ALRPD.PA: Brand value enhance - €1...!
- Maintaining Investment Rating. We are reiterating our BUY SPECULATIVE RISK on Rapid Nutrition PLC (ALRPD.PA) and our price objective of €1.00 per share.
- Plant Based. 2024 is off to a good start as we are seeing the benefits of the acquisition the company did 2 years ago. The Plant-Based Bundle acquisition, which was acquired 2 years ago for approximately $500.0k, is a win-win for the company. The segment generated $976.8k in total revenue in 2023, equating to approximately 59.0% of total revenues. We 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.
- North America (NA). Solid performance in NA, as the U.S. accounted for approximately 59.0% of total revenues in 2023, up from 16.3% in 2022. According to industry data, the plant-based market value in the U.S. is approximately $8.1 billion in 2022, and we forecast a compound annual growth rate (CAGR) of 7.7% from 2022 to 2027. We see consumers in the U.S. becoming more health-conscious and gradually migrating to plant-based dietary products. We believe that the company’s U.S. segment can grow in the range of 8-10% (conservative) per annum from 2023.
- Australia. This segment accounted for approximately 14.2% of total revenues, down from a high of 46% in 2021. We expect management to continue to diversify outside the Australian market as the slow recovery of tourism is negatively impacting the wellness market. The rest of the world should continue to grow, especially in Southeast Asia.
- Debt Ratio. We applaud management for lowering total debt to $194.9k from $356.9k at the end of 2023, equating to a debt-to-cap ratio of 51.9%, down from 76.7%. By our estimates, management is on track to achieve a debt-to-cap ratio in the range of 47.0%-37.0% by 2024-2026, enhancing market confidence, liquidity, and valuation.
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