Stonegate Capital Partners Initiates Coverage on Burcon NutraScience (TSX:BU)

DALLAS, TX / ACCESSWIRE / March 27, 2020 / The full report can be accessed by clicking on the following link: http://www.stonegateinc.com/reports/BU.TO%20Initiation .pdf

COMPANY DESCRIPTION

Burcon Nutrascience Corporation (TSX:BU) is a leader in the development of plant-based proteins. The Company has developed novel protein ingredients from pea, canola, and soy for use in products such as dairy alternatives, dry-blended beverages, meat substitutes, protein bars and crisps, and ready-to-drink beverages. Headquartered in Vancouver, Canada, the Company was founded in 1998 as a venture capital pool corporation and changed its name to Burcon Nutrascience in October 1999

SUMMARY

Plant Based Foods are Surging – Plant based proteins are in the early innings of adoption with Markets and Markets estimating the plant-based protein market accounted for a value of $18.5 billion in 2019 and will grow at a 14.0% CAGR until 2025 to reach $40.6 billion.
History of Developing Plant Proteins – Burcon NutraScience has spent 20 years and raised ~$80 million in order to perfect and patent their process to extract plant proteins that can be used in the commercial production of foods and beverages.
Partnered With Notable Players – The Company has already partnered with Archer-Daniels-Midland, ADM, in the form of a licensing deal for their soy protein, CLARISOY®, in 2011. ADM built a dedicated plant and launched several CLARISOY® products that have since struggled to gain traction due to stigma and emergence of additional plant proteins such as pea and canola. Additionally, Burcon's JV, Merit Functional Foods, recently announced a partnership with Nestlé to tailor their pea and canola proteins for use in products produced by Nestlé.
Move to Pea and Canola Proteins – Burcon has entered into a JV with three industry veterans to construct a production facility focused on pea and canola proteins with estimated production beginning Q4 2020. Burcon will own 40% of Merit Foods and the facility which will initially produce 4,000 tonnes with ability to grow to 8,000 tonnes in the same facility.
Proteins with Differentiators – Burcon's pea and canola proteins will offer traditional nutritional value as well as functional values such as binding, gelling, whipping/foaming, and emulsification that should enhance the overall benefits to food and beverage producers and consumers.
Experienced Management Team – The Company has a solid balance sheet with ~$18.5 million in cash after receiving ~$11.5 million in financing February. The Company has enough cash to last until September 2022, when we anticipate the Company will be generating positive cash flows.
Burcon Looking Forward- The Company has numerous near term catalysts including production commencing at the 88,00 sq. ft. production facility, product development updates with Nestlé, enhanced production capacity at the production facility, continued R&D for additional alternative plant based protein sources.
Valuation – We believe that TSX:BU offers a unique investment opportunity for the marketplace. Using our DCF framework we have arrived at a valuation range of $1.01 to $2.42 with a mid-point at $1.42

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

CONTACT:
214-987-4121
Shane Martin, CFA

SOURCE: Stonegate Capital Partners

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