ALRPD.PA: Rebalance upward – €1…!
>Trading Call. We are maintaining our BUY on Rapid Nutrition PLC (ALRPD.PA), however, we are adjusting our risk rating to HIGH from SPECULATIVE. Our price objective of €1.00 per share is unchanged. Month-to-date, the shares are up by 68%, outperforming the peer group that is down by 2% and the Euronext 100 that is up by 1.9%, respectively. We recommend accumulate the shares on weakness.>Rebalance Upward. Following the termination of the second tranche of the Atlas convertible loan, the company strategic review of the growth outlook in 2024 beyond, the entrance in China, has led the company to expedite repayment of approximately €570.1K. This is more than half of the outstanding convertible loan. The remainder of the convertible loan is expected to be paid by year-end. With this in mind, we believe that it’s worthwhile to rebalance our risk rating to HIGH from SPECULATIVE.
>Asia Pacific Region. We believe the recent foray into Japan and Korea should continue to boost the company’s footprint in the Asia-Pacific region. In our view, this presents plenty of opportunities for the company to capture market share of the $10-15 billion wellness market in the coming years. We see this yielding a positive reaction for Azurene and the SystemLS brand from wellness consumers and equating to an increase in shareholder return.
>We continue to believe that management’s strong commitment to plant-based technology should continue to strengthen revenues in 2024 and beyond, enhancing Rapid Nutrition PLC’s brand value.
>Take Advantage of Volatility. We expect the market to be volatile as we get closer towards the end of the third quarter and we see any pullback as an opportunity to accumulate the shares. We are maintaining our BUY HIGH RISK and our price objective of €1.00 per share.
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