Currency in
Last close As at 08/02/2023
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— 0.00 (0.00%)
Market capitalisation
113m
Research: Consumer
Evolva has signed a distribution agreement to jointly develop the Brazilian market for resveratrol with its new partner, Tovani Benzaquen, a distributor of food and functional ingredients. Management expects revenues to exceed CHF1.5m over the next 2.5 years. The distribution agreement opens the Brazilian market for resveratrol, thus should result in an uplift in revenue expectations for the product. If successful, we believe the distribution agreement could be extended to other markets in Latin America and the model could eventually be rolled out to new markets in Asia, for example. We believe this is a significant step in Evolva’s commercialisation capabilities under new CEO Christian Wichert, as he instils a sense of urgency into the business and transitions the company to a fully product-based commercial model.
Evolva |
Evolving the sales model |
Distribution agreement |
Food and beverages |
18 May 2022 |
Share price performance
Business description
Next events
Analysts
Evolva is a research client of Edison Investment Research Limited |
Evolva has signed a distribution agreement to jointly develop the Brazilian market for resveratrol with its new partner, Tovani Benzaquen, a distributor of food and functional ingredients. Management expects revenues to exceed CHF1.5m over the next 2.5 years. The distribution agreement opens the Brazilian market for resveratrol, thus should result in an uplift in revenue expectations for the product. If successful, we believe the distribution agreement could be extended to other markets in Latin America and the model could eventually be rolled out to new markets in Asia, for example. We believe this is a significant step in Evolva’s commercialisation capabilities under new CEO Christian Wichert, as he instils a sense of urgency into the business and transitions the company to a fully product-based commercial model.
Year end |
Revenue (CHFm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
7.5 |
(23.4) |
(2.9) |
0.0 |
N/A |
N/A |
12/21 |
9.9 |
(24.5) |
(2.6) |
0.0 |
N/A |
N/A |
12/22e |
14.9 |
(13.5) |
(1.3) |
0.0 |
N/A |
N/A |
12/23e |
23.4 |
(8.6) |
(0.8) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Resveratrol a growth driver
Resveratrol is currently the main contributor to Evolva’s Health Ingredients business and the CEO sees it as a key product to significantly boost future growth. As a reminder, it is a naturally occurring ingredient, which Evolva produces via fermentation, with applications in dietary supplements, functional beverages, cosmetics, pharmaceuticals and animal health.
Focus on commercialisation
Christian Wichert, who was appointed unexpectedly in mid-February, gave his first impressions of the business at the FY21 results in March and is clearly putting his words into action. He believes Evolva is well-placed to capitalise on the long-term consumer trend of nature-based products, which are in the sweet spot of health, wellness and sustainability. In March he stated that his immediate focus would be on three levers: boosting commercial performance, executing spending and cost discipline and changing the culture to be entrepreneurial, agile and collaborative. The distribution agreement for resveratrol clearly boosts Evolva’s commercial performance, and we expect to see further similar deals in future.
Valuation: Fair value of CHF0.24/share
We continue to value Evolva on a DCF basis with a 25-year model. Our fair value remains unchanged at CHF0.24/share as we make no changes to our model at this stage. As a reminder, nootkatone contributes c 50% of our fair value for Evolva, with most of this coming from its use in pest control.
Exhibit 1: Financial summary
CHF'000s |
2019 |
2020 |
2021 |
2022e |
2023e |
2024e |
|||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
11,596 |
7,541 |
9,878 |
14,947 |
23,368 |
42,022 |
|
Cost of Sales |
(6,305) |
(9,783) |
(19,184) |
(9,230) |
(12,860) |
(23,557) |
|||
Gross Profit |
5,292 |
(2,242) |
(9,306) |
5,717 |
10,508 |
18,465 |
|||
EBITDA |
|
|
(12,280) |
(16,733) |
(23,796) |
(9,463) |
(4,736) |
3,134 |
|
Operating Profit (before GW and except.) |
(14,067) |
(18,397) |
(25,095) |
(10,653) |
(5,758) |
2,243 |
|||
Intangible Amortisation |
(6,060) |
(6,508) |
(7,306) |
(7,306) |
(7,306) |
(7,306) |
|||
Exceptionals |
0 |
0 |
(9,628) |
0 |
0 |
0 |
|||
Operating Profit |
(20,128) |
(24,905) |
(42,030) |
(17,959) |
(13,064) |
(5,063) |
|||
Net Interest |
(1,486) |
(4,978) |
622 |
(2,819) |
(2,857) |
(2,892) |
|||
Other financial income |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Profit Before Tax (norm) |
|
|
(15,553) |
(23,375) |
(24,473) |
(13,472) |
(8,616) |
(649) |
|
Profit Before Tax (FRS 3) |
|
|
(21,614) |
(29,882) |
(41,408) |
(20,778) |
(15,922) |
(7,955) |
|
Tax |
(25) |
18 |
141 |
0 |
0 |
0 |
|||
Profit After Tax (norm) |
(15,578) |
(23,357) |
(24,332) |
(13,472) |
(8,616) |
(649) |
|||
Profit After Tax (FRS 3) |
(21,639) |
(29,864) |
(41,266) |
(20,778) |
(15,922) |
(7,955) |
|||
Average Number of Shares Outstanding (m) |
770.4 |
809.3 |
926.2 |
1,030.6 |
1,030.6 |
1,030.6 |
|||
EPS - normalised (c) |
|
|
(2.0) |
(2.9) |
(2.6) |
(1.3) |
(0.8) |
(0.1) |
|
EPS - FRS 3 (c) |
|
|
(2.8) |
(3.7) |
(4.5) |
(2.0) |
(1.5) |
(0.8) |
|
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|||
Gross Margin (%) |
45.6 |
-29.7 |
-94.2 |
38.2 |
45.0 |
43.9 |
|||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
|||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
|||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
143,333 |
133,316 |
126,068 |
117,920 |
109,955 |
102,136 |
|
Intangible Assets |
133,939 |
123,894 |
113,302 |
105,996 |
98,690 |
91,384 |
|||
Tangible Assets |
7,211 |
6,914 |
5,953 |
5,111 |
4,451 |
3,938 |
|||
Other fixed assets |
2,184 |
2,508 |
6,814 |
6,814 |
6,814 |
6,814 |
|||
Current Assets |
|
|
48,745 |
33,577 |
34,410 |
17,028 |
17,672 |
30,357 |
|
Stocks |
5,392 |
9,125 |
16,269 |
12,705 |
12,852 |
23,112 |
|||
Debtors |
1,480 |
2,347 |
4,502 |
2,541 |
3,038 |
5,463 |
|||
Cash |
39,920 |
19,669 |
11,857 |
0 |
0 |
0 |
|||
Other current assets |
1,954 |
2,435 |
1,782 |
1,782 |
1,782 |
1,782 |
|||
Current Liabilities |
|
|
(12,295) |
(15,139) |
(15,221) |
(13,340) |
(14,026) |
(16,047) |
|
Creditors |
(2,912) |
(2,128) |
(3,625) |
(1,744) |
(2,430) |
(4,451) |
|||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Finance lease obligations |
(1,289) |
(1,059) |
(834) |
(834) |
(834) |
(834) |
|||
Other current liabilities |
(8,095) |
(11,952) |
(10,762) |
(10,762) |
(10,762) |
(10,762) |
|||
Long Term Liabilities |
|
|
(7,221) |
(6,662) |
(28,383) |
(23,633) |
(10,006) |
(20,657) |
|
Long term borrowings |
0 |
0 |
(19,200) |
(19,200) |
(6,403) |
(17,884) |
|||
Finance lease obligations |
(4,840) |
(4,179) |
(3,574) |
(2,744) |
(1,914) |
(1,083) |
|||
Other long term liabilities |
(2,381) |
(2,484) |
(5,609) |
(1,689) |
(1,689) |
(1,689) |
|||
Net Assets |
|
|
172,562 |
145,092 |
116,875 |
97,976 |
103,595 |
95,789 |
|
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
(13,577) |
(22,317) |
(29,355) |
(5,670) |
(4,546) |
(7,382) |
|
Net Interest |
(583) |
(1,046) |
(431) |
(2,819) |
(2,857) |
(2,892) |
|||
Capex |
(193) |
(1,223) |
(335) |
(349) |
(363) |
(377) |
|||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Financing |
164 |
0 |
7,500 |
0 |
0 |
0 |
|||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Other cash flow |
(6,224) |
4,479 |
13,917 |
(830) |
(830) |
(830) |
|||
Net Cash Flow |
(20,413) |
(20,106) |
(8,704) |
(9,667) |
(8,596) |
(11,481) |
|||
Opening net debt/(cash) |
|
|
(60,381) |
(39,920) |
(19,670) |
(11,005) |
(1,337) |
7,259 |
|
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
|||
Other |
(47) |
(144) |
39 |
0 |
0 |
0 |
|||
Closing net debt/(cash) |
|
|
(39,920) |
(19,670) |
(11,005) |
(1,337) |
7,259 |
18,739 |
Source: Edison Investment Research, company data
|
|
Research: Metals & Mining
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