Wattle Health Australia Limited

WHA Details 

Extension of Entitlement Offer: Wattle Health Australia Limited (ASX: WHA) is engaged in developing, sourcing, and marketing Australian made dairy, health, and wellness food products in Australia. The company operates in the fast-moving consumer goods industry (FMCG), focusing on infant formula and dried dairy products. Wattle Health Australia Limited has informed the market regarding extending its entitlement offer for the existing shareholders of up to 19,220,786 shares. The company has announced on 2 June 2021 that the closing date of its non-renounceable entitlement offer has been extended till 21 June 2021. Under the proposal, the existing shareholders of Wattle Health Australia Limited will receive one share of Wellnex Life Limited (WNX) for 12 shares held in Wattle Health Australia Limited at an issue price of $0.15 per entitlement share. The company is looking to strengthen its balance sheet by raising $2.88mn (Before Costs) through the entitlement offer. The funds would be utilised for meeting working capital requirements and for growth purposes. Wellnex Life Limited is expected to recommence trading on ASX subject to following listing rules –

1. An existing portfolio of consumer brands already in stores and on shelves.
2. Annualised revenue of more than $20mn
3. Distribution relationships with leading retail groups
4. Strong balance sheet.
   

Important Dates: Wattle Health Australia Limited has extended its entitlement offer for its shareholders till 21 June 2021 against 2 June 2021 announced earlier. The company has reserved 16 June 2021 as the last date to open the entitlement offer. Moreover, the company would be announcing the result for the entitlement offer on 24 June 2021. The company would issue reinstatement of the company’s securities to trade on ASX on 29 June 2021. Lastly, the company would issue new securities holding statements on 6 July 2021.

Key Events (Source: Company Reports)

Change in the Company’s Name: Wattle Health Australia Limited (WHA) has announced the change in its name to Wellnex Life Limited and ticker to WNX following the shareholder’s approval at the Annual General Meeting (AGM) held on 21 May 2021. After the entitlement offer gets completed, Wattle Health Australia Limited will be relisted on ASX with the name of Wellnex Life Limited (WNX).

1HFY21 Financial Highlights: Wattle Health Australia Limited has reported an increase in revenue in 1HFY21 to $714k against $463k in 1HFY20, due to increased sales for Wattle Health’s Uganic and Little Innoscents brands. The company has incurred a loss of $12.22mn in 1HFY21. The company has seen a decline in its cash balance to $110k as on 31 December 2020 against $1.11mn as on 30 June 2020. 

Key Risks: The company is mainly engaged in the production of consumer goods. Thus, any disruption in the supply chain may impact the business of the company. In addition, the company holds interest-bearing liabilities. Therefore, any severe change in interest rates may affect the financials of the company. 

Outlook: The company remain focused on expanding its brand portfolio through inorganic growth. Wattle Health Australia Limited expects to capture a broader market through increased distribution channels going forward.

Stock Update: The company has offered its existing shareholders with an entitlement of WNX shares to be listed on ASX soon. The company has no borrowings as reported on 31 December 2020. The company has seen increased sales of its renowned brands through leading retailer Chemist Warehouse in Australia in 1HFY21. The stock was last traded at $0.530. 

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.

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