By Steve Moore | Monday 19 July 2021
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
March-listed provider of ready meals that do not need to be stored in a fridge or freezer, Parsley Box (MEAL) has made a trading update which emphasises “Strong H1 2021 growth driven by repeat purchase rates and average order value”. Why then are the shares currently at 142p, 15.7% lower?!
The update details “expect to report unaudited revenue in H1 2021 of over £14m, an increase of 26% over the same period in 2020… expects H2 revenue growth to be substantially ahead of H1, driven by product innovation and continuing progress in repeat AOV” (Average Order Value). However…new customers orders were -16.6% year-on-year and new customers average order value -3.5%.
The group notes this “as Covid-19 restrictions ease… anticipates that this effect will be short term and is confident that the accelerated shift in consumer behaviour towards our direct-to-consumer model is permanent and that the underlying growth drivers of the business and the favourable demographic trends, remain in place”.
However, the market cap is still £59.9 million – and house broker finnCap initiated coverage forecasting current year closing net cash of £7.8 million after revenue of £35.9 million, with a move into £3.5 million of pre-tax profit next year on revenue of £50.8 million. Parsley Box “ended H1 with £6.5m in cash and no debt following the £5m fundraising completed by the company as part of its successful IPO” and finnCap now forecasts current year closing net cash of £5.5 million after revenue of £32.4 million, with a move into pre-tax profit next year now £0.9 million on revenue of £44.5 million.
The speed of the downgrades suggests caution on even those though whilst the “successful IPO” raising £5 million was at 200p per share – with the shares closing at 168.5p even prior to this latest announcement, not successful for investors then!
That doesn’t look likely to change any time soon and the significant forecast reductions so soon after the March listing means it an AIM IPO roll-call of shame: Chairman Chris van der Kuyl, CEO Kevin Dorren, CFO John Swan, Chief Product Officer Adrienne MacAulay, Non-execs Chris Britton, Hazel Cameron & Ana Stewart, Nomad & Broker: finnC®ap.
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