Why did Cellmid’s (ASX:CDY) shares end today’s session on a high?

  • January 25, 2021 07:39 PM AEDT
  • Team Kalkine
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Why did Cellmid’s (ASX:CDY) shares end today’s session on a high?

Summary

  • Cellmid Limited announced the first order from Chinese distributor and released its Q2 FY2021 highlighting improved Australian and US e-commerce performance.
  • The significant order, coupled with improved cashflows and the ongoing shift to e-commerce, drove Cellmid’s share price.
  • The Company’s US e-commerce performance continued to improve from a lower base. In the last six months, the total conversion rate was up twenty times.
  • The Australian direct-to-consumer performance was impressive with the conversion rates improving to 186% six months into the new website launch.

Health and beauty-tech business, Cellmid Limited (ASX:CDY) reported a growth of 9.523% in its share price post the release of two updates: new order for its Jo-Ju® and Lexilis® products in China, and Q2 FY2021 (period ended 31 December 2020) business update.

CDY shares settled at A$0.115. The Company has a market cap of A$13.35 million.

Let us look at the two updates in detail.

Order from Chinese Distributor

On 25 January 2021, Cellmid Limited announced that it received the first order for 66,000 bottles of Jo-Ju® shampoo from Ourui Health Management Limited (OHM) that would be sent in bulk. The Company received the order after the distribution agreement was signed by both the parties. The packaging would be done in China, and OHM would bear the cost. The order is for 18,672 bottles of finished Jo-Ju® lotions with an import authorisation and would be sent in February and April 2021. In this process, the Company would generate combined revenue of A$530,000 which is paid earlier and would accrue on delivery.

In the announcement dated 14 December 2020, the Company, through its subsidiary companies, Advangen Limited and Advangen Inc. (Japan), entered into an exclusive distribution agreement with Ourui Health Management Limited. As part of the deal, Ourui would distribute its o-Ju®, and Lexilis® branded, anti-aging hair and skincare products.

RELATED: Cellmid forays into Chinese market with exclusive agreement

The order for 66,000 bottles forms a component of 500,000 units orders requisite for the first 12 months of the deal. The Company anticipates providing half of the first-year orders in October 2021.

Q2 FY2021 Business Activity

Another ASX update released by Cellmid Limited on the day was the business activity report for Q2 FY2021.

On 12 November 2020, Cellmid via its Growth Strategy Presentation, highlighted core areas for revenue growth to attain profitability. The Company is presently focused on expanding current strategic partnerships plus executing new alliances in the highly profitable and consistent networks.

©Kalkine Group 2020

  • In Q2 FY2021, the Company's consumer health revenue was in line with the expectations. CDY generated A$1.8 million revenue, down 21% from the previous corresponding period. The drop in the consumer health revenue was due to the change in QVC's JoJu® show schedules.
  • The QVC show outperformed sales target. However, due to reduced airtime, the revenue was lower. Still, there was an improvement in the margin and the overall sales and will continue in the following months, not like in prior years.
  • During the quarter, the consumer health revenue was hit by the softness in the pharmacy channel in Australia and lower volumes from popular retailers in the US.
  • In Australia, consumer health sales dropped 35% during the quarter to A$324,000. The volumes from TV shopping, online sales and salons have started showing signs of improvement. The pharmacy channel, the most important channel, remained soft.
  • Cellmid’s evolis® distributor for cross border e-commerce in China, Aeon International (Aeon) made the first two orders. The distribution for the same started in December. Further deliveries would be made in February 2021.
  • In the US, the operations were impacted by the worsening of the pandemic in Q2 FY2021. Sales dropped by 44% in the US to A$112,000 due to lower volumes from reputed retailers. The Company was pleased with the strong volume from Amazon evolis® Professional store, started in June 2020.
  • US e-commerce performance continued to improve from a lower base. In the last six months, the total conversion rate is up twenty times compared to the previous corresponding period.
  • In the US, there was an increase in the subscription month on month between August and November. However, there was a smaller growth in December 2020.

Cash Flow Highlights

  • Net cash used in operating activities was A$0.560 million.
  • Net cash used in financing activities was A$0.184 million.
  • Net cash and cash equivalents at the end of the period was A$4.551 million.

 

 


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