Stemcell United Ltd
Investment and collaboration move:Stemcell United Ltd.’s (ASX: SCU) stock surged 16.67% on March 29, 2018 and the company has requested for Trading Halt Session until April 03, 2018. The company has initiated discussion on collaboration to extend the plant cell technology for the extraction of cannabis plant stem cells for the production and use in TCM products for cosmetic purposes. SCU CEO Mr. Philip Gu is in China to conclude the discussion with a company on investment and collaboration on TCM products and cannabis products for beauty purpose. However, if the discussion does not materialize, then the company will end the trading halt and make an announcement that the deal has not been successful. Meanwhile, SCU stock has fallen 22.48% in three months as on March 28, 2018. The global Stem Cell Therapy Market, that was valued at USD 86.62 million in 2016, is projected to reach USD 221.03 million by 2025 as per Stem Cell Therapy Market Professional Survey Report 2018 to 2025; and this will be beneficial to the group. Based on the foregoing developments, we give a “Hold” recommendation on the stock at the current price of $0.035
EML Payments Ltd
Recent changes to New South Wales (‘NSW’) legislation relating to purchasing of gift cards:EML Payments Ltd.’s (ASX: EML) stock fell 2.5% on March 29, 2018 after the company announced that they are aware of the recent changes to New South Wales (Fair Trading Act 1987) legislation relating to purchasing of gift cards, commencing 31st March 2018. The Fair Trading Act 1987 (NSW) introduces a mandatory minimum expiry period of 3 years for gift cards and gift vouchers sold to a consumer in NSW, Australia, and a ban on post-purchase administration fees. The proposed changes are expected to affect a small portion of EML’s Australian gift card business as over 80% of Australian Non-Reloadable Gross Debit Volumes come from corporate funded incentive card programs which are exempt from these legislative changes. For FY18, EML expects to generate less than 0.5% of group EBTDA from consumer loaded gift programs impacted by the change. Moreover, for the cards that will be sold within NSW impacted by the legislative changes, the time in which card breakage converts into cash will increase from 12 months to 36 months. However, the impact of this delayed cash flow will be immaterial to the group’s results and will be offset, to some degree, by interest generated on the breakage funds, which the company are required to hold for the extended period. Overall, the NSW legislative changes are a part of the varied international regulatory environments in which EML operates and does not have significant impact on the company’s international markets. Meanwhile, EML stock has fallen 35.60% in three months as on March 28, 2018; although the group had reported a decent interim result with EBTDA up 35% to $13.5 million in HY 2018 with 18% growth in revenue while gross margins of 75% was down 3% on prior corresponding period with the product mix shift towards Reloadable and B2B Virtual Payments, and cash outflow was reported against cash inflow of prior period. As of now, we give a “Buy” recommendation on the stock at the current price of $1.155
Bellamy’s Australia Ltd
Rising competition: Bellamy’s Australia Ltd.’s (ASX: BAL) stock was down 8.15% on March 29, 2018, while the group seems to be coming under pressure owing to the launch of Nestle’s new a2-protein only infant formula and investors going in for some profit booking looking at the rising competition. This has not only affected Bellamy’s, but the stock of the a2 Milk company Ltd. as well. On the other hand, Macquarie Group Ltd became a substantial holder of BAL with 5.3% interest as on March 26, 2018. We maintain a “Hold” at the current price of $19.84
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