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LIFX Review, page-35

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gallea

2,577 Posts.

298

19/10/21

15:46

Post #: 56910843
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Originally posted by Kmtw: ↑

DM is misleading you into believing they have stock to sell and make money. The current inventory is collateral for the revolving line of credit with PFG. If they want to maintain the loan, they need to maintain enough inventory to satisfy the loan terms.

For example, say the loan was on an LVR of 50%. They would need to hold at least $20m of inventory to draw down the loan in full to $10m. If they sell $10m of inventory at a 35% gross margin then of the $13.5m cash received, only $3.5m could be retained by BUD for future operations.

This wouldn't be an issue in a world where you could readily manufacture your products. But because BUD can't get enough chips, this $3.5m quickly disappears in operational costs to keep the lights on.

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Do you spend as much time analysing and commenting on every stock on the ASX that you don't hold or does BUD have a special fascination for you??

BUD Price at posting: 1.7¢ Sentiment: Hold Disclosure: Held
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