Capilano Honey Limited (ASX: CZZ)

Diversifying the portfolio with increasing the export sales - Capilano Honey Limited is engaged in the packing of honey for domestic and export sales and the Company has the capacity to process 45,000 tons of honey per annum. The Company reported a statutory net profit before tax (NPBT) of $5.99 million (for six months period ending on 31 December 2017) as compared to $7.47 million for the same period last year. This year’s NPBT of $5.99 million reflects a 10.8 per cent of increase on its underlying operating profit performance when compared to last year. This increase was driven due to heightened domestic retail sales which rose 7 per cent to $59.0 million. It focuses on diversifying its product range. Moreover, sales from its portfolio of non-honey products grew by 97 per cent and amounted to $5.05 million.


Financial Performance (Source: Company Reports)

In fact, inventory of premium Australian honey also increased by 1,997 tonnes, which is sufficient so that it is able to meet future sales demands and will help in the expansion of export markets, whilst further reducing the requirement for imports. The Group continues to maintain its domestic market share as the Group participates in a normalised market of improved honey supply and despite of the increased promotional activity, gross margin percent has been maintained.The company continues to focus on export sales to improve the contribution by investing in high potential export markets. It is gradually expanding in China. CZZ’s Australian honey inventory and current supply conditions have improved significantly. In the past one year, the stock has risen 9.33%, as at June 27, 2018. We give a “Hold” recommendation at the current market price of $16.79 as it is growing its export sales and its overall performance looks decent.
 

Dicker Data Limited (ASX:DDR)

Diversifying Vendor concentration - Dicker Data Limited is Australia and New Zealand’s largest independent distributor of IT hardware with a network of more than 5,000 resellers.The Group enjoys long-lasting relationships with its marquee clients in the domestic market which helps to facilitate the growth of the company.  Meanwhile, few directors acquired the Company’s shares from the market like Vladimir Mitnovetski (Chief Operating Officer) acquired 199,099 fully paid ordinary shares at a consideration of $2.83 per share and Mary Stojcevski acquired 1,521 fully paid ordinary shares at a consideration of $2.90 per share. DDR has enjoyed continuous growth despite the current economic climate. The group plans to continue its growth through proactive business partners and expanding upon the success experienced with existing competitive strategies.


YTD Before Tax Trend (Source: Company Reports)

Further, the group recorded revenue growth at a CAGR of 10.1 per cent over FY15 to FY17 and is expecting 6.3 per cent of growth for the full-year against the previous year. The group has a customer-centric approach which allows shifting with changing market conditions for proactive reseller engagement and the dynamic ability. The group's product portfolio is laden through leading technology business partners including HP, Cisco, Toshiba, ASUS, Lenovo, Microsoft and other tier 1 global brands. In fact, the Debt Service Cover Ratio improved from 7.2x in December 2016 to 8.6x in December 2017. The Group expects that it will be able to generate revenue and net profit before tax of $1.39 billion and of $42.5 million in FY18. The Group is targeting some distribution agreements in software, high-end enterprise products and with those who address the cloud computing environment. The stock has been falling since the start of the year. The Group is trading at an annual yield of 6.04 per cent. We recommend to “Hold” the stock at the current market price of $2.87 as it is continuously diversifying its product range and vendor concentration.

 
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