Stocks’ Details

Bubs Australia Limited

Record Revenue in March FY19: Bubs Australia Limited (ASX: BUB) offers organic baby food and goat milk infant formula products. In the month of June, the company entered into a partnership with China’s largest mother and baby store chain, Kidswant. The company’s food products are now available in 275 Kidswant stores across China. The company expects to generate retail sales value of AUD 6 million in the first year of the agreement.

Highlights of Q3FY19: During the period ended 31 March 2019, the company generated gross revenue amounting to $11.83 million, up 103% on the prior corresponding period. Gross revenue for the month of March was the highest of any month on record at $6.91 million. Gross sales for goat milk infant formula went up by 302%, depicting 41% of the total revenue during the quarter. Domestic sales reported a rise of 71% on pcp and sales in China increased at a significant rate of 884%, representing 20% of the total revenue during the period.

During 1HFY19, the company reported gross sales of $21.03 million, that exceeded the total FY18 revenue.


1H19 Highlights (Source: Company Reports)

Stock Recommendation: Over a period of 1 year, the stock generated returns of 69.33%. YTD returns from the stock stood at 179.12%. During the third quarter, the company witnessed a rise in all the key metrics. There has been significant progress towards growth in the Chinese market as suggested by the inked Joint Venture MoU with Beingmate for marketing and sales in the country, acquisition of Australia Deloraine Dairy and the recent agreement with Kidswant. Hence, considering the aforesaid factors, we give a “Hold” rating on the stock at the current market price of $1.255, up 1.619% on 16 July 2019.


BUB Daily Chart (Source: Thomson Reuters)
 

Audinate Group Limited

Strong Sales in March 2019: Audinate Group Limited (ASX: AD8) is engaged in the development and sale of digital Audio-Visual networking solutions. The company recently updated that AustralianSuper Pty Ltd ceased to be a substantial shareholder in the company on 11 July 2019.

In another recent announcement, the company updated on the commercial availability of the Dante AV Module^TM and the Dante AV Product Design Suite^TM. The company received its first purchase order from Patton Electronics, a US manufacturer and OEM/ODM supplier of networking and connectivity solutions for Pro-AV and Telephony. In June, the company also announced two new software products initial contribution from which is expected to commence in FY2020.

Quarterly Update: During the quarter ended 31 March 2019, the company reported cash collections amounting to A$6.3 million, up 40% on prior corresponding period. Revenue for the quarter exceeded the cash collections due to strong sales in March. In 1HFY19, the company reported record revenue of A$14.2 million (up 60% on pcp) or US$10.3 million (up 51% on pcp). During the March quarter, the company’s Dante enabled products grew to 1,946 products from 241 OEM customers.


Revenue Growth (Source: Company Reports)

Outlook: For FY19, the company expects a top-line growth in the range of 26% and 31% in US dollar terms, in line with historical revenue growth.

Stock Recommendation: The stock of the company generated YTD returns of 130.90% and 25.50% in the last 3 months. Currently, the stock is trading slightly towards a 52-week high price of $8.66 with high PE multiple of 419.39x. Upon observation of the recent financial results, recent developments in the form of new product launches and commercial sale of products and current trading level, we suggest investors to have a watch stance on the stock at the current market price of $7.880, down 2.475% on 16 July 2019, and wait for better entry levels.


AD8 Daily Chart (Source: Thomson Reuters)
 

Avita Medical Limited

Strong U.S. Product Sales in Third Quarter:Avita Medical Limited (ASX: AVH) is engaged in the development of regenerative medicine. The company recently updated on the change in shareholding of The Bank of New York Mellon Corporation and its group entities. The voting power of the shareholder increased from 26.22% to 27.27%.

The company also notified that it has reported favourable results from the RECELL® System feasibility study for the treatment of diabetic foot ulcers.

Highlights of Q3FY19: During the quarter, the company reported U.S. sales of A$2.2 million, double in comparison to the sales in the second quarter. The company also entered into a collaboration agreement with COSMOTEC for marketing and distribution of the RECELL System in Japan, as a treatment of burns and other wounds. In addition, the company completed equity placements totalling to A$15.5 million during the quarter. Total revenue for the period stood at A$4.7 million as compared to A$1.7 million in pcp.


Sales Data (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 269.57% over a period of 6 months and is trading slightly towards a 52-week high level of $0.540. Based on the performance in the third quarter, the company has progressed well towards the U.S. launch of its RECELL System. Sales in the region increased remarkably in comparison to the previous quarter. Moreover, the favourable results from the recent feasibility study conducted will add value to the business. In 1HFY19, the company witnessed a gross margin of 70.2%, which was higher in comparison to the gross margin of 59% in pcp. Hence, considering the robust top-line growth, U.S. launch of RECELL System, and current trading level, we give a “Hold” rating on the stock at the current market price of $0.420, up 1.205% on 16 July 2019.


AVHDaily Chart (Source: Thomson Reuters)
 

iSignthis Limited

Rapid Rise in Annualised GPTV: iSignthis Limited (ASX: ISX) is a global leader in remote identity verification, payment authentication with deposit taking, transactional banking and payment processing capability. The company recently updated on the progress of Australian licensing and notified that its applications are progressing well on basis of the recent meetings with representatives from the Reserve Bank of Australia (RBA) and Australian Prudential Regulation Authority (APRA). The combination of ADI license, Australian Financial Services License, and RBA account facilities are expected to allow the company to focus on its wholesale electronic money PPF accounts, payment operations and indirect retail.

March Quarter Highlights: During the quarter, the company generated revenue amounting to $1.85 million, up 56% on the previous quarter. Cash receipts during the quarter stood at $1.4 million, reporting an increase of 55% from $0.9 million in Q4 2018. Annualised Gross Processed Transaction Volume (GPTV) for the quarter stood at $380 million. The value on the company’s Tier 1 network has increased 466% from 1 January to 26 April 2019.


Annualised GPTV (Source: Company Reports)

Key Achievements: In January, the company commenced onboarding of merchants to its Tier 1 card processing facilities in the EU. The period also saw an extension to its Intellectual Property portfolio. In February, the company completed the acquisition of Baltic Banking Services for core banking network technologies. The month of March was marked by receival of “BREXIT” license for continued operations in the UK.

EBIT Guidance: The company has issued an EBIT target for CY/FY2019 of ~AUD$10.7 million.

Stock Recommendation: The company’s stock generated returns of 373.33% over a period of 6 months. The stock is currently trading towards its 52-week high level of $0.765. The company reported robust performance during Q1 FY19, with revenues rising remarkably in comparison to the previous quarter. Currently, the stock is trading at EV/Sales multiple of 63.5x in comparison to the industry median of 4.2x. Corresponding to the recent announced results and new flows, the stock price reacted sharply and gained significantly in recent past. With this, we are of the view that the current stretched valuation may not sustain in the absence of further positive developments or news inflows. Based on the aforesaid factors and current trading level, we give an “Expensive” recommendation on the stock at the current market price of $0.670, down 2.899% on 16 July 2019.


ISX Daily Chart (Source: Thomson Reuters)
 

CLINUVEL PHARMACEUTICALS LIMITED

High Cash Generation from EU and Switzerland: CLINUVEL PHARMACEUTICALS LIMITED (ASX: CUV) is engaged in development and commercialisation of its leading drug candidate SCENESSE® for a range of skin disorders. The company recently released its newsletter updating its stakeholders on the extension of the scientific review time for SCENESSE® by the US Food and Drug Administration (US FDA).

Key Highlights of March Quarter: During the period, the company generated cash receipts of $5,898,000, up 126% on the previous quarter and 70% on the prior corresponding period. All the cash receipts during the period pertained to SCENESSE® treatment provided for patients in the European Union and Switzerland.

1HFY19 Highlights: Net profit for the period reported a significant increase of 189% on pcp, at $4.076 million. Revenues position improved with an uplift of 27% on pcp, at $8.981 million. Earnings per share amounted to $0.085, up 188% on pcp.


1HFY19 Highlights (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 202.37% over a period of 1 year and ~49% in the last 6-months. At the current market price of $33.250, the stock is available at higher price to earnings multiple of 99.73x. On EV/Sales front, the stock is trading at EV/Sales multiple of 54.5x, which is significantly higher than the industry median of 11.8x. The company achieved significant growth in key financial metrics during 1HFY19 as compared to the prior corresponding period which is quite reflected in the price performance in the last 6 months. Considering the present stretched valuation, hefty gains in stocks prices and fundamentals, we assume that majority of the positive factors are discounted at the current level. Hence, we give an “Expensive” rating on the stock at the current market price of $33.250, up 1.682% on 16 July 2019.

CUV Daily Chart (Source: Thomson Reuters)

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