Still cheap ?

After a difficult listing start, the company is now regularly producing good results :
- due only to cost cutting in FY 23 (- 10 % for sales),
- and due mainly to the return of a significant top line growth in FY 24 (+ 29 %), with a good control of their costs (+ 42 % for EBITDA).

So, the company is valued at around 315 m$ (at 1.70 $), while it is showing a strong organic growth (+ 29 % in FY 24), high margin (EBITDA margin of 20 %) and a low level of Capex requirement.
I estimate their sustainable free cash flow at around 16 m$ which corresponds to a free cash flow yield of around 6 % (at 1.70 $).
I feel that today's valuation is more a reflection of its past problems (since listing) than of its potential.

The company has now proved that it is able to find a good balance between growth and profitability.

Main questions for them :
- are they just a trendy product or able to deliver regular growth ?
- are they able to continue to grow despite their premium price, while consumption is now struggling ?

Answers to these questions are not obvious, but we get some elements from their H1 24 results and today's update :
- repeat customers represent 60 % of their total customers which shows that they have quite loyal customers,
- the company is also now managing quite well its advertising and marketing budget, as they are able to grow their sales by 25 % without a significant increase of their marketing budget in % of revenues (during H1 24).

One of the warnings was that 2 directors sold a significant number of shares in March 24 and April 24.
But it was not a sign of bad results to come (looking at today's update).

They have already reached a significant share of the Australian men's underwear market.
So, their success will probably depend on their ability to develop in other countries (with the same level of margin), as well as on the women's underwear market.

STP does not disclose its margin by country, but its ad (in % of revenues, in FY 23) which is much higher in the UK and US.
STP also indicates that it is loss making in the US. In the UK, they are probably around BE if they have the same gross margin than in Australia (their ad in the UK represented 47 % of FY 23 sales vs 29 % in Australia).