Sharing my view on another business for some discussion. Vita Life Sciences (VLS) is a pharmaceutical and healthcare company operating in Asia Pacific. Its brand portfolio includes Herbs of Gold, VitaHealth, VitaScience and VitaLife. The market cap is circa 100m AUD as of writing.
I view VLS to not be a value long transaction due to the lack of an economic moat, in spite of some potential to double your money over the next 3-5 years based on a purchase price of 1.29 AUD per share (8 PE ratio*). This potential event may arise where the recent spike in demand of supplements from China continues to grow; and VLS can capitalise on this with marketing.
The upside risk does not appear robust with a single key driver for earnings growth. This relies on the spike in supplement demand from Asia, particularly China, continuing into the future. There is no apparent economic moat. The supplements could be replicated by competitors. Also the brand doesn't appear to have any true advantage against competitors. Worst case insolvency is not a risk due to the lack of debt. Current management appear pragmatic by funding expansion with generated profits. Debt and equity financing is used restrictively.
I'd be keen to hear thoughts of value companies in the supplement industry.
VLS Price at posting:
$1.97 Sentiment: Sell Disclosure: Not Held
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