The Advance Nanotek Ltd (ASX: ANO) share price has surged 11.51% today after the company announced profits are expected to more than double. Net profit before tax for FY20 is expected to be approximately $8.4 million, 2.5 times greater than FY19 profit before tax.
What does Advance Nanotek do?
Advance Nanotek manufactures zinc oxide, which is used in sunscreen. First formed in 1997, Advance Nanotek has been listed on the ASX since 2003. Its product range suits a wide variety of sunscreens and cosmetics, with its Zinxation recipe providing SPF50+ for broad UVA/UVB protection. Advance Nanotek has a current annual capacity of 3,000 tonnes, and is investing to increase capacity beyond 5,000 tonnes.
Advance Nanotek’s business
Around 70% of Advance Nanotek’s sales are in the US. The company’s production facilities were temporarily closed in the US but have now reopened with sunscreen manufacturing recommenced, albeit at smaller volumes. Advance Nanotek expects US sales volumes to return to normal and has established stockpiles in a logistics facility to take advantage of the expected upturn in conditions.
The board is looking to expand Advance Nanotek’s aluminium oxide business into new markets and improve supply to existing customers by raising capacity. Stock will be made available at an EU logistics facility, with sales from the aluminium oxide product in FY20 expected to be ~$2 million.
Financial results
Advance Nanotek recorded sales revenue of $11.3 million in 1HFY20, up from $4.7 million in 1HFY19. Net profit before tax for the half was $4.81 million, nearly 3 times greater than the prior corresponding period. Earnings per share increased to 5.71 cents up from 3.03 cents in 1HFY19.
The company ended the half with cash and cash equivalents of $304,964 and borrowings of $1.1 million. Strong sales continued into the second half with profit before tax of $1.3 million in January. FY20 anticipated turnover is up 46% on FY19 to $18 million.
Outlook
US sales increased 280% for the 7 months to 31 January over the prior corresponding period. Some negative impact from coronavirus has been experienced with US citizens cancelling or delaying travel plans for the summer. This may have a modest negative impact on Advance Nanotek’s $30 million FY20 sales target.
Nonetheless, Advance Nanotek has seen impressive increases in profit over the last few years. Profit before tax increased from $0.56 million in the 5 months to November 2017 to $3.831 million in the 5 months to November 2019. Full year FY20 net profit is estimated to be $8.4 million.
NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….
Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off it’s high, all while offering a fully franked dividend yield over 3%…
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
As of 7/4/2020
More reading
Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Advance NanoTek Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post ASX stock of the day: This ASX materials share jumped 11% today on a 250% surge in profits appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2LeyblJ
Leave a Reply