Looking into more details at MBH since HGA acquisition, I realize that this acquisition has completely modified Maggie Beer Holding profile.
Based on FY 21 pro forma figures, HGA represented 42 % of MBH revenues and 78 % of EBITDA.
I have to recognize that I was sceptical about this acquisition initially for 2 main reasons :
- rather average track record with acquisition for Maggie Beer Holding (ex.Paris Creek still not profitable, 3 years after its acquisition)
- risk that HGA business growth was mainly driven by covid (strong acceleration of the business during FY 21).
Since its acquisition, HGA has continued to have a strong performance : + 63 % for Q1 22 sales (vs what was probably a high basis of comparison as HGA increased its sales by 98 % in FY 21).
Other element regarding the stability of HGA growth : 30 % of customers for The Hamper Emporium are repeat customers (22.5 % for Gift Australia).
Unlike MBH which struggled to get a regular growth before this acquisition, HGA has a different profile :
- regular top line growth since FY 18 (apparently organic only),
- high level of EBITDA margin, which keeps increasing (from 17.1 % in FY 18 to 26.2 % in FY 21),
- "high level of cash generation*".
MBH got also a good price for HGA as they only paid 4.2 x EBITDA 21 (before earnout).
This low price was explained by 2 elements : base earnout (can increase the price by 25 %) and part of the acquisition paid in shares (so the HGA owners remain associated with future success of MBH+ HGA).
Interesting also to note that, since MBH published its Q1 22 results (9/11/21), 2 directors have been buying more shares on the market, while its main shareholder (Perennial) has also increased its holding (while Ellerston has sold 2 million shares on 10/11/21).
* I still can't find HGA past Capex.
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