The Blackmores Limited (ASX: BKL) share price has struggled to gain momentum in recent years. After sliding heavily from mid 2018 to early 2019, Blackmores has since failed to regain these share price losses. The company’s Chinese business, in particular, has underperformed, no doubt contributing to its lack lustre share price performance.

In a recent capital raising, Blackmores successfully raised $92 million at a fixed price of $72.50 per share. Around $50 million of these funds will be used to strengthen the company’s balance sheet. The remainder will be used to support Blackmores’ activities in the Asian market as part of its turnaround strategy.

So, is the Blackmores share price in the buy zone right now?

Rising demand for immunity products offset by other challenges

In a May 2020 market update, Blackmores revealed it has seen a significant increase in demand for its immunity products. However, this demand has been offset by weaker demand across other segments of the business. Furthermore, immunity products only constitute a small part of the company’s overall product portfolio.

Blackmores also reported that supply chain constraints have restricted the company’s ability to keep up with demand in some of its product segments. In particular, Blackmores has been experiencing difficulties accessing some of its internationally-sourced materials.

Ramp up of Asian growth strategy

Blackmores also recently provided an update on the company’s plan to further accelerate its Asian expansion strategy, particularly in China.

Blackmores will continue to expand both its organisational capabilities and partnership opportunities within this highly lucrative market. This will include driving innovation with a new ‘Modern Parenting’ product line.

The company will also inject more funds into its rapidly growing South East Asian business, including identifying new health and nutritional demand areas. Furthermore, Blackmores will increase investment in its IT capabilities, as well as its in-store product advisors across Indonesian operations.

India is another market in which Blackmores is ramping up investment. The company is allocating further working capital to initially target three large Indian cities. This will then act as a launching pad for further growth in this potentially huge market for the Aussie supplements manufacturer.

Lastly, Blackmores is looking to improve its digital capabilities throughout the entire Asian region.

Is the Blackmores share price a buy right now?

The Blackmore’s share price is in my buy zone right now. But only just…

I’m encouraged by the progress Blackmores is making with its Asian strategy. I believe India, in particular, offers Blackmores exciting potential for growth.

Having said that, I would want to see further evidence of its success in turning the business around before classifying Blackmores as a definite buy right now.

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Motley Fool contributor Phil Harpur owns shares of Blackmores Limited. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. 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.

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The Vortiv Ltd (ASX: VOR) share price is flying higher today after the ASX micro-cap delivered a business update.

At the time of writing, Vortiv shares have surged 29.73% to 24 cents. This takes the company’s current market capitalisation to around $33 million.

About Vortiv

Vortiv is a technology-based company focused on cybersecurity and the cloud services sector. It owns Decipher Works, a cybersecurity company that provides consulting, support and managed services to financial institutions and large corporations. It also owns Cloudten Industries, a cloud and cloud security company that helps businesses migrate, secure and manage their infrastructure in the cloud.

Additionally, Vortiv holds a 24.89% interest in TSI India, a company that provides solutions in the payments, electronic surveillance and managed services spaces. TSI India owns and manages around 14,000 ATMs in India.

What did Vortiv announce?

This morning, Vortiv revealed it is on track to deliver another quarter of record growth. This has been driven by cybersecurity requirements of government and financial institutions. 

Revenue from the company’s cybersecurity arm in the June 2020 quarter is expected to land between $3.6 million to $3.8 million. Meanwhile, earnings before interest and tax is expected to be in the range of $0.5 million to $0.6 million.

Vortiv believes its focus on government and financial institutions proves to be sound as both sectors continue to invest significantly to enhance their cybersecurity technologies, particularly in light of recent cyber threats. These sectors represent 24% and 48%, respectively, of Vortiv’s revenue.

TSI India valuation

On top of the trading update for its cybersecurity business, Vortiv also revealed it has completed the carrying value review of its holding in TSI India for the financial year ending 31 March 2020.

According to today’s release, an independent valuation completed by a top 6 global accounting firm estimated Vortiv’s 24.89% stake to be worth between $5.5 million and $8.9 million. This compares to a valuation of $9.7 million in FY19.

The company has elected to adopt the lower end of the valuation estimate in its FY20 balance sheet given the current global conditions. 

TSI India FY20 results

Vortiv also revealed today that while TSI India’s FY20 financial results were adversely impacted by the upgrade of ATMs and COVID-19, its underlying EBITDA performance benefitted from operational efficiency.

As a result, TSI India achieved unaudited full-year results of $51.3 million revenue and underlying EBITDA of $2 million. While revenue decreased slightly by 2.1% compared to FY19, EBITDA grew 11.1% over the prior year.

Looking forward, TSI India expects to benefit from higher ATM up-time as well as lower maintenance and asset replacement costs. The business is, however, experiencing disruption due to COVID-19 lockdowns.

More reading

• Leading brokers name 3 ASX shares to buy today
• Where to invest $20,000 into ASX shares immediately
• Is the Blackmores share price in the buy zone?
• ASX supermarket shares on the radar
• Why Altium, Australian Ethical, Flight Centre, & Transurban are dropping lower

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. 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.

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