Well they have the money now. Seems worth a punt at 15c to me, I...

Well they have the money now.

Seems worth a punt at 15c to me, I applied for some. Hopefully whoever is responsible for the crapquisitions isn't going to be allowed to hang around for long after their masterful display of incompetence, or lack of self control, one way or another. I'd like to see a plus sized City Chic CEO, and a couple more on the BOD as well, and a fun and interesting brand ambassador.

So into the time capsule we had City Chic making a EBIT of about $16m on assets of $71m in 2018, and 20.9 on 84.3m in 2019 (pre AASB16). About a 24% ROA at EBIT level. That is quite a good business metric. About 17% ROA at npat level.

And then in FY20 they bought Avenue, and everything started turning to crap from there, when the market got confused and rewarded them for their new strategy.

So we will have roughly $100m pre aasb16 Assets, and if the pre-existing business can return to past metrics with some focus on business basics, we might start to creep back to similar ROA numbers. At 18% you might have an npat of 12.6m in a couple of years, and applying a growth rate of 10%, the market may be willing to pay $150m or so, plus pay for the tax free status, if an acquirer doesn't grab it. If they can get back to an ROE of about 17%, and just run the business cautiously and prudently I would be happy to hold long term. That might seem a big assumption. But there are bigger parties than me who are interested, and it should remain be a growth segment, unless the world goes back to the superior food quality of the past.

Reminds me a bit of IMD when they ditched the fracking aspirations and returned to focussing on minerals. If they can learn from their mistakes for a couple of decades and stay focussed, the underlying business could be quite successful.