Wattle Health Australia Limited

Wattle Health Plans to Grow Distribution and to Enter New Markets:  Wattle Health Australia Limited (ASX: WHA) reported revenues of $1.57 million in FY 2018 which implies the YoY growth of 67.7%. The company witnessed a substantial rise in the cash holding from $5.7 million in FY 2017 to $55.8 million in FY 2018. The company has made investments in the areas of distribution as well as marketing. The investments in distribution might help the company internationally as well as within domestic border. However, marketing spend would help the company in boosting the awareness of the company’s brand. Wattle is also to emerge as the first vertically integrated Australian organic nutritional dairy company.

Performance (Source: Company Reports)

What Could Help Wattle Health? The management of Wattle Health believes that the company is in a position to expand its presence and to tap new markets. Moreover, an increase in the product offerings would help the company in increasing the presence of the brand. In the FY 2018, the company managed to set channels to deliver the products in the Indian as well as markets in Macau. The company witnessed a rise in the products’ margin on the back of the diverse product range as well as structural changes in the business.

Technical Analysis: After applying the MACD or moving average convergence divergence indicator on the daily chart of WHA, the bullish momentum is expected. The MACD line crossed the signal line and is expected to witness a rise moving forward. The default values have been incorporated with MACD being viewed on the chart. We maintain our “Speculative buy” rating on the stock at the current market price of A$1.090.
 

Jatenergy Limited

Significant Fall in FY 2018 Revenues: In FY 2018, Jatenergy Limited (ASX: JAT) recorded revenues amounting to $2.46 million reflecting the substantial fall of 75% on the YoY basis. The company also witnessed a consolidated loss post income tax of $1.20 million in FY 2018 which implies the substantial increase of 195% on the YoY basis. The primary reasons for the loss in FY 2018 was a huge decline in the trading income and increased director fees expenses as well as consultancy & professional fees.

Jatenergy Limited’s Four Strategic Pillars (Source: Company Reports)

Shares Suspended from Trading: On October 1, 2018, the shares of Jatenergy Limited (ASX: JAT) were suspended from trading on Australian Securities Exchange or ASX. The reason for the suspension of the securities of Jatenergy Limited was that the company was unable to furnish the annual report for the year ended June 30, 2018. Therefore, the regulations of the ASX were not complied with and thus raised the concerns. Acts like these impact the overall performance of the company and the stock price. Thus, we maintain the view to avoid the stock.

Technical Analysis: On the monthly chart of Jatenergy Limited, MACD as well as exponential moving average were applied. The default values have been considered for the both the technical indicators. These technical indicators suggest that the stock is expected to move downward moving forward. MACD line has crossed the signal line and is moving downward reflecting bearish momentum. Also, the exponential moving average (9-day) or EMA has also been reflecting the bearish zone. The stock last traded at A$0.042.
 

Bellamy's Australia Limited

Bellamy’s top-line increases YoY: In FY 2018,Bellamy’s Australia Limited (ASX: BAL) witnessed a strong momentum in the revenues, cash flow as well as profitability. On the normalized basis, during the same period, the company’s sales witnessed the YoY growth of 37% while the company’s earnings before interest, tax, depreciation and amortization or EBITDA rose 65% YoY. According to the company’s management, the fundamentals are strong with regards to the cost discipline, revenue management as well as brand investment.

Performance (Source: Company Reports)

Higher Competition might Impact Sales: The management of Bellamy’s expects that, in the near-term, the company may witness increased competition with regards to the Australian business which could, in turn, impact the sales growth in FY 2019. Despite this near-term headwind, the company’s management is optimistic in the medium-term horizon. The factors that base the performance in the medium-term are market position, strong category fundamentals, three-year growth strategy as well as channel opportunities. Also, Bellamy’s is expected to deploy funds towards premium brand strategy.

Technical Analysis: Technical indicators, MACD or Moving Average Convergence Divergence and Exponential Moving Average or EMA (9-day), have been applied on the daily chart of Bellamy’s Australia Limited. Both the indicators suggest that the stock price is expected to rise. The default values have been used.

MACD line has crossed the signal line (bullish crossover) and may rise moving forward. Also, the stock price has crossed the 9-day EMA and is moving upwards post a steep fall witnessed couple of months back. However, given the near-term challenges and regulatory uncertainty, we maintain our “Expensive” rating on the stock. The stock ended at A$10.35 on October 2, 2018.
 
 

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