Up 330% in a year, Secos (ASX:SES) share price slides on results

The Secos (ASX:SES) share price has skyrocketed over the past year but is sliding today following release of the company's half-year results.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published March 3, 2021 11:18 am AEDT

Secos Group Ltd (ASX: SES) shares are sliding today after the company released its financial results for the half-year ending 31 December (H1 FY21). At the time of writing, the Secos share price has slumped 1.64% to 30 cents. But over the last year, Secos shares have rocketed by nearly 330%.

Let's take a look at how the sustainable packaging manufacturer has been performing.

A man with blonde hair wearing a checked shirt shrugs at news of Origin's $2.21 billion sell-down — Image source: Getty Images

What did Secos report?

The Secos share price is on the slide today despite the company reporting a half-year net profit after tax (NPAT) of $66,000. That compares to a net loss of $1.1 million in the first half of the 2020 financial year.

The company's gross profit margin increased to 18.2%, up from 14.2% in the prior corresponding period.

Revenue increased 30.5% year on year, driven by a 129% increase in the company's biopolymer sales. In H1 FY20, Secos' bio-based sales represented 39% of total sales. In the half-year just reported, bio-based sales made up 73% of total sales.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at $576,000. Secos reported it had $14.3 million in cash with no debt as at 31 December.

The company now boasts global sales to 20 countries, which it says are "protected by strong patents, technical knowhow and distribution channels".

During the half, Secos also completed the first phase of expansion in its China plant. The company noted strong growth in demand for its compostable bags in China, and the plant expansion is intended to open the door to an additional US$3 million in compostable bag sales annually.

Looking ahead, Secos stated, "The forward pipeline for the company is strong, with Secos seeing significant growth opportunities with major brands in various regions." Secos added it "expects to further expand its retail branded MyEcoBag range via Woolworths and other retail chains".

Secos share price snapshot

If you had bought Secos shares this time last year, you'd be sitting on a gain of 328%. By comparison, the All Ordinaries Index (ASX: XAO) is up 8% over the past 12 months.

Year to date, the Secos share price is up 42.86%.

Based on the current Secos share price, the company has a market capitalisation of around $163 million.

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