Stealth Global Holdings Limited (ASX: SGI)

Drive on expansion of footprint: Stealth Global Holdings Limited (ASX: SGI) is an international distribution group that is into supplying various safety, industrial, healthcare and workplace consumable products to business customers and has presence in Australia, Africa, UK, Europe and Asia. The customer base is a diverse one across diversified industry sectors, including construction, resources, engineering, manufacturing, infrastructure, transportation, and industrial services. The key catalyst for the group is the drive towards expansion of services and operations in new markets. Other key aspects include focus on better customer sales and earnings, increasing brand partnerships and exclusive distribution rights, enhancing private label range and improved performance through digital ordering and sales channels. The move on digitization will help new customer growth based on efficiency and purchasing power.

Lately, the group raised $12,500,000 of capital through the issue of 62,500,000 shares at an issue price of $0.20 per share. It was noted that NovaPort Capital Pty Ltd. has grabbed an 8.1% stake in the group. Similarly, Challenger Limited has taken an 8.1% interest in the group. The group’s initial public offering undertaking saw an over-subscription of funds and there has been a significant institutional support. The group’s Earnings Before Interest Taxation Depreciation and Amortisation (EBITDA) before Growth Related Investment (GRI), restructuring and pre-IPO costs was $0.7 million in FY18 while total revenue for FY18 was $23.5 million, which is an increase of $5.8 million. This represented a growth of 33%. Its UK entity witnessed first full year total revenue of $1.9 million in FY18 against $0.5 million in FY17. GRI and restructuring also surged up from $0.17 million to $0.626 million in FY18. The cash flow position enhanced from $0.204 million to $0.976 million. The stock was down by about 8% since listing on ASX, and seems to be a good watch while it has a market capitalisation of $ 21.58 million and last traded at $ 0.175.
 

BWX Limited (ASX: BWX)

Growth through acquisitions: BWX Limited (ASX: BWX) is now under the top ten stocks that the short sellers have been eyeing. The group is a developer, distributor and marketer of branded skin and hair care products and aims to focus on natural segment of the personal care market. The group is known for its Sukin, Derma Sukin, Edward Beale and Renew Skincare brands; and has a market capitalisation of $ 474.32 million. The stock has been down by 33.7% in last three months. As per the recent evaluation of the company’s strategic options following the preliminary, nonbinding, indicative and conditional proposal made by John Humble and Aaron Finlay along with Bain Capital Private Equity and its affiliates, the group stated to remain independent. It has also appointed the Interim CEO Mr. Myles Anceschi as the permanent CEO. The group has highlighted integration activities for Mineral Fusion business in the US, acquisition of the Nourished Life E-Commerce platform, and that of the US-based Andalou Naturals business to set new growth opportunities in attractive channels and markets in last one year. For FY18,  the group reported growth of about 105% in revenue while underlying EBITDA was up 52.4%. With this, underlying NPAT was seen to rise by 37.5% and FY18 fully franked dividends of 7.45 cents were up 11%. The group aims to leverage from the global consumer movement towards natural products. The stock was down 1.8% on October 08, 2018 but the ROE is in positive domain. However, the stock has been below its 200-Day Moving Average (at around $5.5) and may continue the downward streak for some time. We have a “Hold” recommendation on the stock at the current price of $ 3.750.
 

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