Woodbois Ltd is a leading producer and supplier of wood products in Africa, with operations in Gabon, Mozambique, and Mauritius. Since 2017, the company has been publicly listed on the London Stock Exchange. Its appeal to investors lies in its potential for strong growth and commitment to environmental sustainability.
However, the wood industry faces difficulties, particularly due to the COVID-19 pandemic causing disruptions in global supply chains and demand. Over the past three years, Woodbois share price has fluctuated significantly, from a high of 1.80 in January 2023 to a low of 0.33p in May 2023.
In this article, we will analyse the factors that affect Woodbois share price, such as the company’s financial performance, market outlook, competitive advantages, and risks. We will also provide our opinion on whether Woodbois is a good investment opportunity at the current price level. Read on to find out more.
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Woodbois reported a strong financial performance for the year ended 31 December 2022, despite the challenges posed by the COVID-19 pandemic. The company achieved a revenue growth of 38% to $17.4 million, driven by higher production and sales volumes of sawn timber and veneer products.
The company also improved its gross profit margin from 8% in 2021 to 20% in 2022, reflecting its operational efficiency and cost control measures. Woodbois also recorded a positive EBITDA of $2.1 million, compared to a negative EBITDA of $0.4 million in 2021. This was the second consecutive year of positive EBITDA for the company, demonstrating its ability to generate cash from its core operations.
Woodbois also strengthened its balance sheet and reduced its net debt by 27% to $9.6 million as of 31 December 2022. The company secured a $5 million loan facility from the International Finance Corporation (IFC), a member of the World Bank Group, to support its working capital and expansion plans. Woodbois also raised $3.5 million through a share placing and subscription in June 2022, which was oversubscribed by existing and new investors. The company also received $1.5 million from the exercise of warrants and options by its shareholders.
Woodbois promised a positive outlook for 2023, and it is expected to benefit from the continued recovery of the global timber market, which is projected to grow at a CAGR of 5.5% from 2020 to 2027. The company also plans to increase its production capacity and product range, as well as explore new markets and customers. Woodbois also aims to leverage its carbon credit division, which has received a long-term land lease from the Gabonese government for a voluntary carbon credit afforestation project. This project is expected to generate additional revenue streams and enhance the company’s environmental and social impact.
Woodbois share price has been volatile in the past year, ranging from 0.335p to 1.80p per share. As of December 11, 2023, the share price was 0.94p, with a market capitalisation of £34.65m.
Several factors could affect the future performance of Woodbois, such as:
Based on these factors, some analysts have a positive or negative view on Woodbois, depending on their assumptions and expectations. Here is a summary of some of the recent analyst ratings and price targets for Woodbois:
Fidelity: Buy, 1.50p target price. Fidelity believes that Woodbois has a strong competitive advantage in the African timber market, with a diversified product portfolio and a loyal customer base. Fidelity also praises Woodbois for its ESG credentials and its carbon credit project, which could generate significant value in the long term. Fidelity expects Woodbois to deliver robust revenue and earnings growth in 2023 and beyond, supported by the recovery of the global timber demand and the expansion of its production capacity.
Sell, 0.50p target price. Hargreaves Lansdown is bearish on Woodbois, citing the high risks and uncertainties associated with its operations in Africa. Hargreaves Lansdown also questions the sustainability and profitability of Woodbois, given its high debt level and low cash flow generation. Hargreaves Lansdown also warns that Woodbois could face regulatory and environmental challenges, as well as increased competition from other timber producers in the region.
Our Opinion on Woodbois Share Price Based on our analysis, we think that Woodbois share price is currently undervalued and that it could offer a good investment opportunity for long-term investors who are willing to accept some risk and volatility. We think that Woodbois has a unique position in the African timber market, with a strong brand reputation and a loyal customer base.
We also think that Woodbois has a competitive edge in terms of its product quality and diversity, as well as its ESG performance and carbon credit project. We believe that Woodbois could benefit from the increasing demand for timber products in the global market, especially in emerging economies, as well as from the rising awareness and appreciation of sustainable and renewable resources. We also expect Woodbois to improve its financial performance and efficiency, as well as to reduce its debt level and increase its cash flow generation.
Therefore, we think that Woodbois share price could reach 1.20p by the middle of 2024, representing a 27.7% upside potential from the current level. However, we also acknowledge that Woodbois share price is subject to various risks and uncertainties, such as the COVID-19 pandemic and its impact on the global economy and trade. It could also be impacted by the ESG regulations and standards that Woodbois has to comply with, the political and economic stability of the countries where Woodbois operates, the currency and exchange rate fluctuations, and the competitive pressure from other timber producers.
So, we advise investors to do their own research and due diligence before investing in Woodbois to diversify their portfolio and hedge their risks accordingly.
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