Ann: FY24 Results Presentation, page-19

Hello, I did ask in the context of what brand recognition they say they are seeing in China.

They said they are seeing significant repurchasing patterns. If you pay close attention, we have also seen the evidence of this, margins starting to improve quarter on quarter and they have previously referred to initial marketing investments. Marketing 101: Marketing costs to retain a customer are less than to acquire one.

The thesis here was always that though, that the high marketing costs were partly an investment into a brand moat and margins would improve as the brand matures. That these products are sticky, as they are actually a lifestyle choice not a one-off purchase. I watched VLS through the interest rate and cost of living crisis show incredible resilience on revenue. Interestingly Buffett mentioned something a few times, people are habitual and careful about what they put into their mouth. That's why he liked wrigleys gum, coca cola and see's candy.... although he was before the supplement era, I think it would catch his interest.

The bull case here is that the FY24-Q4 cashflow margin of 20%+, is a better approximation to the earning power of this business. I believe that's why management seem so bullish on improving margins in FY25 and I think the trends/evidence is there to support them with their claims. Keep in mind, HIC and PINEHILLS contracts should not incur any marketing spend. If Pinehills $15m contract drops at 75% gross margin, that is c.$11m of incremental EBITDA. So, there's a thesis that Pinehills contract in FY25 could be more profitable than the entire business in FY24.

So, if Management can improve margins and grow revenue like they say, well, where could we land in FY25?