BLT - Blis Technologies

[emearg]

The Swanson product seems to be so new it doesn't even show up on Google yet. Well found indeed. Alltheweb seems to have it dated 24 December.

I think all signs point to this being a brand new product that has only been out there for a few days.

I joined the Swanson mailing list and they have sent out a New Years email advertising three products. One is their K12 based product.

A web version of the email is available here:
http://www.swansonhealthnews.com/off...8/INTE668.html

[emearg]

If Barry is a good negotiator and we have profitable supply contracts then I would be amazed (or massively disappointed) if BLT is not turning a decent profit for the full year. If he is better than an average negotiator then I would be hoping for revenue in excess of $3m.

The half year report stated 7 products in North America. Simla's list currently stands at 22 products so this must be good news for BLT.

What we need to kick start the New Year is
1. The Costco Bioguard trial to be completed with the 50 store trial being increased to all 403 stores
2. M18/ Chewing Gum success
3. The NZ$ to weaken against the US $.

Care to wrap a number around "decent profit"?

$3m revenue is ambitious Chippie! That would be huge growth. It may well be possible if things continue to progress as well as they have in the past 12 months!

I note TechNZ have approved $26,438 for Blis towards a "Scoping study on the potential of BLIS K12 to treatment periodontal disease". The time frame is 6 (months I think?)
http://www.frst.govt.nz/files/user45...ls_2009-10.pdf

One of the videos I posted about the other day mentioned there is growing research about its potential with periodontal disease.

If it is effective, then that would be very helpful with the marketing of any future toothpaste products.

Another potential product is floss me thinks...

[winner69]

I'm not sure you are right, but I'm not sure that I am right either!

Having had a look at the NZX pages for FPH and RBD and looked at their market cap, share price, profit and PE I seem to be on the right track?

Maybe somebody with more expertise can contribute here and put us on the right track?

PEs are based on NPAT - ie PE is Shareprice divided by NAPT (earnings) per share

So at a shareprice of 40 cents and a PE of 12 would require NPAT after tax of 3.3 cents per share (40/12) .... on 138 mill shares that about $4.5M profit after tax .... before allowing for the prefs

Valuing such thibgs as BLT is impossible ... how do you value aspirations/dreams etc

PE prob only meaningful for mature businesses but at least that gives you guys some idea of where they need to get to

[Chippie]

Care to wrap a number around "decent profit"?

$3m revenue is ambitious Chippie! That would be huge growth. It may well be possible if things continue to progress as well as they have in the past 12 months!

...

The first 6 months revenue this year was $1,078k.
- Since then the number of products in the market have tripled from 7 to 22.
- Since then we have seen the first real product push in the North American market. I think it is also the first time over their winter.
So I do not think doubling the first half revenue is too excessive. In fact we probably need to see this type of growth for BLT to become a successful company.

I have always made working assumptions of what kind of potential revenue could be achieved in the USA. Based on previous NZ sales of approx $400Kp/a and a population of 4M people. I calculate 10 cents of revenue per head of population has been achieved with fewer products and very little marketing.

USA population of >300M x 10 cents = $30m. Off course this is a bit rich considering you need the products and distribution need to be in place.

But that being said, Costco states they have 56m cardholders. So 56m x .10 = $5.6m which could be a reasonable working assumption. As you get into the detail you could debate that we are not comparing like with like but you could also argue US$ vs NZ$ and also the fact that BLT costs are significantly lower with Costco doing all the marketing.

But all that being said, it is not unreasonable to assume potential sales through Costco alone of $2M - $5.6M P/A is possible. So I really do hope the 40 store trial is successful.

This is perhaps more hope than science. But I do not see any other shares on the NZX with this much potential growth.

[Chippie]

Running through my notes I also noticed they have another 150 stores accross the several countires including the UK and Asia. So now I really do hope that the initial trial is successful!

http://phx.corporate-ir.net/phoenix....ol-homeprofile

Number of warehouses: 560(as of 09/18/09)

Areas of operation: 407 locations in 40 U.S. States & Puerto Rico;
77 locations in nine Canadian provinces;
21 locations in the United Kingdom;
6 locations in Taiwan;
7 locations in Korea;
9 locations in Japan;
1 location in Australia;
32 locations in 18 Mexican states

Membership Data (as of 8/30/09): 56.0 million cardholders
30.6 million households
21.5 million Gold Star
5.7 million Business
3.4 million Business add ons

Warehouse sizes: 73,000 to 205,000 square feet
(average 142,000 square feet)

Annual revenues
(FY09 - Ended 8/30/09): $71.4 billion

[fungus pudding]

PEs are based on NPAT - ie PE is Shareprice divided by NAPT (earnings) per share

Exactly. You cannot value any business on turnover. Profit is what counts.

[simla]

So, could Blis's revenues be growing well?

Let's first define three cases: (a) full year revenue less than $1.9m ie.second half revenue less than first half; (b) good solid growth, revenues of $2m to $3m ie second half revenue exceeds first half, considerable improvement on last year, probably profitable; and (c) vigorous growth, with revenues over $3m ie. second half revenue more than double first half, good maiden profit possible. Are those reasonable revenue ranges to consider? I don't know, but they were chosen in relation to the existing first half revenue.

Then let's ask what evidence we have either way. Looking at the last half year report, http://blis.co.nz/userfiles/file/Sep...r%20Report.pdf :

1. The company itself seemed very hopeful but understandably still unsure about short term profit in the last report:

• "In general there is still plenty of opportunity in the successful execution of the North American business strategy as the company seeks to increase sales and achieve profitable operations."
• "[Costco] and similar developments with other companies through Frutarom USA are very encouraging to BLIS and are an important factor in the company soon achieving profitable operations."
• "The priority for the Company remains the attainment of profitability through a focus on the leverage of its intellectual property through the development of key international partnerships and the careful management of costs. We are extremely encouraged by the significant investments that third parties are making in development and marketing of products based on our proprietary ingredients."

2. The company seemed to have some high volume opportunities coming to market though:

• "... the introduction of this product into giant US retailer, CostCo Wholesale Corporation. CostCo is the seventh largest retailer in the United States and the largest membership club store in the world. The plan for BLIS K12 BioGuard is to complete a 50 store sales trial in the Pacific Northwest of the US. Subject to a successful outcome, they will roll out the BLIS K12 BioGuard across all 403 US based stores in early 2010."
• Again, "[Costco] and similar developments with other companies through Frutarom USA are very encouraging to BLIS and are an important factor in the company soon achieving profitable operations." Note: "similar developments".

3. More manufacturers are joining the party. Now wouldn't they all be asking, how are sales going? Then they would be unlikely to jump aboard unless there was a positive answer? (But are they looking to short term growth, or growth over two or three years or more?)

• Nestle revenue "is expected to improve during the remainder of the financial year with the commencement of additional projects."
• "It is anticipated that further products will soon be released in Japan and in other North Asian markets."
• "North America ... top 50 dietary supplement manufactures (companies with revenue over US$40 million) as the major sales and marketing priority. To date all of these companies have been prospected and we are working through the sales cycle with a number of them."
• "Success with the "early adopter" companies that have incorporated the BLIS K12 probiotic into their retail offerings, will continue to drive a number of other companies to BLIS K12, who traditionally take a "wait and see" approach to new ingredient innovations. In addition to this market momentum effect, there is the additional benefit from many of the "first to market" retail manufacturers who have made significant investments in consumer education and promotion which in turn builds brand awareness and loyalty."
• "BLIS Technologies can report that there are 5 North American companies (with revenues above US$ 40 million per year) that that have launched one or more products containing a BLIS probiotic ingredient with an additional 3 companies expected to do the same before the end of the financial year (31 March 2010)."
• Another "major global consumer products company" has signed up for development work, for what we do not know.

4. Plus there are moves to increase total market size:

• "In conjunction with Frutarom, the Company is also developing other business opportunities identified in Europe, Taiwan, Japan, Korea, South East Asia and Australia, which it anticipates will generate initial sales in the current financial year."
• "The Company expects to formally launch the BLIS M18 to the broader dietary supplements market early in 2010."
• Not from that report, but we know chewing gum is coming to the market, http://culturedcare.com/ .

So, going from those quotes, case (a), with second half revenues less than first half, seems an unlikely outcome since there is so much going on, whereas (b) good solid growth seems more likely, doesn't it? For (c) vigorous growth, however, some high volume sales are required. To my mind, that would only seem possible, from the list of developments above anyway, via two possible sources. Firstly, if sales at Costco were going very well, volume could be high. Well, we cannot know that, but we might get a clue from whether the trial is extended to all stores soon (will we be told before May though?) or from Imagenetix's quarterly report due in several weeks. Or, secondly, high growth might be achieved if enough "solid growth" occurred in several places at once - from the combination of a growing list of new manufacturers and of growth with the existing manufacturers' markets and from opening in new countries. But, thirdly, vigorous growth could also be achieved from the combination of both of those, even if each was to a lesser degree.

If we thought good solid growth was full year revenue of over $2m, then it looks possible, since the first half was already $1m. But for vigorous growth giving at least $3m full year, then the answer surely is ... maybe. The growth from more countries, more manufacturers, more sales with existing manufacturers, and reasonable sales via Costco ... maybe that would add up to that.

Alas, all just guesses I'm afraid. We'll find out in May! Ideas anyone?

[neopoleII]

dont know about you lot,
but i rarely buy health products, or even look for health products on the internet.
i could also spectulate that most ordinary people dont either.
setting up an internet shop is cheap and easy, and internet advertising is also cheap.
to achieve market penitration you have to be in the real world......... that is tv or radio advertising................. bliss has ZERO penitration..................


one day......... bliss will make mainstream,
and when it does it will skyrocket........... unless it has ( like all NZ companies) been sold or taken over.
if bliss is to be an outstanding success, it will only be because the controlling shareholders havent sold out.

untill that day comes.............. i will hold to my huge holding
ps..
bought on ipo,
averaged down for the 9 years
would consider myself very lucky to break even......... for the simple fact that IF this company succedes it will be under new ownership before the original shareholders see a dime.

[emearg]

So, could Blis's revenues be growing well?

Let's first define three cases: (a) full year revenue less than $1.9m ie.second half revenue less than first half; (b) good solid growth, revenues of $2m to $3m ie second half revenue exceeds first half, considerable improvement on last year, probably profitable; and (c) vigorous growth, with revenues over $3m ie. second half revenue more than double first half, good maiden profit possible. Are those reasonable revenue ranges to consider? I don't know, but they were chosen in relation to the existing first half revenue.

Here is how I rate the three options likelihood:

a) 0%
b) 90%
c) 10%

Growth is continuing, but the increase required to achieve 2 million in revenue for the second half seems unlikely to me.

Remember that a fair bit of the first half revenue came from their newly announced deal with the "major global consumer company"

And if you recall the growth of accounts receivable in the first half was large. Two possibilities come to mind here:
1) Blis are slow to get paid and they have two or more months of revenue that had not been collected. Either they aren't chasing the money effectively, or their customers are slow to pay, or a combination of the two.
2) The growth in sales is very large and the money outstanding was the result of a very busy month.

Option 2 would be excellent, but the figures don't quite work in my opinion. I suspect it is a combination of the two options with the first being the dominant one. I say this having looked at the previous year's full year accounts receivable and this year's half figures.

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. Those sales are likely to be less than are occurring now meaning the growth that is occurring month by month (so it seems anyway) won't translate into as great an increase in revenue as you might expect. Does what make sense?

In addition to this, new sales to some of the Asian countries may occur in the second half, but in some cases revenue won't be recorded in this financial year. It will also be written to the accounts receivable line.

One bit of good news is the Prairie Naturals will have produced enough gum to allow a Canada wide distribution to occur. That should flow through this half and be reasonably substantial?

With the M18 launch officially happening early in 2010 with any luck Frutarom will have bought a reasonable stock pile which will hopefully translate into revenue this half even if we don't see any/many new M18 products coming to the market.

...but we might get a clue from whether the trial is extended to all stores soon (will we be told before May though?) or from Imagenetix's quarterly report due in several weeks.

Simla, Jessica Rabbit who writes 'The Truth About BioGuard' blog has said she will tell me if and when the BioGuard product is launched nationally. Her father-in-law works at Imagenetix and apparently will be one of the first to find out.

[emearg]

dont know about you lot,
but i rarely buy health products, or even look for health products on the internet.
i could also spectulate that most ordinary people dont either.

I agree. It is a pretty small market.

setting up an internet shop is cheap and easy, and internet advertising is also cheap.
to achieve market penitration you have to be in the real world......... that is tv or radio advertising................. bliss has ZERO penitration..................

I think that TV and radio advertising are much more effective than internet advertising, but internet (web, email, facebook, twitter etc etc) is better than nothing. In fact much of it might be much more targeted (most are opt in, unlike radio and TV) so might be more effective than one might first think?

It seems that marketing has been outsourced as Blis don't have the muscle to do anything big.

In NZ there has been some print and radio advertising.

We know of TV advertising for BioGuard in the states. How big this campaign is is hard to know.

Thankfully the makers of most products containing Blis are much bigger than Blis itself. US 40 million plus revenue so they have a bit more muscle.

They are able to invest significant cash to make their products successful. Blis was never able to do this for their products.

one day......... bliss will make mainstream,

That may happen in NZ and Aussi soon. It may not. We don't know but the good news is that K12 can now be included in foods. That is mainstream aye? If a yoghurt product or something similar comes out that would be a big step.

In the USA GRASsa is being sought. That will allow inclusion in food.

untill that day comes.............. i will hold to my huge holding
ps..
bought on ipo,
averaged down for the 9 years
would consider myself very lucky to break even......... for the simple fact that IF this company succedes it will be under new ownership before the original shareholders see a dime.

The IPO was $1 aye? I can understand why you are so disappointed with the performance of your shares!

They have been a shocker!

But for those who bought at their lows just 6 months ago they have been a great performer. Looking forward I think they will continue to perform better than the market as a whole.

neopoleII, any thoughts on what will happen with Blis over the next 12 - 24 months?

Are you feeling more positive about the future given the performance in the last year or so, or do you think we are all dreaming?