Agrieuro Corp (OTCBB:EURI), is focused on the agricultural, aquaculture and tourism industry in Europe. The company’s primary property is located at the junction of the Danube delta and the Black Sea and includes multiple revenue producing and soon-to-be producing businesses. Danube delta is considered to be one of the largest and best preserved of all European deltas, having over 300 species of birds and 45 species of fish.
On March 16th 2017, it announced completion of two farming ponds for its fish-farming project. The ponds are now fully equipped with pumping stations and will receive “cycle 2” fish. These are medium-sized fish that require relatively shorter maturity time. Management expects the product to hit markets within the next 12 months after settlement of the ponds.
According to a research, aquaculture is estimated be a 200 billion dollars market per year by 2020 and now far exceeds the production of natural sources such as oceans and lakes. For instance, over 90% of current shrimp consumption in United States comes from farmed and imported sources.
In a separate announcement, Euri confirmed acquisition of a “Seiga Machine” at a cost of 70,000 Euros. As per management, “Seiga” will allow them to significantly increase reed production. Demand for Euri’s reed still outweighs the supply and company is working on several solutions to increase off take. In fact, company sold out its most recent reed harvest at an average price of 1.55 euro per bundle after huge international demand.
Moreover, EURI is expecting to harvest a record amount of reed in 2017, far exceeding its 2016 harvest. In spite of that, management is confident that the harvest will be sold out well before it’s ready to deliver.
Which is why, it has invested in “Seiga” and plans to continue investing in new equipment’s. The company plans to place order for 3 additional machines during 2017 and are expecting to eventually bring production up to 1.5 million raw bundles of reed.
In order to maximize value of its multi-acred property, management is committed towards developing multiple streams of revenue in different sectors with a view towards sustained, long-term growth.
The business profile of Euri is likely to receive a significant boost primarily driven by expectation of robust demand for its products. Despite various challenges such as small scale of operations, liquidity issues and rising cost of production. Euri has retained its leadership position in the industry. Strong demand situation, supply deficit, multiple revenue sources and recently enhanced production capacity suggests the long-term growth story of Euri will remain intact.
The company’s stock has unsurprisingly found enormous strength in the recent past. Euri reported increase in the stock price backed by these announcements laying foundation for expanding its market size and overall business growth.
Description & about the Company:
Agrieuro Corp (OTCBB:EURI) operates in the aquaculture and agriculture industries, and is in the process of developing a luxury hotel on its property to enter into the hospitality industry as well.
The company’s flagship property is located at the junction of the Danube delta and the Black Sea and encompasses a variety of currently revenue-producing and soon-to-be producing businesses. It spans over 4,200 acres on a Unesco World Heritage site.
Euri owns 1709 hectares of land in the Danube Delta, which is the second largest river Delta in Europe, and the best preserved in the continent. Currently, Euri operates reed-farming operations on 700 hectares of the property, and has commenced into aquaculture and fish farming operations on 1000 hectares of the property.
Major revenue drivers:
Water Reed Harvesting: Euri’s water reed is considered as one of the finest in the world. Mainly due to salty water and winds from the black sea and the fresh water from the Danube River, which offers conducive production environment.
Production process flow:
Key divisional highlights, recent announcement & outlook:
- During 2016, only reed farming produced revenue for Euri.
- The reeds are used for insulation and roofing across northern Europe. Reeds grown in the Danube Delta are in high demand.
- Off take for EURI’s reed still outweighs the current supply and the company is working on several solutions to bring more reed into the market. In fact, company sold out its most recent reed harvest at an average price of 1.55 euro per bundle after huge international demand.
- The company recently acquired advanced machine for the production & plans to place order for 3 additional machines during 2017 and are expecting to eventually bring production up to 1.5 million raw bundles of reed.
- Automation driven expansion of the reed farming acres is likely to will increase both revenue and profitability for the company.
Under Aquaculture division, Euri is doing farming of aquatic organisms such as fish, crustaceans, mollusks and aquatic plants. It involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is the harvesting of wild fish. Consumption from aquaculture farming has overtaken consumption of wild-caught fish and this trend is set to continue. In fact, it is predicted that the majority of fish consumption in 20 years will be from farmed fish.
Key divisional highlights, recent announcement & outlook:
Fish consumption is growing at a faster pace than beef, pork and poultry, driven by an expanding, increasingly prosperous global population that recognizes the health benefits of eating seafood. Demand is forecast by the United Nations to outstrip supply in coming years.
In fact, Aquaculture is estimated to be a 200 billion dollars market per year by 2020 and now far exceeds the production of natural sources such as oceans and lakes. For instance, over 90% of current shrimp consumption in United States comes from farmed and imported sources.
Euri recently finished preparing 2 growing ponds for its fish farm project. The ponds are fully equipped with pumping stations and will receive “cycle 2” fish. Management expects the product will reach fish markets within 12 months following population.
The Danube Carp will be the main species farmed on the property, as it is a local fish, which will easily thrive in the environment on offer. It also happens to be a type of fish that grows relatively quickly.
The company is committed to follow all applicable regulations required to raise fish that can be labeled “Organic”. Euri wants to implement only natural methods of growing fish product making the process as nature-friendly as possible and at the same time increasing its chances of becoming the first ecological fish farm in Romania.
Hospitality: EURI owns several buildings & properties. It plans to renovate these buildings as well as build new ones and turn part of the project into an all-inclusive resort. The plan includes building of recreational areas for tourism activities such as hunting, fishing, bird watching, water sports activities among others. A 4-building complex will host 120 accommodations while a holiday lake house complex will host 500 accommodations.
Key divisional highlights, recent announcement & outlook:
- On December 2 EURI announced it has engaged Tehnomontaj, one of the largest construction firms in Romania, to design its resort project.
- Tehnomontaj will complete a geotechnological study, including preliminary layout for holiday cabins on a 5 acre island on the existing property that will be completely equipped with AgriEuro Corp reed roofs and solar panels. These cabins are to be designed to be fully green and energy-efficient and to blend in with the surrounding nature.
Key Stock Influences:
Some key influences that might govern future stock price performance include:
- The company’s aggressive business plans under aquaculture division entails substantial incremental funding, though Euri is working on increasing its reed harvests through acquisition of specialized equipments and plans to reinvest plough back profits into aquaculture venture. However, the timeliness and quantum of this plan is still a contingency. Any liquidity and financial flexibility issue might lead to significant variance between the actual and budgeted performance of Euri during 2017.
- In fact, present small scale of operations, constrained profitability, liquidity and cash crunch issues continues to impinge Euri’s other divisions as well. Euri has an aggressive outlook for 2017 to increase its operations, timely debt servicing and add value for stockholders. However, the main constraining factor continues to be “additional funding”, as the company’s existing operations are very small to run the show in a planned manner. Also, any additional equity is prone to substantial dilution.
- Therefore, Euri’s ability to revamp its sales strategy so as to increase its scale of operations & profitability in a time bound manner would hold the key over the near to medium term.
Net sales for three-month period ended September 30, 2016 was $53,595 compared to $21,947 during September 30, 2015. During year ended December 31, 2015, Euri commenced realizing revenue for the first time. This revenue was generated entirely by reed farming business. However, revenue that was generated was not sufficient to generate net profits for the 2015 year or for the 9 months ended September 30, 2016. The company therefore continued to incur net losses.
Euri’s net loss for three-month period ended September 30, 2016 was $10,182 compared to loss of $94,410 during September 30, 2015. During the three-month periods ending September 30, 2016 it generated gross profit of $53,595 compared to a gross profit of $21,947 for September 30, 2015. Revenues were directly related to the sale of approximately 54,720 finished reed bundles.
Cash Flow & Balance Sheet:
The Company continued to increase its current liabilities as compared to fiscal year end December 31, 2015 as they were unable to meet operational overheads as they come due.
Accumulated deficit increased from $851,058 as of December 31, 2015 to $977,261 as of September 30, 2016.
Euri is currently dependent upon receiving loans from shareholders. It expects to raise additional capital to continue moving the Company towards profitability.
On Friday, March 17th, 2017, during initial trades, Euri shares declined by 18.25% to $0.172 on an average volume of 2.33 million shares exchanging hands. Market capitalization is $54.89 million. The current RSI is 62.02
In the past 52 weeks, shares of Euri have traded as low as $0.02 and as high as $0.22.
At $0.172, shares of Euri are trading above their 50-day moving average (MA) at $0.05 and 200-day MA at $0.07.
The present support and resistance levels for the stock are at $0.1657 & $0.2253 respectively.
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