VIP Gloves Ltd

VIP Details

VIP Gloves Ltd (ASX: VIP), together with its subsidiary, manufactures nitrile disposable gloves that are sold predominately on an Original Equipment Manufacturer (OEM) basis to distributors and wholesalers. The company’s products are used in industries including medical, pharmaceutical, agriculture, hospitality, food and beverages, and electronics industries.

Result Performance – For the First Half Ended 31 December 2020 – (H1FY21)

• Rise in Revenue: Revenues from ordinary activities stood at A$20.98 million, up 298.9% YoY
• EBITDA stood at A$8.51 million as compared to a negative EBITDA of (A$0.39m) in H1FY20, driven by a significant rise in revenue from glove sales, and EBITDA margin stood at 40.6%.
• Profit from ordinary activities after tax attributable to the owners of the company stood at A$2.53 million, up 326.3% YoY

Key Data (Source: Company Reports)

Quarterly Activities and Cash Flow Report for Q4FY21 Ended 30 June 2021

• As per the release dated 29 July 2021, the company received USFDA accreditation; in process of applying for Australian TGA certification
• Rise in Revenue: Total sales revenue stood at RM37.3 million (~A$12 million), down 22% QoQ, while up 164% YoY. Its FY2021 total sales revenue stood at RM148.3 million (~A$49 million), approximately 4 times higher than RM38.2 million revenue in FY2020.
• Total gloves sold in FY2021 stood at 551.5 million pieces, a 30% increase over FY2020
• Average Selling Prices (ASP) for Q4FY21 fell ~13% QoQ, primarily due to an abrupt increase of product into the local and regional Asian markets
• Net Cash from Operations was short of A$1.4 million from a surplus of A$5.8 million in Q3FY21.
• Cash and cash equivalents at the end of 30 June 2021 stood at ~$1.70 million

Outlook:

As per the management of the company, the commissioning of glove production lines 7 and 8 is expected to be operational in August 2021 and September 2021 respectively. These new lines are expected to increase nitrile gloves production capacity to 78 million pieces p.m., or 936 million pieces p.a. Further, the construction of the second factory and production lines on the land owned by the company is still waiting for regulatory and fire approvals. This new factory, once operational will add eight (8) double former production lines with an annual production capacity of about 1.6 billion pieces of gloves, pushing the company’s total capacity to 2.6 billion pieces p.a. These developments are expected to provide growth momentum in the future period.

Key Risks:

The company is exposed to financial risks that include market risk, foreign currency risk, price risk, interest rate risk, credit risk, liquidity risk, and capital risk. Also, the company has an ambitious plan to increase the production capacity through building a new plant, which is expecting regulatory approvals. Any delay or cancellation of regulatory approval would impact the company’s financials.

Technical Overview:

VIP's prices tested a downward sloping trend line resistance at $0.048 level but were unable to break the level, indicating the possibility of a downside correction. On the daily chart, the leading indicator RSI (14-period) is trading around the mid-point, indicates a directionless movement. However, the 21-period SMA is sustaining below the CMP, which acts as a support level for the stock. Now an immediate resistance level for the stock appears at $0.050 while support is at $0.038 level. 

Stock Recommendation:

The stock of the company fell by ~25.86% in the past six months and ~65.60% in the past one year. It has made a 52-week low and high of $0.038 and $0.150, respectively. Considering the technical overview mentioned above, and current trading levels, we suggest investors to liquidate the stock. Hence, we give a “Sell” rating on the stock at the market price of $0.044 per share, as on 17 August 2021, 11.00 AM (GMT+10), Sydney, Eastern Australia.

VIP Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line in the chart depicts RSI (14-period), while the yellow color line represents the trend line. The green color line show 21-Period SMA. 

Yowie Group Ltd

YOW Details

Yowie Group Ltd (ASX: YOW) is a brand licensing company specialized in the development of consumer products designed to promote learning, understanding, and engagement with the natural world through the adventures and exploits of six endearing Yowie characters.

Result Performance – For the First Half Ended 31 December 2020 – (H1FY21)

• Fall in Revenue: Global net sales stood at US$5.57 million, down 13% YoY, primarily due to COVID-19 related shutdowns in both the US and AUS, though some improvement in sales was seen in the last few months of H1FY21.
• Gross Margin stood at 51% of net sales enabling the company to invest with retailers and marketing where required
• EBITDA loss stood at US$0.14 million, an improvement from EBITDA loss of US$1.2 million in H1FY20, mainly led by the reduction in administration and marketing expenditures
• Net loss after tax attributable to members stood at US$0.1 million, versus US$2.93 million in H1FY20, mainly driven by the impairment of the non-current assets H1FY20 and an improvement in EBITDA as described above.

Key Data (Source: Company Reports)

Quarterly Activities and Cash Flow Report for Q4FY21 Ended 30 June 2021

• As per the release dated 28 July 2021, the company received an acceptance to raise its interest in Boral Shares up to 61.87%
• Q4FY21 net sales stood at US$3,960k up 102% YoY driven by consumer consumption momentum, while FY21 sales reached US$12,578k, up 17% YoY
• Q4FY21 EBITDA stood at +US$707k versus EBITDA loss of -US$1,946k in Q4FY20, due to rise in sales and reductions in administration and marketing expenditures, while FY21 EBITDA stood at US$715k versus EBITDA loss of -US$3,818k
• Net cash for the Q4FY21 increased by US$324k, while FY21 yielded +US$2,426k from operations and an FX gain. Cash and cash equivalent as of 30 June 2021 stood at $8.41 million
  

Outlook:

Despite COVID-19 related circumstance, that has affected both the US and AUS markets, the company was able to meet consumer and retailer expectations, cementing the company’s foothold as it entered FY22. The company is focused on achieving sustainable operating profitability and effective cash management. To meet this plan, the company is driving its top-line sales with increased distribution in both the US and AUS and offering effective trade programs across all trade channels. Also, the company is looking for new ways to increase consumer awareness and educating consumers about conservation and endangered species.

Key Risks:

The company is exposed to COVID-19 related uncertainties affecting both the US and AUS markets, manufacturing disruptions, and the volatile global supply chain. Also, the company is exposed to financial risk, credit risk, and liquidity risk, among others. 

Technical Overview:

YOW's prices recently tested a major resistance level of $0.049 but were unable to break the level, indicating the possibility of a downside correction. On the daily chart, the leading indicator RSI (14-period) started to move downside after testing an overbought zone, further supporting a downward trend. However, the 21-period SMA is sustaining below the CMP, which acts as a support level for the stock. Now an immediate resistance level for the stock appears at $0.049 while support is at $0.042 level.

Stock Recommendation:

The stock of the company corrected ~2.22% in the past three months and posted positive returns of ~12.82% in the past one year. It has made a 52-week low and high of $0.035 and $0.059, respectively. Considering the technical overview mentioned above and current trading levels, we suggest investors to liquidate the stock. Hence, we give a “Sell” rating on the stock at the market price of $0.047 per share, as on 17 August 2021, 11.00 AM (GMT+10), Sydney, Eastern Australia.

YOW Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line in the chart depicts RSI (14-period), while the green color line shows 21-Period SMA. 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.