Catenae Innovation PLC

Catenae Innovation PLC (LON: CTEA) is a media company, which is providing solutions related to Distributed Ledger Technology (blockchain). The solutions provided by the company helps in solving commercial challenges and creates new prospects for its clients.

The company will release its annual audited accounts to shareholders for the year ended 30 September 2019 by 30 June 2020.

Recent News
On 17^th April 2020, the company announced that it had joined a consortium on Cov-ID Project led by Z/Yen (Z/Yen Group), which has the objective of building a GDPR compliant identity documentation exchange system to record an individual's Covid-19 test status.

On 16^th April 2020,the company has appointed a sole corporate broker, Brandon Hill Capital Limited.

Trading Update (as on 31^st March 2020)
As per the recent corporate restructuring, the company has shown a loss of £789,565 (2018: £1,106,788) and turnover of £102,549 (2018: £157,218) in the year to 30 September 2019. Further to the notices in December 2019 regarding working capital requirements and trading performance, the group has given a disappointing performance. Catenae Innovation has implemented the cost-cutting programme. The company is closely watching the impact of the Coronavirus. Regarding this, the main objective is wellbeing and safety of the staff. All the workforce work remotely, reflects the performance is resilience in the current circumstances. Led by the existing COVID-19 outbreak, the group will be unable to release its annual reports for the financial year 2019 by the 31 March 2020. Previously, the company announced that John Farthing and Brian Thompson would be selected as a director to the Company.

Share Price Performance

Daily Chart as of April 17th, 2020, after the market closed (Source: Thomson Reuters)

On April 17, 2020, Catenae Innovation PLC shares closed at GBX 1, up by 100% against the previous day closing price. Stock's 52 weeks High is GBX 7.50, and 52 weeks Low is GBX 0.275. The shares of the company have delivered a negative return of approx. 45.95 per cent in the last six months. The company’s stock has given investors approx. 86.67 per cent of a negative returns in the last one year.

Conclusion
The Group has shown improvement in FY2019 results. Although, the revenue has decreased, while the profitability remained in the negative zone for the period. The company need to manage its operating costs effectively for better performance. The group's performance in the recent trading update was lacklustre, and situations are going to be more challenging going forward. Also, the group's losses are going to exceed the estimates made by the group for the full-year FY19. The company’s operations are negatively impacted due to ongoing uncertainty created by Brexit or COVID-19. Moreover, the volatility in the market during Coronavirus emergency has boosted several activities. The Group has several plans to maintain liquidity in case of crisis potentially generated by Covid-19 or any macro-economic uncertainty. It also reported that the ongoing challenging situation would lead to a heavy loss for the year, much higher than expected.

Therefore, considering the ongoing challenging conditions for the group, we recommend investors to keep a “Watch” stance on the stock at the closing price of GBX 1.00 (as on 17^th April 2020), while new catalysts need to be evaluated at a later stage.

Real Good Food PLC
Real Good Food PLC (LON: RGD) is a United Kingdom-based food manufacturing and distribution company, which is involved in the sourcing, distribution, and manufacture of food to the industrial, retail, and foodservice sectors. The company is differentiated into two divisions: cake decoration and food ingredients.

Year-End Trading and COVID-19 Update (as on 8^th April 2020)
The company provides a trading update for its financial year ended 31 March 2020. For the year ended 31 March 2020, the Group’s revenue increased by 9% to £67 million as compared with the previous year.  Adjusted EBITDA for the financial year 2020 rose by 178% to £5.4 million against the previous year data and has benefited from further decreases in head office costs.

The revenue from Brighter Foods surged by 67% on a year-on-year basis.It is also securing a new contract with an international customer, which started in January 2020. Brighter efficiencies were delivered in line with expectations and started producing products on its new production line.  

In Cake Decoration division, the company has come under pressure owing to the decreasing market for marzipan (down 2.1%) and sugar paste (down 14.7%).  In the US and Europe, the revenues are broadly in line with anticipations, while Cake Decorations has decreased its overheads by 11%. The company will continue to review its cost base during the financial year 2021.  

In the first quarter of 2021, the management anticipates a material impact on revenues, driven by lockdown created by COVID-19. The Group is serving customers with product in line with reduced levels of demand and manufacturing sites stay open. Real Good Food PLC is well supported by its major shareholders and funders.

Share Price Performance

Daily Chart as of April 17th, 2020, after the market closed (Source: Thomson Reuters)

On April 17, 2020, Real Good Food PLC shares closed at GBX 4.25, up by 54.55% against the previous day closing price. Stock's 52 weeks High is GBX 8.00, and 52 weeks Low is GBX 1.80.

Conclusion
Real Good Food PLC is operating in a highly competitive environment, and since it is into its development stage, failure to achieve the anticipated cost-saving measures or difficulties in implementing supply chain investment could result in a greater impact on margins.Weather condition is also a critical factor for the group. Also, the group's performance is highly exposed to Brexit related risks, which could have a significant impact on the group's supply chain.

Resilient performance in the current period despite market challenges across both cake decoration and food ingredients divisions.The company continue to monitor the impact of COVID-19 closely, with a high level of uncertainty, important steps have been taken to protect the people, and contingency planning in place to limit any negative impact on the Group’s performance.
Being a food producers’ company, Real Good Food needs to invest heavily in innovation and system maintenance and, any failure to do so will impact the brand royalty and may affect the company’s financial performance. The supply of the cake and food ingredient is limited, due to the lockdown of cities. This will impact the company’s financial performance in FY2021. However, conditions in UK markets have remained challenging, which impacted the volumes and margins for the company.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 4.25 (as on 17th April 2020), with support from few catalysts needs to be evaluated at a later stage.

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