Miami, FL – August 16, 2018 (EmergingGrowth.com NewsWire) — EmergingGrowth.com, a leading independent small cap media portal with an extensive history of providing unparalleled content for the Emerging Growth markets and companies, reports on RealBiz Media Group, Inc. (OTC Pink: RBIZ)
The Gulf Cooperation Council (GCC) countries have always been a haven for retailers. The trade bloc, which consists of the energy rich Gulf monarchies (Saudi Arabia, United Arab Emirates, Oman, Bahrain, Kuwait and Qatar), has all the ingredients global retailers look for—a high concentration of world-class malls, high per capita income, a combined population of more than 45 million people with a strong consumerist culture, and an intricate network of modern air and sea ports that provide linkages to global supply chains.
Disposable income per capita in the Gulf Cooperation Council in 2015, by select city (in U.S. dollars)
High Disposable income per capita in GCC cities makes the region a haven for global retailers such as Verus Foods (RBIZ); source: Statista
With ideal market conditions such as these, it is not difficult to understand why the GCC’s retail sector is growing robustly. Dubai based investment firm, Alpen Capital, notes in a recent report that the sector will grow at a compound average growth rate (CAGR) of 4.6% from a value of $250.5 billion in 2016 to $313.2 billion in 2021. Moreover, Gulf governments’ efforts to cut reliance on oil revenues and diversify their economies has seen sectors such as retail, which is considered low-hanging fruit, receive extensive support in the form of less onerous regulation, free trade zones and tax exemptions, among other incentives. There has never been a better time for retailers to invest in the region.
It is against this backdrop that RealBiz Media Group (OTCMKTS: RBIZ), which is currently operating as Verus Foods, is making deeper inroads into the GCC’s lucrative retail sector—specifically the consumer food product space.
Though the company’s interests in the Gulf have been in the public domain since late 2016 , when it announced that it had been awarded a $78 million contract to supply beef to the region, it was at the time only operating in the wholesale space; where it already has a competitive edge in 30+ countries in regions as diverse as Sub-Saharan Africa, North Africa, Australia, Asia and South America.
However, now the company is moving into the retail space; and not just any retail space, but the Gulf. This a game changer that investors are keen to capitalize on, going by the recent swings in dollar trading volumes, which indicate that big, possibly institutional, investors are interested.
Vertical integration builds competitive advantage
The company is shifting from a wholesale to a retail focus as part of a strategy to create a more valuable distribution network, beginning with about 2,800 locations. As earlier noted, the Gulf will be a key retail market and the company is already in talks with Asian, South American and North American food companies to act as their conduit into the high-growth region. RBIZ is essentially building a vertically integrated business—it is simultaneously operating at different levels of the supply chain in order to improve efficiencies and increase its margins. This model will be particularly useful in the Gulf, which has a high growth retail sector that can act as the last link in RBIZ’s global supply chain. This could open up a clear path to profitability.
RBIZ is already performing notably well, having posted stellar topline growth for the half year ended April 30, 2018. During this six-month period, the company’s revenue totaled $2.23 million, a 102% increase from $985K in the first half of the previous financial year. Operating loss also declined by almost half to $614k from slightly over $1 million in the first half of fiscal year 2017.
Once the Gulf retail opportunities are fully unlocked, revenues will increase exponentially, pushing the company closer to profitability. This may explain the wild swings in trading volumes in recent weeks. Investors appear to be taking advantage of the current low price to accumulate the stock.
Moreover, the company plans to retire all remaining convertible debt in the current financial year. This means that dilutive financing will not erode shareholder value. To finance its business, particularly in the Gulf, the company will now rely on trade finance, at least until it becomes profitable. This should be straight forward as trade finance instruments are widely available in the Middle East due to the region’s positioning as a trade hub. The company is also the exclusive distributor of Disney in the UAE and Oman and the CEO, Anshu Bhatnagar, has extensive experience working in manufacturing and distribution in the Middle East. These factors should work in its favour as far as getting financing for it operations and gaining traction in that critical region is concerned.
Conclusion
With half year revenue of $2.23 million, RBIZ is absurdly undervalued (on a price/sales basis) in view of its market capitalization of around $2.4 million. The prospects of a strong full year—particularly as and when the retail opportunities in the Gulf are unlocked—strengthens its investment case. Its consumer food products gambit, which has seen it fully divest of its real estate interest, could pan out well—hence its imminent plans to change the name and symbol to Verus Foods. Although the long-term opportunity is immense, smart investors might want to start getting in before the stock begins its upward journey, which could very easily see it soar past $0.010 – which, although a modest share price, represents a 300% spike from the current share price of $0.0031 (at the time of writing). This stock could be a big winner at current levels.
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