Naked Brand Group Ltd

Naked Brand Group Ltd (NASDAQ: NAKD) is a US-listed swimwear and intimate apparel Company. The Company is engaged in the business of designing, manufacturing and marketing a portfolio of 11 Companies and brands.

Investment Highlights - Naked Brand Group Ltd – Avoid at USD 1.35

• The Company’s performance was significantly impacted by covid-19 pandemic, which resulted in lower revenue.
• In the last week, the Company delivered a negative return of ~11.18% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales multiple of the Naked Brand Group Ltd is currently higher as compared to the corresponding multiple of the Textiles & Apparel industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 57 level), which means the stock price could decline in the short term.

Key Risks

• The Company may experience an increase in operating expenses due to disruptions in the supply chain.
• To meet the new regulations, the Company needs to implement new processes, failing to do so would increase the compliance risk.

Financial Highlights – H1 FY2021 (31 July 2020) (released on 27 November 2020)

(Source: Interim Report, Company Website) 

• In the first half of the financial year 2021, due to the impact of the covid-19 pandemic on sales, the revenue declined by 17.9% compared to last year data for the same period.
• The profitability for the period improved, reflecting better control over expenses. The profitability margins remained in the negative zone for the period.
• The cash balance as on 31 July 2020 stood at NZ$18,119 thousand (31 January 2020: NZ$ 3,791 thousand).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown an increase in financial performance in the first half of the financial year 2021. Despite the lower revenue, the bottom-line performance for the period improved, while profitability margins remained in the negative zone. The liquidity position for the period improved with the well-positioned balance sheet. NAKD’s operational performance was significantly impacted due to covid-19 pandemic as it leads to the closing of bricks and mortar stores in Australia and New Zealand. At present, the Company is not able to access the full magnitude of the pandemic on future results of operations, liquidity and financial condition. The stock made a 52-week low and high of USD 0.0661 and USD 3.40, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on Naked Brand Group Ltd at the closing price of USD 1.35 (as on 17 February 2021), and with support from few catalysts needs to be evaluated at a later stage such as easing in lockdown restrictions.

Castor Maritime Inc

Castor Maritime Inc (NASDAQ: CTRM) is a Cyprus based dry bulk shipping Company. The Company is focused on growing business through the acquisition of modern and new vessels.

Investment Highlights - Castor Maritime Inc – Avoid at USD 1.16

• Despite the higher revenue, the Company reported a significant decline in the profitability margins due to higher expenses incurred.
• In the last one year, the Company delivered a negative return of ~3.33% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales & Price/Earnings multiples of the Castor Maritime Inc are currently higher as compared to the corresponding multiples of the Freight & Logistics Services industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 56 level), which means the stock price could decline in the short term.

Key Risks

• Any change in regulations and government policies could affect the overall business of the Company.
• The covid-19 outbreak has resulted in supply chain disruptions which will have a negative impact on the Company’s performance.

Recent News

On 11 February 2021, Castor Maritime announced that it had signed a purchase agreement to purchase two 2005 Korean-built Aframax LR2 tankers through two separate wholly-owned subsidiaries from an unaffiliated third-party seller for $27.2 million.

Financial Highlights – Q3 & 9M FY2020 (30 September 2020) (released on 11 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter and nine months period of the financial year 2020, the Company reported a significant increase in revenue.
• The profitability margins declined significantly for the period, due to higher operating expenses incurred.
• The Company’s cash balance increased significantly by 654% to $38.1 million as on 30 September 2020 (31 December 2019: $5.1 million).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a decline in financial performance in the third quarter and nine months period of the financial year 2020. Despite the higher revenue, the bottom-line performance declined, while profitability margins remained in the negative zone. Castor Maritime needs to manage its operating expenses unless it results in further deterioration in financial performance in the coming years. The Company’s operations were significantly impacted by the impact of the covid-19 pandemic, as it caused significant turbulence in the dry bulk sector. CTRM expects shipping market to remain uncertain in the near future. The stock made a 52-week low and high of USD 0.1123 and USD 2.60, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on Castor Maritime Inc at the closing price of USD 1.16 (as on 17 February 2021), and with support from few catalysts needs to be evaluated at a later stage such as the improved charter rates.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.