Wellness and Beauty Solutions Limited

 

WNB Details
 
COLES’ Stores to Sell WNB’s Jbronze by Jennifer Hawkins: Wellness and Beauty Solutions Limited (ASX: WNB) is a non-surgical medical aesthetics services company that offers anti-aging cosmetic and body-sculpting treatments. As on 17 June 2020, the market capitalization of the company stood at ~$7.73 million. On June 16, 2020, the company informed the market that its wholly owned subsidiary, The Giving Brands Company Pty Ltd (GBCo), has been instructed that Jbronze by Jennifer Hawkins, (Jbronze) will be sold in about 800 COLES stores, starting from mid-August 2020. The company predicts that the brand is likely to accomplish sales of more than $2 million, on an annual basis in FY2021.
 
Results of Share Purchase Plan: On June 10, 2020, the company stated the results of its Share Purchase Plan (SPP) offer which was published on 11 May 2020. WNB has obtained valid applications from shareholders totalling $222,000 for the issue of 27,750,000 fully paid ordinary shares at $0.008 per share. On 11 May 2020, the company had raised $1.3 million in a Share Placement wherein it issued ~163 million ordinary shares at $0.008 per share. The proceeds from the raised funds will be utilised for working capital for sales, distribution, and marketing across the GBCo brand portfolio.
 
WNB Receives Follow up Purchase Orders for ELLE and MICRO19 Portfolios into Asia: The company has recently revealed that The Giving Brands Company Pty Ltd, has received additional purchase orders for $600k for the sale of its brands into Asia. The purchase orders for WNB brand ranges, including ELLE Makeup, ELLE kids, ELLE Baby and MICRO19, are for retailers in Singapore and Hong Kong.
 
Quarterly Highlights (For the Period Ended 31 March 2020): For the third quarter ended 31 March 2020, cash receipts of the company stood at $3.058 million as compared to $3.855 million in the previous quarter. This result reflects the challenging retail environment because of bushfire crisis in Australia, which was compounded by the COVID-19 pandemic. For the quarter, the company reported a reduction of 11.3% in net operating cash outflows to $2.12 million.
 

Quarterly Cash Used in Operating Activities (Source: Company Reports)
 
Growth Strategies: During the third quarter, the company launched MICRO19 hand sanitiser to open new sales channels and respond to the demand for hand and surface spray sanitiser to protect people against the COVID-19 outbreak. During the period, WNB received its first order for MICRO19, which valued more than $400K with receipts to be recognised in the forthcoming quarter. The company has taken a decision to close its nine Immersion Clinical Spas following the social distancing rules. It is, however, focused on deriving financial benefits out of its recently announced MICRO19 sanitiser range. Further, the company is confident about the strong consumer demand for hygiene products in the future.
 
Risk Analysis:The company’s consolidated activities are exposed to financial risk, foreign exchange fluctuation risk, interest rate risk, credit risk and liquidity risk. The company also has a leveraged balance sheet, which remains a potential headwind. As of 31 December 2019, total debt stood at ~$8.43 million while cash and cash equivalents amounted to ~$3.5 million.
 
Stock Recommendation: As per ASX, the stock WNB gave a negative return of 40% in the past six months and a negative return of 33.33% in the last one month (as at 16 June 2020). The stock is trading below the average of its 52-week trading range of $0.002 - $0.025 and holds a limited potential for growth. During 1H20, gross margin of the company was 29.6%, lower than the industry median of 69.1%. The company’s debt to equity ratio stood at 1.53x in the same time span, higher than the industry median of 0.13x. On the trailing twelve months (TTM) basis, the stock is trading at a price to book value multiple of 1.4x, in line with the industry median (Healthcare Providers and services) of 1.4x. Considering the volatility in returns, valuation on TTM basis, lower gross margin, closure of clinics, and uncertain outlook due to the increased spread of COVID-19 pandemic, we have a watch stance on the stock at the current market price of $0.007, up 16.667% on 17 June 2020.  

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

Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.