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RE: Results beat forecasts, plus positive outlook29 May '22
Despite the management presentation the market has not reacted positively. For those of a brave disposition now is a decent entry point….I don’t feel like committing more money until the recovery starts.
RE: Results beat forecasts, plus positive outlook21 May '22
I've been doing some further analysis and judging VLG based on a study of its 2021 accounts. One element that stood out for me was how the Operating Profit differed dramatically from the "Adjusted Earnings". There are 3 parts to this: Acquisition costs, share based payments and Amortisation. 1. Amortisation assumes all its brands are worthless within 5-10 years. My personal view here is that while it is a prudent perspective but not "real". In 5 years will be no longer use mouthwash? Will the brand suddenly become worthless? (Bearing in mind ongoing VLG sales and marketing). I don't think so. 2. Acquisition costs - by definition this is non-repeatable. So fair to exclude it to look at y-o-y trends. 3. Share based payments - Warren Buffett's view is that adjusted earnings shouldn't exclude this, so I've recalculated the 2020 and 2021 adjusted earnings ***including*** this. The results are 2020 - EPS 3.68p/share 2021 - EPS 4.5p/share An 18.2% yoy increase. And that's in a year where lots of bad stuff happened, covid, 2020 hand gel sales not repeating in 2021 due to market saturation, ineffective China distributor). Can we extrapolate to 2022? Absolutely. If we take the Q4 2021 run rates of the acquired businesses, new (proven) Chinese distributor achieves same as 2020 Chinese sales), apply 2021 growth rates (1.4%) even though the 2022 order book is “comfortably ahead” then I conservatively arrive at adjusted 2022 EPS at 5.2p (deducting share based payments). Plus its cash generative, has capacity to grow without further fixed asset investment, plus has capacity to acquire. Lots of reasons why adjusted EPS 5.2p could be higher.
RE: Results beat forecasts, plus positive outlook20 May '22
Cheers Agricore, a good summary. A couple of extracts:
"If Venture delivers on analysts’ forecasts, then expect a material re-rating from the current valuation of 5.5 times cash profit estimates to enterprise valuation. That’s a hefty 60 per cent plus discount to sector peers, as I pointed out at the start of the year (‘Venture Life’s recovery potential revealed’, 10 January 2022). N+1 Singer’s 66p target price is not only double Venture’s current share price, but the directors are targeting further earnings accretive bolt-on acquisitions to utilise the £50mn low-cost credit facilities in place, another catalyst for earnings upgrades to support my 100p target. Buy."
"On this basis, expect underlying pre-tax profit (before amortisation charges, share based payments and exceptional costs) of £6.8mn, or 49 per cent higher than in 2021, to produce adjusted earnings per share (EPS) of 4.5p. This implies the shares are rated on a current year price/earnings (PE)ratio of 7.3. They are priced 43 per cent below book value, too."
RE: Results beat forecasts, plus positive outlook18 May '22
There is a lot of caution and talk about difficult Q1, logistics difficult and margin was down several % which is never good news. The market is unconvinced and needs to see what VLG can do…. Can it realise the potential sales in the pipeline. Does it have pricing power or will margins be further eroded by higher costs? Plenty of potential….but management has promised alot in the past and then been caught out by events…..IMO there is another 12-18m of results to deliver before there will be a significant rerating.
RE: Results beat forecasts, plus positive outlook17 May '22
Hi Rivaldo, really pleased with the results - and they were exactly along the lines of the trading update. Singer are also bullish in their update this morning and see an 85% upside from here.
The attraction here (apart from the obvious value) is its defensiveness. Even though it's growing, the business is quite defensive: The products are fairly impervious to the challenges of inflation (inelastic demand) - I mean do you even know how much a bottle of mouthwash is? Most people don't I would think. Let alone the price of some of the more esoteric treatments. If people need them they just buy them - simple as that.
Results beat forecasts, plus positive outlook17 May '22
Pleasantly surprised by the results, which were nicely ahead of broker expectations. The outlook is confident too.
Producing 4.65p adjusted diluted EPS in a pandemic-hit year when Chinese sales and hand sanitizer sales both reduced to almost nothing is pretty impressive.
Hopefully the new Samarkand distributorship agreement will kick in smoothly and quickly given SMK's already existing trade routes into Asia.
Cenkos have introduced what they call "conservative" forecasts of 4.52p adjusted EPS this year.
"FY21 results, positive outlook
Venture Life Group has reported its results for FY21A, with revenues and adjusted EBITDA coming in ahead of our forecasts. Revenues, supported by two acquisitions, grew 9% to £32.8m with the acquisitions more than offsetting lost FY20A COVID-related sales and significantly reduced shipments to China. The gross margin was also affected by these factors, though also supported by higher margin acquisitions. Adjusted EBITDA grew 8%.
Management have provided a positive outlook for FY22E, based on trading to date and the order book, which supports our forecasts and the introduction of FY23E expectations. We believe the company has set strong foundations for growth and maintain our Buy recommendation."
"Investment thesis – We believe the H2/21A performance demonstrates the potential within Venture Life. Looking forward, the company has a stronger and broader portfolio of Brands, a larger order book (vs the same point in 2021) and increased available manufacturing capacity to support organic Group level growth. With a strong balance sheet, we expect this organic growth to be supported by additional accretive acquisitions. We maintain our Buy rating."