Woodbois Stock Forecast: Is WBI a Worthy Penny Stock to Buy for Long Term?

Woodbois Stock Forecast: The current momentum is highly Bearish and the trade recommendation is SELL.

Woodbois Limited Stock Latest Price for Today

Woodbois Latest News

• According to the official website, Woodbois is ranked 8th in the SPOTT Timber and Pulp rankings.
• According to Woodbois’ latest integrated report, sawn timber production in 2022 increased by a significant 42% to 18,652 cubic meters compared to the previous year. Veneer production also grew, reaching 5,246 cubic meters, a 38% year-on-year increase.

Woodbois Stock Forecast Today

Woodbois Limited Stock Performance

• Last 1 Month: -8.6%
• Last 6 Months: -51.3%
• Last 1 Year: -82.8%

Woodbois Stock Forecast: Bull Case

Better 2022 First-Half Results – Woodbois came up with better first-half results as compared to last year. Revenue for the first six months came at $11.3 million, which was 38% higher than that of last year. As Woodbois is a producer of sawn timber from its own forest possessions in Mozambique and the Republic of Gabon in Africa, the production figure of timber is very important, which increased to 37% year on year in the first half of 2022. Veneer production increased by 50%.

The most important figure is operating profit, which is reported for the first time in the company’s history. Although the amount is very low at only $15,000, it is better than a $654,000 loss for the same period in 2021.

Carbon Credit Business- There is a lot of speculation about the carbon credit business of Woodbois. Let us first understand the basics of this business. There is a common concession around the globe to limit the emission of greenhouse gases and hence there is a cap on every company for the amount of carbon it can emit. If a company exceeds these limits, it can buy permits from another company that is carbon negative.

Now, Woodbois owns millions of acres of pure forests in Africa and it is a carbon-negative company hence it can sell those surplus credits to another carbon-positive company like a coal power plant.

This carbon market is worth billions of pounds. Although it is still in the infant stage for Woodbois there is a lot of potential in this business and if it takes off, it can add a lot of value to revenue and profitability.

Frenzy Trading in the Past- Many penny stocks are subjected to frenzy trading which presents an opportunity for traders to make some quick bucks. Woodbois shares are no different. In May 2022, it went for such a crazy trading period. Its share price increased by around 250% in a span of a fortnight. Woodbois shares closed at 3.70 GBX on 7th April 2022 and it went on to touch 9 GBX on 4th May 2022. Similar frenzy trading happened in the year 2021 also. The bull case for the stock takes into consideration the possibility of such frenzy trading in the future also if the fundamentals of the company improve further.

Woodbois Stock Forecast: Bear Case

Track Record Not Impressive – The most fundamental thing any investor looks at before picking a stock is its past stock performance. True, WBI is a penny stock today, but it was not the case always. WBI stock got listed on London Stock Exchange in the year 2008 at 24.25 GBX, and it went on to touch 51 GBX by the year 2011, but in the next couple of years, it went more than 85% down to 7.63 GBX by 2013.

Since 2013, it has been moving in that range only and is a penny stock. It has given negative 85% returns since its listing, with around negative 80% returns in the last five years. Such stock performance forces investors to double-think of their decision to invest a penny in Woodbois.

Its Potential vs Risk- Woodbois has a great opportunity to grow in the future due to its carbon credit business as discussed above. But at the same time, we will have to look at another side of the lens in terms of the risks involved. Woodbois is a penny stock for the last nine years and its stock has been diluted quite a few times. This is quite common with penny stocks they raise funds through equity.

So, even if the share price doubles or triples in the coming years, an investor may not be able to juice out the complete benefit as ownership is likely to be reduced in the same time period.

Geopolitical Tensions in Mozambique- Woodbois has forestry assets in Africa in Gabon and Mozambique. The company has a permit with the government of Gabon till 2036, which seems to be a stable situation, but its operation in northern Mozambique is a sign of concern.

Last month only, six people are beheaded in the region of Mozambique, where Woodbois operates. Terrorism is a known and growing problem in Mozambique in recent years. This can increase the operational risk for the Woodbois in an environment of political instability.

Conclusion: What Lies Ahead for Woodbois?

True that Woodbois stock is a penny stock today. It is a million-dollar question will it explode and touch new heights in future? Going with the data, it points to something else. It reported a sizeable loss of $489,000 in the first six months of 2022 and a total comprehensive loss of $2.5 million. Moreover, it reported a net cash outflow of $78,000 for the same period.

Woodbois is making huge investments to develop its carbon credit business. But nobody can imagine where will this business be in a decade’s time or so. Till the time the company becomes cash-flow positive with its carbon-positive business, I do not feel comfortable investing in it.

LUCID Stock Forecast is revised HIGHER to $28

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