Yesterday, Charlie's released full-year-to-June financial guidance predicting revenue and after-tax profits up by as much as 46 % and 94% respectively, largely on the back of "significant" growth in Australia.
Charlie's, whose shares have generally been languishing since its July 2005 float, has recently snared distribution contracts with Coles and Woolworths in Australia, which are expected to underpin a huge boost to its revenue and see Australian sales outstripping New Zealand sales.
Its shares bounded almost 30% to 28c on Tuesday last week when it announced the Woolworths distribution contract, before settling down to trade around 26c-27c since then, giving it a market capitalisation of about $76 million.
During the past 12 months, its shares had languished as low as 7.6c before hitting 28c, which was an "exceptional performance", Craigs Investment Partners broker Peter McIntyre said yesterday.
"Charlie's will be attracting the attention of some of the bigger Australian players now; the likes of Coca-Cola Amatil," he said.
In yesterday's guidance, Charlie's chief executive, Stefan Lepionka, noted gross sales for the third quarter to March were up 48%, or $4.9 million, on a year ago and for the nine months to March, they were up 36%, or $9.9 million, to $37.2 million.
Guidance for the full-year result was gross sales in a range between $48 million and $50 million, or 40%-46% on last year, with after-tax profit expected to be up between $2.2 million and $2.5 million, or 71%-94%.
"These latest trading results are a reflection of the rapid growth we are currently experiencing in Australia," Mr Lepionka said, citing its contract with supermarket chain Coles, where Charlie's now has an 11% market share of its chilled juice and beverages.
Mr McIntyre said that, just like New Zealand vodka brand 42 Below, which began in a garage and was later sold by its founders for $138 million, Charlie's had established a "recognisable and growing brand", albeit still at fledgling stage.
"They have been out there knocking on doors, and that is paying off with the boost to distribution through Woolies and Coles," Mr McIntyre said.
Forsyth Barr broker Suzanne Kinnaird said that while there was no indication of any takeover interest in Charlie's at present, it could not be ruled out.
"Charlie's is still a small player in the overall beverage market. But as it continues to successfully expand its reach, it's sure to become noticed by the bigger players," she said.
Mr McIntyre said that while yesterday's guidance was "very positive" for the company, it had "possibly exhausted" further growth prospects with its new stable of distributors.
"For the board, a key step is now paying a dividend; to show consistent earnings [ability], or there could be a takeover offer," Mr McIntyre said.
Another "significant" attraction of Charlie's as a takeover target was its debt-to-equity ratio, which was 53% at June 2009 and 21% at June 2010, Mr McIntyre said.
Since then, Charlie's had said in its half-year to December report that net debt was down 50%, or $800,000, from $1.6 million the previous year. Its debt-to-equity ratio had fallen from 17% to 5%.
Charlie's was created in a reverse listing on the stock exchange in July 2005, with its predecessor Spectrum Resources shares valued around 1.5c, but then a 1:10 share consolidation and name change to Charlie's saw its shares enter the market that July at 15c.
Charlie's paid $10 million cash for beverage maker and distributor Phoenix Organics in 2005 and in 2007 bought the Australian juice-processing assets of Gallard and Mirage Groups for $2.4 million.
Mr McIntyre said Charlie's might see more value in continuing with its expansion than in selling out.
