\u00a0<\/p>\n
Vested Equities initiates coverage of Wellnex Life with an overweight rating and 11.5 cents target price<\/strong> \u00a0<\/p>\n Special Report:<\/em><\/strong> Vested Equities has initiated coverage on Wellnex Life with an overweight rating and 11.5 cents\/share 12-month price target, saying the owner and developer of some of Australia\u2019s leading health brands is well positioned to deliver strong revenue growth. <\/strong><\/p>\n In its initiation report Vested says the Wellnex Life (ASX:WNX)<\/strong><\/a> agreement with world-leading consumer healthcare company Haleon, continued margin expansion resulting from an increase in owned brand sales, and the Pain Away acquisition will drive revenue growth.<\/p>\n \u201cWe anticipate substantial revenue growth from FY23\u2019s $27.9 million to an estimated $143.7 million in FY26E,\u201d Vested says in its report.<\/p>\n \u201cWe anticipate FY24 as the year when EBITDA turns positive at $6.5 million, albeit slightly lower than management\u2019s estimates due to our projection of slightly higher integration costs.<\/p>\n Vested says for FY26E, it forecasts a conservative EBITDA margin of 17% because it firstly wants to see how the integration of Pain Away goes and secondly its owned brand revenue contribution.<\/p>\n\n Source: Vested Equities<\/em><\/p>\n \u00a0<\/p>\n Vested says WNX managing director Zack Bozinovski and CEO George Karafotias have \u201cThis is testament to their remarkable blend of vision, experience, and strategic acumen that makes us unequivocally bullish on their ability to guide the company to new heights,\u201d it says.<\/p>\n Vested says it is further excited to see the appointment of sales manager Nicholas Krogh and marketing manager Dominique Ries.<\/p>\n \u201cThe addition reaffirms their confidence in the future growth of the company \u2013 and our confidence in management ability to deliver results,\u201d Vested says in its report.<\/p>\n \u00a0<\/p>\n WNX introduced the initial soft gel liquid paracetamol to the Aussie market after significant investment in time and resources, particularly in creating a comprehensive dossier.<\/p>\n Vested says the dossier not only encompasses crucial intellectual property but also necessitates clinical and patient data demonstrating the product\u2019s effectiveness and safety.<\/p>\n Approval of the dossier from the Therapeutic Goods Administration (TGA) is mandatory before any sales, which Vested says provides a high barrier to entry for competitors.<\/p>\n WNX inked a deal in March 2022 to retail its innovative soft gel liquid paracetamol in Australia and New Zealand under the behemoth Haleon brand (formerly GSK Consumer Healthcare).<\/p>\n WNX recently achieved a key milestone by extending its supply agreement<\/a> with Haleon.<\/p>\n Haleon is a world-leading consumer healthcare company that owns brands including Panadol, Sensodyne, Voltaren, Polident, Centrum, Otrivin and Advil.<\/p>\n Starting FY24, WNX will supply Haleon into the European and Middle East markets with:<\/p>\n Liquid Paracetamol Soft Gel WNX earlier this month announced a $13.6m entitlement offer to fund the acquisition of Pain Away, the largest Australian-owned topical pain relief brand and number two provider of topical pain relief products in Australia.<\/p>\n WNX will pay $20.85 million, plus inventory to a targeted value of $1.15 million, for Pain Away, which develops and manufactures pain relief products focused on joint and muscle pain using all natural ingredients.<\/p>\n Pain Away\u2019s current product range consists of 25 individual products across five main categories including\u00a0creams, sprays, patches, lotions and other (primarily tablets, capsules, and bath salts).<\/p>\n The products are distributed nationally through more than 6,000 pharmacy outlets across Australia, including Chemist Warehouse, Terry White Chemmart, Priceline Pharmacy, Amcal\u00a0as well as grocery retailers including Woolworths, Coles, and Aldi.<\/p>\n \u201cWe believe the Pain Away acquisition will have an immediate impact on the company\u2019s financial position and their bottom line and provide future growth opportunities for the business as a whole,\u201d Vested says in its report.<\/p>\n \u201cWe agree with management\u2019s rationale behind the Pain Away acquisition, especially their emphasis on the operational synergies that should be realised immediately after integration.\u201d<\/p>\n WNX is projecting revenue to increase by ~118% compared to FY23 with gross margins expected to rise from just below 25% to just under 30%.<\/p>\n \u00a0<\/p>\n In FY23, WNX entered a partnership with One Life Botanicals, a leading producer of medicinal cannabis.<\/p>\n The collaboration gives WNX access to high-quality locally made medicinal cannabis products for the Special Access Scheme Category B (SAS-B) market, offering competitive pricing.<\/p>\n Acknowledging the unique aspects of this joint venture, Chemist Warehouse also joined forces to introduce a new medicinal cannabis brand.<\/p>\n Vested says WNX appears to be well-positioned to capitalise on the \u201ccollaborative endeavours\u201d and the burgeoning SAS-B market, projected to reach ~$600 million in FY24.<\/p>\n \u201cPain Away is a perfect fit to extend its presence in the medicinal cannabis market and in the future the company will look at bringing to market an over-the-counter S3 medicinal cannabis product,\u201d Vested says.<\/p>\n \u00a0<\/p>\n Vested says its 12-month price target of 11.5 cents\/share, which is ~117% increase on its 5.3 cents last close price, is based on a peer-group-based analysis comprising of three custom FactSet Industry indices including:<\/p>\n Health Technology \u201cFor our base multiple, we use an equally weighted metric of the three indices which are applied to both Vested\u2019s forecast and management\u2019s guidance for EBITDA and net Income,\u201d the Vested report says.<\/p>\n \u201cWe use equal weights for each estimate then take a time weighted average of 24E & 25E which produces the 12-month price target of 14.5c \u2013 that is then adjusted for a 20% liquidity discount resulting in our price target of 11.5c.\u201d<\/p>\n\n Source: Vested Equities<\/em><\/p>\n \u00a0<\/p>\n This article was developed in collaboration with Wellnex Life, a Stockhead advertiser at the time of publishing. <\/em>\u00a0<\/em><\/p>\n This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n Vested has not and will not receive a fee either directly by the company itself or by a third party for the initial coverage report. <\/em><\/p>\n <\/span><\/p>\n The post Wellnex Life to rise 117pc in next 12 months forecasts Vested Equities<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nBroker says agreement with Haleon and margin expansion from own brand sales driving revenue growth<\/strong>
\nPain Away acquisition expected to have immediate impact on bottom line with future growth opportunities<\/strong><\/p>\nStrong management team <\/strong><\/h2>\n
\n\u201cdemonstrated their ability building strategic partnerships with the likes of Haleon and Arrotex, as well as negotiating accretive acquisitions such as Pain Away\u201d.<\/p>\nFirst soft gel paracetamol to Aussie market<\/strong><\/h2>\n
\nLiquid Paracetamol plus Caffeine Soft Gel
\nLiquid Paracetamol plus Ibuprofen Soft Gel<\/p>\n<\/h2>\n
Pain Away to immediately impact financials<\/strong><\/h2>\n
Collaborations to capitalise on cannabis sector growth<\/strong><\/h2>\n
Arriving at valuation <\/strong><\/h2>\n
\nRetail Trade
\nAustralian broad market index<\/p>\n