Wide Open Agriculture Limited

WOA Details

A Quick Look at Q2FY21 Results: Wide Open Agriculture Limited (ASX: WOA) is engaged in regenerative food and farming. As on 8^th February 2021, the market capitalisation of the company stood at ~$83.49 million. The company recently signed a research services contract with Curtin University to undertake early-stage product development via usage of food-grade lupin protein. It has secured in Stuart Johnson, the co-founder of lupin protein technology at Curtin University, as a consultant to the firm. During the quarter, the company reported an increase of 29% QoQ in revenue to $989k due to steady demand from the company’s growing customer base. WOA rolled out a few products, diversified DCF’s product range and witnessed revenue growth across all sales channels. Online sales showed sustained growth despite lockdown reaching $299k during the period. Revenues from food service and cafes posted $554k, retail sales went up by 38% to $135k.

During Q2FY21, the company raised $7 million through placement to investors and another $1.5 million via a share purchase plan (SPP) for funding growth activities.  WOA earned $889k of cash receipts from the customers in Q2Y21. The company held $14.3 million in cash as on 30 September 2020.

Growth in Revenue, Q1FY20-Q1FY21 (Source: Company Reports)

Outlook: The company launched OatUP product during late December 2020 quarter. The company forecasts OatUP to add quarterly growth to revenue throughout FY21. The company aims to deploy funds for expansion at OatUP’s East Coast and drive initial sales into South-East Asian markets. It will also use these funds to accelerate development of a pilot-scale lupin protein manufacturing facility and Oat Milk production facility in Western Australia.

Stock Recommendation: The stock of WOA gave a negative return of 16.75% in the past three months and a positive return of 13.23% in the past six months. The stock is currently trading towards its 52-weeks’ low level of $0.09. The stock of WOA has a support level of ~$0.715 and a resistance level of ~$0.84. Considering the 6^th consecutive quarter of revenue growth in Q2FY21, decent outlook for FY21, current trading level, and key risks associated with the business, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.770, down by 2.532% on 8^th February 2021.

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

The Food Revolution Group Limited

FOD Details

Q2FY21 Result Highlights: The Food Revolution Group Limited (ASX: FOD) is a food processing company producing a range of juices, fibres, infused fruits and fruit waters as branded products or ingredients to customers. The company deploys a range of processing technologies, including CCE- Current Counter Extraction technology. Its processing facilities are situated in Mill Park, Victoria. As on 8^th February 2021, the market capitalisation of the company stood at ~$29.07 million. The company reported growth of 16.2% QoQ in quarterly revenue ending December 2020 to $11.1 million. On pcp basis, it registered an increase of 9.8% YoY in revenue for December 2020 quarter. This increase is driven by the rise in prices registered in September 2020 for all FOD’s retailing customers for its Origin Black Label (OBL) juice products. With this growth, it achieved revenue of $20.7 million and an EBITDA over $2 million for 1H21.  During the quarter, FOD raised $498k capital through a SPP to its existing shareholders. FOD earned $9.42 million cash receipts from the customers for Q2Y21. The company held $2.93 million as on 30 December 2020.

Cash Flows from Operating Activities, Q2FY21 (Source: Company Reports)

Outlook: The company has laid out a list of its focus areas for FY21 in its Q2FY21 update. It includes seeking listings for the roll out of carbonated beverages, Juice Lab shots, and juice range. It aims to extend Juice Lab and OBL availability into convenience and petrol outlets. It wants to establish brand Eridani on ecommerce platform Careline C-Mart in increasing distribution into China.

Stock Recommendation: The stock of FOD gave a negative return of 22.72% in the past three months and a positive return of 31.99% in the past six months. The stock is currently trading towards its 52-weeks’ low level of $0.033. The stock of FOD has a support level of ~$0.032 and a resistance level of ~$0.045. Considering the decent results of Q2FY21, decent outlook for FY21, current trading level, and we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.034, down by 5.556% on 8^th February 2021.

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

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