The Food Revolution Group Limited

Gross Margin Fell but Net Sales Rose: The Food Revolution Group Limited (ASX: FOD) ended FY 2018 by generating net sales amounting to $33.1 million thus reflecting the growth of 5% on the YoY basis thanks to the branded product distribution as well as sales.As per the management of the company, gross margin stood at 38% which is still in a decent position. However, this implies a decline on the YoY basis because of the different product mix, wider product portfolio, and LTC sale.  

FY18 Financial Summary (Source: Company Reports)

The company’s management stated that they have adopted crucial steps which would help the company in witnessing the growth, especially in the international markets.The company also witnessed a decline of 9% on the YoY basis in the total costs in FY 2018. The decline in the administration costs was encountered on the back of lesser transaction as well as legal expenses.

Product Launches, Innovation to Support FOD’s Future: The management of The Food Revolution Group is having a favourable view moving forward. In FY 2019, the company would primarily be focusing on the innovation of the products as well launches of the new products. Apart from these objectives, the company would also look towards diversification in the new categories.

As per the company’s management, the rollout of the new products like the supplements would help the company in generating sales with respect to the Australian market. The company would be tapping the growth opportunities moving forward.

Stock Analysis from Technical Perspective:  On the daily chart of The Food Revolution Group, two technical indicators have been applied by using the default values. The Moving Average Convergence Divergence or MACD indicator suggests a bullish momentum as the MACD line has crossed the signal line and is moving upwards. However, Relative Strength Index or RSI reflects a different point of view. The 14-day RSI is near its overbought region and might reach that region. After it reaches there, a decline is expected. Therefore, the market players need to closely track and watch the price movements of this stock. Its current market price is A$0.180 per share.

Freedom Foods Group Limited

Factors which Supported FNP in FY 2018: The financial performance of Freedom Foods Group Limited (ASX: FNP) witnessed the favourable momentum and this momentum was also encountered in the earnings as well as cash generation and in the sales revenues.The robust growth momentum in the crucial business markets as well as divisions was aided by the higher deployments in the brand and market development as well as in the areas of innovation.
  
Sales by sales channel (Source: Company Reports)

As per the management, the company witnessed robust demand in all the markets in FY 2018. During the same period, the transformation activities have also helped the company.These activities have supported the growth momentum with respect to the brands like Australia’s Own as well as Freedom Foods in the crucial markets of SE Asia, Australia as well as China.

What Investors Can Expect from Freedom Foods Group: The management of Freedom Foods is having an optimistic outlook. According to them, the company is expected to generate net sales revenues between $500-$530 million in FY 2019. The product revenue streams as a result of the capital expenditure or CAPEX projects would help the earnings as well as sales in the upcoming years. Since the company has a decent position in important beverage as well as food platforms, the management expects that is strongly-positioned to increase its presence in the global beverage as well as food business.

Stock Analysis from Technical Perspective: Two technical indicators named Moving Average Convergence Divergence or MACD as well as Relative Strength Index or RSI have been applied on the daily chart of Freedom Foods Group and default values have been utilized. As per the observation, the MACD line has crossed the signal line and is moving downwards. However, the 14-day RSI has started to rebound after touching the oversold region which signifies the bullish momentum. As a result, the market players need to wait and watch carefully the price movements of the stock. FNP’s shares traded at $4.870 with the market capitalization of circa $1.15 Bn (as on November 27, 2018).  
 

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