That's confidence, page-61

Two things are going on here.
Firstly the underlying business of Adairs and Mocka is trading well, it’s new National DC in Tullamarine is now performing to expectations. Since listing Adairs has noT raised any capital. It is a wonderful cash generator and without the latest acquisition it was on track to be debt free by 30 June 2022.

The smart fundies have started to realise this. I recently saw a broker report that had a SP target of $7.00 and that was before the latest acquisition.

Secondly the latest acquisition is a gem and has significant operational synergies, very close cultural alignment and has a great growth runway.

The acquisition of Focus On Furniture & Bedding (FOFAB) rounds out the offering to customers and means a customer can affordably furnish their whole home from the ADH range.

Like Adairs and Mocka FOFAB has its own design, marketing, procurement and distribution teams meaning it owns the whole value piece and the IP to bring the product to market. That means it can capture a bigger slice of the inherent margin in the product, very much like Nick Scali and very unlike TPW andHarvey Norman.

FOFAB with just 23 stores (only strong in Vic) has the opportunity to grow its store footprint in NSW and Qld in a very efficient way whereas growth in Vic may see some cannabalization of sales. I am certain that the team will play around with the FOFAB store format in a similar way to how Adairs has discovered it’s sweet spot with the upsizing of stores which generates fabulous returns on the additional capital spend.

In my view the market has woken up to the continuing great potential of the group. And the little matter of director Trent Peterson buying another half a million dollars of shares recently would have woken some analysts and fund managers up.

Don’t be surprised if ADH shoots up to $5.20 after the H1 results are announced. This has been my target for a while. And if FOFAB has a good H2 FY’22 then $7.00 is in danger of being exceeded.

Cheers…..D