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Highlights
- Hygrovest Ltd reports a 2% increase in pre-tax Net Tangible Asset (NTA) per share.
- Sale of Delivra Health Brands Inc. shares boosts capital with a favorable return.
- The company’s strategic focus narrows to key investments like Weed Me Inc.
Hygrovest Ltd (ASX:HGV) has reported a 2% increase in its pre-tax Net Tangible Asset (NTA) value per share for October, reaching A$0.1075, compared to A$0.1055 in September. This rise marks the strongest quarterly result for Hygrovest in the past year, with previous NTAs recorded at A$0.1037 and A$0.1028. The positive shift in NTA was mainly due to a 5% increase in the Enterprise Value to Net Revenue Multiple (EV/NRM) applied to the valuation of its holding in unlisted Canadian company Weed Me Inc.
Overview of Hygrovest's Investment Strategy
Hygrovest, listed on the ASX since 2015, specializes in investments within various growth sectors, managed by HD Capital Partners Pty Ltd. Appointed as the investment manager in July 2023, HD Capital Partners focuses on managing Hygrovest’s assets over a five-year term. The October report by HD Capital Partners highlights that the company’s post-tax NTA per share rose slightly to A$0.0960, from A$0.0947 in September. Meanwhile, the overall Net Asset Value per share increased to A$0.0963, reflecting steady asset growth.
Strategic Divestment of Delivra Health Brands Shares
A notable transaction in October was Hygrovest’s sale of its shares in Delivra Health Brands Inc., securing around C$1.1 million. This amount exceeded the investment’s carrying value at the time HD Capital Partners assumed management. According to HD Capital Partners, the sale of DHB shares aligns with Hygrovest’s broader strategy to streamline its portfolio, phasing out non-core assets under its prior investment model. The approach mirrors the recent sale of Emerging Therapeutics Group shares, which was also part of the company’s previous investment strategy.
The sale of DHB shares underlines Hygrovest’s objective to optimize value for shareholders by focusing on core investments. HD Capital Partners noted that this strategic shift is designed to retain only those assets that align with long-term goals, with sales conducted thoughtfully to ensure maximum benefit for stakeholders. With the divestment of DHB shares, Hygrovest’s primary remaining legacy asset is its interest in Weed Me Inc., representing a core holding of the company.
Assessment and Valuation
While Hygrovest’s monthly NTA is a key performance indicator, HD Capital Partners emphasizes that it represents a point-in-time measure. Given Weed Me Inc. is an unlisted entity, Hygrovest applies a 15% discount on its valuation to reflect this status. This valuation method aims to provide a balanced perspective on the company’s asset value in a constantly evolving market.
Hygrovest’s recent results and portfolio realignments reflect an ongoing commitment to generating long-term value for shareholders while maintaining a patient, measured approach to its remaining investments.
