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Mitchfowler

191 Posts.

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03/01/21

19:15

Post #: 49915129
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Originally posted by Neilus: ↑

Impossible to say,
Assuming it does in fact re-list -
No matter how positive a spin the cpy puts on the recapitalisation and no-matter how well sales are going in the Dairy and Nutrition division - there will be a rush to the exit door on the first trading day.
I assume the remaining fundies, those that didn't listen to the first profit warning back in Feb, won't be missing the next chance to get out.
For blindly loyal, and dumb followers such as myself, I'll have to prepare myself for a long slow grind back.
So ignoring the upcoming dilution of ANOTHER cap raise and a 22% increase in debt to $335M, the only two divisions worth looking at are Dairy & Nutritionals (D&N) and Plant Based Beverages (PBB)
D&N revenue was up 37% to $363M
PBB rev was up 30% to $132M
D&N showed an EBITDA loss of $52M whilst PBB showed a profit of $17M
For the Loyal & Dumb (L&D) such as myself, we can hope that the hard lifting has well and truly been done and the D&N division is ready to grow profits like its been growing revenue.
For PBB, the Milklab products, revenue and profit growth looks great.
The L&D will also look at the accounting losses and re-cap expenses and say they are well and truly overdone.
They are writing off $75M alone in Goodwill! Net assets has tumbled to $61M. Remember that little A2 investment we used to have, F it.
So where does a L&D reckon this will re-open?
If PBB keeps growing at 30%+ that's $22.1M to the bottom line
If D&N can turn a profit of say 12% of revenue, and say revenue has increased another 30% to $471M, that's $56m.
So that's EBITDA of $78M.
A pie in the sky number? Looks too good to be true..
Of course we have to take fat director fees, business expenses and other division losses from that for a final number.
So I don't know price it's going to re-open at, but I do know that I will remain L&D.

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I think you may be a bit optimistic on the D&N assumptions. Given the company has acknowledged they have been selling into retailers at below cost - and given the accounting issues, likely not having an understanding of what the true cost of the majority of their portfolio is - you would expect them to need to rebase wholesale prices across the total range.

If anything I’d think they’ll be a softening of growth rates or sales decline following the repositioning and potential few years before the division can generate a profit.

IMO

FNP Price at posting: $3.01 Sentiment: None Disclosure: Not Held
4 Upvote

0 Great analysis

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