Relevium Technologies Inc

Relevium Technologies Inc (TSXV: RLV) is a Canada based company that operates in the health and wellness industry and mainly focuses on online distribution. The principal business of the Company is the identification, evaluation, acquisition, and operations of brands and businesses in the health and wellness markets with a focus on e-commerce.

Q1FY21 Financial Highlights for the quarter ended September 30, 2020:

• RLV announced its quarterly results, wherein the group posted its revenue at CAD 333,116, significantly lower than CAD 1,017,686 in the previous corresponding period (pcp). The performance of the company was impacted by the ongoing pandemic.
• Gross margins improved to 58% from 54% in pcp, primarily the result of changes to the sales mix, and the company’s focus on the top 10 products. 
• Total expenses stood at CAD 5,32,829, significantly lower than CAD 1,395,681 in the previous corresponding period (pcp). The decline was primarily attributed to the considerable changes made within the costs and expense structure, in order to adapt to the current situation. 
• The company reported a net loss of CAD 339,557, significantly lower than a loss of CAD 850,346 in pcp.
• Cash and cash equivalent stood at CAD 103,107 while total assets were recorded at CAD 32,105,405.

Q1FY21 Income Statement Highlights (Source: Company Reports)

Outlook: The group would continue to adjust its cost structure and would seek business opportunities coming from the Personal Protective Equipment (PPE) market.

Risks: The group’s operation has been hindered due to the lower sale of Bioganix® products. Continuation of the above trend would dampen the company’s overall operations.

Stock Recommendation:

In August 2020, RLV secured a contract to deliver USD 20 million in personal protective equipment to Canadian institutions. In the recent past, the company reported significantly lower operations due to the negative impact of COVID 19. The Company is focusing on the acquisition of e-retail brands, businesses and technologies within the health and wellness market. The group derives its revenue from a single source i.e. Bioganix® brand, and due to the recent fall in the performance, the upcoming prospects looks gloomy; hence, we prefer to remain on the sidelines. The stock corrected ~25% in the last nine months. Moreover, the company could not file its Q1FY21 financial reports within the prescribed timeframe. On the valuation front, the stock is trading at an EV to Sales multiple of 3.8x on TTM basis which is higher than the industry median of 2.4x. Hence, considering the aforesaid facts, we recommend an ‘Avoid’ rating on the stock at the closing price of CAD 0.03 on January 28, 2021.

RLV Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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