Ann: 2023 AGM Presentation, page-18

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MattKeaton

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28/11/23

22:12

Post #: 71156062
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Originally posted by timbowls: ↑

Hi guys,

I've had a good read through the AGM notes now and would like to post my thoughts as writing it all up helps clarify my perspective

Overview

I got a general sense that management is cautiously optimistic about the remainder of this financial year and it seems thinks have at least stabilised.

I was encouraged to read the Halloween and Streets Ice Cream collaboration range performed well because I was recently in the Geelong store with my Fiancé (who loves Dusk and got me interested in them as an investment) and I can confirm that both of these ranges were genuinely very unique and eye catching

I'm no where near as convinced about the expansion into fragrance ranges etc. but am encouraged to read that the initial sales have been positive there.

Christmas trading is performing "to expectations" and there was also mention of expectations for "improved trading as FY24 progresses"

Thai Fund

I was a bit disappointed with the lack of elaboration around the rejection of the buy back idea proposed by the Thai fund that's picked up a 3 percent stake in DSK. I actually agree with the sentiment and am fine with them holding onto cash in an uncertain time but am confused as to why they would need to borrow money in order to achieve this when they've got 25.6 cents per share in cash on the books? I've written to John Joyce to clarify this and also written to the Thai fund to see whether they would like to provide any further elaboration on their stated valuation in the AFR of between $3 and $4 per share as that might be helpful for all of us.

I'm very glad to see some shareholder activism start to happen as I think it can only be a positive for the SP and if nothing else generate a bit of interest in DSK being at a low valuation.

I've also been a bit disappointed with the lack of directors buying on market recently and would like to see the new CEO make a significant on market purchase in the next 12 months to show some faith in his strategy.

To be fair I was just looking at the substantial shareholders trying to establish just how open the share register is to any more corporate raiders and John Joyce does already hold around 3 percent of the company so he's suffered as much as anyone else from the falling share price.

Valuation

I'm trying to calculate a forward looking EPS for DSK and note that Bell Direct has their projected earnings at 9.2 cents per share for the current financial year which would put us on a multiple of 10.5 and a dividend yield of just over 6 percent fully franked presuming a further 3 cent dividend

I find it a bit difficult to calculate a best case scenario for DSK when the retail environment improves as so much of their listed life has been in unrealistic government stimulus conditions during the pandemic.

I'd be interested in some thoughts from other holders and will let you if I hear back on either of my two emails.

Expand

I couldn't attend the AGM so spoke to Dusk last week.
Regarding buy backs... It was one of the items discussed.
The part in the release is pretty much verbatim the response I received during my call. I therefore noted: A) I acknowledge that there is an inclination to conservatively manage solvency, but due to the float (and the share price) it takes pocket change to move the needle (i.e. why would borrowing be required?); and B) if buy backs are off the table, when are they on the table - $0.80? $0.60...? At some point it must be acknowledged there is more than one way to improve and/or unlock value. My comments acknowledged but obviously no traction.

DSK Price at posting: 97.0¢ Sentiment: None Disclosure: Held
4 Upvote

2 Great analysis

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Ann: 2023 AGM Presentation, page-18

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Ann: 2023 AGM Presentation, page-18

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