BLT - Blis Technologies

[False Profit]

This is definitely a bottom drawer stock at present. Happy to have and to hold from this day forward, 'til death do us part - or until the SP moves back in the black

[Bobcat.]

Financial report has been published. Management's commentary has a depressing tone to it but the figures don't look too bad. Still, nothing to get very excited about -- all a bit Ho-Hum until their market access issues to the USA and China get sorted.

https://www.nzx.com/files/attachments/194343.pdf

[Harvey Specter]

Financial report has been published. Management's commentary has a depressing tone to it but the figures don't look too bad. Still, nothing to get very excited about -- all a bit Ho-Hum until their market access issues to the USA and China get sorted.

The commentary was negative but that was mainly backward looking. Forward looking, there are only a few issues to sort out for their sales growth to continue.

HOpefully next year they will be able to put a positive spin on their accounts.

[simla]

So, annual report out. https://nzx.com/files/attachments/194343.pdf

Points that struck me as important:

p3

"delays in the ... neutraceutical manufacturing facilities ... no corresponding revenue was generated until late March" - so there WAS some.

"ingrediant sales ... up significantly" but delays in [US]

"revenues ... part and finished goods exceeded expectations"

NZ revenue increased from 265k to 494k

p4

Reduced capitalisations from 431k to 100k (ie increased loss by 330k from that alone)

Net cash flow -976k and -348k from capital costs, leaving 3652k

"now has the capital base to support its business strategies" "provides the company with financial stability"

"major commercial developments" "anticipated to come to fruition over the next six to twelve months"

"expectations of significant growth" in Asia and Europe are being met

"we anticipate ingredient sales to increase materially"

"Sinopharm in early phase of their commericial strategy with plans for market launches in China"

p5

"the nutritional formulation plant, which is able to produce milk and non-milk based formulations and to pack them in sachets for food and other products, is now operational"

"The company is in the final stages of the process for approval to export milk-based formulations to specific markets"

red tape problems with access in the US - now in the final stages of resolution

"sound progress" in Europe

"sales in Asia" "significant growth"

full accreditation of the plant expected in "June quarter", delay due to Chinese rules. The company has been through several plant audits, but has no control on the final decision. Upon full accreditation, sales to Australasia, Asia, Europe of finished products. [EDIT: changed "December" to "June quarter" - according to the internet that probably means by end of June, but not clear.]

p6

New machinery for blister packs and bottles of lozenges going in.

Sinopharm has Blis in three cities as a pilot study. Sales in China now! Also planning clinical studies of their own. [EDIT: 3 CITIES, not 3 pharmacies]

p7

Blis Q24 patents gathering pace

Rheumatic fever trial (funded by NZ Government) due to report in 2016.

"Provided outstanding market access issues are resolved our expectations remain for the Company to move to profitable operations during the course of the 2015 financial year" (ie this year.)

p28

seeking clarification from IRD on whether the placements last year jeopardise some outstanding tax losses (continuity rules)

p39

The usual annual discussion on the assumption of "going concern"

p40

Sales to Asia+Europe - 540k, up from 217k

[simla]

So, overall positive but still with a few doubts.

• Still expecting profitable operations sometime this financial year.
• But that is subject to getting Chinese full approval and sorting out red tape problem in the US.
• Still have $3.6m in the bank (or did then)
• Ingredient sales growing strongly anyway, but not enough to push out the extra $1m or so to operational profit in just one more year at current rate, as I read it.
• Sales have commenced in China. But only 3 cities as a pilot study while Sinopharm develop the markting plan. That's absolutely fine, but delay in revenues while they decide how to do it.
• The plant in Dunedin has started operation. Can't sell Dairy stuff till China makes a decision (they hope soon) but can sell other products anyway.

As you say, the Blis reports often start with doom and gloom. But by the end it is usually more positively by the time you get to the end.

In this case, "Provided outstanding market access issues are resolved our expectations remain for the Company to move to profitable operations during the course of the 2015 financial year" (ie this year.) p7.


So, still in line with hoping for profit. But obviously they are very much in the hands of the Chinese approval still. They have had "several audits" (p5) which is surely positive. US issue unfortunate after Blis has jumped through so many hoops already. Nevertheless, Sinopharm selling in three cities in China could still be pretty useful.

Overall, still very promising, but still no guarantees? Definitiely continuing the trend of good news that started over a year ago now, in my opinion.

[simla]

Well, Chinese accreditation would obviously have been welcome news, as the food side doesn't seem able to kick off until then.

But underneath the razzamatazz of that story, ingredient sales are obviously starting to get strong growth going again. The company is also obviously comfortable with Stratum, which is good news considering how much upheaval that change involved.

I sense that they would be on for operating profit within say a couple of years regardless of the Dairy business, although that's just a guess from the sort of growth they reported. And they make no mention of wanting more cash this time.

The dairy thing would obvious give things a good boost, but I have a feeling that that report just painted a picture of a secure future anyway, maybe? That would be mighty welcome after the last few years. Just my opinion, obviously.

[Chippie]

Hi Simla, thanks for your thoughts on the report. It is very useful and apprecaited. thanks

[Chippie]

I am still in for the long term. They are still way ahead of the company that first listed so there is more hope now than then.

[simla]

Still, nothing to get very excited about -- all a bit Ho-Hum until their market access issues to the USA and China get sorted.

True. But with the US issue in "final stages of resolution" (p5) and the China accreditation (maybe) "anticipated in the June quarter" (p5), there's still room for sudden change.

The share price closed today at 1.3 cents. Interesting question for shareholders, including for me. Is this a moment to be looked at seriously? Or, as you say, "a bit ho-hum", nothing to see here?

The trouble is, of course, that we are not reading this in isolation, but framing it with knowledge of years of slow progress. Is that help or hinderance?

[simla]

Thanks, Chippie.