Ok, here's the $CRESY thread. Sum of parts + macro. Here's what we have:

1) > 1.3M acres of wholly owned SA farmland (beef, corn, soy, sugarcane

2) 62.4% stake in a truly impressive real estate portfolio - 15 malls, 4 skyscrapers, 3 luxury hotels, nearly 1000 acres of land in Buenos Aires and Montevideo, the Buenos Aires fairground, 2 convention centers, a consumer bank, a commercial bank, and an arena

3) 50% stake in Argentina's biggest ag exchange

4) 22.5% stake in ag fintech platform

The farming segment itself is currently profitable, and with the current outlook for cattle, corn, soy, and sugarcane, earnings should continue to improve. Despite more than doubling since the March lows, CRESY is seriously lagging its fundamentals. The earnings for this company are set to explode as they realize skyrocketing agricultural prices.

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The real estate segment is currently trading at just 161M USD. Just two years the capitalization was over a billion dollars. Given that most of these properties are all located in Argentina, this valuation is probably mostly due to the fact that the company has been an absolute basket case. While Fitch views the bonds at distressed levels, IRSA has nonetheless reduced its exposure and leverage is incredibly low. 0 chance of bankruptcy.

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The real estate segment also owns a 30% stake in a healthy retail bank (Banco Hipotecaria), which is worth around 50M USD in the open market. It also owns a stake in a US REIT worth around 10M, and 37.7% of a commercial bank. The commercial bank is currently losing money, but has a reasonably healthy balance sheet. The consumer bank is profitable.

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It's difficult to stress enough the quality of the assets - IRSA owns 2 convention centers in expensive Latin American capital cities, a stadium, nearly 1000 acres of prime undeveloped urban real estate, 4 skyscrapers, 15 malls, and
some of the finest hotels on the continent. Many of these assets have been closed for 6 months due to the pandemic.

I think IRSA itself could be worth billions in a health Argentine economy with no pandemic raging. Things certainly can't get much worse.

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Then we have the 50% stake in fyo and the 22.5 stake in Agrofy. This started as an ag tech startup in 2000 and evolved into one of the most important brick and mortar ag exchanges in Latin America. They do futures, options, and brokering.

Agrofy recently raised 23M in a series B from SP Ventures. This was the largest Latin American agtech deal ever done. Agrofy has 2.6M in revenue, which has increased 50% YoY.

I think we can say with confidence these two stakes are worth at least 50M.

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So, we've got a possible future South American equivalent of the CME, a possible Amazon for farms and farm equipment, and a commercial real estate business, on their own, are trading for half of CRESY current market cap, and could have intrinsic value of billions.

The core land that CRESY possesses is worth perhaps billions as well if we believe their valuation assessments. An extremely conservative $750/hectare for the whole portfolio yields 400M.

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Sum parts for current trading value alone, and and CRESY is undervalued by at least 30% upside.

Price in 27%, 21%, 7%, and 42% respective rises in corn, sugar, beef, and soy since Q3 report where farming segment generated more than 100M in EBITDA.

Price in normalization of the Argentine economy post pandemic and consider the extremely low leverage and high quality assets of their real estate portfolio.

Price in unicorn status for Agrofy.

What's CRESY worth? A hell of a lot more.

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@admin I think you're way undervaluing the land. My back of the envelop valuation below.

US farmland produces 10.73 t/ha and is valued at 11400 $/ha.
Cresy produces on average 6.1 t/ha, this implies a value of 6480 $/ha.

Ofc SA land should trade at a discount as there's a lower level of infrastructure, increased regulatory and operational risk. I useda discount of 30%, resulting in a price of 4536 $/ha for the cropland.

.....

@dasahib Here in Panama, a "good price" for farmland would be a few bucks per meter. In general you'd probably see it selling for 5-10k per hectare.

@admin seems quite in line with my research. The Agroriego land also sells for 10k.

The price, however, is highly dependent on the location and requires a lot more data which I dont have. So this was my modest attempt.

I have a whole spreadsheet with the individual values of all farms.

Exact amount of land is also unclear as I believe they consolidate parts of Brasilagro, but haven't found the energy to figure that out yet.

@dasahib Regardless, we can agree that the land holdings alone justify the current share valuation and then some. Increased profits from commodity cycle will drive up land values and revenues.

@admin @dasahib this thread is making me question the validity of Refinitiv data from my broker, the sanity of markets, and my ability to do basic math all at the same time... like are we all missing something here? TL;DR they are trading at roughly 1/3 of fair value by the model I tend to like (based on The Dao of Capital by Mark Spitznagel).

The balance sheet side of things does seem to be a case of severe undervaluation if their assets are anywhere near book value in reality. Holy crap.

@admin @dasahib Popping back up to the main thread, I haven't done a deep read of the statements for any funky notes yet, but the cleaned up statements via my broker match the originals based on the exchange rate at the time of the quarterly report. The other junk fintech-y providers are... well... wrong -_- And past ones also line up. So the comparisons are generally fair as USD was stable enough over the period. I'm starting to like this idea...

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@admin @dasahib As Calvin already noted, it looks like you can significantly discount quite a lot of the assets from their stated values and still come up with a really attractive investment. Not to mention the fact that it seems they have somehow depreciated like half their "hard asset" (PP&E etc) values in the last year. That's... interesting. Also they have a now defunct Israeli real estate op? The last 6 months also saw large windfalls from real estate sales.

@admin @dasahib That said, multiple units are indeed profitable and appear conservatively valued, and I like the optionality combined with what should be more steady if not increasing income streams. And apparently credit markets aren't worried if they are issuing short-term notes in the 2-4% range.

@ianthetechie @dasahib The israeli real estate op isn't defunct, they couldn't make the capital calls so they lost control. Seems to be a symptom of how totally fucked Argentina is.

@admin @dasahib haha yeah sorry, I think my sarcastic understatement didn't make it across in text form. Agreed though; this seems to be simultaneously the biggest risk factor and also the biggest opportunity.

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