Are Clover Corporation's FY18 Results Meeting Shareholders' Expectations?

  • Nov 26, 2018 AEDT
  • Team Kalkine
Are Clover Corporation's FY18 Results Meeting Shareholders' Expectations?

On 23 November 2018, in the annual general meeting of Clover Corporation Limited (ASX: CLV) where the managing director of the company, presents before its shareholders, the mission and vision of the company, the financial performance of the company, its sales statistics based on geography and Product. Further, a market update followed by its Melody Dairies investment. He also disclosed about the growth platform and its half-yearly outlook for FY2019.  

The presentation begins with the vision and mission statement of the company. Further, as the presentation proceeds, the performance highlight for the FY2018 was presented before the investors. As compared to the FY2017, this year there was an increase in the revenue of the company by 32% which is equivalent to $62.9 million. There was an increase in the net profit by 109% which is equivalent to $7.6 million. The company increased its investment in people and technology to develop new products and sales which increased in the operating expense by $8.3 million. It was reported that there were new products launched which led to the growth of the company in new segments and countries. The company maintained a strong balance sheet with the cash and cash equivalent at the end of the year worth $7.9 million. The company declared a final dividend of 1.25 cents per share.

The balance sheet of the company as on 31 July 2018, reflected the net asset of the company increased by $5.5 million. There was an increase in the trade receivables by $3.2 million which reflects the increase in the sale of the company. The company was able to maintain its inventory. The total liabilities have gone down by $3.9 million. There was also a fall in the current liabilities by $0.2 million.

Compared to the FY2017, there was an increase in the sales growth in its key regions. Amongst all the key regions Australia and New Zealand remain the major growing region. The major sales revenue of the company is driven by encapsulated Tuna oil.

It was reported that CFDA registration to sell international brands to China has slowed which has made the customers of CLV cautious about the inventory. A new EU regulation has come out where DHA is a mandatory component in the infant formula and this need to be included by February 2020. For this, the manufacturer of the infant formula will be using encapsulated DHA like Clove. Those brands which have manufacturing in Australia / New Zealand is more in demand. Now China has extended its CBEC market (cross-border electronic commerce) as per the new market regulations expected in early 2019. On the other hand, clover already supplies its manufacturers who are directly benefitted using the CBEC trade.

The investors were also shared an overview of Melody Dairies investment. Melody Dairies is a separate company that is into the business of building and operating nutritional spray dryer. It is situated in Hamilton, New Zealand. Under this segment, there was an increase in the volume by 20%. CLV maintains its relationship with NZFIW who the owner of the dryer is and also operates in the same location. Based on the share of the business, the four partners of the Melody dairies will access the dryer’s capacity. The capacity of the dryer is 1.2 metric tonnes per hour.

The company is looking for its growth in the European market which will be driven by the need to increase the DHA levels in the infant formula. Further, the company has entered into a new contract to purchase the share in spray dryer facility. CLV is stepping ahead to target sports nutrition as well as children’s and adult’s health. CLV is further looking to expand in Asia, the USA, and South America. Further, they will work in improving the efficiencies and reduce operating cost.

Based on the performance of the company, it will create a positive impact on the shareholders, however, due to market volatility there was a fall the market price of the share and it traded at A$1.350 by the day end.


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