From the 'US Yowie Market Update' on March 18th 2015 (
http://www.yowiegroup.com/fileadmin/public/assets/announcements/US_MARKET_UPDATE_18_March_2015.pdf)
"Results to date for the Walgreens trial have
exceeded threshold sell through rates. YNA have been notified that Walgreens
next modular reset is during October and as such a permanent product listing shall be considered at that time."
From the Canaccord Broker report which had target price of $1.80 (
http://www.yowiegroup.com/fileadmin...valuation_and_price_target_June_17th_2015.pdf)
The market may be pricing in Walmart, but not Yowie’s other major US customers or the rest of the world
In our initiation report, we analysed what level of sales and EBITDA we estimated the market was pricing in. Our conclusion at $0.76 share price was the market had priced in $10.5m of EBITDA (using 11.7x EV/EBITDA multiple) or 25m units pa. We translated this to selling 614 units per store, per month, through 3,394 Walmart stores out of a possible 4,300 US based stores. Following today's announcement and using a share price of $0.94, we estimate the market is now pricing in $13.0m of EBITDA or 31.1m units pa, which is the equivalent of 4,220 Walmart stores of the possible 4,300 stores. On this basis, we estimate that the market may be effectively pricing in Walmart, but does not appear to be attributing any value to the other US customers that Yowie is already dealing with (including Safeway, CVS, Walgreens, 7-Eleven) or other international customers outside of the USA. This appears conservative in our view.
Although the share price is now $1.14 is still doesn't seem to be pricing in much outside of the Walmart rollout to 4,300 stores.
So what does this mean? Well, if you believe that Yowie will be successful in any of the trials they have mentioned so far (Walgreens with 4,000 possible stores, 7/11 with 5,000+ possible stores, CVS Pharmacy with 6,000+ possible stores, Valero with 1,100 possible stores etc) then hold this stock. If you think full Walmart rollout is the end of the road, then sell.
I'm holding.
(20min delay)