Samarkand Group PLC’s latest trading news “is very encouraging”, says broker
Recent trading news from Samarkand Group PLC (AQSE:SMK) “is very encouraging,” according to analysts at VSA Capital, underpinning their “positive view of the company’s return to profitability.”
The city agent noted that Samarkand sees the lifting of Covid-related restrictions, China’s cumulative consumer savings growth of 42% to $4.8 trillion since the beginning of 2020 and pent-up consumer demand, all pointing to a positive consumer demand outlook suggest brands.
Samarkand owns four brands – Probio7 (nutritional supplements), Zita West and Baba West (fertility supplements) and Napiers (natural health, beauty and skin care products). The company said in today’s market update that it has continued to trade well in the months since its December 2022 interim (H1) results update and expects full year (FY) 2023 results to be in line with market expectations.
READ: Samarkand Group highlights improving near-term trade prospects in China, its key market
The company’s H1 results to the end of September 2022 showed the business recovering from the impact of COVID-19 in China as revenue increased by 15% to £8.3m (H1 2022: £7.2m ) increased and Adjusted EBITDA loss fell to £1.3m from £2.6m for restructuring and cost cutting.
Analysts at VSA Capital said their full-year forecasts are unchanged following the company’s last update. For the full year to end March 2023 (FY2023) they estimate revenue of £17.0m and an Adjusted EBITDA loss of £3.1m compared to £6.9m the year before due to restructuring and cost cutting and as a company is beginning to recover from the depths of the lockdown in China.
Samarkand also said today that its key trading period in November resulted in a profitable performance for the company at a net profit level and that it continues to make strides to become profitable in fiscal 2024 through gross margin improvement and variable cost reduction.
For FY2024, analysts at VSA Capital are forecasting revenue of £22.5m and adjusted EBITDA of £0.2m.
They commented: “Samarkand is facing exceptional market conditions beyond its control and the management team has responded quickly by reducing headcount, streamlining operations and maintaining a strong focus on technology development, market channel expansion and brand development. All of this means that SMK will be poised to recover when logistics in China return to normal.”
Analysts at VSA Capital reiterated a “buy” rating and a price target of 200p for Samarkand shares, which were trading at 42.50p on the Aquis Exchange late Monday morning.