New Updates from CEO, page-2

I think they need a fair bit of water under the bridge before they become a takeover target.

Their biggest contributor to profit at the HY was writing back a part of the performance earnout for the hamper business. I think they're being very optimistic by not writing back the entire amount. HGA needs to hit $10m EBITDA in FY23 for the vendors to get the $10m earnout that remains. Here's this year's HY


HGA is a highly seasonal business. It earns 90% of its EBITDA in the Christmas half (they said so in the prezo for the acquisition). Unless I have missed something, I have no idea (a) how they will make anywhere near $10m EBITDA and (b) how they thought they would at the HY.

They bought a mail order hamper business in the middle of covid at a full price on covid earnings let alone 15x pre-covid earnings. You can even see just how pedestrian this business was pre-covid.



I would suggest that the old CEO wanted to get out the door without highlighting just how much they overpaid, and by the time the new CEO arrived (March 1) it was too late to make any adjustments. Expect some deck clearing.

This is a company with history of terrible, absolutely horrendous, acquisitions and this one fits the pattern.

On the main Maggie Beer business. That is at the very discretionary end of the grocery market and it has fairly pedestrian margins. When Aldi is reporting just how much of a switch to their supermarkets they are seeing as cost of living starts to bite and Coles and Woolworths are reporting a shift to their home brands for similar reasons I'd pencil a fair amount of downside risk to MB.

Personally, I don't think the SP currently reflects reality.