged analysis here.
Pro-Gest was one of our favourite trades last year as it was one of the rare fundamental stories unrelated to the pandemic. Now that Montova is up and running and that Carlyle have stepped in to provide liquidity, but also layer the bonds, we are earning less than 5% yield on an event-prone name that still harbours considerable complexities, even if masked by strong momentum.
Mantova 2x faster:
The Mantova ramp-up is proceeding significantly faster than we had dared to assume. Original forecasts for the year had included 300kt of production but were based on trials commencing in Q420. The plant has produced 15kt in March and 20kt in April. Management are guiding that the 300kt are unlikely to be achieved this year due to the late start, but that they are hoping to come close. This suggests monthly levels of 30kt from May onwards, which is 2x the volume we dared to count on.
Financials inline:
The call today revealed little news. Respectively, Sales and EBITDA were E5m and E4m better than our assumptions and FCF was spot on.
Positioning:
The next reporting (Q1) will be in only a few weeks time. We are not anticipating any significant news by then and news flow thereafter should be only in September. So there is no great urgency at the moment, but we will try to get 96c/E for it (4.5% yield) in the next weeks and trade out of what has swollen to a 6% of NAV position.
Happy to discuss,
Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003