Experience Co Limited (ASX:EXP)

EXP Details

Adverse Weather Conditions impacted the operations- Experience Co Limited is an adventure tourism and leisure company. It was noted that unseasonably adverse weather patterns throughout the east coast of Australia and particularly in North Queensland affected the customer bookings which impacted the March Quarter and the month of April. The adverse weather conditions impacted the operations like skydiving and adventure operations like ballooning in which 8 days were lost where activities were completely non-operational. It impacted Tully River Rafting, canyoning and other such activities. The Company witnessed an accident in April as the strong rainfall caused the road to the Tully River to collapse because of which the Company temporarily ceased the Raging Thunder Adventure white water operations. Moreover, the Gross Profit Margins also contracted. During this time EXP entered into few short term fixed contracts, assuming that the normal weather patterns will allow for the processing of a large number of customers.


Performance of the Company’s segments (Source: Company Reports)

After this, the Group revised its FY18 forecasts and expects its revenue to be in the range of $127-$130 million and EBITDA in the range of $30-$31 million, respectively. The Company made some changes to its Securities Trading Policy and made a change in its closing periods from 2 months to 3 months and clarified that providing security over shares requires approval from the Chairman. Meanwhile, Paradice Investment Management Pty Ltd ceased to be substantial holder of the Company since 30 April 2018. Further, the Company is on track and will realise the expected synergies from recent acquisitions and organic growth from its adventure activities in FY19. The stock prices were declining since the start of the year and were down by 23.81 per cent as on 29 June 2018. The stock slipped by 3.125 per cent as on 02 July 2018. We give a “Hold” recommendation at the current market price of $0.62 by looking at its performance which was adversely impacted by weather conditions.
 

EXP Daily Chart (Source: Thomson Reuters)
 

Speciality Fashion Group Limited (ASX:SFH)

SFH Details

Successfully completed the divestment of its five brands - Group’s City Chic is a leading Australian multichannel retailer specialising in the plus-size (size 14+) women’s apparel, accessories and footwear market. The Group successfully completed the sale of the Millers, Katies, Crossroads, Autograph and Rivers businesses to Noni B Limited. As per the sale agreement, Noni B has acquired all assets and liabilities relating to these businesses for cash consideration of $31.0 million (before working capital adjustments, transaction and separation costs). These sale proceeds will be used to strengthen SFH’s balance sheet by paying down debt and will enhance the Group’s cash position to support City Chic’s growth plans. This sale marks a new beginning for SFH as now company will focus wholly on City Chic’s strategic priorities and growth agenda. Now the Group is well positioned to further strengthen its customer-led approach and execute its strategy to become a global brand.


Underlying EBITDA and NPAT Reconciliation (Source: Company Reports)

Moreover, the Company confirmed that its existing external funding liability has been agreed which will result in the bank loan facility reducing from $22 million to $15 million from 1 July 2018. After this transaction gets completed the Board will commence to reflect the new structure and requirements of the Company, with a search now underway. Pinnacle Investment Management Group Limited ceased to be the substantial holder of the Group since 20 June 2018. The Group reported a revenue of $399.0 million for six months period ending on 31 December 2017 (31 December 2016: $430.0 million) and the Group ended the half-year with net cash of $21.3 million at 31 December 2017 (compared with net cash of $12.3 million in the prior half-year). Basic EPS decreased from 6.3 cents per share  as on 31 December 2016 to 1.6 cents per share as on 31 December 2017. In 6 months, the stock price has been moving in an upward direction and was up by 633.33 per cent as on 29 June 2018. The stock looks “Expensive” at the current market price of $0.99 and it is better to wait and watch the impact of the disinvestment.
 

SFH Daily Chart (Source: Thomson Reuters)
 

Starpharma Holdings Limited (ASX:SPL)

SPL Details

Expansion into European markets - Starpharma Holdings Limited is engaged in the development of dendrimer products for pharmaceutical, life science and other applications. Recently, Starpharma and Mundipharma  signed a licence agreement for the sales and marketing rights to VivaGel® BV for 43 countries in Europe, Russia, the Commonwealth of Independent States (CIS) and the balance of countries in Latin America. SPL will continue to receive returns via a revenue share on VivaGel® BV sales and is also eligible to receive signing, launch and other commercial milestones. Now after this Starpharma was eligible to receive total signing, regulatory and commercial milestones of up to A$33.3 million (US$24.7 million), in addition to receiving revenue share. It is worth noting that Europe represents a very important market for VivaGel® BV and with this licence in place, VivaGel® BV will soon be available to millions of European women who suffer from BV. Moreover, the Company has also entered into advanced commercial negotiations for marketing rights to VivaGel® BV in North America and expects to announce further licensing arrangements in the near future. Lately, the Group lodged its New Drug Application (NDA) with the US FDA under a Fast Track designation in April 2018. The Group reported a net loss of $6,231,000 for the half-year ending on 31 December 2017 (against December 2016:$8,335,000) and this was due to the decrease in the research and development expenses due to completion of its VivaGel® BV phase 3 trials. Since the start of the year, the stock price was declining and was down by 6.80 per cent in last one month as on 29 June 2018 but started recovering since last five days and was up by 3.10 per cent.


Financial Performance for half-year ending on 31 December 2017 (Source: Company Reports)

The stock price moved up by 0.8 per cent as on 2 July 2018. We give a “Hold” recommendation at the current market price of $1.175 as the Group has potential to grow and by looking at the demand of VivaGel® BV it is expected that it will gain customer acceptance soon in the markets.
 

SPL Daily Chart (Source: Thomson Reuters)

 
Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.