Just Life Group Limited

Company Overview: Just Life Group Limited (NZX: JLG) is engaged in providing drinking water, water coolers, and filters to homes, offices, and organisations throughout New Zealand. It is also a prominent player in supplying natural lighting, heating, and ventilation products for homes.

Just Life Group Limited

JLG Details

The market capitalisation of the company stood at ~$71.95 million on 11^th April 2022.

Looking at the past performance over FY17 to FY21, JLG’s top line grew with a compounded annual growth rate (CAGR) of 18.31%. Total Revenue of the company improved from $16.5 million in FY17 to $32.2 million in FY21. Net Income improved from $2.1 million in FY17 to $3.3 million in FY21.

Exhibit 1: Financial Statistics

Source: Analysis by Kalkine Group

Result Performance for H1FY22 (6 Months Ended 31 December 2021)

• Increase in Shareholder Equity: Shareholder equity increased from $18.9 million on 31 December 2020 to $26.8 million on 31 December 2021.
• Interest Bearing Debt Level to Total Assets Rose to 36%: The company witnessed an increase in the group’s interest-bearing debt level relative to total assets to 36% as on 31 December 2021. The rise in debt levels was due to the impact of acquisitions of About Health and Intenza during the last 12 months.
• Cash Flows from Operating Activities Stood at $1.1 million: The company recorded cash flows from operating activities of $1.1 million in H1FY22 versus $3.3 million in H1FY21.
• The Board of Directors declared an interim dividend of 1.0 cent per share.

Top 10 Shareholders: 

The top 10 shareholders have been highlighted in the table, which together forms ~92.24% of the total shareholding.

Exhibit 2: Top 10 Shareholders

Source: Analysis by Kalkine Group

A Quick Look at Key Metrics: 

In FY 2021, the company has posted net margin of 10.2% as compared to the industry median of 4.7%. Therefore, it could be said that JLG is possessing decent capabilities to convert its top line into bottom line as compared to the broader industry. The company has posted ROE of 15.3% in FY 2021.

Exhibit 3: Key Metrics

Analysis by Kalkine Group

Recent Updates:

On 17 March 2022, the company set the strike price pertaining to the shares to be issued under the dividend reinvestment plan operating for the dividend which was payable on the 24^th March 2022 at 79.3 cents ($0.793) per share.

On 3 March 2022, the company mentioned that Jacinta Taliauli has been chosen to take part in the IOD ‘Future Directors’ programme operated by the board of Just Life Group. This programme seeks to develop the next generation of directors and build capability to positively transform their organisations, communities, and New Zealand.

Outlook:

The company anticipates a challenging future ahead due to COVID-19 related circumstances. However, the directors of the company are of the view that the consumers are more focused on their health and wellbeing in this difficult time of uncertainty. The long-term intention remains on providing growth as well as dividend yield to investors, driven by organic growth and acquisitions. The company continues to explore opportunities within its two strategic segments, Healthy Living and Healthy Homes. Considering the ongoing expansion of the group along with the recent business acquisitions, the company has expanded its executive leadership team.

Risks:

The group uses international suppliers and is prone to foreign exchange risk, mainly USD and AUD. The group is also exposed to the interest rate risk that mainly arises from long-term borrowings with variable rates.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation:

Despite the significant impact of the Covid-19 pandemic including the extended lockdown of its major market Auckland, the company managed to witness a marginal decline in net earnings in H1FY22 over the prior year. This was driven by the benefits of the acquisitions of About Health, Intenza and The Cylinder Guy, which partially offset the impact of lower trading volumes in Healthy Homes product sales and installations and Just Water bottle deliveries owing to the pandemic.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the above facts and its current trading levels, we give a “Speculative Buy” recommendation on the stock at the closing market price of NZ$0.730 per share on 11^th April 2022.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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