Clover Corporation Limited

CLV Details

Fall in Demand During 1HFY21: Clover Corporation Limited (ASX: CLV) is involved in the manufacturing and supply of functional food ingredients with a market capitalisation of $339.27 Mn as on 21^st October 2020. Recently, the company notified with update on trading performance for 1H FY21, wherein, it stated that it has witnessed a fall in demand with lower than originally expected orders upcoming in Q1 FY21 from infant formula manufacturers. The fall in demand was largely due to the recalibration of market after a significant rise in Q4 FY20 orders. However, the company experienced growth in sales across all key business areas during FY20 against FY19. In addition, EU region provides substantial growth to the business supported by new customers and existing rising demand to match the new IF standard.

EU Sales (Source: Company Reports)

Outlook: Previously, the company advised the market that COVID-19 led uncertainty may impact the business positively and negatively and as a result of this, the company is witnessing reduced demand in 1H FY21. As of now, CLV is expecting to report a fall of 15% to 25% in revenue as compared to 1H FY20 due to continuing COVID-19 uncertainty. Despite these circumstances, the company continues to engage with its customers for retaining its market position. In addition, CLV also continues to work on numerous growth projects for future business. Moreover, the company is likely to provide additional busines update on Annual General Meeting, which has been scheduled to conduct on 20^th November 2020.

Stock Details: As on 31^st July 2020, the company reported cash balance of $9.2 million as compared to $8.3 million as on 31^st July 2019. CLV ended FY20 with net debt of $5.4 million against $5.2 million in FY19. In addition, the company announced a final dividend of 2.5 cents per share. Current ratio of the company stood at 5.40x in FY20 as compared to the industry median of 1.28x, which indicates the company is well-positioned to settle its short-term obligations against the broader industry. On the technical analysis front, the stock price of CLV has a support level of ~$1.624 and a resistance level of ~$2.451. The stock of CLV closed at $1.750 per share, down by 14.216% on 21^st October 2020 owing to release of trading update for 1H FY21.

CLV Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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