ANO 0.00% 72.0¢ advance zinctek limited

Quick analysis from the initial read.This is definitely a...

  1. 172 Posts.
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    Quick analysis from the initial read.

    This is definitely a company that has been hit for six with the COVID related shutdowns.

    Keeping in mind Q4 is normally the slowest quarter...but you can still tell that all sunscreen orders essentially fell off a cliff.

    Q1-3: Revenue: $16.295m
    Q4: $1.671m

    On top of this (in expectation of a big year) they have purchased so much raw stock that the cash flow was essentially break even! Talk about ramping up for a big year...

    That said, let's look at the positive, they still have managed to significantly increase investment in the future, via increased manufacturing production (5000 tonnes!), a greater breadth of product, a huge increase in Alusion (& more opportunity for this going forward) , and to top it off they have secured a 1st mover advantage via new distribution facilities for when (if) the market rebounds. All in all a very well run company that is using its shareholders funds wisely.

    My initial questions would be around:

    Rest of World:

    $969,770 versus $1,568,821 -- what's the reason for this? Seems bigger than a one quarter slowdown, every other region was still well up overall, did we lose a major customer, if so, why? Who?

    Everzinc:

    Confirming they have no concerns re Everzinc being competitive on a cost basis. Obviously there's a market share battle happening in the mineral sunscreen space, how have Everzinc responded? can we use our lower cost structure to grab share in Europe? etc

    Japanese/Korean/China Market:

    I've long thought the ultimate is the east Asian market (especially given the prominence of skin whitening as a desirable property) - disappointing to see once again that this part of the world is still a tiny proportion of sales. What work is happening to activate partners/distributors/brands in this part of the world?

    Overall a very solid result that is clearly laying the foundation for a valuable company in 5,10+ years, being run for the long term not the short. Very disappointing that COVID has occurred, but hasn't seemed to stop them investing back in the business at all. (though our mooted dividend is probably now a FY22 goal)





 
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