By Jenny Ruth
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Friday 18th February 2011 |
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New Image Group's 69% share price fall over the past 18 months will have damaged investors' perception of the company, says McDouall Stuart.
“Management will need to demonstrate a sustainable business model before investor interest is renewed,” the broker says.
Over the last 18 months, sales and earnings have fallen as the global financial crisis, the stronger New Zealand dollar and an unsuccessful product launch affected trading. That followed substantial growth in the year ended June 2009 when annual sales had risen from $39 million to $98 million and profit jumped from $2 million to $15.5 million.
Its latest result showed net profit for the six months ended December 2010 fell to $1.9 million from $2.8 million in the previous first-half.
The company expects better prospects ahead for its colostrum-based products with its fortified infant formula range, nutriceutical supplements and COL+ now sld through wholesalers in China and other East Asia market and with increased investment in R&D, marketing and manufacturing, McDouall Stuart says.
The company, which exports 90% of its products, made two acquisitions late in 2010, 50% of skin care company Living Nature and buying the intellectual properties and patents associated with a sleep-enhancing milk product which was successfully trialled in Taiwan.
McDouall Stuart values the shares at 23 cents.
Recommendation: Hold.
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