Stocks’ Details

NOVONIX Limited

Additional Listing on OTCQX®:  NOVONIX Limited (ASX: NVX) is engaged in the development of a strategy to transform itself into a supplier of advanced battery materials, equipment, and services to the global Lithium-ion Battery (LIB) market. The market capitalisation of the company stood at ~$529.65 Mn as on 24^th September 2020. Recently, the company notified the market with an update in relation to the additional listing of its shares on OTCQX®, which happens to be the top market in North America. The company added that it has filled all requirements for the listing and waiting for a listing date.  In another update, the company announced the appointments of Dr. Chris Burns as Chief Executive Officer and Nick Liveris as Chief Financial Officer of the company.

FY20 Key Highlights: For FY20, the company reported revenue from contracts with customers of $4,253,435 as compared to $1,817,049 in FY19. The company recorded a statutory loss after tax of $20,028,526 as compared to a loss of $26,121,912 in FY19. The company closed the year with net assets of $66,532,293 and cash and cash equivalents of $38,807,662.

Key Financials (Source: Company Reports)

Outlook: The company seems to be well-placed to take part in the rapidly rising electric vehicle and energy storage system market owing to its operations in North America. The company’s priorities for FY21 revolves around growing anode production capacity to 2,000 tpa. The company has scheduled to conduct its Annual Shareholders Meeting on 19^th November 2020.

Stock Recommendation: The stock of NVX has moved up by 55.10% and 860% in the past three and six months, respectively. The 52-week low-high range for the stock stands at $0.130-$2.400, respectively. In addition, the stock is trading at a price to book value multiple of 8.0x as compared to the industry average of 3.7x on TTM basis. On the technical analysis front, the stock of NVX has a support level of ~$1.049 and a resistance level of ~$1.539. Therefore, considering the price movement in the past months and current trading levels, we suggest investors to avoid the stock at the current market price of $1.200 per share, down by 21.053% on 24^th September 2020, owing to the release of North America Listing. 

Gage Roads Brewing Co Limited

Opening of New Project: Gage Roads Brewing Co Limited (ASX: GRB) is engaged in the brewing of craft beer, lager beer, cider, and other beverages. The market capitalisation of the company stood at ~$68.44 Mn as on 24^th September 2020. Recently, the company announced the opening of Atomic Beer Project in Sydney. In another update, the company notified the market with the purchase of 27.1 million shares at 5 cents per share by the Board and senior management team.

Growth in Good Drink Sales: During FY20, the company experienced numerous challenges, which mainly included an isolated and temporary shortfall in the sales number during 1H.  Revenue for FY20 amounted to $36.8 million, reflecting a fall of 7% over pcp. The company experienced a rise of 18% in good drinks independent sales to 2.9m litres and draught sales encountered a growth of 9%, despite the challenges led by COVID-19 pandemic. Amid the uncertainty during FY20, the company maintained full production and supply at its operations.

Key Financials (Source: Company Reports)

Outlook: The company expects to provide strong returns in FY21, which is likely to be underpinned by its investment in sales and marketing. The company has scheduled to conduct its Annual Shareholders Meeting on 19^th November 2020.

Stock Recommendation: The company reported a rise of $4.1 million in its debtors, mainly due to a change in payment terms with its leading national chain customer. In addition, the company managed to secure a senior debt facility of $5.8 million, which primarily supported the business to finance its short-term working capital requirements. In order to strengthen the balance sheet and enhance financial flexibility, the company finished a capital raising of $5.2 million through placement. GRB has an EV/Sales multiple of 2.2x against the industry median (Beverages) of 3.1x on TTM basis. In addition, the stock is trading at a price to book value multiple of 1.3x as compared to the industry median (Beverages) of 2.8x on TTM basis. On the technical analysis front, the stock of GRB has a support level of ~$0.043 and a resistance level of ~$0.06.  Therefore, considering the growth in good drink sales, healthy business operations, recent capital raising and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.055 per share on 24^th September 2020.

The Food Revolution Group Limited

Launch of New Wellness Range: The Food Revolution Group Limited (ASX: FOD) is engaged in the production of food and beverages. The market capitalisation of the company stood at $32.61 Mn as on 24^th September 2020. Recently, the company rolled out Eridani, which is the premium range of Marine Collagens and secured an initial order of $1 million from the Chinese e-commerce trading platform “C- Mart”. On 3^rd September 2020, the company stated that it has received a rise in juice prices from major domestic retailers, which is likely to be effective from the September 2020 end. This would also provide strong revenue momentum for the business in FY21.

Growth in Gross Sales Revenue: During FY20, the company purchased Original Juice Co Black Label brand (OBL) from Heinz to strengthen its existing functional beverage range. During the year, the company experienced a rise of 31.9% in gross sales revenue to $42.2 million. Beverage revenues for the period amounted to $36.6 million, which indicates the intensity of sales from the Original Juice Black Label brand. Normalised EBITDA loss for the year amounted to $1.1 million.

Financial Summary (Source: Company Reports)

Outlook: The company seems to be well-placed to report growth in financial performance during FY21 on the back of improving volumes, rising prices, security of raw material supply as well as FOD’s focus on operational efficiencies and cost control.

Stock Recommendation: The stock of FOD has corrected 10% and 18.18% in the past one and three months, respectively. As a result, the stock of inclined towards its 52-week low level of $0.036, offering decent opportunities for accumulation. On the technical analysis front, the stock of FOD has a support level of ~$0.036 and a resistance level of ~$0.055. Therefore, considering the growth in sales revenue, launch of new wellness range, current trading levels and key risks, we give a “Speculative Buy” recommendation on the stock at the current market prices of $0.047 per share, up by 4.444%  on 24^th September 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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