The Clover Corporation Limited (ASX: CLV) share price has risen after the ASX share revealed a large amount of profit growth in its HY23 result.
This company says that its superior ‘microencapsulation’ technology enables nutritional oils such as tuna, fish, algal and fungal oils to be added to infant formula, foods and beverages.
HY23 result
Here are some of the highlights from the result:
- Net sales revenue increased by 49.5% to $44.4 million
- The company revealed new customers and products delivering growth
- Net profit after tax (NPAT) jumped 81.1% to $3.6 million
- Dividend declared of 0.75 cents per share
There was strong revenue growth in each of the regions that it operates. Europe and Middle East revenue rose 76%, Asian revenue rose 36% and ANZ revenue went up 76%.
Management said the company has stabilised its gross profit margin position by “managing supply chain inputs and price positions under increasing price inflation across people, raw materials and freight.”
The company noted that as customers work though their inventory and await their Chinese GB license, Clover thinks there will be “volatility in demand” in the second half.
Whilst the Chinese retail market requires a GB license, Clover explained that cross-border and the ‘grey market’ does not require a license – these areas of the market have strengthened as the impacts of COVID-19 have reduced. Clover said that its customers have been able to navigate new channels to access that market, improving overall demand.
Other highlights for the ASX share
Clover said that during the half-year, it implemented modifications to the Melody Dairies (NZ) spray dryer in Hamilton which has improved productivity in manufacturing Clover’s products.
The company’s new product pipeline includes a new proprietary encapsulation technology.
It also announced the successful outcome of the clinical trial with preterm infants and the introduction of a new product called Premneo, targeted at hospital pharmacies. The company said it may take 18 to 36 months to generate meaningful revenue.
The ASX share said that its innovations have potential to add significant growth in the medium-term.
Final thoughts on the Clover share price
It’s expecting to generate full year revenue in FY23 in the range of $80 million to $90 million.
According to Commsec, the Clover share price could make $0.085 of profit / earnings per share (EPS) in FY25. That puts Clover shares at under 16x FY25’s projected profit.
If the business can navigate the Chinese market changes, I think it’s worthwhile to consider, though there are other ASX growth shares that operate in less complicated markets, in my opinion.
