Ann: Buderim Group receives bid for the Ginger Division, page-5

This is an interesting development - but there's one piece of information missing and I can't find it in any of BUG's announcements.

BUG reported inventories of $31.6m in its most recent half-year report. I'd be curious to know the value of the ginger inventories - because presumably they will be included with the sale of the ginger/tourism assets.

Assuming ginger inventories are included in the sale, for its $8.3m Global Foods would be getting all the ginger assets, the tourism facility... and who knows how much $ worth of ginger inventories.

If the value of the ginger inventories is anything like $8m, then I'd suggest Global Foods would be getting a damn good deal. It could sell the inventory and effectively get the ginger/tourism assets for nothing.

On the other hand, if the ginger inventories are worth somewhat less than $8m (or aren't included in the sale), the new BUG - solely focused on macadamias - would shape up as a quite appealing investment proposition.

It would have debt of $15m (assuming it uses the sale proceeds to pay down debt), but would be sitting on inventories of say $25m+, have substantial net asset backing per share, with annual sales of around $40-50m and probably a profit of over $1m this year.

All in all, I think there's scope for Global Foods to get a very good deal and for the new BUG to shape up as a very attractive company. And that outcome can only be possible if BUG at current prices is substantially undervalued - I believe it is.