If I was Shisedo or Elizabeth Arden or L'Oreal I'd find Blis would be a cheap pipeline of NPD
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What’s your logic on that? Surely the big cosmetic companies already have plenty of opportunities.
Don’t get me wrong, cosmeceuticals are a growth area but many are already doing it and there are plenty of well established ones available. The microbiome is trendy but it would be cheap for a cosmetics company to do a bit of research and simply add a probiotic that has positive research for the skin into a formulation. Just as they all started adding green tea extract, and then pomegranate, etc.
Same with drinks. Most of the meal replacement shakes now add probiotics. Quicker and easier ways to jump on the trends IMO. No NPD needed. Just add in one ingredient. Bam. Done.
Blis doesn’t have name recognition in this market. It’s much easier to have a grad student spend a couple of days on pubmed to come up with the next hot thing and throw it in. It’s the way they all do it these days
I like the focus on marketing and establishing a credible brand in new markets (Canada and China), and it appeared that this will take priority over R&D, which is good. It will take time and money, which they acknowledge with a flat EBITDA forecast for the next year.
The media is dominated by health stories, the world is focused on health, all it takes is a Bollywood/chinese based influencer on TikTok to recommend Blis, and it's all on. Good question from the floor about getting young media people involved! Not sure the question was answered about whether they have the capability to quickly ramp up production... hmmmm
There was mention of barriers to entry for a competitor to take the patent and replicate the products when they expire at the end of this year. Does anyone know what those barriers are?
Didn't attend the virtual AGM as fine weather was calling me outdoors. Now back from a beautiful morning adventuring in the hills I'm slowly absorbing the results and comments.
1.) Mr Market not too fussed by the result (at 1pm...no big deal.) Footnote; nice to see the SP improving later this aft. I reckon, 8c will be the new 'floor.'
2.) The result was pretty damn good IMHO. Profit up 320% EBITDA up 130%. working capital up $1.8 mill. Revenue up 29%
3.) Many punters were expecting a stronger result assuming Blis products would be great to treat the onset of Covid. However there is no marketing or manufacturing claims made along these lines (yet) so a tab optimistic IMHO.
4.) Many punters just in for a quick profit may be disappointed, but those of us with a longer term view will note the new product lines (promising) growing profitability (even in Covid times) growing cash on hand, and growing attempts to establish new markets in places like Canada and China.
While I await more details from the AGM via Pierre who was attending (along with a long list of Q's) BLT is still a firm hold for me. Traders will Trade. Holders will Hold.
In my view - BLT is a small cap NZ business on the verge of profitability and gradually securing a secure niche in global markets.
Disc - Holding and happy. BAU IMHO.
First time poster, long time observer on sharetrader.
Highest volume going through today in the last few months. Agree LF the market will possibly set 8c as a floor. Possibly see a share consolidation period till the next update which will be good for reducing volatility. Together with the mentioned share consolidation potentially happening as we heard at the meeting this morning.
Disc Hold
I attended the meeting this morning and was pleased with what I heard. Here are my comments and thoughts in pretty random order:
* The market reacted negatively to the first quarter result. I was expecting a bit more too. However I spoke to Brian after the meeting and he said he is confident of sustainable growth over the coming year despite the first quarter basically equalling last year. He said the company had a history of over-promising and he prefers to operate with more caution so will not publicly put a number on the growth forecast at this stage.
* Expect ongoing growth in revenue but don't expect too much net profit growth over the next year or two (don't expect any losses though). Profits from increased sales will be invested in marketing, product development and other growth-focused activities.
* The business is transforming itself from a research-led company into a sales and marketing-led operation. New staff employed to assist with development of e-commerce cross-border sales into China - including an Alibaba store. (The Sinopharm connection has not delivered the anticipated results but is not dead yet.)
* Strong focus on brand-building and development of on-line channels. Tony Balfour who was appointed to the Board late last year gave a brief address prior to the vote for his re-election. I'd say he was an inspired choice for the Board with his hugely successful background in marketing and brand building. (Tony was responsible for launching the Mainland Cheese old guys advts which are now the longest running marketing campaign in NZ.) I'm sure he will pay for himself many times over in providing support and advice for BLT in the marketing arena.
* The launch programme is well advanced for sales Canada in time for winter. It was largely in place pre-Covid travel restrictions. Population of Canada is about 40 million – around 50% more than Oz. Initial sell-in should give a good boost to sales. Lets hope ongoing performance is better than Oz.
* UltraBLis is about to be released through pharmacy distribution channel in addition to current online sales ex the BLT web site.
* New products are underway - Q24 skincare to be released this year. A brand manager has been hired to look after the skin care product as they venture into a completely new (and huge) market segment. New initiatives into the dental health market are also in prospect.
* I raised the question of patents due to expire from late this year through to 2026. Brian said the company has no concerns about that and that branding, trademarks, trade secrets and other IP will insulate the company from the impact of potential competition.
* We can anticipate some action on a share consolidation this year to help minimise some of the volatility in the SP. And don't be surprised if there is a cap raising to support the launch of a new product (maybe skincare?). My conjecture is that the cap raise and consolidation may go hand in hand.
* In summary, there’s lots going on and it’s all focused on growing the business by selling more stuff to more people. But as Tony Balfour said, “99% of our customers have never heard of Blis yet,” which implies that while there's a big opportunity, there’s also a big marketing job to do.
If you’re looking for dividends, BLT is not for you. But if you want to be part of a success story then it will most likelybe worth hopping onboard – or hanging in if you’re already there. I am - but I've been onboard since 2005!
[DISCL: This is not financial advice]
Thanks Pierre...just a couple of questions.
Do you know if it will be Blis produced finished product in Canada? Or will they be supplying ingredients only?
Did he tell you this during your chat? I don't think this was stated in the presentation? Generating revenue from this product this year strikes me as unrealistic but super happy to be told otherwise.
Did he tell you this during your chat?
Thanks so much for the summary and your thoughts
Long overdue. This has been my ongoing gripe. Great products. Crappy marketing.
Their website and packaging used to look like it was done by the CEO's 10 year old.
I thought this was a great question. I wasn't convinced by the answer.
Did you by any chance chat with him later to ask what they thought the barriers to entry are to stop a competitor jumping on board when patents start expiring at the end of 2020?
When I’m not on the water I spend a lot of time at international tech transfer conferences, the megatrend is that corporates are outsourcing R&D as much as possible and winding back in house work. Why pay for permanent labs and personnel when you can contract/acquire it in. Even better if it’s a small company that have overcome key technical risk, moves it up Th e TRL numbers and even started selling. When you add in the salaries of USA or euro researchers and an antipodean company is bargain basement. I’m not saying it’s likely but it will never be off the table as an option
Thanks Pierre.
I don't hold BLT anymore, however I was looking to see whether re-entry would be appropriate based on today's report.
I am disappointed by the q1 results, not just because they are a tiny gain over last year, but because there was a clear tailwind that was clearly short-lived .. prior to end of FY20 we had this huge spike in sales and the runrate from that spike was not sustained which was a little discouraging. Especially because ingredient sales were looking juicy.
It looks like there will be some sp spiking announcements in the future, but at the moment it feels all a little speculative. I do think there are potential pipelines for growth, so re-entry could be a possibility in the future.
Future anticpated growth catalysts:
Launch of Blis branded products into Canada in Nov for sale Dec.
UltraBlis into NZ and amazon
Building of the cross boarder e-commerce platform for china
Skincare Product currently in the late phase of commercialization
Tres Bon..... Merci Pierre!!
(that's about the extent of my French!) Great to have your feedback on the meeting. Thank you for taking the time to post such a thorough report.
Can't help thinking Blis shareholders should adopt Tony Balfour's Mainland Cheese advertising tag line - "GOOD THINGS TAKE TIME."
Like Emearg and Tango, I'm a tab concerned by the glib response to the patent and copyright question. I recall at one stage ATM published in their annual report a summary of key patents/copyrights and their expiry.... might be a good idea for BLT. However, we shareholders pay managers to manage and sometimes we have to hope their assurances have teeth. You have certainly raised our concerns and heightened awareness.
Like you I take think that a share consolidation is a 'definite maybe' ( 10:1 sounds about right) and possibly to be linked to a share sale cash raise (akin to ANZ in PEB this week)or a cap raise. Let's hope it is well managed and works to SH advantage like it did with PEB.
China and Canada looking a tab exciting. As to new products, too early to get excited IMHO, it's just 'Business as Usual'.
I still consider BLT a 'hold' and will be adding more on any weakness.
Bon chance!!
One of the reasons that they have moved more into marketing and diversified their product is to try and protect the market when they come off patent.
It has taken them many years to learn how to get stability and functionality into the product. You don't just snap your fingers and it happens.
The market is so small that it may well be in the "why bother?" category for most potential replicators.
There is no way that most consumers will be able to tell if a competitor has managed to successfully copy them or is just claiming the same benefits at little or no function.
It would have been easy for a large company to have a similar product introduced to the market and say to a cash strapped Blis "take us to court"
Blis need to get an Edison Report done ---- and tell them they want to see a valuation in excess of 20 cents
Does anyone take a paid for Edison report seriously??