Greencross Limited

Rising online sales: Greencross Limited (ASX: GXL) reported a solid sales momentum which has continued into FY19. They reported a 7.5% top line growth and 4.9% like-for-like (LFL) sales growth. They delivered an 8.5% LFL sales growth while added 17 in-store vet clinics with 15 in Australia and 2 in NZ. Twenty two percent of retail stores have an in-store clinic while the group has a sound loyalty program with over 1.9 million active members accounting for over 90% of retail sales. Their Private label sales rose to over $115 million while private label food sales in Australia surged by 25%. GXL reported an outstanding online sales rise of 70% to over $20 million, driven by click & collect. GXL made a positive start in FY19 reporting a 5.8% Group LFL sales growth as of week 6. They reported a 6.1% Group Retail LFL sales growth and a 5.2% Australian Vet LFL sales growth including negative LFL sales in standalone GP clinics of 0.5%. As of week 6, GXL reported 8.0% Group revenue growth. Going forward, GXL would cut total capex in FY19 to over $50 million, and is aiming for an Annualized cost saving target of $10m to $13m with $5.8m realized to date. We maintain a “Hold” recommendation on the stock (which has a market capitalisation of $477.5m) at the current price of $ 3.890.


Solid loyalty programs (Source: Company reports)
 

Mayne Pharma Group Limited

Better second half of FY18 performance: Mayne Pharma Group Limited (ASX: MYX) reported a better trading in 2HFY18 with adjusted EBITDA rising 35% to $95m on 1HFY18 boosted by the rebound of generic products. The group delivered a positive operating cash flow of $121.5m with 2HFY18 operating cashflow rising 53% on 1HFY18. They expanded Specialty Brands field team to 114 sales representatives leading to the growth of Fabior® and Sorilux® in the second half. They launched six generic products in the US, and filed eight products with the US Food and Drug Administration (FDA) including generic NuvaRing® and a New Drug Application (NDA) for SUBA®-Itraconazole anti-fungal capsule. Their Metrics Contract Services delivered three consecutive years of double digit revenue growth in USD and got the first commercial contract manufacturing revenues. The group made Strategic investments at Salisbury, South Australia and Greenville, North Carolina wherein many generic products transferred in-house during the year which have contributed to improved product margins in the second half. These positive drivers led to the stock rise of over 53.1% in the last three months (as of August 24, 2018). We recommend investors to watch the stock (which has a market capitalisation of $ 1.74bn) as we rate the stock to be “Expensive” at the current price of $ 1.090.


Segment performance (Source: Company reports)

 
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