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Else Nutrition
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== Summary == '''Else Nutrition has a globally patented, 100% plant-based dairy- and soy-free formula, which offers a clean-label alternative for babies who are intolerant to dairy and soy and to families who are flexitarian or seeking more sustainable food options. It launched its toddler formula in August 2020 and successfully built sales infrastructure in the US during 2021, rolling out sales online and in-store. It has expanded by launching a nutritional drink for children and, more recently, a line of baby cereals, and plans to expand into Canada, Western Europe and China during H222. Its infant formula is undergoing rigorous testing before launch, expected in FY25. Momentum is clearly building, with geographic and product expansion as major catalysts for growth. Edison Investment Research forecasts a three-year revenue CAGR of c 130% and its mid-case 12-month DCF-based value is C$6.0/share.''' {| class="wikitable" |+Key financials<ref>Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.</ref> !Year end !Revenue (C$m) !PBT* (C$m) !EPS* (C$) !DPS (C$) !P/E (x) !EV/sales (x) |- |12/20 |1.5 |(8.0) |(0.10) |0.0 |N/A |60.7 |- |12/21 |4.7 |(15.5) |(0.16) |0.0 |N/A |19.2 |- |12/22e |13.6 |(17.3) |(0.17) |0.0 |N/A |6.6 |- |12/23e |33.0 |(16.8) |(0.16) |0.0 |N/A |2.7 |} === Plant-based products in the sweet spot === Plant-based diets are no longer restricted to vegans and are being adopted as part of a flexitarian lifestyle as consumers look for healthier, more sustainable options. Non-dairy milks have become ubiquitous in many markets during the last five years. Else’s products offer a solution for children with allergies and intolerances but could be adopted more widely given their clean label and minimal processing. === Q122 results: Delivering growth === Q1 results demonstrated the momentum that is building in the business and validate the company’s strategy in terms of the development of its sales infrastructure. Q1 revenues were up 26% sequentially to C$1.6m, including a 40% increase in sales on Amazon.com. The business has enough cash to fund short-term plans but will require further equity or debt to support the high growth. === Valuation: Mid-case 12-month value of C$6.0/share === Edison values Else primarily on a DCF basis and flex for different scenarios. Edison's base case assumes a sales CAGR of 47% in years 4 to 10, followed by 15% in years 11–15 and 10% in years 16–20. Edison Investment Research assumes 2.0% terminal growth and a 15% terminal EBIT margin, resulting in a mid-case 12-month value of C$6.0. Edison also look at peer group analysis. Although there are not many directly comparable peers, Else trades on an FY22 EV/sales multiple of 6.6x versus a peer group of baby food and plant-based manufacturers on 3.0x. Given Else’s disruptive model, Edison believes a premium is justified. On a more bullish scenario, assuming a faster roll-out and uptake of product, its fair value is C$10.4, and on more pessimistic assumptions its fair value is C$4.2, which still represents significant upside to current levels.
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