Very nice write-up. Irish based OGN shareholder here. I did a write-up on it ages ago which you may find interesting. Two angles in particular worth calling out are Brexit and ESG (sustainable farming practices). Totally agree with your capital returns thesis https://tbifund.wordpress.com/2021/08/14/origin-enterprises-ogn-id-green-shoots/
Thanks for the write-up. We use to own this back in 2018 but sold on concerns with leverage. One thing to just be aware of - they have a funny year (July 31st). This is because the business has huge NWC needs and this year end is when NWC is at a low point. The implication of this is that average debt and average invested capital is much higher the rest of the year - which increases both the leverage profile while lowering the ROIC. Not a fact that kills the investment but just something to be aware of when thinking about those two things.
This was the company that actually made me add the following item to my accounting checklist: "If the company has an abnormal year end, ask how average debt and NWC compares to year end figures. Also understand they they chose that year end" ... although not always, company's will often choose funny year end dates with some motivation in mind.
Thanks again for the write-up, your posts are great.
Yeah but from 0. And FCF will be significantly higher than earnings in 2025 and 2026. They could probably be almost debt free 3 years from now if they want to.
Very nice write-up. Irish based OGN shareholder here. I did a write-up on it ages ago which you may find interesting. Two angles in particular worth calling out are Brexit and ESG (sustainable farming practices). Totally agree with your capital returns thesis https://tbifund.wordpress.com/2021/08/14/origin-enterprises-ogn-id-green-shoots/
Thanks for the write-up. We use to own this back in 2018 but sold on concerns with leverage. One thing to just be aware of - they have a funny year (July 31st). This is because the business has huge NWC needs and this year end is when NWC is at a low point. The implication of this is that average debt and average invested capital is much higher the rest of the year - which increases both the leverage profile while lowering the ROIC. Not a fact that kills the investment but just something to be aware of when thinking about those two things.
This was the company that actually made me add the following item to my accounting checklist: "If the company has an abnormal year end, ask how average debt and NWC compares to year end figures. Also understand they they chose that year end" ... although not always, company's will often choose funny year end dates with some motivation in mind.
Thanks again for the write-up, your posts are great.
Interesting, thanks. I will add that to my checklist as well. It would reduce to an average business from above average.
I wonder what ROIC on their growing Brazil and amenity business is. Possibly higher due to higher margins?
Your sale was well timed btw.
Symmetry Invest also found your stock; https://www.symmetry.dk/wp-content/uploads/2024/03/Symmetry-annual-letter-23-English.pdf
Those guys have a pretty impressive track record.
How about leverage? Debt has gone up massively...
Yeah but from 0. And FCF will be significantly higher than earnings in 2025 and 2026. They could probably be almost debt free 3 years from now if they want to.