Ann: Change in substantial holding - EGP Capital, page-10

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saintex

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17/04/24

17:50

Post #: 73392886
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Originally posted by jaluma: ↑

No, that's not entirely correct, it is organic growth, but it's different to winning a new contract.
Most of the market don't seem to understand this element from what I can tell.
The video below is the best explainer on this.
Listen to the following section - Start at 4.40 through to the 8min mark.

Mike explains it as a 'charge through' model. He compares it to MetCash (ie: a buying group).
This is where they run a central buying unit, but it gets delivered to your local store.
He has spoken about doing this with their top 10 suppliers, but initially the $60m is focused on the top 3.
The example given is it will reduce 1,100 invoices from 1 supplier each month, down to 3, by purchasing centrally.
Creates economy of scales, better prices, better margins and Stealth takes a cut for administering it.
Mike mentions it is part of what will help drive a hockey stick effect for revenue.
The market will likely need to see the impacts on revenues to believe it I guess.
If top 3 suppliers = $60m, I'm hoping once they onboard their top 10 suppliers, it is closer to $100m.

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You're right Jaluma.
It is possible that I do not get their explanation, when they compare with the Metcash model.

I need to better understand the difference between what they do now and what they expect to do with this new Metcash model.
For example, these 60 m$ of revenues (with 3 suppliers) are now directly charged by the suppliers to the end customers ?
Why would they go through SGI in the future ?

SGI Price at posting: 26.0¢ Sentiment: None Disclosure: Held
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0 Great analysis

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