Glacier Media Inc

Glacier Media Inc (TSX: GVC) is a Canada based company, which offers information and marketing solutions. It operates in three segments Environmental, Property and Financial Information, Commodity Information and Community Media.

Key highlights 

• Selling JWN energy business: Recently, the company announced that its affiliate GVIC Communications Corp. (“GVIC” or the “Company”) has sold JWN Energy information business (“JWN”) to geoLOGIC systems ltd for a total of up to CAD 8.0 million. 

• Reports higher cash flow from operations: The company reported higher consolidated cash flow from operations at CAD 21.4 million for the year ended December 31, 2020 as compared to CAD 3.9 million in the previous corresponding period.

• Improvement on the sequential basis: The Company is regularly monitoring the conditions and is responding accordingly. They witnessed a gradual recovery in revenues compared on a sequential basis. The Company is working to maintain sufficient operating income levels and make concerted efforts to bring revenues back further and increase profits and cash flow.

Source: Company 

Financial overview of FY2020 (In thousands of CAD)

Source: Company 

• In FY 2020, the company reported CAD 151.3 million revenue, compared to 184.7 million in the previous corresponding period. The revenue fell primarily due to declining print advertising revenue and the cyclical nature of certain businesses of the group. On the flip side, on a sequential basis, the company registered a growth in revenue at CAD 41.7 million in Q4 2020, against CAD 35.3 million in Q3 2020. 
• The company's operating profit stood at CAD 22.9 million in FY 2020, compared to CAD 7.9 million in pcp. The increase was mainly due to operating expenses and lower G&A expenses.
• The company posted net loss of CAD 14.7 million in the reported period against a net profit of CAD 37.3 million in the previous corresponding period. Primarily due to impairment expenses of CAD 23.5 million. 

Risks associated with investment

The company derives its revenues from selling advertising and subscriptions related to its publications; a drop in the subscription level can lead to adverse results. The other risk factors include foreign exchange rate fluctuations, the seasonal and cyclical nature of the agricultural and energy sectors, discontinuation of government programs, general market conditions in Canada and the United States, changes in the prices of purchased supplies including newsprint, and cybersecurity risk. 

Stock recommendation

While the pandemic is still affecting the Company’s businesses to varying degrees, its digital media, data, and information businesses have held up relatively well. Revenues have begun to recover in several areas and are gradually improving on an overall basis. On a sequential basis, the Company registered a growth of CAD 6.4 million in revenue, which is a key positive. The Company also implemented some extensive measures to reduce operating expenses to ensure its businesses can operate profitably at the reduced revenue levels without the wage subsidy. Furthermore, the company has been working to strengthen its financial position and operating profitability during the pandemic and expects that as time progresses, and the pandemic abates, revenues would recover. On the valuation front, the stock is available at TTM EV/EBITDA of 3.14x against the industry (Media & Publishing) median of 5.26x. Hence, considering the rationale mentioned above, we suggest a “Speculative Buy” recommendation on the stock at the closing price of CAD 0.475 on April 26, 2021.

1-Year Price Chart (as on April 26, 2021). Source: Refinitiv (Thomson Reuters)

Ceapro Inc

Ceapro Inc (TSXV: CZO) is engaged in the development and application of proprietary extraction technology to produce extracts and active ingredients from oats and other renewable plant sources. Its operating segments are the Active ingredient product technology industry and the Cosmeceutical industry.

Key highlights 

• Growing demand for cosmeceutical base business: The organization effectively finished the combination of production activities under one rooftop in Edmonton. It's committed production group effectively reacted to the developing business sector interest for the cosmeceutical base business by delivering more than 250 metric huge loads of dynamic fixings in 2020, a 25% expansion over the past comparing time period.

• Value driving lead products: The company has established base business with multiple growth opportunities and leveraging two value-driving products and enabling technologies, which supports near-term and future growth.

Source: Company 

• Increase in net cash flows: As on December 31, 2020, the group announced CAD 3.5 million net improvement in cash flow, compared to CAD 13,000 in the previous comparable year. The rise in cash flow was largely attributed to higher cash from operations, as long-term debt and CAAP loan repayments were just CAD 197,000 in FY2020, relative to CAD 423,000 in pcp. 

• Industry Beating Margins:  The resilient business of the company assisted in outperforming the industry margins. The matrix below gives a glimpse of this.

Source: Refinitiv (Thomson Reuters) 

Financial overview of FY2020

Source: Company

• In FY2020, the company reported 17% higher revenue at CAD 15.12 million, against CAD 12.88 million in the previous corresponding period. The increase in sales revenue was primarily driven by a 33% increase in the sale of avenanthramides, which was partially offset by a 16% decrease in the sale of beta glucan year over year.
• On the back of lower cost of goods sold the company posted higher gross profit at CAD 7.6 million, against CAD 5.4 million in pcp. Gross margin improved to 50% V/s 42% in 2019.
• The company’s operating profit stood at CAD 2.1 million compared to a loss of CAD 0.5 million in pcp, primarily due to minimized operating expenses, partially offset by higher G&A expenses.
• The company made posted a net income of CAD 1.8 million, against a loss of CAD 1.1 million in FY2019. 

Risks associated with investment

The company is exposed to a varied range of risks ranging from regulatory risks, uncertainty in product development and related clinical trials and validation studies. Further, the company is exposed to forex risks, and investor are exposed to liquidity risk given the penny-cap market categorization of the company.

Stock recommendation

In FY 2020, the company secured business continuity by emphasizing production operations to serve its customers in the cosmetic sector. This approach has resulted in a significant increase in sales, net profits and cash on hand. This also allowed the group to maintain investments in Research and Development as per its strategy to expand the business model from a contract manufacturer/commodity company to a high-value life science/biopharmaceutical company offering innovative products and delivery systems to the healthcare sector. The company is thrilled with its development of beta-glucan from yeast and its potential as an inhalable therapeutic for COVID-19 patients. On the valuation front, the stock is available at a forward EV/Sales multiple of 2.8x, which is significantly lower than the industry (Healthcare) median of 6.9x. Hence, considering the above rationale, we suggest a “Speculative Buy” recommendation on the stock at the closing price of CAD 0.70 on April 26, 2021.

1-Year Price Chart (as on April 26, 2021). Source: Refinitiv (Thomson Reuters)

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.