Thank you, you are actually right. I re-read the latest half year report and your additional context makes it more understandable.
This would then mean the only risk preventing that debt from being paid back would be:
Some destruction of inventory (unlikely due to geographical diversification) while under GNC's control (not sure if they are insured for this, I was not able to find anything pertaining to this).
I suppose commodity fluctuations as well but they hedge via derivatives don't they + diversification of commodities because I note they take delivery of wheat, barley, canola, chickpeas and sorghum.
I agree with you that GNC will likely continue generating cashflow as a middleman, my biggest concern was some sort of financial crisis calling loans in at an inopportune time due to bank contagion.
What are your thoughts on the current valuation being on the higher side relative to this figure from the latest half year report? Net tangible assets per share: $6.54
Appreciate the discussion guys
GNC Price at posting:
$7.79 Sentiment: None Disclosure: Not Held
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