Zoono Group Limited

ZNO Details
 
Market Update: Zoono Group Limited (ASX: ZNO) is a global biotech company which is engaged in the development, manufacturing, and distribution of scientifically-validated, long-lasting and environmentally-friendly antimicrobial solutions. As on 14 May 2020, the market capitalization of the company stood at $289.06 million. During April 2020, the company invoiced business to business (B2B) sales of more than NZ$11 million. The company also signed several new distribution agreements in the UK and Europe and has generated strong sales in India and China.

JLG signs agreement with ZNO: The company has recently entered into an Exclusive Distribution and Partnership Agreement with Johns Lyng Group for an initial five-year term. Under the terms of the agreement, Johns Lyng will make the product available throughout its commercial building division with a specific focus on the 70,000-plus strata titles.  

Q3 sales revenues jump to NZ$15.7 Million: During the third quarter ended 31 March 2020, the company reported a significant increase in revenue to NZ$15.7 million, up from NZ$1.715 million for the whole of the first half of FY20. This resulted in an increase in gross margin. In the same time span, it witnessed an increase in cash resources to NZ$5.7 million and generated a positive operating cash flow of NZ$3.1 million. 


Quarterly Cash Flows (Source: Company Reports)

What to Expect: With the global impact from the outbreak of coronavirus, and the efficacy of the company’s technology and products against viruses and bacteria, the company is facing major issues to manage the level of enquiry for its products and the influx of orders. However, it is working hard to increase its production and order fulfilment capabilities.

Stock Recommendation: As per ASX, the stock of ZNO gave a substantial return of 763.41% in the last 6 months and a return of 25.09% in the past three months. During 1H20, gross margin of the company stood at 52.1%, higher than the industry median of 30.4%. In the same time span, current ratio of the company was 3.31x as compared to the industry median of 1.28x. The stock is inclined towards its 52-week high and is indicating a good time for the investors to book profits. Considering the returns in the past three months and trading levels,we recommend a ‘Sell’ rating on the stock at the current market price of $1.790, up by 1.13% on 14 May 2020. 

 
ZNO Daily Technical Chart (Source: Refinitiv, Thomson Reuters)  
 
 

Jatenergy Limited

JAT Details
 
Creation of New Brand and Release of New Products: Jatenergy Limited (ASX: JAT) is engaged in the development and manufacture of a range of consumer products and the sale of the client and in-house products, primarily in Australia and China via a multichannel strategy. As on 14 May 2020, the market capitalization of the company stood at $42.05 million. JAT has developed the Abbeyard brand, which will be used for the distribution of its mother and baby care products. The company has also manufactured and sold its first orders of different types of camel milk powder with lactoferrin.

Record Monthly Revenue and Fourth Successive Cash Flow Positive Quarter: During the quarter ended 31 March 2020, the company witnessed material increase in its product orders and witnessed record revenue of $8.5 million in February and $8.1 million in March. The company also reported a fourth successive cashflow positive quarter, generating $1.65 million in net cash from operations.


Cash Flow from Operating Activities (Source: Company Reports)

What to Expect: The company is positive about its growth in the near-term. It has diversified revenue base and has expanded its capacity at ANMA dairy manufacturing factory. However, the outbreak of COVID-19 is posing some challenges for the company. The Chinese New Year holidays were extended to mid-February 2020, resulting in the delay of impeded access to the site of its Shanghai Maternity and Infant Boutique.

Stock Recommendation: As per ASX, the stock of JAT gave a negative return of 9.70% in the past six months and a negative return of 11.76% in the last one month. During 1H20, EBITDA margin of the company witnessed a decline over the previous half and stood at 3.2%, down from 8.6% in 2H19. In the same time span, net margin and ROE saw a decrease on the previous half. On a TTM basis, the stock is trading at an EV/EBITDA multiple of 16.9x, higher than the industry average (Food & Drug retailing) of 7.9x. Considering the negative returns in the past six months, softer market conditions due to the global pandemic and higher EV/EBITDA multiple, we suggest investors to book profit and recommend a ‘Sell’ rating on the stock at the current market price of $0.046, up by 2.222% on 14 May 2020.

 
JAT Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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