3 Stocks Under Investors’ Purview – MXC, RAP and A2M

  • Sep 28, 2018 AEST
  • Team Kalkine
3 Stocks Under Investors’ Purview – MXC, RAP and A2M

MGC PHARMACEUTICALS LTD (ASX: MXC)

On 27 September 2018, the MGC Pharmaceuticals ltd.’s securities were reinstated to official quotation after the company’s announcement of sale of its MGC Derma business to cannabis investment company Cannaglobal, which was followed by intraday increase of 8.333% in the share price of MGC as on 27 September 2018. A binding term sheet has been signed for C$12.5 million in Cannaglobal equity, a C$2.5 million loan repayment to the company and a 5-year CBD and cosmetic materials supply agreement. To facilitate the transaction with Cannaglobal, the company has acquired the remaining 49% of MGC Derma held by partner Dr. M. Burnstein Ltd for C$1.25 million. Recently, a distribution agreement was signed by the company with A.M. Mangion Ltd which is a leading distributor of pharmaceutical products.

The company’s revenue increased by 146% to $296,811 in FY2018 from $120,242 in FY2017. The loss of the company increased by 1.25% to $8.24 million. Cash used in operating activities increased from $4.65 million in FY2017 to $5.88 million in FY2018. In the last six months, the company’s share price decreased by 40.23% as on 27 September 2018.

MXC slipped by 5.7% on September 28, 2018 (12:50 pm AEST).

RESAPP HEALTH LIMITED (ASX: RAP)

Resapp Health Limited (ASX: RAP) released its company’s presentation on 12 September 2018 in which the management advised that the company was-well funded to execute its ongoing clinical strategy. However, on 17 September the company announced a trading halt of its securities while the company was preparing an announcement regarding a capital raising. On 19 September 2018, the company made an announcement stating that it has received firm commitments from institutional and sophisticated investors to raise $7.5 million at a price of 22 cents per share.

The proceeds from the placement will be used to strengthen the balance sheet of the company to enable it to effectively pursue multiple projects simultaneously which includes investment in Sales and market capabilities to commercialize ResAppDx. And the proceeds will also be used to deploy resources for the expansion of clinical programs and investigate an array of new applications for company’s core technology. In the FY 2018, the total revenue of the company was 57% higher than the previous year and the loss after tax reduced by 35% to $6.53 million. 

In the past six months, the share price of the company increased by 60% and it was further up by 5% on September 28, 2018 (12:50 pm AEST). This one is an interesting stock to be watched out.

THE A2 MILK COMPANY LIMITED (ASX: A2M)

THE A2 MILK COMPANY LIMITED (ASX: A2M) produces, markets and sells premium branded dairy nutritional products in Targeted global markets. In FY2018, the total revenue of the company increased by 68% to NZ$923 million compared to last year. The EBITDA of the company increased by 101% to NZ$283 million. The earnings per share of the company increased by 113% to NZ$21c. For upcoming years, the company is expecting further growth in revenue particularly in respect to the market growth of the nutritious product in China and Liquid Milk in US. The company is planning to spend more on marketing expenditure given continued investment in Australia market and US market expansion.

In the past six months, the share price of the company decreased by 19% as on 27 September 2018. It was further down by 3% on September 28, 2018 (12:50 pm AEST). It seems the stock is now under the sell zone as investors have been taking profits while the group seems to have exhausted many growth drivers as of now with more cost being anticipated going forward.

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