Nanosonics Ltd (ASX: NAN)
Accelerating sales and service infrastructure in Germany: Nanosonics witnessed a stock price rise of 2.8% on April 05, 2018 as the group seems to be benefitting from the growing awareness about ultrasound probe decontamination in Germany, which is an important market that represents a large opportunity for Trophon. NAN particularly updated the market that the German Society of Ultrasound in Medicine (DEGUM) has published comprehensive recommendations for infection prevention in ultrasound and endoscopic ultrasound and the new guidelines address the cleaning and disinfection requirements for ultrasound and endoscopic ultrasound probes in procedures ranging from percutaneous interventions to transvaginal and transrectal ultrasound. These guidelines that focus on the aspect about ultrasound probe decontamination, and particularly, disinfection of all semi-critical ultrasound probes with disinfectants that are proven bactericidal (including mycobacteria), fungicidal and importantly, virucidal, are expected to boost the use of NAN’s trophon® EPR device that is said to meet all the requirements. In fact, the growing awareness helped NAN get an audience of about 450 infection prevention healthcare practitioners to group’s symposium to hear opinions on probe decontamination, at the recent annual national conference of the German Infection Prevention Society (DGKH) in Berlin. The group thus aims to grow its direct sales and service infrastructure in Germany, based on adoption of its Trophon system. Meanwhile, Macqaurie Group has ceased to be a substantial holder of NAN. On the other hand, the group witnessed continued strong installed base (IB) growth of trophon® EPR units in North America with UK growth momentum continuing with Managed Equipment Service (MES) installed base growing by 86%, as reported during 1H FY18 result update. However, the total first half sales were $30.0 million, down 4% compared with prior half (2% in constant currency) while operating profit before tax of $3.7 million was up 3% on prior half. The stock still seems to have a decent upside potential while the interim results were mixed, and we give a “Speculative Buy” recommendation on NAN (having a market capitalisation of 748.34m) at the current price of $2.570.
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Growth Strategies (Source: Company Reports)
Wattle Health Australia Ltd (ASX: WHA)
Enhancing footprint in China:Up 4.8% on April 05, 2018, Wattle Health (with a market capitalisation of 314.98m) has bagged an Agreement with International Supplies and Distribution Company Pty Ltd (ISDC) regarding the supply of WHA’s conventional cow infant formula for sale in traditional retail/ general trade in Mainland China. The guaranteed volumes for the first 18 months entail purchase of a minimum of 1,500,000 units, then a further 1,500,000 units for the following 12 months; and yet another 2,200,000 units for the following 12 months period thereafter. While finalisation of this distribution arrangement is subject to finalisation of CFDA accreditation and finalisation of formal supply agreement, ISDC has guaranteed minimum annual volumes to service the China Market committing a bank guarantee (of an amount equivalent to 25% of the production cost) to secure the supply. On the other hand, the group is yet to report positive performance in terms of profit while revenue for the first half of the 2018 financial year was $661,261 and with the sales received in January 2018 of $329,000, exceeds the total sales for the full financial year 2017 of $990,261. Net Loss for 1H18 was $13,080,506 at the back of a non-cash expense on issuance of loan funded employee shares (LFES) of $9,607,861. We would wait for more positives from the group and give an “Expensive” recommendation at the current price of $2.180.
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