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MCO - Myeco Group

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SES appeared in my scans recently and I liked what I read in their latest business update.

The price chart shows a huge spike when Woolworths decided to use some of their compostable bags. Since then SES has continued to add contracts both here (Aust) and abroad (US). They're still a minnow, but seem to be growing the business. It's a business that should attract the ESG followers.

The chart shows a big resistance level at 0.20. It may take more time and additional contracts to get past that level. I've taken a small (spec) position as I not entirely comfortable with the RR at this price. I may add at a lower price if there's evidence of demand at the lower prices.



If their chemistry is unique and well patented then I would anticipate that SES is a takeover target for a large packaging company.
 
and a good, a very interesting quarterly, and 30c easily breached.

Financial Highlights
• December quarterly sales of $7.9m were up by 50.1% vs the corresponding December 2019 quarter, and increased 34.2% vs the preceding September 2020 quarter,
• Biopolymer sales were up 71.1% from the September 2020 quarter and now represent over 73.3% of total sales,
• Driven by record biopolymer sales, SECOS expects to report a maiden profit for the first half for FY21,
• SECOS reported a net operating cash outflow of $1.4 million in December 2020 quarter after investing over $2.6 million in new working capital to support increasing sales volumes,
• The Balance Sheet remains strong with $14.3 million in cash and no debt,
• Capex investment continues with additional extrusion and bagging lines in China and Malaysia to support increased demand.
 
• Positive EBITDA $576K and NPAT $66K
• Revenue up 30.5% vs PCP
• Biopolymer sales up 129% vs PCP
• Gross profit margin 18.2% vs 14.2% PCP
• Strong balance sheet: $14.3m cash with no debt

 
I'm entering Secos Group (SES) as my May monthly comp pick. I'm basing this on the hopes of a reversal in the share price. I'm hoping price reverses off support at the 200 SMA. If not, my chances are toast.
 
SES, one of my longer term holds (it hasn't been easy to hold) finally sees some positive news. Woolworths increases their distribution of Secos' range of compostable bin liners.

 
Material Improvement in FY21 Results

Highlights:
• SECOS expects to report a net profit of $2.6m (unaudited) for the year ended 30 June 2021, significantly up from the net loss of $1.2m in the prior comparative period.
• The net profit includes $2.07m of deferred tax assets recognised as the Company has started to utilise tax losses carried forward but previously not booked.
 
Selecting SES as my Dec21 monthly pick. SES makes biodegradable packaging and is slowly gaining more substantial contracts as other companies try to comply with their ESG obligations.

SES is in a long term up trend that I think will continue. Unfortunately, it's unlikely to gain +50% in a month but +20% is quite possible if it continues to win more contracts. I'm waiting for a BO>0.32 for a possible entry.
 
finally a bit of a lift

Coles Group to launch SECOS MyEcoBag in 770 Retail Stores

Highlights
• Coles Group (ASX: COL) to launch SECOS’ MyEcoBagTM compostable bag products in 770 retail stores across Australia.
• The selection by Coles follows a recent range review involving SECOS’ compostable products and is on the back of significant sales growth YoY for MyEcoBag™ in Woolworths stores.
• For Coles, SECOS will launch a new shelf-ready presentation pack of the well-received 36L pack and a new 27L pack. Both packs are ideal for kitchen food & garden waste diversion to green bins FOGO programs, providing a fully compostable solution.
• Coles has added the two MyEcoBagTM SKUs on a non-trail basis, which will be distributed nationally. The ongoing supply of the two MyEcoBagTM SKUs will be subject to meeting sales projections as part of the annual range review.
• The significant growth in MyEcoBag™ sales in Woolworths and now Coles will take the MyEcoTM branded products to over 2000 retail stores in Australia. This store footprint plus our Australian-wide distribution network, which supplies a select range of independents stores gives SECOS a significant retail reach.

 
I've been keen on the potential for SES's biodegradable Eco bags. Was quite optimistic when they got them into Woolies over a year ago. Since then price has dropped off the proverbial cliff and my interest in SES disappeared.

Reappeared in my radar recently but I couldn't get keen due to the price down trend. I intuit that there's something not "right" within Secos. It has to be management. The Woolies contract should have been a company accelerator but it stalled. Now that Coles has them in store SES gets another chance to progress it's business. I'm still happily on the sidelines.
 
( disclaimer . i hold WOW and COL )

in my experience a relationship with WOW is NOT a positive thing , the small company in the relationship normally suffers ( i could list several , but Gage Road and HIL should useful examples

however now SES has a contract with COL as well SES is less exposed to 'key customer risk '

there is a ( very ) small chance that i buy into this within the next two years , i would rather sit and watch ( and see if rising costs become a problem )
 
peter2 said:
I've been keen on the potential for SES's biodegradable Eco bags. Was quite optimistic when they got them into Woolies over a year ago.
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Understandably so. I thought along similar lines, ...but then, small and without market muscle. Even the virtuous buy on price.
peter2 said:
Since then price has dropped off the proverbial cliff and my interest in SES disappeared.
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Only kept on watchlist. Now 10c and given up nearly all of the earlier 2020-21 rally.

Now, we have management changes ... looks like a demotion for someone.

SECOS Board and CEO Changes
.
Current SECOS Executive Chairman, Mr Richard Tegoni will take on the role of CEO and Executive Director. Current non-executive director Mr Jim Walsh will assume the role of Non-Executive Chairman. The changes will be effective from 01 February 2023.

After four years as SECOS CEO, Mr Ian Stacey will step down to focus on sales and strategic partnership development including working with Industry participants and corporate development opportunities.
 
Dona Ferentes said:
Only kept on watchlist. Now 10c and given up nearly all of the earlier 2020-21 rally.

Now, we have management changes ... looks like a demotion for someone.
SECOS Board and CEO Changes
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New CEO appointed last month, ..... and up 20 per cent on no news today.

 
Business is so much more than having a timely product. Others need to know about it.



A wasted half life since listing.
 
peter2 said:
Business is so much more than having a timely product. Others need to know about it. ..A wasted half life since listing.
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Settled around the 5c mark.

SECOS DIVESTS TRADITIONAL PLASTIC ASSETS
• SECOS to exit low margin traditional plastic market to focus entirely on sustainable packaging
• Traditional plastic assets sold to ADVENT for RM$0.6m (approximately AUD$0.2m) and will also unlock approximately AUD$2.0m of working capital
• SECOS enters into an exclusive manufacturing supply agreement with ADVENT for the supply of MyEcoWorld™ compostable pallet wrap and bio-packaging films
• ADVENT, a packaging manufacturer based in Malaysia, will manufacture SECOS’ MyEcoWorld™ compostable cast films using SECOS’ proprietary compostable resins
• Provisions of approximately AUD$0.5m will be taken up to account for closure costs
 
results out. Corner turned?

- Cash at bank increased by $4.3m driven by positive operating cashflow of $2.0m and net $3.7m raised from share placement and Share Purchase Plan

 
still at it



The Board of SECOS Group, a leading producer of sustainable packaging and materials, is pleased to announce a significant expansion of its agreement to supply compostable shopping bags to Ritchies IGA following a successful trial that exceeded both parties’ expectations.

Expanded Compostable Shopping Bag agreement with Ritchies IGA

The SECOS MyEcoBag® compostable shopping bags were so well received by customers in an 8-week trial in 5 Ritchies stores in Victoria, that Ritchies has asked SECOS to supply all 76 Ritchies stores in Victoria, New South Wales and Queensland. Under the agreement Ritchies offers MyEcoBag®re-usable compostable shopping bags to customers at the checkout. The program is a major step in Australia’s plastic waste and carbon reduction efforts, reducing reliance on traditional plastic and carbon intensive paper bags. It also significantly expands a major new product category for SECOS. As part of the agreement, SECOS will be working with Ritchies’ staff to explain the benefits of compostable bags to shoppers through educational campaigns and live demonstrations.

Currently, supermarkets and other stores typically offer either traditional plastic or paper bags to shoppers. It is a common misconception that paper bags made from plantation trees are an environmentally friendly choice. In reality:
• Paper bags require roughly four times more water than the manufacture of plastic, and produce 3.1 times more greenhouse gases;
• Paper bags are bulkier and weigh roughly eight times more than plastic bags, meaning transporting two million paper bags will require seven times as many trucks as two million plastic bags; and
• Critically, paper bags are often lined with untested or unregulated waterproofing or strengthening materials that are not fully compostable and may be harmful to soil and compost quality.

MyEcoBag® gives shoppers the confidence that they are choosing a safe, certified alternative that protects both the environment and the integrity of compost systems.
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realistically , it has to be pull not push. some customers will choose these, if they are price insensitive. And use appropriately.
 
On November 20th, 2024, Secos Group Ltd (SES) changed its name and ASX code to Myeco Group Ltd (MCO).
 
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