Roots Sustainable Agricultural Technologies Ltd

ROO Details

Multiple Tie-ups to Boost Revenues: Roots Sustainable Agricultural Technologies Ltd (ASX: ROO) is an Israel-based company that develops agricultural technologies. The company develops and commercialises agricultural technologies to address critical problems faced in crop yields, such as plant climate management and shortage of water for irrigation. Its technology products include Root Zone Temperature Optimization (RZTO) and Irrigation by Condensation (IBC). In December 2020, ROO signed a new sales contract for its RZTO technology valued at A$58,000 from My Green Fields. The contract has enabled RTO to install over 1000 heat exchange probe units with the My Green Fields cannabis farm.

ROO has also secured a non-binding LOI with Humboldt. Under this agreement, ROO will invest US$100,000 in Humboldt for its 10% holding and Humboldt will be marketing, selling, and distributing root heat exchange kits in Northern California. ROO has signed an agreement with FinePro to ascertain the level of demand for off-grid technologies. ROO has also begun its collaboration with Talgil, which will help ROO to access Talgil’s global dealer network. For FY20, the company reported total revenue of US$0.107 million and a net loss of US$3.2 million. As at 31 December 2020, the company had cash and cash equivalent of US$3.067mn.

FY20 Results (Source: Company Reports)

Benefitting Farmers to Reduce Cost: ROO has developed an agriculture system for the farmers where they can utilise the system to combine plant irrigation and fertigation functions with ROO’s heat exchange probe technology. As per ROO, this will benefit the farmers to reduce their operating cost for maintaining two functions.

ROO to Raise Capital: As per the company reports, ROO has secured commitments from investors to raise up to A$3.95mn through the issue of ~179mn CDIs at an issue price of $0.022 per CDI. The raised funds will be utilised for operating expenses, deliver sales, ensure patent maintenance and registering new IP. 

Outlook: ROO is securing contracts with multiple companies to boost its sales, going forward. As per the company reports, ROO is expecting a positive impact from UN’s decision on Narcotic Drugs, which accepted WHO recommendation to remove cannabis and its derivatives.

Stock Recommendation: In the last six months, the stock of ROO has corrected by 57.44% on ASX. The market capitalisation of ROO stands at ~A$11.33mn as on 01 March 2021. The stock is currently trading below the average 52-week price range of A$0.009-A$0.048. On the technical analysis front, the stock has a support level of ~A$0.014 and a resistance of ~A$0.024. Despite a recent sales agreement, investor’s interest, decent cash balance, the stock is trading sideways from the past three months. Also, the company has registered a loss in 1HFY21 and debt to sales is at a higher level. Hence, we suggest an “Avoid” rating on the stock at the current market price of A$0.020, down by 4.762% as on 1 March 2021.

ROO Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.