Marley Spoon AG

Strong revenue growth: Marley Spoon AG (ASX: MMM) is a food delivery service provider. The company provides subscription-based weekly meal kit service to its customers across Australia, the United States, and Europe. It also offers recipes and ingredient services. On the financial front, the net revenue of the company stood at €92 million in CY18, up by 73% from the previous year driven by strong growth across all regions, particularly in the US.The company delivered more than 15 million portions to its customers in 2018. The company generated 91% of revenue from repeat customer orders. The operating EBITDA stood at (€34.3) million in CY18 compared to (€24.6) million in CY17 and the rise was primarily due to investment in marketing to support scale up. The contribution margin of the company continues to improve Y-o-Y to 21% in 2018 compared to 16.5% in 2017.
 

CY18 Key Metrics (Source: Company Reports)

EBITDA guidance reaffirmed: Going forward, the company has a positive outlook as operating EBITDA profitability target for 2020 has been being re-affirmed. The company’s path to profitability will be supported by additional top-line growth, product and marketing initiatives to increase customer lifetime value, careful investment in improved operational capabilities as well as further improved contribution margins.

Meanwhile, the share price has fallen 6.86% in the past one month as at March 04, 2019 and is trading close to a 52-week lower level of $0.340. Hence, the stock seems to be trading at attractive prices and looking attractive for accumulation. By looking at improving operating margins and decent outlook along with current trading level, we, therefore, uphold our “Speculative Buy” recommendation on the stock at the current market price of $0.465 (down 2.105% on 5 March 2019).
 
 

Wattle Health Australia Limited

Significant Rise in Working Capital:Wattle Health Australia Limited (ASX: WHA) is a well-known, high-quality infant formula producer that broadly focuses on 100% Australian made health and wellness products. The group has many products already in a commercialized phase. Recently, the company announced that 59,106,250 ordinary shares would be released from escrow on 15 March 2019. WHA will apply to the ASX for quotation of these shares on 15 March 2019 pursuant to ASX listing rules.Recently, the group posted 1HFY19 results in which revenue down by 43.2 percent to $0.363 million as against $0.639 million in the prior corresponding period. It was mainly impacted by the discontinuation of the conventional nutritional dairy product range to the first truly Australian organic product offering. The working capital of the company is up 350% to circa $45 million for HY19 as compared to HY18. After the completion of the half year, the company announced the proposed acquisition of Australia’s largest independent (by volume) and CNCA accredited nutritional manufacturing plant, Blend and Pack.
 
 

Statement of P&L (Source: Company Reports)
 
What To Expect From WHA: Going forward, the company proposed the launch of a new organic brand set to be available in the market in the third quarter of FY19, and further expansion into key off-shore markets including India and China (pending SAMR approval). Further, the business is also gearing up for the international launch of 'Little Innoscents' organic baby skincare range, currently available in the domestic market via chemist warehouse and other major pharmacy chains.
 
Meanwhile, the share price has fallen 6.88% in the past three months as at March 04, 2019 and is trading close to a 52-week lower level of $0.860. However, we expect that the company has a brighter outlook in the long run as the group continues to grow its distribution channels both domestically and internationally. Hence, we maintain our “Speculative Buy” rating on the stock at the current market price of $0.875 per share.
 

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