Elixinol Global 

Increased capacity to drive growth: Elixinol Global Limited (ASX: EXL) saw a major growth in the organic revenue in the 1H FY18 at $14.9 Mn, increase of 110% against 1H FY17 revenue of $7.1 Mn. There was a significant growth registered in EBITDA at $0.8 Mn compared to loss of $0.1 Mn in the 1H FY17. Underlying NPAT also improved to $0.6 Mn in 1H FY18 compared to the loss of $0.3 Mn in 1H FY17. During the period, Elixinol USA contributed significantly in the EBITDA growth of the company. We expect that Elixinol USA will support to increase production capacity and sustain future growth, Elixinol USA has plans to relocate to a newly leased facility in the Colorado Tech Centre (CTC), situated in the neighboring town of Louisville and it is expected to be completed by late 2018. Moreover, the company is determined to launch more new products in 2H FY18. The company is progressing with its expansion plans supported by the marketing strategies in geographies including Japan and Europe. On the cultivation front, Elixinol has entered into joint venture with Kersey AG company LLC to produce and supply high cannabidiol hemp. Under the agreement, EXL has access to 700 acres of irrigated farmland immediately and has planted 173 acres of high CBD hemp planted in 1H FY18.

 

Revenue Growth (Source: Company Reports)

Stock Performance: The stock has been falling gradually from quite some time but held on to its support level of $1.34. Thereafter, snubbing the weakness, the price rebounded and move above the resistance level of $1.45 on the back of positive results. After consolidating for a couple of trading sessions, the stock seems to have now form a ‘Dark Cloud Cover’ (previous two candles are engulfed by one large bearish candle) which signals some more correction from the current level. However, $1.48 is the crucial support level for the stock and if the price sustains that level, there could be a good opportunity to make an entry in the stock. We recommend a “Speculative Buy” in the stock at the current market price of $1.48 as the number of new products are expected to be launched in FY19 and make an impact going forward.
 

Super Retail Group 

Decent Performance in FY18: Super Retail Group Limited (ASX: SUL) has posted FY18 total group sales of $2,570 Mn, an increase of 4.2% pcp. It was mainly driven by robust growth in all segments i.e., Auto, outdoor and Sports. Total segment EBIT was posted at $219.6 Mn, an increase of 5.09% over the comparative period. The company posted the normalized NPAT of $145.3 Mn, up 7.0% pcp. Higher NPAT was the outcome of reduced interest expense and supporting effective tax rate. Net Debt surged as the company opted for full debt funding of Macpac acquisition totaling to $133.8 Mn during the period. Based on the decent performance, the Board of Directors declared fully franked final dividend of 27.5 cents per share and it will be payable on October 02, 2018 with the record date of August 30, 2018. This brings the total full-year dividend to 49.0 cents per share, an increase of 5.4% higher than the last year. Moreover, for FY19, the company plans to open new stores, launch the new website, convert 9 Rays Stores among others.


Segmental Growth (Source: Company Reports)
Stock Performance: Stock has performed decently with a YTD return of 13.33%. There was a gap up opening on the day of full-year results, but the price could not sustain the levels and corrected sharply. The stock is, however, looking positive, holding the support level of $9.06. Moreover, there is no significant downside in the price expected, until the stock remains above the long-term rising trendline of, holding the support level of $8.77. Sighting the developments across the segments and healthy numbers posted by the company, we believe that the performance would continue in the months to come. We recommend a “Hold” rating on the stock at the current market price of $9.18.
 
 

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