www.ubs.com/investmentresearch This report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 16. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Global Research 29 June 2020 Future of Farming Transcript: Precision Ag and Future of Farming Call Series: A Grain Farmer's perspective Precision planters & sprayers are in high-demand, though cost remains a hurdle We hosted a call with Matt Danner, owner of a large Iowa grain farm, to discuss trends in ag-tech and the outlook for the 2020 season. He believes precision planters are currently farmer's most sought-after tech solution. On that, he noted that he sees advantages of DE's offerings vs. Precision Planting's. Specifically, DE's offerings are more seamlessly integrated with DE's machinery (which constitutes most of his fleet), and don't require adding an extra monitor to the cab. He also noted DE's system have mechanical advantages; they are slightly more accurate than Precision Planting's, and the DE system uses a brushless electric motor, which generally run cooler, last longer, and have fewer issues compared to a non-brushless motor. However he also noted DE's precision planting system is ~$50k more expensive, and while it will add value, he is not certain the difference is worth it. He added that precision spraying is another solution in high-demand, but that the components are not meeting durability expectations and are expensive to replace, which is slowing adoption. Farmers are eagerly awaiting autonomous equipment While some of basic technological advances, such as auto-steering, section spraying, and a basic digital platform have improved farm income & become a necessity for farmers to compete, the systems are generally ubiquitous, and new improvements are incremental. The next thing farmers really want to see is autonomous equipment. While some of the smaller machines have been mostly-automated, nothing yet has allowed them to reduce headcount. Given US farm production is the highest cost globally, reducing labor costs is one of the biggest levers farmers could (theoretically) pull to increase profitability. 2020 challenge: No price windows to sell crop; long term concern: ethanol Farming economics are shaping up to be challenging in 2020, as crop prices remain low. Typically, there is a window of higher prices to sell forward some of the crop, but this year that opportunity has not presented itself. Our speaker noted that he needs $3.50 corn (cash price) on 215 bu/acre yield, and $9+ soybeans at mid 50's bu/acre yield to break even, and that's with some gov't support payments. As of June 11, market prices were $2.98 corn, and $8.40 beans. In the long term (3-5 years), what keeps him up at night is the gradual decline in ethanol demand and the rise of alternative meat (would reduce cattle on feed). Equities Americas Heavy Machinery Steven Fisher, CFA Analyst steven.fisher@ubs.com +1-212-713 8634 Avinatan Jaroslawicz Associate Analyst avinatan.jaroslawicz@ubs.com +1 212 713-1405 Future of Farming 29 June 2020 2 Precision Ag and Future of Farming Call Series: Farmers Edge Host: Steven Fisher, UBS U.S. Machinery and Engineering & Construction Analyst Speaker: Matt Danner, Proprietor & Farmer, Templeton Farms We present below the transcript from our recent call with Mr. Matt Danner. Minor grammatical changes that do not impact the meaning of content have been applied. The opinions expressed by Matt Danner, personally or on behalf of Templeton Farms, herein do not necessarily reflect the views and opinions of UBS. UBS accepts no responsibility for the accuracy, reliability or completeness of the information and will not be liable, either directly or indirectly, for any loss or damage arising out of the use of this information or any part thereof. June 11th, 2020 11:00 AM ET Steve: Good morning, good afternoon. I’m Steve Fisher, UBS US Machinery and E&C Analyst. Thanks for joining us. This is our sixth call in our Precision Ag Future of Farm Technology Call Series. Through this series we intend to provide investors a view on agricultural technology trends, development in precision ag and digital ag, along with viewpoints on current business conditions. We’re featuring both the well-established incumbents, as well as newer companies. Today we are really lucky to have someone that can provide us the user’s view of what’s happening in the field and can sort out all the supplier dynamics for us. We have Mr. Matt Danner with us. He and his family are the owners of Templeton Family Farms, a large grain farm in Iowa. Matt has been working on this farm for a number of years, and prior to that spent time working at John Deere. We’ve had severa...
发表评论取消回复