I first bought RFG at $4.4 in late September as that was a good support level. It held and went up to 4.6 after the AGM. But then the negative news campaign started and the stock plummeted to $3.25 on 11 December. I wasn't worried by it because there had been similar articles written about Bakers Delight, Dominos, Seven Eleven, etc in the past. $3 was a good support level so I added some more at $3.07 , bringing my average down to $3.6.
My investment decisions were based on management's reassurance on 13 December that NPAT would grow at 6% for FY18.
Today RFG announced that first half profit would be $22 million, compared to $33.5 million for 1H17. It's also subject to $5 million sales completed by 31 December, which means 1H18 profit could be as low as $17 million.
This is totally unacceptable and amounts to deceitful conduct by management. I'll join the class action law suit for sure if there's one initiated.
Assuming the 6% NPAT growth is distributed evenly betwen 1H18 and 2H18, 1H18 NPAT should be 33.5*1.06 = 35.5 million. On 13 December 2017, 2 weeks before the end of 1H18, how could the company have no idea that 1H18 profit was not going to meet target? Even adding back the $7 million spent on Deloitte, NPAT would be just $24 million.
Nobody knows what FY18 results could be. Let's assume today's update is 100% honest, best estimate for FY18 NPAT would be around $50 million. Given the current market cap of $360 million, the direction of the SP depends on people's opinion on the company's future.
This is the worst stock I invested in this year. It leaves an otherwise very good year on a very bad note. I've had a few other crushed stocks before. Most of them turn out OK. But it's an awful experience which I try to avoid by capping each investment at 2% of total capital. But still, losing 0.4% on a single stock in a single day brings a lot of stress. Management need to be held accountable and made to pay for misleading investors.
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6.6¢ |
Change
-0.001(1.49%) |
Mkt cap ! $164.4M |
Open | High | Low | Value | Volume |
6.5¢ | 6.7¢ | 6.5¢ | $19.32K | 291.3K |
Buyers (Bids)
No. | Vol. | Price($) |
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2 | 144296 | 6.6¢ |
Sellers (Offers)
Price($) | Vol. | No. |
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6.7¢ | 147411 | 5 |
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No. | Vol. | Price($) |
---|---|---|
2 | 144296 | 0.066 |
10 | 345409 | 0.065 |
3 | 874516 | 0.064 |
4 | 75714 | 0.063 |
3 | 118937 | 0.062 |
Price($) | Vol. | No. |
---|---|---|
0.067 | 147411 | 5 |
0.068 | 377875 | 6 |
0.069 | 468565 | 4 |
0.070 | 2693796 | 14 |
0.071 | 37502 | 2 |
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