link copied to clipboard
Investment firm Lodge Partners forecast that EZZ’s revenue and earnings will grow in fiscal 23 as it overcomes Covid-19 and Chinese regulatory challenges.
A full report from investment firm Lodge Partners expects profits from genomics generation firm EZZ Life Science Holdings (ASX:EZZ) to recover in fiscal 23 as Covid-19 and restrictions begin to ease.
Lodge Partners said EZZ’s business model, expansion strategy and goals are also strong for long-term success.
Since its inception in 2018, EZZ, which focuses on the sale, distribution and studies of customer skin care and fitness products, has experienced growth.
The company, which was indexed in ASX in March 2021, owns the exclusive rights to distribute the EAORON logo of skincare products in pharmacies, supermarkets and specialty stores in Australia and New Zealand.
In 2020, EZZ introduced its own brand of products for internally evolved customers, which it distributes to stores in Australia, New Zealand and China.
The company also owns retail outlets on major Chinese e-commerce sites, adding Alibaba-owned Tmall Global.
In March, EZZ saw its ASX list from retail to a pharmaceutical, biotech and life sciences company.
EZZ focuses on genomic studies and product progression to isolate and decompress 4 key health spaces, including:
While EZZ has effectively navigated the first 12 months of Covid-19, posting a profit increase of approximately 25% to $22. 3 million in FY21, the past 12 months have been more challenging.
Lockdowns in much of Australia sometimes affected EZZ, specifically for EAORON products domestically, falling by 34% in the first part of FY22.
Chinese regulators’ antitrust crackdown on Alibaba has also had an impact. Margin EZZ products are sold on Tmall Global and this is where the company generated 43% of its total profit in FY21.
Reacting to uncertainty and the expected decline in margins, EZZ reduced its marketing expenses by nearly 75% to $1. 2 million in the first part of fiscal 2022.
The report notes that strict blockades in China in the first part of the year further dislocated chains.
However, Lodge Partners said the issues that have plagued the company over the past year are expected to improve and it is ready to grow.
“We expect those disruptions to largely diminish over the next 12 months, as blockages will be a thing of the afterlife in the evolved world,” the report says.
“As such, we expect EZZ’s earnings to recover in fiscal 23 and profitability to grow over the next five years as the company continues to expand its distribution channels and shifts its profit mix to higher-margin EZZ products. “
EZZ remains one of the few successful biotechnology and life sciences corporations at ASX. At the end of the first part of fiscal year 22, it held money reserves of $8. 9 million and no debt.
In addition to expanding either in sales issues or distribution channels and jurisdictions, EZZ detailed expansion and objectives in the short term, less than a year, and in the medium term, from 2 to 5 years.
Short-term includes:
While EZZ’s percentage value was hit like a lot of global small- and mid-cap market volatility this year, it rose 15% over the past month in a much-needed july rally for healthcare stocks.
“We value EZZ employing a discounted money style (DCF) and a WACC of 13. 93 percent,” the report said.
“Based on this, we have placed a buy advice on EZZ, obtaining a valuation of $0. 51 consistent with the stock, which represents an implicit 76% retracement of existing levels. “
This article was developed in collaboration with EZZ Life Science Holdings, a Stockhead advertiser at the time of publication.
This article does not constitute a recommendation on monetary products. You deserve to get an independent recommendation before making any monetary decision.
link copied to clipboard
Get the newest culatin loose in your inbox.
Read our policy
Get the latest news and action straight to your inbox.
Read our policy