VANCOUVER, BRITISH COLUMBIA–(Marketwired – July 14, 2016) – Naturally Splendid (TSXV:NSP) (OTCQB:NSPDF)(FRANKFURT:50N) (“NSP”) is positioning itself to export healthy foods and value added natural formulations globally. The global functional, allergen-free, organic and other healthy foods market will push through the $1 trillion (EUR770 billion) mark for the first time in 2017, as consumer interest in preventing illness via foods snowballs, says Euromonitor International. According to NSP:
“We looked at the history of hemp and came to one clear conclusion – it was time for a radical change.”
In consideration of today’s remarkable sales figures, which the market obviously didn’t expect, NSP’s share price potentially offers an outstanding opportunity at the very moment.
With only 57.4 million shares issued and outstanding, NSP is currently valued at $15.5 million CDN. If the sales figures of the first two quarters are any indication for the last two quarters, NSP may bag total sales of $11.2 million CDN in 2016: A spectacular sales increase of 3,609% over 2015.
With an implied enterprise value (“EV”) of $15.5 million CDN and projected sales of $11.2 million in 2016, NSP enjoys an EV/Sales multiple of only 1.4x.
According to data from New York’s Stern University, the following sectors had EV/Sales multiples significantly higher than NSP’s current multiple of 1.4x:
| Drugs (Biotechnology): | 8.32x |
| Drugs (Pharmaceuticals): | 4.76x |
| Healthcare Products: | 3.75x |
| Average of all sectors: | 2.65x |
Therefore, when applying a conservative EV/Sales multiple of 2.65x, NSP’s stock would trade close to $0.54 CDN/shares (+89% from current price). When applying a multiple of 5x, as being the case with drugs, NSP would be fairly valued at $0.96 CDN/share (+257% from current level). In case management succeeds in growing Q3/4 sales figures stronger than Q1/2, an even higher valuation appears plausible. As per today’s news, NSP may exceed expectations again. The hemp/cannabis and healthcare sector is gaining momentum again, not only in North America but on a global scale, and as such an increased investor’s interest is expected in the foreseeable future.
CEO Craig Goodwin said in today’s news release:
“We are off to a good start for Q3. Having already secured a Purchase Order for $1,450,000 for Q3, Naturally Splendid is on pace to equal the sales performance of Q2. Our goal is to exceed our Q2 sales figures through increased export activity, increased retail sales, as well as securing additional clients and optimizing operations at POS / BPC. We are definitely pleased with the increase in our gross sales throughout our divisions. More importantly, we believe the Company is reaching the stage of being cash flow positive on a consistent basis. This is due in fact to not only the increased gross sales, but also increasing margins as scales of economy begin to show a positive effect on our bottom line. As the Company approaches being cash flow positive, we can begin to focus more attention and resources towards the lucrative omega markets globally with HempOmega® and also begin to focus attention on the positively evolving cannabinoid opportunities in the United States, specifically focusing on the Cannabidiol (CBD) markets.”
According to today’s news:
“Naturally Splendid is experiencing growth in gross sales in many of its divisions. The most significant growth has been in the export division where South Korean exports have exceeded initial projections by over 400% to date. However, the overall increase in gross sales can be attributed to several factors including Naturally Splendid’s retail lines NATERA®, Chii™ and Pawsitive FX™ which are showing consistent growth in sales. As reported earlier, the Company is pleased to confirm that in Q1 2016 their majority owned subsidiary, POS / BPC Manufacturing Corp. (“POS / BPC”), completed the preparation/training work to begin normal manufacturing status at this facility and has begun manufacturing for multiple clients. The POS / BPC facility will add additional revenue to Naturally Splendid in 2016. The 12,000-square-foot POS / BPC Facility – which is managed for POS / BPC by POS Bio-Sciences – is positioned to offer commercial-scale custom processing solutions for biological materials, such as functional foods and natural health ingredients to a wide range of clients. POS / BPC came on line March 28, 2016 having spent Q1 completing significant upgrades to the facility. In Q2, the first quarter that POS / BPC has been operational, the facility grossed in excess of $390,000 and is expected to be cash flow positive in 2016. Management expects gross revenue for POS / BPC to increase in Q3 and Q4.”
To view the first graph associated with this release, please visit the following link: http://media3.marketwire.com/docs/nsp0714graph1.jpg.
To view the second graph associated with this release, please visit the following link: http://media3.marketwire.com/docs/nsp0714graph2.jpg.
In a 2013 Nutraceuticals World article it was reported:
“Omega production is forecast to grow a mammoth 32.8% annually in volume (15.1% in value) by 2018, by which time 3.3 million metric tons worth $9.1 billion will be produced. “Plant omega 3 production value is expected to grow twice as fast as marine during the next five years,” Mr. Bender predicted. “As a result, by 2018, plant omega 3s will account for 52% of production value compared to 48% for marine. Plant omega 3s will benefit from consumers’ desire to get away from animal based products.”
Naturally Splendid is positioned to be at the forefront of this opportunity and intends to capitalize on this shift for omega sources.
Goodwin summarizes:
Our success exporting to South Korea is just the beginning. The South Korean opportunity secures Naturally Splendid a foothold in the growing Asian health and wellness market and we are experiencing increased interest for our products in Asia since attending tradeshows as official Members of the Canadian Trade Delegation in Singapore and Seoul and more recently as official Members of the Premier’s Trade Mission to Seoul, Manila and Tokyo, which was lead by British Columbia’s Premier Christy Clark. The success that we have had in South Korea creates the opportunity to increase our exporting sales by expanding to additional countries not only in Asia but globally, as well as adding additional product offerings such as hemp protein, hemp oil and HempOmega®. However, we are not limited to just hemp products. We are pursuing numerous opportunities to introduce additional food products outside of hemp into our exporting offerings, utilizing in part the same successful product launch strategy executed with our shelled hemp seed hearts in South Korea.”
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