More patience required by BLT investors
I attended The BLT ASM along with about 50 other pretty passive shareholders. No fireworks of any kind and very few questions - mine were answered in the presentations.
The addresses from the chairman and the CEO were long on promises but short on detail as to the financial benefits those promises will deliver.
My executive summary is:
a) Good things are coming - yes I know we’ve heard it many times before - but the Probi collaboration is significant. BLT don’t know, or wont tell, how much extra revenue to expect. The best I could get from Brian is that despite a slow first quarter ($1.8m), FY22 revenue will definitely exceed the $10.6m achieved in FY21 and FY20.
b) They are investing for growth (more marketing, people and product development) so don’t expect much initial upward movement on the bottom line.
c) In short, shareholder patience is again (or still) being tested but has a good chance of being rewarded – eventually.
Key takeouts:
- The Probi connection is a game changer - their $9m capital injection provides BLT with cash for greater and faster growth.
- Lots of new stuff in development (eg probiotic toothpaste) and Blis branding of Probi products will significantly expand the current range. Probi will use BLT to expand their range too - they currently sell in 40 markets!
- Staff numbers now 29 and expected to double over the next 2-3 years if sales targets are met.
- Key markets for ingredient sales growth are USA, Japan and China.
- The company has a Long Term Incentive (LTI) plan to attract and reward key personnel. Exercising rights to the shares requires minimum compound annual growth of 15% per annum in profits and share price. (That could see the SP at 11c+ in 3 years time).
- After the issue to Probi, BLT now has 1.2 billion shares issued so consolidation is finally being considered.
Speaking to Brian after the meeting he seemed very upbeat about prospects but totally avoided specifics. Told him my wife would not be a repeat buyer of the Skincare product. He said the target market is millennials who are prepared to spend big on beauty. (My wife is not a millennial but doesn't seem to stop her spending heaps on cosmetics - just not more of this one.) NZ being used as a test for skincare marketing and will be refined for launch into other markets, especially USA. Addressable market is huge. E-commerce is key focus for sales growth following success during the Covid period.
The Probi connection, focus on sales/marketing and the LTI plan, give me confidence that the company is heading for bigger, better and brighter things - it wont happen overnight though!
I'm continuing to hold.