Great to see some chat here, finally. this will be a quick (so not edited post)... Apologies in advance if jumps over the place...
Almost just need a craft alcohol thread, to combine more thoughts in general on the space.
Yes im longish term holder in Lark, first started DD on it about a week before the cap raise at $1.10, I bought on the day of the announcement of the cap raise - at about $1.25. My key concern from DD was their ability to fund growth, and they did the raise so I was good to jump in then as they had the funding capacity to lay down whisky which was the inventory value driver (not dissimilar to TSI currently building inventory).
Initial re rate on Lark through to circa $3 was just delivering on strategy, there has always been an underlying asset play at hand too, but the discount was because there were some gaps in product in storage, and poor execution of the strategy etc. Management has this sorted, only risk moving forward is they go too commercial and lose the "Lark" feeling, at the moment, this doesn't seem to be an issue to me so I'm a comfortable holder in LRK. Their marketing is really quite great and they seem to be staying true to being different, and innovative. Still holding, and have added to position a couple of times since, as recently as $4.58 a couple of weeks back. Jump to circa $5 on back of upgrade to net sales price they achieved in the last 12m, so asset valuation uplift, and margin uplift.
Back to TSI - Margins are tighter than LRK, always going to be the case as they aren't in the premium space, they are ultimately a volume player. Not to say there is anything wrong with the strategy, just have to produce and sell more litres to generate a profit. 2021 margins about 25%.
TSI has a strategy that can deliver longer term, and getting some good people to execute it (i.e. Trent Fraser) helps, they just need another couple of quarters of sales growth for the market to catch on to its true potential - i.e. to hit $100m revenue by 2024 at a 3x sales multiple, that's a $300m basic valuation so +$6.50.
Key item is need for capital to fund whiskey inventory growth. I think market thinks another CR is coming, But I reckon they will push through on debt funding (they just announced facility increase).
So, next two quarterlies will be important (and my current timeline for the rerate was post Dec results), unfortunately VIC and NSW lockdowns might push this back to June results 2022, only 9 months away.
That's short enough a timeline for me to stay put on this one. And I do like the Agave differentiation, which is longer term again.
Cheers all.
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