Wood Seeds: all about the company and its bonds

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Updated on March 10, 2024 June 14, 2022 Are you interested in investing in bonds? Then you might also be interested in bonds issued by the private Czech company Wood ... Read More

Updated on March 10, 2024

June 14, 2022

Are you interested in investing in bonds? Then you might also be interested in bonds issued by the private Czech company Wood Seeds. You can choose between several types of bonds with different maturities and different interest rates. By buying Wood Seeds bonds, you will help not only your wallet, but also the Czech nature. Let’s now take a closer look at the activities of this company with Czech origins. And also what kind of bond offer you as investors will find with it.

Bonds

Even before we look at the company Wood Seeds s.r.o. and say everything important about it and its bonds, let’s look at the bonds as such. It is good to have an overview of what a bond actually is. What are its advantages and what, on the other hand, may be the risks of buying a bond. And not just Wood Seeds bonds. But any company. Buying a bond is an investment like any other. Therefore, you should first consider all the risks.

What is a bond?

Bonds are securities that can serve as investments. You can trade them on the exchange, but also off it. If you consider yourself more of a speculator who constantly needs some action in the form of price level movements, then bonds probably won’t be for you. This is because it is a longer-term type of investment. Usually for several years. Your finances are valued slowly, gradually. Similar to stocks.

However, bonds are considered a safer type of investment. Even safer than stocks. And that’s why bonds should form the core of your trading portfolio. And it doesn’t matter whether you are a cautious trader who bets on longer-term investments or, on the contrary, an intraday trader. In both cases, it is necessary to diversify the portfolio. Nevertheless, bonds carry certain risks that you should keep in mind when trading them.

As with a stock, you may not always see your finances appreciate in a bond. Anything can happen. The company in which you invest through a share or bond does not necessarily have to prosper. On the other hand, it can also end up in insolvency. And in that case, you don’t have to see either the dividend or the repayments from the bond.

Who issues bonds

The issuer, i.e. the issuer, of the bond is a company that for some reason needs a certain amount of money. But he doesn’t want to borrow from the bank. And so he decides to issue bonds. And for what reason does he need money? These are often newly established companies that need finance for their successful start. Alternatively, it may also be a longer existing company that plans to expand. At best. At worst, he will need the money to pay off his creditors.

Therefore, it is always necessary to investigate who is the issuer of the bond. Don’t be fooled by, for example, an unusually high interest rate. First of all, it is important to research what kind of company it is. Whether it pays its creditors, whether it earns or, on the contrary, has debts. When it comes to a newly established company, it is also a good idea to check the management. All of these can tell you whether investing in a bond is worth it or not. You can also use technical and fundamental analysis.

How bonds work

And how does it all work? Basically like a bank loan. With the difference that the company does not borrow money from the bank, but from you. So the moment you buy any number of bonds of a corporation, you give it that amount of money. She can then manipulate him and use him as she sees fit. Of course, you don’t just give her these finances. At the same time, you become her creditor.

This means that the company must repay the amount you provided. And until the date stated on the bond. And not just the amount you provided to the company. But also interest. Even he should always be known in advance. So you always know in advance what income you can expect from trading with a given bond. And when. Intervals between installments can be set differently. It is usually paid quarterly. However, in the case of Wood Seeds s.r.o., you should expect your installments every month.

Bond and stock

Bond or stock? That’s the question you might be asking yourself. And we’ll help you crack it. Although don’t expect a clear answer from us. Both stocks and bonds have their pros and cons. However, both variants are intended for a longer-term appreciation of your savings. And in both cases, these are safer types of investment. Certainly safer than leveraged margin trading.

In general, a bond is considered even safer than a stock. And for two reasons. The first is that the bond holder knows exactly how much he will earn on the investment and on what date the amount will be repaid. While the holder of the share, i.e. the shareholder, is dependent on whether the company’s management decides to issue a dividend or not. Even that can happen. And this in the event that the company has low earnings for the given accounting period. Alternatively, he wants to invest it in his further development. On the other hand, the bond holder should see his repayments at regular intervals.

And the second reason is that in case of insolvency, the bond holder has priority over the shareholder. Why? Because whoever buys the bond becomes a creditor. So the company effectively owes him the amount he paid for the bond. Plus interest of course. Whereas the shareholder does not have such a relationship with the given company. Therefore, shareholders are usually one of the last to get the company’s assets in such a case.

Invest in bonds?

So to invest in bonds or not? We probably won’t please you again. The answer to such a question is not clear-cut. However, if you want to invest in something with a lower level of risk, then in bonds. We have already sufficiently outlined the reason in the previous part of the article. So it is clear that this is one of the safest investments. Although far from the most profitable. But then it is up to you whether you prefer to invest safely with a lower income, or with a high risk of financial leverage and the prospect of a high income.

The risk of investing in bonds lies mainly in the fact that these are often newly established companies. So to put your own savings in their hands and trust in their return, you need to trust in their future. And no one will tell you whether your chosen company will break through or not. It is therefore necessary to consider this fact very well. Ideally, analyze its current financial situation and the economic area in which your chosen corporation operates.

Bond trading and fees

You can trade bonds in different ways. One option is to register with an online broker or a bank and buy them indirectly. This is how bonds are bought on stock exchanges. Here you can count on variously high fees. Their amount is determined by the trade intermediary. And it will also depend on whether you trade physical bonds, their CFDs, ETFs, or bond funds.

However, in the case of Wood Seeds s.r.o. bonds, you do not need to look for any such intermediary. They are not traded on the stock exchange, but publicly outside it. You can purchase the currently offered bonds directly on the website of this corporation. This purchase of any of Wood Seeds’ bonds is fee-free.

However, as with trading shares or other assets, whether you are trading physical assets or their derivatives, you must expect to pay taxes. Specifically, this is income tax, which is currently 15% of your net profit. This tax deduction should be made by the issuer when paying the interest income. Your account should thus be credited with the amount of the interest rate already reduced by the amount of tax. Similarly, as is the case with the payment of dividends on shares.

Wood Seeds s.r.o.

Even before you decide to invest in the bond of one of the companies, it is important to find out everything you need about it. You should know what industry it is in, what its business is and how it operates. You should know its management and navigate its profits. And last but not least, you should have enough information about the market in which your chosen company orients itself.

Without this knowledge, you should not start investing in bonds. It might not turn out well. Bonds are considered a safer investment than stocks. However, you should be careful about which corporation you invest in this way. And that’s why let’s now talk about everything important about the bond issuer that will be discussed today. So about the company Wood Seeds.

Wood Seeds: Basic Information

Wood Seeds s.r.o. is a timber company based in Prague. Since 2020, the sole partner of this company is the company HBR WORLD a.s. According to the server hlidacstatu.cz, its indirect real owners are Jan Hero, Barbora Herová and Linda Tuzarová. Wood Seeds s.r.o. has been operating since May 2019 and, according to its website, has experts in its field. That is, in the field of forestry and logging.

Here you will find experts with many years of experience. Namely Luboš Muchna, who can boast of 18 years of experience as a professional forest manager. And we can also name Jaroslav Soušek. According to information available on the website, he has 31 years of experience in buying and selling forests and wood. The executives of Wood Seeds are Oldřich Klíma and Adam Beneš.

And what is the focus of Wood Seeds? Its activity covers the purchase of forest land with the intention of logging. This wood should be further processed and sold to other entities. Its intention is to specialize mainly in oak and beech wood. This should be subsequently processed into joiner quality lumber after mining. Specifically boards and planks. These should then be intended for the production of furniture, windows or stairs. The vision of the company’s management is that these products will be sold not only in the Czech Republic. The company should expand beyond the borders. Specifically to European countries, to Asia and also to America.

Wood Seeds and its financial side

If you decide to invest in a company’s bond, you should be well acquainted with its earnings. Such a company should be economically sound. This means that it should be able to repay its obligations to its creditors. Well, if you own her bond, you’ll be one of them. So it’s a good idea to first search in the Public Register and find out everything you need. So let’s now examine the financial situation of Wood Seeds.

Let’s start by saying that Wood Seeds is a Limited Liability Company (LLC). Its registered capital is 1 million crowns. These are the funds that the company had at its disposal in 2019, i.e. at the time of its foundation. If we look at the financial statements, which companies are obliged to publish for the past year, we will find that it was already at a loss at the end of 2019. However, we will be more interested in more recent data. So let’s take a look at the financial statements for 2020. As of the last day of this year, the loss of the Wood Seeds company amounted to 3,054,000 crowns.

The reason for these losses is the costs associated with issuing bonds. More precisely, administration fees And also the Covid crisis. However, Adam Beneš, i.e. the company’s managing director, believes that the company is not at risk in the future, according to the information contained in the deadline. In the first two years of its existence, it allegedly prepared for its entrepreneurial activity in the field of forestry and intends to carry it out in the following period. At the same time, the company is to be financed precisely through bonds.

Management last year

The financial statements for 2021 are not yet available in the Public Register. However, if we look at the Wood Seeds website, there is a provisional cutoff date of September 30th last year. The results of this deadline are not flattering. The company’s loss, which amounts to a total of CZK 16,697,000, the unreimbursed loss from previous years in the amount of CZK 3,253,000, and the company’s negative equity are listed here. It amounts to 18,950,000 crowns. The document therefore draws attention to the significant material uncertainty of Wood Seeds. This may result in the company not being able to maintain itself on the market.

Wood Seeds: current plans

From the closing date of 2020, but also from its website, it appears that the company continues to believe that it will be able to generate a profit not only from the bonds, but also from its own business activity. This opinion is supported by the current development of the price of wood and the demand for it. He describes the woodworking industry as stable with potential for future growth. It is also worth noting that Wood Seeds owns land worth 72.8 million. However, according to some sources, this amount is overestimated. At the same time, she should have paid advances for other forest land in the total value of 58 million crowns.

And in addition to the purchase of forest land, he is currently working on the reconstruction of the production hall in Břasy near Rokycan. This area for wood processing is to be one of the most modern in Europe after the completion of the reconstruction. The total area is 30,000 m 2 . The factory should include a production line for wood processing, two band saws and handling equipment, drying boxes and a place to store wood.

As for profitability, the company’s management expects sales of 100 million crowns this year. Profits from this should total 12 million. Until 2025, these sales should then grow by 100 million annually. After that, according to the plans, they should stabilize at 395 million. The profit should be 179 million per year from this total figure. Considering the company’s financial results so far, the question arises as to whether this idea is realistic.

Wood Seeds: bond issue

This year’s issue is not the first, and certainly not the last, that the company will undertake in the future. The Czech National Bank has approved a prospectus according to which it can issue bonds for 500 million crowns over the next 10 years. Let’s now look at what specific Wood Seeds bonds you, as an investor, can purchase. And that directly on the website of the corporation.

All types of bonds have a fixed interest rate. Thus, you can calculate exactly how much you will earn by buying a specific Wood Seeds bond. Moreover, this interest rate is quite high. So it exceeds even the current rate of inflation. While the interest rate of previously issued bonds was below 9%, the interest rate of the more recently issued ones already exceeds 9%. We even find an interest rate of 9.5% among them. In terms of maturity, these are medium-term bonds. Their maturity varies between 2 and 3 years.

You can currently choose between four bond options. And with nice interest. The price of one bond, regardless of any of the ones we will talk about, is 50,000 crowns. You can then expect their installments to be paid once a month. The dates for their monthly payment are set differently for each bond. In addition, they also differ in the amount of interest you get for holding the bond, the maturity period and also the date of issue. See the table below for details.

BondOak forests 9.2/23 I.Oak forests 9.5/25 I.Oak forests 9.2/24 I.AB OAK WOODS 8,8/25
Bond price50 thousand CZK50 thousand CZK50 thousand CZK50 thousand CZK
Bond interest9,2 %9,5 %9,2 %8,8 %
Maturity of the bond17. 5. 20215. 4. 20245. 4. 202425. 3. 2025
Bond issue date17. 5. 20235. 5. 20225. 4. 202225.3. 2022
Emission volume20 million CZK40 million CZK25 million CZK30 million CZK

Previously issued bonds

If we look at previously issued bonds, there was a lot of interest in them among investors. Unlike those issued in previous years, they have scheduled monthly installments. Bonds issued by Wood Seeds in earlier years have different intervals between repayments. These intervals range from one installment per month to two installments per year.

It will be practical for us to look at the WOOD SEEDS III bond. 8.1/21. It was due on April 19 of last year. The price of one bond was again set at 50,000 crowns with an interest rate of 8.1%. The total volume of this issue was 5 million crowns. It was a short-term bond, the holders of which were expected to pay it off in less than a year.

To bring these dates closer, this bond was issued on October 19, 2020. The maturity date was set at April 19, 2021. The interest payment frequency was set at 2 payments per year. And how did it turn out? The payment of the principal and all interest took place on time and the bonds are currently properly repaid.

Wood market

What remains to be seen now is the current state of the timber market. That is, the development of the price level of this commodity. And also how the demand for it is currently developing. If we look at the latest studies, good times are shining for companies whose activities are related to the extraction of wood and its further processing. The demand for wood is growing. Compared to last year, the demand for wood is 30% higher. And it should continue to grow during this year.

However, we are mainly talking about firewood. This is mainly related to the rise in energy prices. People therefore rely more on heating with wood. But not only about him. There is also an increase in the price of wood due to the fact that the total volume of wood extraction has decreased. This is mainly due to the bark beetle calamity that affected Czech forests in the past years.

Real estate market

Since Wood Seeds is currently focused on buying up forest land, let’s take a quick look at how the real estate market is doing right now. It will certainly come as no surprise that property prices have been rising in recent years. And of course, this also applies to land. Last year alone, their prices rose by 23% year-on-year. And their growth should continue this year as well.

Wood Seeds bonds and their risks

By now you should know everything you need to know about the company. Wood Seeds s.r.o. is a relatively newly founded company that has been operating on the market for 3 years. And therein lies one of the pitfalls. Since the company is not an experienced player and at the same time has been in a significant loss in recent years, there is a risk that you may not see your money again after buying bonds. Let alone the promised interest. It is true that the current valuation of the land owned by the company and which it would be forced to guarantee in the event of insolvency is 72.8 million. However, considering that it can issue bonds up to a total of 500 million, this is only a poor consolation.

As we mentioned earlier, Wood Seeds has been making losses in recent years. And not a small one. So the claim “We are one of the biggest players in the Czech Republic”, which it proudly promotes on its website, is certainly not adequate for a newly established company in a loss. At the same time, it generates profits not from its business, but from bond issues. He has the ambition to generate profits from his business for years to come.

Wood Seeds: invest in bonds?

However, in order to stand up for Wood Seeds and put it in perspective, it is necessary to look at the other side of the coin. The fact that the company is new to the market can be a risk for you as an investor. But also a business opportunity. Bonds are often issued by newly established companies that need initial capital to implement their business visions. And Wood Seeds is one of them. So far, she is concentrating on the purchase of forest and production land, which are key to starting her business.

It is headed by an experienced team that, taking into account the experience of its members, should know what it is doing. And the current development in the timber market also plays into the cards for the Wood Seeds corporation. But no one can ever guarantee that your investment will pay off. Anything can happen. Wood Seeds has no modest plans. It can therefore begin to prosper, or, on the contrary, it may not see its ambitious vision through to the end. You have to weigh the risks yourself and decide whether or not you believe in the business vision of Wood Seeds. No one else will do it for you.

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