Equity Analyst
Mrkt BUZZ Nosa Plugs: What’s that smell? Opportunity
2 Jun 2023
Read the full report here:
Equity research Nosa Plugs
Carlsquare Equity Research comments on the recent financial report from Nosa Plugs AB for the first quarter of 2023. Nosa Plugs develops, manufactures and markets intranasal breathing products. The plugs are used for various applications such as for odor protection, as allergy filters and for protection against viruses and bacteria.
After a solid quarter with good YoY growth across the board and with many exciting opportunities in the pipeline the company is looking set to embark on a good trajectory.
Watch our interview with CEO Adrian Liljefors regarding the first quarter here.
In an exciting phase with tools for growth
Nosa Plugs is a Swedish medtech company specializing in intranasal breathing products. The company is public following a reverse merger with the company formerly known as Frisq Holding in March. Now, with a restocked war chest, the company has a solid foundation to deliver on its growth targets and expand the sales force. Being relatively unknown outside the Nordics, the company has opportunities for further growth in international markets. Taking all the above into account the coming period is one where major moves can be made, and shareholders will want t
Gaining momentum in Q1 with pipeline possibilities
The first quarter of 2023 saw revenues rise faster than costs, meaning margin improvements across the board. The increase in sales bodes well for the future, especially considering that Germany and Switzerland, two important pre-pandemic markets, removed requirements for face masks in March. This means that sales to the DACH region should start to recover, hopefully boosting revenues for Q3. Further revenue prospects lie in the pipeline, with one example being the possibility of a product for olfactory training, something that has been in the spotlight recently due to long covid, and another being the recent expansion into the UK. Furthermore, there are possibilities for applications in drug delivery for various indications using their patented technology for a slow release of substances.
Diverse product portfolio with many potential customers
The current product portfolio consists of three different types of nasal plugs, but the main workhorse in terms of revenues is the NOSA menthol plugs, at almost 90 % of revenues in 2022. A frequent workplace hazard in many professions, bad odor is encountered by, e.g., nurses and other hospital staff as well as policemen. The product solves the problem by discretely releasing a smell of menthol. The menthol plugs are available in most of Europe as well as in the US.
The NOSA filter plugs block airborne contaminants, both biological and inorganic dust particulates. For example, it blocks common allergens such as pollen, mite and mould. By sitting tightly at the openings of the nose, the filter inside effectively blocks inbound particles. Launched in 2020, the filter plugs are available in Europe for both consumers and businesses and have started to pick up steam in the former.
Nosa Microbial Control plugs eliminate harmful bacteria and viruses by forcing them to come into contact with the lamella of the plugs where they are neutralized, as opposed to getting them stuck in filters, as is the case with face masks. The plugs, launched in 2021, achieve this through ceramically enclosed silver ions that are part of the lamellar structure.
As an example, the plugs are up to 93 % effective against Covid-19 without the inconvenience and uncomfortableness associated with face masks.
Strong Q1 performance but questions remain
In summary, the company has a diversified portfolio of products with the lead product, the menthol plugs, sporting solid organic growth with a high degree of recurring revenues from existing customers. We see the opportunity for solid margins and cash flows if company’s plans for geographic and product expansion are successful. The first quarter of 2023 painted a positive picture, reinforcing faith in the product’s ability to grow organically. With the influx of cash from the merger, possible inorganic growth through acquisitions might push breakeven earlier. The allergy filter and microbial control plugs launched in less-than-ideal market conditions in the midst of the pandemic, but as face masks are decreasing in usage, these products can finally be tested. Taking this into account, growth might start to come in from several directions, increasing the probability of them reaching their financial targets of a minimum of 80 % revenue growth, gross margins above 65 % and EBITDA-margin well above 20 % post-2026.
Disclaimer
Carlsquare AB, www.carlsquare.se, hereinafter referred to as Carlsquare, is engaged in corporate finance and equity research, publishing information on companies and including analyses. The information has been compiled from sources that Carlsquare deems reliable. However, Carlsquare cannot guarantee the accuracy of the information. Nothing written in the analysis should be considered a recommendation or solicitation to invest in any financial instrument, option, or the like. Opinions and conclusions expressed in the analysis are intended solely for the recipient.
The content may not be copied, reproduced, or distributed to any other person without the written consent of Carlsquare. Carlsquare shall not be liable for either direct or indirect damages caused by decisions made on the basis of information contained in this analysis. Investments in financial instruments offer the potential for appreciation and gains. All such investments are also subject to risks. The risks vary between different types of financial instruments and combinations thereof. Past performance should not be taken as an indication of future returns.
The analysis is not directed at U.S. Persons (as that term is defined in Regulation S under the United States Securities Act and interpreted in the United States Investment Companies Act of 1940), nor may it be disseminated to such persons. The analysis is not directed at natural or legal persons where the distribution of the analysis to such persons would involve or entail a risk of violation of Swedish or foreign laws or regulations.
The analysis is a so-called Assignment Analysis for which the analyzed Company has signed an agreement with Carlsquare for analysis coverage. The analyses are published on an ongoing basis during the contract period and for the usually fixed fee.
Carlsquare may or may not have a financial interest with respect to the subject matter of this analysis. Carlsquare values the assurance of objectivity and independence and has established procedures for managing conflicts of interest for this purpose.
The analysts Niklas Elmhammer and Herman Kuntscher do not own and may not own shares in the analyzed Company
Similar News
