ArborGen Holdings — Shifting focus to US South and Brazil

ArborGen Holdings (NZX: ARB)

Last close As at 20/11/2024

NZD0.14

−0.01 (−6.67%)

Market capitalisation

NZD77m

More on this equity

Research: Industrials

ArborGen Holdings — Shifting focus to US South and Brazil

ArborGen delivered solid FY22 sales growth across continuing operations, with revenues up 11% to US$47.6m. Record US advanced genetic seedling sales, up 32% y-o-y, reflect the company’s focus on advanced genetics. Management also completed its strategic review, shifting focus to the high-growth US South and Brazilian markets, divesting the Australian and New Zealand business, exploring opportunities in using trees to offset carbon emissions and strategically expanding in its core markets. ArborGen is well positioned to deliver on its new strategy; we are reviewing our estimates and will update them in the near future.

Analyst avatar placeholder

Written by

Industrials

ArborGen Holdings

Shifting focus to US South and Brazil

FY22 results

Basic materials

30 June 2022

Price

NZ$0.22

Market cap

NZ$110m

US$0.63/NZ$

Net debt (US$m) as of March 2022 (includes lease obligations)

16.5

Shares in issue

501.5m

Free float

33%

Code

ARB

Primary exchange

NZX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.2)

(8.2)

4.7

Rel (local)

(6.9)

0.4

24.0

52-week high/low

NZ$0.3

NZ$0.2

Business description

ArborGen Holdings is an NZX-listed investment company and is the world’s largest integrated developer, commercial manufacturer and supplier of advanced forestry seedlings with operations in the United States and Brazil.

Next event

Q123 results

TBD

Analysts

Ken Mestemacher, CFA

+44 (0)20 3077 5700

Andy Murphy

+44 (0)20 3077 5700

ArborGen Holdings is a research client of Edison Investment Research Limited

ArborGen delivered solid FY22 sales growth across continuing operations, with revenues up 11% to US$47.6m. Record US advanced genetic seedling sales, up 32% y-o-y, reflect the company's focus on advanced genetics. Management also completed its strategic review, shifting focus to the high-growth US South and Brazilian markets, divesting the Australian and New Zealand business, exploring opportunities in using trees to offset carbon emissions and strategically expanding in its core markets. ArborGen is well positioned to deliver on its new strategy; we are reviewing our estimates and will update them in the near future.

Year end

Revenue
(US$m)

EBITDA*
(US$m)

EBIT**
(US$m)

EPS
(c)

EV/revenue
(x)

Net debt***
(US$m)

03/21 (restated)

42.8

7.4

1.0

0.3

3.0

33.3

03/22

47.6

10.1

2.7

0.3

2.7

16.5

Note: *EBITDA is US GAAP, adjusting for investments in intellectual property, government grants, inventory adjustments, etc. **EBIT excludes strategic review costs, grants, etc. ***Includes capitalised leases. FY21 numbers have been restated to reflect the divestment.

FY22: Harvesting sales in both US and Brazil

In FY22, ArborGen generated solid results across continuing operations in the US and Brazil, growing revenues 11% y-o-y to $47.6m, with US sales rising $3.1m to $39.9m and Brazil increasing $1.7m to $7.7m. Adjusted US-GAAP EBITDA from continuing operations rose 36% y-o-y, while management strengthened the balance sheet, lowering net debt to $16.5m from FY21’s $33.3m ($27.4m and $11.5m, excluding leases). Seedling sales rose 3m seedlings y-o-y to 362m in FY22, although US sales were affected by the COVID-19 pandemic and fell 3% to 284m seedlings.

Strategic review completed: Three new initiatives

Over the last year, ArborGen conducted a strategic review and revised its strategy to target several new initiatives. First, it will focus on the high-growth US South and Brazil markets. ArborGen should benefit from growing demand, as it is the leading commercial supplier of advanced genetics loblolly seedlings in the US South. In Brazil, ArborGen has expanded to become one of the largest commercial suppliers of eucalyptus and loblolly pine seedlings and expects to see rising demand. Because of the shift in geographic focus, management sold its mature Australia and New Zealand business in November 2021 for NZ$22.25m. Second, management is evaluating opportunities in emerging carbon markets, where trees can be used to offset carbon emissions. Finally, ArborGen will strategically invest in opportunities in its core markets and build its advanced genetics MCP supply seed supply to minimise its reliance on single year harvests.

Outlook: Look to high-growth US and Brazil markets

While global supply chain issues and inflation may continue in FY23, management projects solid sales growth of its advanced genetic products in FY24 and beyond due to its emphasis on the higher-growth markets of the US South and Brazil. To offset a recent freeze in the Eastern US region, management is maximizing its November 2022 harvest (expected to be well in excess of FY24e’s expected sales).

FY22: US sales growth and completed strategic review

ArborGen enjoyed solid financial results in FY22 across its continuing operations, as presented in Exhibit 1. Revenues reached US$47.6m, growing 11% y-o-y, with its key US region’s sales at US$39.9m, up $3.1m y-o-y, and Brazilian sales rising US$1.7m to US$7.7m. Notably, ArborGen delivered its highest ever US advanced genetic sales, 32% higher than last year. Gross margins improved nearly 100bps y-o-y to 37%, boosting FY22’s operating earnings from continuing operations (before other significant items) to US$2.7m versus US$1.0m in FY21. Adjusted US-GAAP EBITDA from continuing operations reached US$10.1m, rising 36% y-o-y, while net profit from continuing operations remained steady at US$0.3/share. Net debt fell to US$16.5m (including lease liabilities of US$5.0m) (FY21: US$33.3m), as it was able to pay down a significant amount of its debt due to the proceeds from the NZ$22.5m sale of its Australian/New Zealand business in November 2021.

Exhibit 1: Financial performance (continuing operations)

US$m

FY22

FY21 (restated)

% change

Revenue

47.6

42.8

+11%

Gross profit

17.8

15.6

+14%

Operating earnings, normalized*

2.7

1.0

+170%

Net earnings from continuing operations

1.7

1.5

+13%

Net earnings from discontinued operations

0

1.7

N/A

EPS (cents per share)

0.3

0.3

0%

Net debt (including financial leases)

16.5

33.3

(50%)

Cash from operations

7.5

9.9

(24%)

Adjusted US-GAAP EBITDA Reconciliation

Net earnings from continuing operations

1.7

1.5

+13%

Less tax benefit

(4.7)

(0.6)

N/A

Plus financing expense

1.7

2.0

(15%)

Plus D&A

9.6

9.8

(2%)

Plus corporate costs

1.0

1.3

(23%)

IFRS EBITDA – ArborGen

9.3

14.0

(34%)

Investments in intellectual property

(3.1)

(3.7)

N/A

Other IFRS adjustments

(0.1)

(1.0)

N/A

Other significant items

4.0

(1.9)

N/A

Adjusted US-GAAP EBITDA

10.1

7.4

36%

Source: ArborGen, Edison Investment Research. Note: *Before government grant income, seedlings write-off, strategic review costs, etc.

As displayed in Exhibit 2, seedling sales rose slightly to 362m units versus 359m in FY21, as the COVID-19 pandemic affected US seedling sales, which fell 3% to 284m. However, US loblolly advanced genetics seeds rose to 42% of total seedling sales, boosted by ARB’s focus on growing its advanced genetics business. Advanced genetic seedling sales also were up nearly 60% to the private landowner segment, a key area of expected growth. While large national accounts like real estate investment trusts and timber investment management organisations accounted for most of ArborGen’s advanced genetics volume, sales to the private landowner segment have grown to about 35% of advanced genetics volume. Brazil sales rose to 78m seedlings, up 13m yoy as both eucalyptus and pine seedling sales grew.

Exhibit 2: Seedling sales

Region

FY22 (m units)

FY21 (m units)

US

284

294

US loblolly advanced genetics as % of total

42%

32%

Brazil

78

65

Total

362

359

Source: ArborGen, Edison Investment Research

Revised strategy stemming from recent strategic review

ArborGen recently completed its FY22 strategic review, and considered various options to unlock value, including reinvestments, sales, a US listing (though it concluded the cost currently outweighs the benefits of a US listing), among other options. Resulting from this review, ArborGen revised its strategy to focus on the following initiatives:

Refocus business on high-growth markets of US South and Brazil. The US and Brazil are now the primary focus of ARB’s growth strategy, as both are supported by solid fundamentals and are expected to enjoy high growth. Management believes that the long-term underlying fundamentals are strong for the Southern US forestry markets and associated sales of advanced genetic products. Management expects that market growth will be supported by an underbuilt and ageing US housing stock, as well as a large proportion of adults moving into the house buying phase. As a result, demand for wood products and the upstream timber supply should rise, with Forest Economic Advisors projecting the strongest increase in lumber production to be in the US South, growing 24% above FY21 and reaching 26.0bn board feet by 2025.1 ArborGen is the leading commercial supplier of proprietary advanced genetics loblolly seedlings in the US South and will likely benefit from this trend, already having seen increasing demand for both its bareroot and containerised MCP seedlings (its highest value seedlings). In line with this expected growth, ArborGen plans to expand its in-house container capacity across two existing owned sites, boosting in-house production from 10m to 16m containerised seedlings per year. ArborGen has also grown to become one of the largest commercial suppliers of eucalyptus and loblolly pine seedings in the Brazilian market, as it replicates its US strategy to convert the Brazilian market to products with superior genetics. According to management, this growth is enabled by Brazil’s strong, underlying market fundamentals, with increasing domestic and export demand. To support this growth, management recently acquired a 10m seedling capacity nursery in Canoinhas, Santa Catarina, Brazil, to strengthen its position in the local pine markets. Furthermore, it plans to expand internal eucalyptus production capacity later in CY22 through leasing a third eucalyptus nursery, potentially raising internal eucalyptus capacity to nearly 50m seedlings per annum. Because of this geographic shift in focus to its traditional and emerging high-growth markets of the US South and Brazil, management sold its mature Australia and New Zealand business in November 2021 for NZ$22.25m, using the cash to strengthen its balance sheet (ie paying down debt), and provide capital to invest in targeted growth areas.

  Forest Economic Advisors 2nd Quarter 2022 Timber Quarterly Forecast.

Opportunities in emerging carbon markets. With the global emphasis on reducing greenhouse gases, new opportunities have arisen based on the role trees can play in offsetting carbon emissions. Management stresses that its advanced genetics and strong channels to forest landowners in the US South make it uniquely positioned to exploit and benefit from these opportunities. For instance, ArborGen is engaged with various carbon registries and major carbon companies, looking at developing protocols for plantation forestry, as forest-based carbon projects will be key in creating new demand for seedlings. Furthermore, management is meeting with carbon project developers to provide seedlings to large-scale afforestation and reforestation projects in the Southern US.

Advanced genetics MCP seed supply. Growing its seed supply is also a key area of focus for ArborGen, especially its advanced genetics MCP seed inventory as it seeks to reduce the risk from a single year’s harvest. Seed inventory can be held in storage for several years, and the company has about one to two years of MCP inventory on-hand for its Western regions, but faces constraints in the Eastern region. ArborGen’s overall orchard footprint is 70% young orchards, and as these mature and become more productive, it will seek to bag as many flowers as possible to maximise seed output in the medium term. Unfortunately, ArborGen suffered a freeze event and, combined with high winds during this year’s pollination season, its pine flowers at Eastern US orchards were damaged, which will have an impact on cones and seeds due to be harvested in November 2023 and available for FY25 sales. However, it did not affect cones on trees that will be harvested in November 2022 and available for FY24 and beyond sales, nor did the orchards suffer any long-term damage. ArborGen recognised US$1.5m in costs in FY22 related to the freeze event. Management expects to harvest advanced genetics MCP seed equivalent to over 200m seedlings in the US South in November 2022, well in excess of FY24’s forecasted sales. That projected surplus, the ability to use material from neighboring areas and the fact that ArborGen has several years of open pollinated seed inventory should somewhat offset the effect of the freeze.

Exhibit 3: Financial summary

US$m

2021 (restated)

2022

Year end 31 March

IFRS

IFRS

PROFIT & LOSS

Revenue

 

42.8

47.6

Cost of Sales

(27.2)

(29.8)

Gross Profit

15.6

17.8

Operating Expenses

(15.4)

(15.1)

Other Income/(Expense)

0.8

-

EBITDA - US GAAP, Adjusted

 

7.4

10.1

EBITDA - IFRS - ArborGen

 

14.0

9.3

D&A

9.8

9.6

Operating Profit (before except.)

 

1.0

2.7

Exceptionals/Other

1.9

(4.0)

Operating Profit/(Loss) (EBIT)

 

2.9

(1.3)

Net Interest and financial expense

(2.0)

(1.7)

Profit Before Tax (norm)

 

(1.0)

1.0

Profit Before Tax (IFRS)

 

0.9

(3.0)

Tax

0.6

4.7

Profit After Tax (norm)

 

(0.4)

5.7

Profit After Tax (IFRS)

 

1.5

1.7

P/(L) from discontinued operations

1.7

-

Net income (IFRS)

 

3.2

1.7

Average Number of Shares Outstanding, basic, millions

499.5

500.8

EPS - normalised, continuing operations, basic (US cents)

 

(0.1)

1.1

EPS - normalised, continuing operations, diluted (US cents)

 

(0.1)

1.1

EPS - IFRS, continuing operations, basic (US cents)

 

0.3

0.3

Dividend per share (US cents)

-

-

Gross Margin (%)

36.4%

37.4%

EBITDA Margin (%)

17.3%

21.2%

Operating Margin (before except.) (%)

2.3%

5.7%

BALANCE SHEET

Fixed Assets

 

150.4

138.8

Intangible Assets

101.3

97.1

Tangible Assets

43.3

32.9

Right of Use Assets

5.8

4.7

Other

-

4.1

Current Assets

 

52.9

53.3

Cash and liquid deposits

6.2

15.2

Receivables

12.2

10.8

Inventories

34.5

27.3

Current Liabilities

 

(15.9)

(10.5)

Trade and other payables

(13.1)

(8.7)

Current Debt

(1.0)

(1.0)

Lease liabilities

(0.8)

(0.8)

Other

(1.0)

-

Long Term Liabilities

 

(39.2)

(30.2)

Long term debt

(32.6)

(25.7)

Lease liabilities

(5.1)

(4.2)

Other

(1.5)

(0.3)

Shareholder's Equity

 

148.2

151.4

CASH FLOW

Operating Cash Flow (before interest, tax, etc.)

8.1

10.8

Financing expense

2.0

1.7

Tax

(0.6)

(4.7)

FX

0.4

(0.3)

Capex

(1.0)

(1.5)

Investment in Intellectual Property

(3.7)

(3.1)

Acquisitions/disposals

-

15.2

Lease payments

(1.3)

(0.9)

Interest paid

(2.0)

(1.7)

Other

-

-

Change in net cash

1.9

15.5

Opening net debt/(cash), not incl. leases

 

29.6

27.4

Exchange rate movements

0.3

0.0

Closing net debt/(cash), not incl. leases

 

27.4

11.5

Closing net debt/(cash), incl. leases

 

33.3

16.5

Source: ArborGen

General disclaimer and copyright

This report has been commissioned by ArborGen Holdings and prepared and issued by Edison, in consideration of a fee payable by ArborGen Holdings. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by ArborGen Holdings and prepared and issued by Edison, in consideration of a fee payable by ArborGen Holdings. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on ArborGen Holdings

View All

Latest from the Industrials sector

View All Industrials content

Research: Investment Companies

Henderson Smaller Companies Investment Trust — A compelling option for UK small and mid-caps

Henderson Smaller Companies Investment Trust (HSL) aims to maximise shareholders’ total returns by investing in UK mid- and smaller-cap companies. Macroeconomic and stylistic events have conspired to make this a challenging task over the past year, but HSL has strong fundamental pillars in place for long-term outperformance. It is managed by the experienced Neil Hermon together with his established team of Indriatti van Hien and Shivam Sedani at Janus Henderson Investors (JHI), who utilise a repeatable and effective investment process seeking to identify growth at the right price. Fees are structured so that in the event of underperformance, investors pay a commensurately low management fee.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free