Despite yesterday’s Interim Results announcement from the Venture Life Group (LON:VLG) I still consider that the company’s shares are a bargain.
The group’s principal activities are the development, manufacture and distribution of healthcare and dermatology products.
The Half-Time figures to end-June showed sales standing still at £23.5m, while its adjusted pre-tax loss increased to £1.6m (£1.3m loss).
The Business
Venture Life, whose products are sold in over 90 countries worldwide, is an international consumer self-care company focused on developing, manufacturing and commercialising products for the global self-care market.
With operations in the UK, Italy, The Netherlands and Sweden, the group’s product portfolio includes some key products such as the UltraDEX and Dentyl oral care product ranges, the Balance Activ range in the area of women’s intimate healthcare, the Lift and Glucogel product ranges for hypoglycaemia, Gelclair and Pomi-T for oncology support, Earol for ear wax removal, products for fungal infections and proctology, and dermo-cosmetics for addressing the signs of ageing.
The group’s products, which are typically recommended by pharmacists or healthcare practitioners, are available primarily through pharmacies and grocery multiples.
In the UK and The Netherlands these are supplied direct by the company to retailers, elsewhere they are supplied by the group’s international distribution partners.
Through its two Development & Manufacturing operations in Italy and Sweden, the group also provides development and manufacturing services to companies in the medical devices and cosmetic sectors.
Management Comment
CEO Jerry Randall stated that:
“I am pleased with growth of VLG’s Brands in the UK where we have launched some great new products over the last year and continued to grow our distribution points on the back of new listings, most significantly across our core brands.
The increased investment in marketing activities and strengthening of relationships with major retailers is delivering evident results and has put us well placed to build-out further both in the UK and Europe.
Our innovation team continue to develop and deliver a pipeline of relevant consumer focused products to enhance our offering for years to come.
As previously noted we intentionally increased marketing expenditure during the period which, as anticipated, impacted H1 performance, the benefits of this increased spend have started to be delivered with 56 new listings achieved since the beginning of the year, including 24 new listings which go live during H2 24.
Further, we have taken steps to internalise production of the recently acquired Earol brand and have begun manufacturing these products from Biokosmes during H2 which supports gross margin improvement.
As such, and as a result of the progress made against these initiatives and the ability to rationalise certain costs in the business the Board remains confident in the Group’s ability to achieve management’s expectations for the full year and to continue the Groups’ growth trajectory into 2025.”
Analyst Views
Analysts Chris Donnellan and Stuart Harris, at Cavendish Capital Markets, have estimates out for the end-December year to increase its current-year revenues to £52.5m (£51.4m), while lifting adjusted pre-tax profits by over 60% to £2.9m (£1.8m), with earnings of 4.6p (4.1p) per share.
They go for £59.4m sales next year, almost doubling profits to £5.6m, generating 6.1p per share in earnings.
In My View
Selling globally, this group’s products are well-known and in growing markets.
Margins are increasing, while there are a number of possible acquisitions under consideration to expand the group’s portfolio.
On the back of the standstill sales in the first half of the year, increasing its Interim loss, the group’s shares eased back by 7% to 44.5p, valuing the company at only £56m, they were up to 51.25p in mid-July, which is a level that I consider will soon be bettered and then some.
Trading on 9.6 times current year earnings and just 7.3 times prospective, these shares are cheap.