It's absurd to be arguing the viability of PFT as an investment based on the idea that food scarcity in Africa or China's visit in 2014 will cause a takeover bid.
PFT's share price is reflecting what investors believe the value of this company to be. It was previously much higher due to their constant stream of acquisition and roll-out news, and it has fallen greatly due to the claims and suggestions which the team have currently been unable to deliver on.
It's purely the inability to provide the outcomes suggested in the time frames they've laid out, which is causing a decrease in value (as the outcomes were previously factored into the share price and now are being removed from that valuation).
My reasons for currently sitting on the sideline: - 72.15% product cost (CoGs / (Revenue+inventory). Pretty slim margin on just the product cost.- Constant talking up P&G which still hasn't rolled out, select store trials means they are still very at risk with having the supermarkets opt not to stock them.
- Talk about other acquisitions they are looking into that never occur (they previously mentioned looking for a beverage acquisition, I can't remember the wording but it seemed to suggest it was imminent but radio silence on it since).
- Acquisitions of Lauds. A company that in 3 years before their purchase only managed to get to an annual revenue at time of purchase of $200,000. Sure it has potential, but it's a fairly busy niche already but was the revenue leading up to that purchase due to product not selling well in the market or due to previous owners not being able to grow their business? They don't even mention sales in their quarterly (just a comment about export to India), and the update they released completely omits it.
- Acquisition of Cashew Creamery. Created in 2015, they only got to $120k sales for 9 months to March 2021, and now $227k). Again, another purchase of a incredibly small business, they clearly put the money into the social media, but doing $227k when their website suggests that are stocked at 400 locations nationwide (not including the claim of available at 'Woolworths Metro' stores, which isn't shown on their website), it means they are averaging $16 at each location per week.. which I assume is roughly 2-3 units per week. Doesn't reflect keen interest in the product.
Can't fault them for what they're aiming to do, and if they manage to get it together then it will be quite successful.. but I currently just keep seeing nice clean PFT cars cruising around every day, and the high quality of their production work (and the related expenditure), and products not yet really shown to sell in the wider market. And I have to assume due to the very tight margins, that scaling up this business is heavily reliant on P&G being successful in Woolworths/Coles, so they have an easier way in with the rest of the range they are developing.
PFT Price at posting:
44.0¢ Sentiment: Hold Disclosure: Held
