One Stock from Hospitality Space With Decent Growth Prospects

As the market participants are aware, the global economy was impacted by the outbreak of the COVID-19 pandemic. However, there are companies which could perform well moving forward. This company from the F&B space might navigate the challenging operating environment because of its sound business model. It could be said that because of the fall in overhead costs of the group, this company is well-positioned for the future profitability. Over the last 1 month, the stock rose by 40% and, over the last 3 months, it rose by ~28.9%.

Cooks Global Foods Limited

Summary

  • CGF witnessed corporate costs of $0.8 Mn as compared to $1.2 Mn in the last year because of the overall reduced expenses, mainly in relation to the legal as well as consulting fees.
  • During the year, the overall corporate costs witnessed a reduction because of the simplification of the business together with the sale of non-core business units.
  • CGF delivered cash flow from the operating activities of positive $1.2 Mn as compared to the previous year’s figure of $0.2 Mn.

Overview of Cooks Global Foods Limited

Cooks Global Foods Limited (NZX: CGF) happens to be an integrated F&B retail as well as supply group which was founded on the globally leveraging NZ’s reputation for fresh as well as quality foods.
The company owns the intellectual property as well as master franchising rights to Esquires Coffee Houses worldwide (excluding Canada, Australia and NZ). CGF also owns numerous wholesale and retail companies in the related industries.

Preliminary Financial Results (For 12 Months Ended 31st March 2021)

Cooks Global Foods Limited recently released its financial results for the 12 months ended 31st March 2021 and the company stated that the impact of pandemic on trading was significant throughout all the markets. Also, the company witnessed delays in the store development as well as opening program. Notably, the acquisition of fast-growing triple two coffee business in the month of June 2020 managed to add scale to the core UK market. The company has also mentioned that the trading when the outlets were open offered increased revenue as compared to the prior years as well as broader industry comparisons. Notably, total group revenue from continuing activities witnessed a fall of 26.8% to $3.1 Mn. The company has posted net loss before tax from the continuing operations of $3.6 Mn and this was at the same level as compared to the same period of the previous year. This implies the benefits of the prior restructuring as well as fall in costs against fall in revenue because of the lockdowns due to the Covid-19 pandemic.

Overview of Results (Source: Company Reports)

The company posted cash flow from the operating activities of positive $1.2 Mn as compared to the previous year of $0.2 Mn. It was mentioned that the fall in revenue due to Covid-19 lockdowns was partly offset by the support packages announced by the government, mainly in the UK as well as Ireland. Even though there have been delays in timing with regards to new store openings, there were no closures of the existing stores or withdrawal from the opening plans of the new stores through the global network attributable to the pandemic.

With regards to the global segment, the company stated that its operating revenue amounted to $0.15 Mn as compared to the last year’s operating revenue of $1.4 Mn. It needs to be noted that the decline was related to the discontinued international product sales to the Middle East.

Also Read: 5 Interesting NZX stocks garnering investors’ attention - HMY, PPH, GTK, CGF, IFT

Overview of CGF’s Balance Sheet

The company’s borrowings witnessed a rise to $7.8 Mn from $5.5 Mn at the same time of the previous year. Notably, these consists of loans from the entities which are associated with Executive Chairman Keith Jackson as well as some other convertible loan notes. The company has been pursuing the financing options to better reflect the proper mix of equity as well as debt requirements for its business.

The company has managed to enter new debt facilities of ~$500,000 with the Summit Capital Limited. The company has also repaid all the facilities with the ANZ Bank. It has informed that it has allotted 100,000 mandatory convertible notes at the face value of $1.00 per note, garnering $100,000 of debt from the wholesale investor.

Outlook

The company has stated that the permanent restructuring changes which were wrapped up during the last 12 months substantially reduced the overhead costs of the group. The company is well-positioned for the future profitability.

With regards to the COVID-19, the company has mentioned that it cannot accurately assess the full long-term impact.

CGF stated that its revenue in the supply business fell by $37k as compared to the same period a year ago. Also, crux products witnessed weaker sales mainly because of the timing of shipments as well as logistics challenges which are related to Covid-19 factors. Notably, supply operating profit amounted to $18k as compared to $0.124 Mn at the same time in the previous year.

On 18th June 2021, the stock closed at $0.049 per share.

Do Read: Is Kiwi Food Industry All Set To Witness A Turnaround This Year? A Look At 4 Related Stocks


Disclaimer
The website https://kalkinemedia.com/nz is a service of Kalkine Media New Zealand Limited (Kalkine Media), Company Number: 8107196. The principal purpose of the content on this website is to provide factual information only and does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform. In providing you with the content on this website, we have not considered your objectives, financial situation or needs. You should make your own enquiries and obtain your own independent advice prior to making any financial decisions.
Some of the images that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed on this website unless stated otherwise. The images that may be used on this website are taken from various sources on the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image. The information provided on the website is in good faith, however Kalkine Media does not make any representation or warranty regarding the content, accuracy, or use of the content on the website.

   

Kalkine

Rated 4.3/5 based on 904 Reviews at Google My Business
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK