BLT - Blis Technologies

[brucea]

Where have you guys been? - health products are big business - eg the herbal antidepressant St John's wort enjoys enormous world-wide sales (maybe boosted by long-suffering Blis shareholders!) and is now sold in supermarkets in NZ, although was relatively unknown a decade or so ago. Mouth wash and mints for fresh breath are big business too, yet are mainly ineffective, usually only disguising the symptoms rather than preventing malodour like K12 does. I think Blis is on the road to success now that other companies are marketing it through the power of the internet. I expect Blis shares will be in the range 20-22 cents by the end of 2010. I am keen to go to the next shareholders meeting in Dunedin, whenever it is.
Again, just to add how much I enjoy reading emearg, chippie and simla informative posts - well done.

[winner69]

Soooooo, sales that occur in the last month of two of this half will be written to the accounts receivable line and not the revenue line. Sales that occurred in the last month or two of the previous half will come through as revenue in this half.

emearg - sales made on credit are recorded as revenues at the time the sale is made. The amounts owing remain in receivables until paid.

Thus high receivables mentioned for H1 reflect 'high' revenues in the same period .... so yoor 2) is the correct view.

Do they sell a lot on extended terms? ... like pay when you sell sort of deal? Maybe the development work that is secret (that has been charged for) has yet been paid for?

[simla]

NeopoleII, "unless it has ( like all NZ companies) been sold or taken over" - yes, I hope NZers deserve to still own the company because we've had the gumption to hold on and take the rough with the smooth. Somewhere along the line, the objective in finance has become to only eat the sugar. Happily, most BLT owners have already shown they like to hold on, so you never know. I'm still hoping to hold on to the shares, and only take out the dividends. BLT should produce a good dividend stream I would have thought since its product is essentially a volume proposition. (I haven't ever seen anyone express an opinion on BLT's long term dividends?)

As to advertising though, I expect there is already non-internet advertising going on locally, but we cannot see it from a distance. If that is more effective, as you say, then the various manufacturers will already be working on that basis surely?

Emearg, I think I'm more optimistic than you on revenue - doesn't make me right though! I think Chippie has a point on the sheer potential of high volume outlets like Costco. And I think there is much power in the Blis strategy of pursuing very many outlets. I might put outcome (b) at 70% and outcome (c) at 30%. Don't forget also that it is the northern winter, when people would be at their most receptive to this sort of product.

And on share price, I'm more optimistic than you, Brucea. By the end of next year we will have had an entire year's trading from now, and it's looking like it could be a big year for the company. As you say, Brucea, the health supplements market is very big. The main question for Blis now would seem to be at what rate it can expand, and you would have to say that the signs are looking pretty good on that front.

[brucea]

I see there are a number of Vietnamese websites (with the .vn suffix) that carry info about Bioguard - most of them take ages (if ever) to load, although the following link worked OK http://216.240.151.24/product/detail...-blis-k12.html
The product is sourced from the ImAgenetix in the States

[emearg]

emearg - sales made on credit are recorded as revenues at the time the sale is made. The amounts owing remain in receivables until paid.

Thus high receivables mentioned for H1 reflect 'high' revenues in the same period .... so yoor 2) is the correct view.

Do they sell a lot on extended terms? ... like pay when you sell sort of deal? Maybe the development work that is secret (that has been charged for) has yet been paid for?

Thanks for putting me right on that one Winner69.

We don't know what terms they have in place. Your suggestion about the development work makes sense. That may be paid in installments?

[winner69]

Thanks for putting me right on that one Winner69.

We don't know what terms they have in place. Your suggestion about the development work makes sense. That may be paid in installments?

One way of looking at receivables is how many months revenues are outstanding at any time .... in BLS case just on 3 months (receivables as %age of 12 months sales expressed in months) ..... 3 months as at March and 3 months as at September so situation hasn't changed much recently

[winner69]

......thought since its product is essentially a volume proposition.

Assume you are saying that once a certain level of critical mass has been reached then most of the additional revenues fall through to the bottom line

I don't think it is as simple as all that .... thinking that is often flawed

Hate to make the comparison but much of what you guys are saying recently mirrors that what has been said on the Wellington Drive thread over the years ..... and they have got revenues up to $30m but still burning cash

Hope BLT turns out better than WDT .... you guys sure are passionate

[simla]

Yes, BLT and WDT are surprisingly parallel developments in quite a few ways, which is quite fascinating. I keep an interested eye on WDT, but have never bought any shares myself so far.

Both have a very go-ahead view, both have done a lot of work to forge markets overseas, both are science based, and both are aware of the need to add to their product range.

And both are riding markets whose time has come.

There are one or two differences apparent, too.

Naturally any two companies will have different working capital positions at any given time: Blis's last half report http://blis.co.nz/userfiles/file/Sep...r%20Report.pdf , and for WDT, interim report June http://www.wdtl.com/pdf/WTB0104Jun09...t_Released.pdf, November 6 update http://www.wdtl.com/pdf/WT6690ChairmanSpeechEGM_1.pdf, and a capital raising update on 23 November http://www.wdtl.com/pdf/WT6735NZX-ca...ingresults.pdf

Blis appear to have their market largely to themselves so far. WDT reports in the June report, "Wellington is currently winning a substantial proportion of global high efficiency motor sales", which I understood to mean they have competitors in their base market.

Blis are deliberately joining up with Frutarom with their established world wide network of marketers. WDT are obviously out there successfully opening markets around the world too, but I haven't myself been able to get clear how WDT are tackling that issue.

Blis are selling into a mass consumer end market, whereas WDT's end market is semi-industrial/commercial it would seem.

WDT seem to have higher running costs than BLT, and they also seem to have greater revenue.

I am not clear myself what the relative size of their respective end markets are, nor what portion of those markets is needed long term to sustain each company's profits.

As usual, anyone interested in any of these observations should check them for themselves. Links are included above.

Despite those observations on similarities and differences, I couldn't possibly compare the two companies, and wouldn't attempt to say one was better than the other. WDT are forecasting profit in 2010 and I certainly hope they succeed. BLT don't forecast as a rule, and I hope they succeed too!

[simla]

By the way, winner69, we're probably passionate because we've all used the product and it really is good.

[emearg]

Assume you are saying that once a certain level of critical mass has been reached then most of the additional revenues fall through to the bottom line

I don't think it is as simple as all that .... thinking that is often flawed

Hate to make the comparison but much of what you guys are saying recently mirrors that what has been said on the Wellington Drive thread over the years ..... and they have got revenues up to $30m but still burning cash

Hope BLT turns out better than WDT .... you guys sure are passionate

I own both. I still hold some hope for WDT mainly because the directors keep sinking their money in and WDT hasn't run out of cash yet...

The major difference between WDT and BLT is the more WDT sells the bigger their loss, and the more BLT the smaller their loss.

This has been a constant trend with WDT. It has been very disappointing. They keep saying this will change but to date it hasn't.

BLT is a very different business, and the way it is being run is very different so while I take your point I don't think too many comparisons can be made.

BLT has outsourced just about everything. They have few staff. They don't require much capital. They can have a relatively small inventory. Shipping cost of the primary stock being sold (K12 ingredient) is low and they only have to send it to one customer (Frutarom). They are good at containing costs.

Unfortunately the opposite can be said of WDT on every one of these points.

Will most of the additional revenue fall through to the bottom line? The way the business is currently being run I think much of it will. I say this looking at their revenue/expense graphs. They suggest the margins are good considering their turnover is only a million in 6 months, and yet they were virtually able to cover all the expenses of the business (excluding the new financing costs).

If the business spends more on product development, regulatory work and/or marketing then obviously any future profits will be reduced.

Barry has signalled more will be spent of product development once positive cashflow is achieved.

I suspect they will also increase their spending on regulatory work, but this will be limited by the number of staff they have with the expertise to progress applications.

Once they can afford to I think they will increase the marketing of their own products in NZ.

All of this will stop BLT becoming a major cash cow for the next few years.

This is assuming any of what I think is correct...

What do you think?