Wellnex Life Limited

WNX Details

Highlights of Presentation at "Hidden Gems” Webinar: Wellnex Life Limited (ASX: WNX) is a wellness and health firm engaged in distributing dietary and vitamin supplements. As of 16 July 2021, the market capitalisation of WNX stood at ~$36.03 million. In the recently held ShareCafe Small Cap "Hidden Gems" Webinar, WNX’s CEO, George Karafotias, shared the company’s growth strategy.

• Increasing the Brand Portfolio: The strategy is focused on increasing the brand portfolio through acquisition and new product development. Further, the company is focused on capturing a wider market through increased distribution channels.
• Growing Market Share: WNX is planning to grow its market share in different verticals including, vitamin and dietary supplements, sports nutrition, herbal / traditional products, health & wellness category, etc.
• Drivers of Future Revenue Growth: WNX expects that its future revenue will be supported by the launch of new products, new strategic partnerships, and acquisitions.

Management’s Address: On 15 July 2021, the management affirmed the investors that WNX is now well-placed to tap the health and wellness sector opportunities with a robust balance sheet, a clear plan for product development and growth.

Restoration of Quotation at ASX: On 15^th July 2021, the securities of Wellnex Life Limited were reinstated to official quotation. The company has met all the conditions before the re-quotation at ASX. WNX has completed and received $1.31 million capital under an entitlement offer contained in the prospectus (released on 13 May 2021) and a supplementary prospectus (1 July 2021). WNX has also completed the allotment and issue of shares to applicants as per the terms of the offer.

Trading Update:

• Revenue Growth: WNX posted revenue growth of 21% YoY to $4.65 million for Q4FY21. The revenue growth is due to robust sales of the brands - Little Innocents and Uganic in the quarter.
• Reduced Opex: WNX reported a decline of 67% YoY in operating expenses in Q4FY21.

Revenue & Net Loss Trend from FY16-FY20; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of changes in consumer demand, spending and income. WNX is exposed to delays in regulatory approvals and launch plans for distributing products in the market.  

Outlook: In a recent letter to shareholders, the company has informed the shareholders of its plans to launch three new brands in 1HFY22 and a revenue base of ~$18.3 million for FY21. Based on the purchase order pipeline, WNX estimates an increase of 7.5% QoQ in revenue to ~$5.1 million in Q1FY22 (September 2021 quarter). The company also expects to sign and undertake more supply contracts in the September quarter.

Stock Details: The stock of WNX gave a negative return of 67.04% in the past three months. The shares have been trading again on the ASX from 15 July 2021 post capital raise and share allotment completion on 13 July 2021. The stock of WNX opened at $0.120 today and closed at $0.165, up by 37.50% as of 16 July 2021. This rise in the stock price can be attributed to the recent reinstatement of shares for trading at ASX and the CEO’s presentation at the “Hidden Gems” webinar.

Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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