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billyen

6,892 Posts.

2861

09/04/20

08:31

Post #: 43963255
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Originally posted by domg10 ↑

Long time reader and investor, first time poster. Just wanted to share my 2c through a basic situational analysis of WNB.

Strengths:

Pre-existing relationships with strong sales channels. Already received a $400k purchase from Chemist Warehouse, with links formed with other major retails such as Myer, Coles, etc. If WNB are able to fulfill the CWH order, sales will explode and a HUGE opportunity to the Chinese market may present itself (Through CWH's Chinese store). P.s. WNB announced yesterday that they are on track to fulfill the mentioned order.

Strong supply chain. WNB has been operating in the industry for a while now. While they are new to the HS market (like many others), they are not new to the beauty and cosmetic manufacturing space. They have a strong supply chain in place, with access to all the appropriate manufacturing plants, packaging materials, and (based on yesterday's announcement) raw materials to produce HS. These are not things that are readily available to those entering the market with no background (especially under the current climate), and this sole reasons places them 10 steps ahead of much of the competition.

New management. While WNB has had it's issues in the past, changes to senior management appear to be having a positive affect. The board were smart enough to recognise opportunities in the HS market and prepare accordingly, and close their cash burning spas (due to COVID-19, but lets hope they stay closed). Christine has excellent relationships in the industry and access to strong distribution channels as mentioned previously, and I guess other senior managers have been brought in to manage the previously poor financial management of the business.

Alex Waislitz. He is a substantial holder in the company. Look him up. (Thanks @billyen)

Weaknesses:

Financials. This is the elephant in the room, with the company recording high levels of debt in relation to cash in hand in their most recent financials. If the company can fulfill and increase their future orders, cash flow will not be a problem. The issue is the short term debt. Either they will need to renegotiate lending terms (which could be possible if they are able to sell their HS range sooner rather than later) or find more cash, likely through a capital raising. If it is the 2nd option, hopefully it comes as the SP increases.

Clarity. As minor investors, we are currently in the dark (to a degree). Recent news has been positive so far, so I have no reason to doubt that they are in trouble. Hopefully the announcement tomorrow provides some more clarity.

Opportunities:

Hand Sanitiser. Unless you've been living under a rock, you would've heard of something called COVID-19. Demand for hand sanitiser has gone absolutely bezerk, and it's likely that demand will be high (and increasing) for a long time to come. WNB is in an excellent position to capitalize on this demand, while many others aren't.

SP and MC of competitors. If you've been paying attention to the ASX, companies in the HS space have been going through the roof. I won't name them all here, but you may have heard of a stock called ZNO? It's MC is currently $340m... WNB is at $11m. ZNO started at a similar point to WNB. By no stretch am I saying that WNB will definitely reach the heights of ZNO (and i'm not going to speculate on potential SP) but even if it can crack into a small portion of the market... YOU DO THE MATHS.

Access to Asia. I already touched on this, but any product penetrating the Asian market is huge. Through CWH, WNB have a real chance at this.

Threats:

Increasing supply of HS. While demand is increasing, so is supply through new manufacturers entering the market. I won't ramble on too much about this as I have already touched on it throughout the analysis, but I believe WNB is in an excellent positon to be producing HS compared to most others.

SUMMARY:
If WNB can successfully fulfill their initial order with CWH, I truly believe this can be one of the shares of 2020. They have the right pillars in place to capitalize on a rapidly growing market, and it has more upside in comparison to most of their competitors IMO. Of course there is risk (it's a 1.1c/share company) but that is what creates the opportunity. MC is still unbelievably low, get in while you can. The announcement tomorrow could be huge for WNB.

Not looking for all to agree with me, only my opinion. DYOR.

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Bloody amazing post mate!
WNB Price at posting: 1.1¢ Sentiment: Buy Disclosure: Held
4 Upvote

0 Great analysis

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