Investor Presentaiton
GBM
October 12, 2021
PROTEAK'S TEAK
Proteak wholly owns 7,137 ha. (GBMe) of teak in Mexico. Its plantations go through 18-20-
year rotation periods (i.e., the time from sowing to harvesting) depending on the type of seeds
used, the quality of the soil, etc. Harvests are supposed to improve over time, hand in hand
with the increased knowledge and better practices adopted by Proteak.
57% of wholly-owned hectares are five to ten years old. The company's first farms were
located in the Mexican state of Nayarit. By the time of its IPO in 2010, management realized
that the soil in the state of Tabasco had better conditions. Moreover, around this time, the
company started to use clonal seeds. With that in mind, we expect higher prices per tree
starting in 2027 when the Tabasco plantations are harvested. Proteak also owns 1,160 ha.
through a JV ("Tacotalpa"), which has been described to us as "the crown jewel" of the
company.
High-quality EBITDA = strong FCF generation. In the 2013-'15 period, Proteak generated
average annual revenues of P$125 million and an EBITDA margin of 30% through the sale of
logs from plantations acquired that have reached maturity. By then, EBIT represented ca.
95% of the segment's EBITDA, which proves the business' strong FCF generation capacity.
Wholly-Owned Farms
5-10 years old
11-15 years old
>15 years old
Clonal Seeds
Non-Clonal Seeds
57%
37%
5.6%
100%
50%
50%
Year Hectares planted
2002
2003
0000000 182
0000 102
200454
000 65
2005
2006
2007
2008
2009
2010
2011
2012
A
0
F
F
C
C
F
F
515
513
C
♡
700
F
Expected
Final Harvest
2022
2023
2024
2025
2026
2027
2028
948
2029
2030
1,000
2031
1,200
2030
2013
909
Proteak's own teak is just entering its harvesting period. Previously, the company acquired
mature teak plantations in Colombia and Costa Rica that allowed it to establish relationships
with brokers and teak buyers in Asia. Although the relative quality of Proteak's harvests is yet to
be defined by the market, we find reasons to be optimistic:
.
•
Cost structure: The largest outflows already occurred. Land acquisition and maintenance
during the first five years of a tree's life represent the largest outlays per hectare. All of
Proteak's plantations are above this age and some are close to reaching harvesting periods,
which will transform the Teak unit into a cash-generating business.
FSC. Proteak currently has 1,716 verified hectares and is expected to reach 4,488 by year's
end. The company grows all its plantations based on FSC guidelines and will audit the rest of
the fields as they mature.
2014
2015*
F
950
1160
No teak ha. has been planted since 2015 as management has focused its efforts on the MDF unit.
100% Owned
7,137ha
Tacotalpa JV
1,160ha
Assumes an 18 year rotations period for clonal seed ha and 20-year for non-clonal
Source: GBM Research based on annual reports
Total
8,297ha
2031
2032
2033
TEAK: AFTER ALL, MONEY DOES GROW ON TREES. | 15View entire presentation