RE:New target for EOY 2021?DiggeDiego wrote: I remember reading som of the authors here had a target price of 1.5-2 CAD for the end of this year, that was in the beginning of 2021 when potash was at 220$, now at 500$+ for potash do
you have new estimates for the NPK SP? 4-5 CAD?
Hello DiggeDiago,
Having hit $1.97 on March 18 2021 from its December 31, 2020 price of $0.83, many shareholders believed the run up had been too much too fast - the result of active buying by momentum traders whose active interest (in the face of very few long term shareholders willing to bail out when the Company had appeared to have turned the profitability corner) pushed the share price to an unsupportable high. When these traders quickly closed out their positions and took their quick gains, the share price naturally declined, although found resistance around the $1 level, still up 25% from January 1st.
Unfortunately the disclosure in March of the actions of the Board and CEO in granting new stock options and the payment of a $550,000 bonus in 2020, and the increased quarterly loss reported for 2021 Q1 removed any chance of a quick rebound, and the share price has continued to remain around $1 on weak volume. Some existing shareholders have used the pull back to add to their positions, and we know of other shareholders who decided they had lost confidence in the current management team and finally exited their long held positions.
I believe these recent unencouraging events have overshadowed the continued positive fundemental progress being made by Verde. 2021 Q1 sales recorded an increase over Q1 2020 (16,558 tonnes versus 10,170 tonnes, and $831,000 versus $510,000, producing a gross margin of $341,000 versus $178,000 and a GM % of 41% versus 35%).
WIth the average selling price per tonne in Q1 2021 at $50.19 versus an average $37 throughout 2020, and Q2 prices strengthening due to increasing demand for fertilizers world wide, the anticipated/forecasted Q2 2021 results (due out in a couple of weeks) should see a continuation of this positive trend. Last year in Q2 the Company sold 71,183 tonnes, and we have been told to expect this amount to be readily exceeded in 2021. Taking a very modest position on the likely increase, say to a total of 80,000 tonnes, and using a $75 per tonne average selling price (based on the tracking of the Verde selling price on their online ordering platform - well above the $35 per tonne average earned in Q2 last year), we should see top line sales for Q2 2021 at around $6,000,000 compared to the $2.5 million reported in 2020.
This sets the potential for a multi-million dollar quarterly profit - the highest ever reported by the Company, and sets up Q3 to report quarterly sales significantly above the sales figure for all of 2020 (somewhere in the $15 million range compared to the annual sales in 2020 at just over $9 million).
If we do indeed see 2021 Q2 and Q3 figures anywhere near these projections, I have little doubt that the Verde share price will retrace its Q1 run up, readily hitting the $2 per share price anticipated by December 31, 2021. If it is also demonstrated that the Company is now hitting the 50,000 tonnes per month production capacity and is as a result using increases in local pricing to limit demand until the first line of Plant 2 can be brought online in 2020, the probability and trajectory of the future success of the Company would receive a significant boost, attracting new investors to the market and likely pushing the share price well beyond the current 2021 $2 target. This makes the current share price in teh $1.00 to $1.10 range look very attractive.
This all in my personal opinion - please rely on your own due diligence of the available public information to draw your own conclusions.
All the best.
S.