The Share Price of FOD Zoomed Up By 3.333% After The Upgradation Of The Processing Facility

  • Jan 17, 2019 AEDT
  • Team Kalkine
The Share Price of FOD Zoomed Up By 3.333% After The Upgradation Of The Processing Facility

On 17 January 2019, The Food Revolution Group Limited (ASX: FOD), a company from the food, beverage & tobacco sector which is into the business of food and beverage production announced that the company made upgradation of its Mill Park processing facility for expanding the product range to meet the high demands of Chinese customers.

The upgraded processing facility will enable the company to produce a high end, high margin, and high-volume of functional health and beauty aid products. The company has plans to install new gel/liquid sachet machines and powder sachet machines whose distribution will be through Careline’s extensive sales network and also through the distribution partners of the company.

The upgradation of the facility will help the company in scaling its business along with increased efficiency. Through this, the company has made a five years target to generate $500 million per year. Following the upgradation of the facility, the company has also entered into a distribution agreement with Sinopec which is the world’s largest oil, refining gas and petrochemical conglomerate China Petroleum and Chemical Corporation for the distribution of its Australia Garden Canola Oil across 35,000+ petrol and convenience outlets.

There is another distribution agreement signed with the JJ Global Fine Foods who are responsible for supplying Fruit Farm Orange Juice through mainland China and in high-end hotel chains.

FOD’s reach to high-end hotel chains will create a presence of FOD’s product in China and also improvise its brand status. It will also enhance its distribution footprint as its distribution partners FOD, and JJ Global expects that the volume will increase 50% on a year-on-year basis.

Dr. Norman Li, who is the chairperson of the Food Revolution Group Limited is confident that the company has positioned itself well in the Chinese market which will generate revenues for the company.

He states that post the acceptance of the FOD's products by the Chinese customers, the company will be entering into many other distribution deals to cater all its customers across China with its brand presence.

The official listing date of FOD on ASX is 29 June 2012, where the overall performance of the company remains -89.92%. However, in its last one year, the company has performed very well where its performance was 275%.

Based on the annual report of FOD by the end of FY2018 on 30 June 2018, the company made a profit of $2,221,712. The balance sheet of FOD shows a net asset base of $19,982,967 and a debt to equity ratio of 1.0034 which means the company can manage its long-term obligation. However, its debt-equity ratio says that the company took assistance from the external sources in the form of debt majorly for any financial requirement within the company. The balance sheet also states that FOD is not in a position to meet its working capital needs and clear its short-term obligation as its total current liabilities is much above its current assets. FY2018, reports a decrease in accumulated losses indicating an improved operating efficiency.

FOD’s current expansion program, its future growth outlook as well as its past performance within six years of its listing on ASX creates confidence amongst the investors and the shareholders that the company will give a much better result in upcoming future.

By the end of the trading on 17 January 2019, the closing price of the share was A$0.150 with the market capitalization of $74.88 million and PE ratio 24.59x.


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