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Shekel Brainweigh

Recasting Numbers for New Retail Division Developments

810 Views04 Mar 2020 01:55
Issuer-paid
SUMMARY

Shekel Brainweigh Limited (ASX:SBW) has announced its CY19 result and provided some update on potential developments into CY20. The result was solid with revenue +1% to US$18.8m but +5.2% in 2H19 while EBITDA (ex AASB16) turned negative as expected on the back of significantly higher R&D spend for new products. On the back of this result and recent product developments we have recast our medium-term assumptions for the new Retail Division, placing more emphasis on “Innovendi” and “The Micro-market Capsule” and less on standalone shelves. This shift in new product development is the result of new technology developed and/or licenced through technology partners, and the realisation that large retailers will be slow to adopt the smart shelf “sorter” technology for traditional big-box stores. The resulting higher Innovendi sales assumptions increases near-term numbers, albeit there is significant forecast risk both to the upside and downside. SBW is trading at a 50% discount to the nearest peer on an EV/Sales basis (80%-90% to most), is incurring relatively modest PBT losses, has significant relative sales and is the verge of new product revenues.   

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