This is an excellent partnership for DW8 & Bibendum. It highlights that a one of the most successful wholesale beverage companies in Australia wants to be a part of the B2B marketplace via a formal partnership. This means that other larger distributors may also partner with DW8 thereby gaining mass exposure for their brands to a larger trade buyer base then they currently have.
Bibendum has 160 brands of wines & spirits brands & will increase DW8's current brands/sku's by about 40-50%. Bidendum appears to also have over 4,000 trade buyers. They currently operate their own wholesale platform that will be integrated with DW8's B2B platform.
Difficult to estimate revenue associated with the announcement. Bibendum will use DW8's depots in all states apart from Melbourne to enable fast delivery of their products to customers outside of Victoria so DW8 will have this additional revenue stream. DW8 will also generate revenue via the B2B platform to Bibendum's trade buyer base. DW8 will also leverage Bibendum's team of 54 staff to get behind the launch of the B2B platform.
The platforms will be integrated by late April most likely prior to the full launch. Appears the soft launch has not yet commenced as DT still mentions late March so most likely tomorrow. Most likely full launch will be late April when the integration with Bibendum is completed.
Trade fleet via Direct Couriers is excellent as DW8 now have a dedicated fleet for time sensitive trade deliveries.
This is a similar scenario to Kaddy that we discussed yesterday forming a partnership so that DW8 had additional sku's & most importantly a ready to go trade buyer base. However, this is much better as Bibendum has 4,000 trade buyers in leau of Kaddy's 400-500 & they have some great brands in comparison. Bibendum has been in business a long time & have a solid reputation along with a larger network. And they are immediately going to use DW8's logistics solution outside of Victoria. Bibendum is like Kaddy on steroids.
The main thing to look at is the huge number of additional brands/sku's, huge trade buyer customer base, 54 additional staff to get behind the launch of B2B & will be using DW8's logistics network outside of Victoria.
DW8 had to pay $2.4M to acquire WDA with about the same number of brands & circa $1.5M revenue. Bibendum is like an acquisition without being an acquisition. It appears they will more or less work together with a common goal of building a B2B marketplace. DW8 have offered 20M shares equivalent to $2.9M at 14.5c when they formed the partnership with issue date 30/6/2023 subject to Bibendum performance.
DW8 has also offered 4,000 x $250 incentive vouchers = $1M if all are used by trade buyers. This also indicates that Bibendum has at least 4,000 trade buyers. Terms of the partnership mention 800 x $250 incentive vouchers must be used = $200k minimum incentive spend by DW8. DW8 mentioned $1.5M total incentives for B2B & $1M can be accounted for here means there is another $0.5M incentives yet to be disclosed.
Bibendum will have to generate $800k in sales minimum x 10% fees = $80k DW8 minimum revenue. At least 50% of the $800k will be in Sydney via DW8's logistics = $400k / $50 case/order = 8,000 x $5 margin = $40k thus total DW8 gross profit of $120k vs $200k minimum incentives cost = $80k DW8 nett cost is minimal for 4,000 trade buyers. If all the trade buyers use the incentive vouchers totaling $1M then it will be about $880k DW8 nett cost but I doubt it will be this high as it will be offset by much higher sales. There may be some venues that use the $250 voucher & never return but I am sure once they see the additional product range they will be back again for more. Having an integrated Bidendum platform with DW8 will make it easy to order.
Fair value SP was about 12c based on upcoming 4C Q3 2021 & 50% QOQ growth. The underlying logistics revenue is expected to continue growing at 50% QOQ, however, soon DW8 will have the additional DTC revenue stream via Ebay etc & the additional B2B revenue stream that should increase the 50% QOQ growth rate. A premium must be factored in on top of fair value to account for the additional new revenue streams. Possibly up to 50% premium thus about 18c SP may now be expected to be fair value. The market will determine this over the next few days/weeks. There are potentially 4,000 trade buyers ready to use the B2B platform that will be promoted by Bibendum staff as well.
4,000 / 50,0000 venues = 8% market share if all become users of the DW8 B2B platform. At 50% take up rate that is still 2,000 venues & 4% market share. 20% of annual wine sales are via venues x $5B total = $1B x 8% market share = $80M potential at 100% saturation rate. Minimum requirement of 800 trade buyers = 1.6% market share or about $16M potential but they will also be buying Bibendum products direct so allow about $8M for DW8 x 15% fees/storage = $1.2M per year.
$8M / $50 per case/order = 160,000 cases x 50% via Sydney depot as Bibendum have Melbourne depot = 80,000 cases/orders x $5 each as local/bulk = $400k per year. Potential DW8 combined revenue circa $1.5M & very similar to the WDA acquisition.
SP wise according to barchart it appears to be a Strong Buy Top 1% so has more to run. RSI is fairly high at 87, however, barchart doesn't mention it is overbought so appears to continue the gradual climb up. Cup & handle 12.4c SP target has been hit, 18.6c briefly bit today & should close around there in following days. Probably will form the next base around 18-19c maybe even a round 20c. Was expecting a retrace to say 15c but not sure as there will be numerous announcement to buoy the SP & today was substantial with the huge amount of trade buyers/brands/sku's/staff assistance.
Barchart Technical Opinion
The Barchart Technical Opinion rating is a 100% Buy and ranks in the Top 1% of all short term signal directions.
Long term indicators fully support a continuation of the trend.
Apologies for the late response.
(20min delay)