Port Phillip publishing - Microcap Trader, have again given Rotogro a buy recommendation, though they seem to have forgotten about Gibio. This is a premium newsletter limited to 500 subscribers - you can't presently subscribe to it, just go on a waiting list.
Roto-Gro International Ltd [ASX:RGI] may be one company set to boom from the current drought problems.
The company’s patented rotary grower isn’t just for cannabis. You can grow a whole range of different crops in the devices. Roto-Gro has already successfully grown lettuce, cherry tomatoes, cabbage, chili peppers and more. It doesn’t matter what you’re growing, the technology always provides the same added benefits of improved crop yield and efficiency.
However, until recently, Roto-Gro couldn’t actually sell the device for this purpose. They only had the rights to sell the device for growing cannabis. The reason for our recommendation in the first place.
As of 6 August though, Roto-Gro snapped up the missing patents once and for all. A strategic move that now gives them full control over sales of the system. And it means they can start selling them to grower’s right around the globe.
Now this doesn’t mean the company has given up on targeting cannabis growers. We still firmly believe that cannabis will be the big driver for Roto-Gro’s growth. At least in the short to medium term.
However, this new avenue could be a nice money maker as well.
Roto-Gro has wasted no time signing up their first buyer. On 24 August, they announced their first produce partnership.
They’ve teamed up Freshero, a company that is looking to build urban farming facilities. The whole idea is to grow organic food within the city so it gets to customers faster and fresher.
Freshero is looking to buy 100 systems in order to build these urban farms. And if all goes well, we anticipate more orders could come from this partnership.
Before any of that happens though, Roto-Gro will still have to prove the systems work.
Together, the two companies will run a testing period for 120 days. This will showcase how the system works, and which crops benefit the most from the unique growing process.
Testing will begin on 1 October, and therefore by our count, should wind up at the end of January. But during that time, the pair will work together to design Freshero’s urban farms:
‘During the period of training and testing, the parties will collaborate on key terms of a definitive joint venture agreement which will also include a join business plan and facility design for Freshero’s first urban farming facility.’
By the sound of that, Roto-Gro may be doing more than just providing some fancy flowerbeds. In fact, this agreement could be the start of a very close relationship.
Like we said, the need for agtech solutions is dire. Together, Roto-Gro and Freshero may be able to crack a burgeoning industry opportunity. We’re not suggesting that urban farming is a new idea. But rather, Roto-Gro could make it far more cost-effective.
Also, success here could prove to other produce growers that it doesn’t matter about where you grow, with the right technology you can grow anywhere. And that could be the silver bullet farmers and Scott Morrison are looking for.
At a current price of around 33.5 cents, Roto-Gro is below our buy-up-to price and remains an active BUY recommendation.
RGI Price at posting:
32.0¢ Sentiment: Buy Disclosure: Held
