 Hello everyone. Welcome back to Investor and Tell. I'm Peter Clausi, bit of a new one for you today. We're here with Chris Thompson, who is a get ready for it CFA MBA PNG, but more importantly for this conversation the owner of e-research. Hi, Chris Good morning Peter. How are you today? I'm well, so I've known you a long time You've done a lot in the business a lot in the industry, but you're relatively new to e-research That's about a year and a half for you, right? That's correct. Yeah, I bought it at the end of 2018, but really relaunched it last year in 2019 And e-research is an independent research house that provides research on public companies That's correct. Yeah, we focused primarily on public companies providing equity research reports, industry reports, and company reports covering a variety of sectors Do you have a favorite sector seeing how you're a PNG? Going for the mining. Yeah background for me I come from a mining household, so Stop there. Your dad's in the mining hall of fame. Let's not undersell it Okay, I have a fairly good knowledge of the business from growing up with with him and You know investing alongside him in the various companies that he worked out over the years And so I've been investing, you know in the mining space ever since I was 15 Property in North America your dad hasn't walked I Would say probably not you know at one point in time when he retired from the you know his President role he then became a professional director and so you know at anyone given time He was a director of six-day companies and so You know all the way from South America, you know, he was in You know Africa in the 70s and 80s well before a lot of the other people were yeah, so I think most of the properties He's either heard of or walked on one time over another or kicked some rocks at least It's like I talked to Tom a grizzly when I tried to surprise him with something. It's just not possible Yeah, and in this business is sometimes important to have that history because you know guys dust off all project old projects all the time and they want to see what what's under the covers The other specialty for me is in is in you know technology I have a background from you know from my work in my engineering and then you know We cover a variety of other spaces including you know the general, you know the food industry You know technology health tech, you know in the Canadian market You have to be very flexible when it comes to to covering companies So apart from who's gonna pay you how do you decide who you're gonna cover? Okay, and I'm not I'm not downplaying the payment part. We all get paid to do our things you make disclosure you're transparent There's nothing wrong with it, but how do you pick who you want to cover? Really we're looking at companies and industries where there are catalysts that are driving things forward And so like right now you're looking at you know, what is the valuation on companies that are either That could have some sort of catalyst to drive it higher. You know in this right now. We're looking at things like you know the electric vehicle space, which you know is a very A good industry right now growing and leaps and bounds both from a technology side as well as a mining side Other in just other industries like the food industry is also one of the ones right now Which is which is very active especially on the organic side and the plant-based side where you have companies that are Following a demographic where there's right now. There's a huge trend towards healthy eating healthy living You know organic product natural products Plant-based products and so these are the areas so we try to focus on you know industries where we see the natural growth occurring And that companies that that can then you know benefit from that growth in the actual overall industry And then find the ones that will have that catalyst You know to grow further and that brings us to November 11th 2020 in a company I'd never heard of called organic garage limited you initiated coverage on it It's growing because it's organic and it's having a COVID-19 sales bump Well, yes, it's actually it's been around for a long time too So it's been around since 2005 but only listed in 2016. So but so it's been around and sort of You know growing slowly into this marketplace But it so it was sort of a leader in the organic food space and it's a really it's it's a differentiated product Well, you go find it because they really want to be the low-cost Provider over organic and natural foods. How many stores do they have? Currently right now they have four active and there's one that's being built in Toronto in Leeside Which should come on board sometime next year and your report says they plan to open a new store annually for how long? Well that they that that's their plan is they want to keep on growing into their market They believe there's in Ontario. There's at least 20 other locations and markets that could be in and so they want to grow You know annually the store count and that's what they and continue to hit that marketplace It seems like they're a direct competitor to Whole Foods How's that going to go or Inc? Oh, it's the other one called goodness me Yeah, so they are competitive to Whole Foods and so what they try to focus on There are much smaller footprint with the much with fewer skews or your fewer products So they can focus on providing that low-cost organic solution So they're not trying to be everything to everybody in the store It's a situation where you will go in to do a very fast shop and you'll get your your basics And you'll know that that everything is either organic or it's natural which is not necessarily true as some of their competitors And you'll be able to do a fast shop and it's and it's and you'll know that the pricing is probably Anywhere from 10 to 20 percent lower priced than its competitors in the marketplace and that's what they strive to And you've and you value them as a multiple of forward revenue and EBITDA How'd you set? How did you settle on that as a metric? Well, you look at the industry itself and so the industry is is valued on their on their sales or forward sales And how fast they're growing in this case their price at about a half times a revenue multiple To next year's revenue where their competitors are priced You know closer to one times revenue, so it's it's undervalued right now in that and that metric But you know part of the reason why it was it was Valued it that way it was because their EBITDA was negative and so they had they were burning cash And so over the last couple of years and parts part of that problem was as they were growing They had a couple of bumps in the road one of them being the new store in Leeside was supposed to open two years ago And that took a lot of you know more cost and more, you know management time Time to have to deal with the delays not impacted the overall performance But right now so but over those two years they spent a lot of time reducing costs and they've also now closed their distribution center and are going to be shipping the product directly to the stores and that should and in my mind When I was doing the numbers should save anywhere from say 400 to 600 thousand dollars in next year's You know expenses which then you know makes them being some marginally unprofitable to book to profitable And with the launch of the new store You know fully open by the end of next year You know you should see a good revenue boost and it's in the Leeside neighborhood of Toronto Which is a fairly affluent neighborhood and would be a prime location for for people who are looking for healthier eating and Organic type of food so has he researched published a report since organic garage came out? In the last two months you mean like the last month. No, okay We haven't done an update report yet No, no, no, no, no, no Chris not on organic I meant on anything. Oh no We have a couple update reports coming out soon, but Nothing yet so far. Okay. Well, I always appreciate chatting with you. I'm missing you in person Thanks, I'll hoist a virtual whiskey in your honor tonight. Oh, okay. Okay. Thanks for your time Thanks, Peter. Thank you Chris Thompson from e-research Peter Clausi signing off from investor Intel Have a safe day