The specialty chemicals group has today given an insight into its trading halt
The post What’s going on with the Alexium (ASX:AJX) share price? appeared first on The Motley Fool Australia. –
The Alexium International Group Ltd (ASX: AJX) share price is on the radar again as we close out the trading week.
As of 12pm today, Alexium shares have recommenced trading, and have slipped 18% into the red to 7.9 cents. Here we discuss the reasons behind the trading halt and today’s share price action.
Let’s find out what this announcement from the specialty chemicals producer means for investors.
BioCool products clarification
Recall that Alexium rebranded its flagship materials product as BioCool last year. On 12 August, in a sales update, Alexium advised that sales traction and market adoption of BioCool had gained considerable steam.
In the update, Alexium said BioCool now accounts for almost 50% of total sales in its mattresses segment.
Moreover, the company believes BioCool products will capture revenue embedded into adjacent textile markets, such as foam bedding, moving forward.
As a result of the sales update, Alexium shares were placed in a trading halt on Thursday, while the company sought to provide “clarification” on its BioCool products. At this time the Alexium share price was 9.7 cents.
Alexium offered the clarification in the release that was put to market just before lunch today.
In it, Alexium stated that sales of BioCool “began in earnest” in April this year, and “already accounted for around 48% of (its) revenue streams from the mattress market segment by July 2021”.
The mattress market segment “contributed US$5.3 million” to the company’s FY21 revenue, in both foam and textile.
However, in Alexium’s “conversion of customers to BioCool products”, the company “does not have insight into the exact end-use” for its customers. This is even though the “sales are to new and established businesses”.
From what it seems, this serves as the clarity Alexium sought to provide investors. However, the market hasn’t welcomed the news well, pushing the Alexium share price into the red in afternoon trade.
What did the company have to say?
Touching on the BioCool products themselves, Alexium stated:
More than a year of research and product development went into this technology, and is strong evidence of our strategies in action. In the Quarterly Report, the company announced that the introduction of its BioCool products had seen strong market adoption with an expected upward sales trend into the first half of FY22.
Expanding on the growth vision of BioCool, the company added:
This rapid adoption by our customers of this new BioCool product demonstrates the significance of ecoconscious products to the US bedding market. Consumer demand for these goods is on the rise, and the company’s commercialisation strategy for BioCool has positioned us to maximise the value of the opportunity.
Alexium share price snapshot
Investors have reacted unfavourably to the company’s announcement today, driving Alexium shares into the red as they recommenced trading from midday.
The Alexium share price has posted a year-to-date gain of 67%, and a 12-month climb of 33%.
These results have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of around 25% over the past year.
In the last month alone, Alexium shares have climbed 94% into the green.
Should you invest $1,000 in Alexium right now?
Before you consider Alexium, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Alexium wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.