While the company achieved an impressive top-line growth of 41%, the regression in profits tempered my enthusiasm, rendering the results somewhat average from my perspective.

The decline in profitability can be attributed to increased investments in product development and launches, with a particularly notable rise in marketing expenses. The escalating customer acquisition costs could pose a long-term challenge if not managed effectively.

The broader picture for me remains the company's current enterprise value of $8.4M against a forward earnings projection of $2.2M. This seems a little too cheap.

This valuation discrepancy provides a compelling reason to maintain holdings until the full-year results are published, at which point a more informed reassessment can be made.

With all the above in mind, here’s why I still find them interesting. 

1. Growth. Whilst the update we received in Q1 wasn’t over the top on the growth front at 12% on PCP, that’s on the back of a monster FY23 result with revenue growth of 147.3% year on year. 
2. We also got an update that during this year’s Double 11 Global Shopping Festival (an important selling moment for them) held in November sales increased by 25% increase from the AUD2.56m achieved last year. So growth appears to be continuing. 
3. Undemanding Valuation. Let’s do the quick math here. 
4. Market Cap. At today’s share price of 0.64, with 42.71M shares on issue, that’s a MC of $27M. 
5. Cash. FY23 saw a positive operating cash flow of $4m resulting in a cash position of $13.8m at year-end.
6. Profit. FY23 full year profit of $3.6M 
7. FCF. FY23 full year free cash flow of $3.4M 
8. Enterprise Value. $27M - $14M = EV of $13M. 
9. Multiples.
10. PE of 7.5
11. EV / Profit of 3.6
12. EV / FCF of 3.8
13. Profitable. 

Conclusion: It’s a Cheapie with a Chance. If the profitable growth can continue, there’s a chance this one is undervalued. A supplement company won’t command a PE of 25, but I think we can forecast fair value with a EV / Profit of 10. This would result is share price of $1.77

Let’s start with the problems on this one, there are a few. 

1. Premium Pricing Risk. Who sells a bottle of supplements for $800? Isn’t that a bit much? One man’s margin is another man’s opportunity, how long can they keep this up? 
2. Marketing dependant. The last quarterly shows marketing spend of $3.5M on customer receipts of $6.7M. Level one thinking may get you think that if only they spent less than 52% of revenue of marketing, margins could look even better. But I think that’s simply not possible; revenue is marketing dependant given the company doesn’t yet have a recognisable brand and product, and spent on marketing will likely remain elevated in the near term. Marketing is a good game because is more tech dependent than people dependent than sales, but there’s always the risk that Google increase the tax and margins start to look less appealing. 
3. The leadership situation. I tend to dislike it when the chairman’s the one leading all investor communications. Given they’ve now confirmed Mark Qin as the CEO after nearly 4 years in the COO position, it would be refreshing to see him taking the lead in conversations with investors. We want to hear from the person actually running the show, not just the one on the board with a partial view of internal operations.