Capilano Honey Ltd


CZZ Details
 
Building partnerships for future growth: Capilano Honey Ltd (ASX: CZZ) is boosting its capital position by raising $16.8 million through right issue and the offer documents have been dispatched to eligible shareholders. On the other side, CZZ made a partnership with Comvita, a global natural health products company for forming an apiary business. The new business aims to operate a number of Leptospermum honey producing apiaries in Australia, to deliver premium honey for a range of medical and natural health products.
 

Financial performance (Source: Company Reports)
 
CZZ also reported a decent half year of 2016 performance wherein the revenues rose by around 15% yoy to $67.1 million on the back of ongoing increase in market share of branded retail products throughout the business. Export sales surged by 32% yoy during the period driven by the Asian markets which rose by over 53%. Given the group’s strong performance, CZZ stock already surged 75.23% over the last one year (as of June 14, 2016), placing them at very higher levels. The stock is also trading at a relatively higher P/E. Hence, we give an “Expensive” recommendation on this relatively lower dividend yield stock at the current price of $20.80
 

CZZ Daily Chart (Source: Thomson Reuters)
 
Vitaco Holdings Limited


VIT Details

Potential Niche Player: Vitaco Holdings Limited (ASX: VIT) expects to have 23% growth in revenue and 15% in EBITDA for FY16 as compared to FY 15. The group had acquired Musashi in July 2015 while Musashi added EBITDA of $4 million from April 2016. The company is expanding presence in China and appointed General Manager from China itself who has joined the board from June 01, 2016. VIT has also recently entered the UK market through a range of Aussie Bodies protein bars at Boots. The United Kingdom consumption of sports nutrition products per capita is approximately one-third the amount in Australia. It represents a significant upside opportunity for a brand like Aussie Bodies. VIT is expanding its existing product portfolio in the Middle East, which is predominantly vitamins & supplements with the Sports Nutrition product. We give a “Buy” recommendation on the stock at the current price of $1.455
 

VIT Daily Chart (Source: Thomson Reuters)
 
Freedom Foods Group Ltd


FNP Details

Acquisitions & Capacity Expansion: Freedom Foods Group Ltd (ASX: FNP) has reported a 21% growth in the first half 2016 sales driven by growth in sales of Australia’s Own Kids Milk in China in Q2 of 2016. On the other hand, the sales rise was partly impacted by Darlington Point Mill acquired by the group in December 2015. The operating EBITDA had increased 32% in the first half 2016 as compared to corresponding period of 2015 due to increase in Cereal, Snacks and Beverage operations but is offset by a decrease in contribution from Seafood and increased loss in North America. FNP has even raised capital and realized their investment in the a2 Milk Company. Meanwhile, FNP has commenced construction of a new UHT facility at a site in Ingleburn in South West Sydney which is due to be completed by November 2016, with the commissioning process estimated to be completed by April 2017. The first stage installed capacity is expected to be approximately 80 million liters, from current capacity of 50 liters. From 01 January 2016, the company has increased its shareholding in PDG to 50% (from the conversion of notes already held by the company). Freedom is also launching new range of Australian dairy milk products in Vietnam.
 

First half of 2016 performance (Source: Company reports)
 
Pactum Dairy Group or PDG has reported sales of $30 million and will significantly step up in sales in the second half 2016 due to new contracts and increasing demand in Australia, China and South East Asia. FNP is expanding its manufacturing contract with Chinese food and beverage distributor, Pinlive which would go on sale in the second half of 2016. The company has also recently announced for exercising employee share options. Given the various expansion & developments, FNP stock has risen 24.62% in the last four weeks (as of June 14, 2016) placing it a very unreasonable levels. As a result, the stock is trading at a very high P/E and accordingly, we give an “Expensive” recommendation on the stock at the current price of $3.86, and would review the stock at a later date.
 

FNP Daily Chart (Source: Thomson Reuters)

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