Source: Stonegate Capital Partners
DALLAS, TX / ACCESSWIRE / December 8, 2021 / Gaucho Group Holdings, Inc. (NASDAQ:VINO): The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/VINO Q321.pdf
Gaucho Group Holdings, through its subsidiaries, invests in, develops, and operates real estate in Argentina. The company also owns and operates Algodon Mansion, a luxury boutique hotel in Buenos Aires; and Algodon Wine Estates, a winery and golf resort with tennis courts, dining, and hotel amenities in Mendoza, as well as subdivides property for residential developments. It also distributes and sells high-end luxury fashion products and accessories through an e-commerce platform.
- Building a luxury brand - Gaucho seeks to become a world class provider of luxury brands and e-commerce, including direct-to consumer fine wines, leather accessories and fashion, home and living goods, and experiential hospitality assets. The Company believes that all its segments/brands are all intertwined together to create the complete luxury experience and should help it achieve its goal of becoming the LVMH of South America.
- Leveraging e-commerce growth - The pandemic has acted as a catalyst for e-commerce, as consumers shopped online to avoid crowds and COVID-19. According to Digital Commerce 360, US consumers spent $861.1B online with US merchants, and US e-commerce grew 44% in 2020. The Company has a fully optimized e-commerce platform that should benefit from increased e-commerce demand for its luxury goods and services.
- Unique luxury vineyard real estate project - One of Gaucho's luxury properties is Algodon Wine Estates, where someone can buy a lot on the property. These lots are positioned around the golf course and enjoy sweeping views of the vineyards and the Sierra Pintada Mountain range. Gaucho states that these lots are often a fraction of the cost of comparable properties in Napa or Tuscany and is one of the last opportunities for consumers to purchase affordable real estate in a leading world wine center. The Company currently has 350 lots available for sale with an expansion plan to add 500 more lots. Its goal is to sell 20 lots/quarter at an average price of US$200,000.
- Devaluation of the peso- While there are multiple negatives associated with the devaluation of a currency, Gaucho believes the devaluation of the Argentine Peso provides it with an opportunity. As Gaucho produces wines and other goods in Argentina, the Company pays for the manufacturing and labor in the devalued currency and can then sell these wines and goods at a favorable exchange rate in USD to U.S. consumers and/or other world consumers. Devaluation should also favorably impact tourism, benefiting Gaucho's hospitality assets.
- Scalable model - According to Research and Markets.com, the global market for luxury goods was $349B in 2020 and is expected to grow to $403B by 2027 for a 15.5% increase. Report Linker.com also notes forecasts the global e-commerce market for spirits & wine is expected to nearly double in 2021, with the wine market in the US alone estimated at $88B in 2020. Gaucho's brands are all built and ready to produce and provide services. As such, management believes it can easily increase production of wines, home goods, and leather goods to meet demand. Furthermore, it believes it can see real-estate appreciation and interest income on financed lot sales.
- Valuation - We are using the potential real-estate lot sales to drive our valuation range. Based on various assumptions, we arrived at a valuation range of $5.50 to $7.75 with a mid-point of $6.75. Please see pages 7 and 8 for further details.
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.
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