YOW (ASX) The Numbers

Originally posted by GreenTuatara ↑

The Numbers:

Number of stores: 1500

Expected eggs per store per week: 35-50

Expected EBIT per egg: 20-30c

They have been getting 30c at smaller stores selling them at much higher prices, but Walmart will be selling them for half the price of some other stores and will have a lot of power to whittle down Yowies' margin.

Annual EBIT from initial Walmart contract using midpoints: $828,750 (25c x 42.5 eggs x 52 weeks x 1500 stores)

Net Earnings (assuming 33% tax and no interest costs): $638,137.5

Numbers don't exactly look amazing.

If Walmart go on to double the roll out to 3,000 stores that's still only $1,276,275 pa.

Even if they have 5 chains signed up to an average of 1500 stores, that's still only $3,190,687.5

I think eventually they would hope to well exceed these numbers, but even if they double them (i.e 10 chains averaging 1500 stores each) that's still only just over $6m net profit.

I think maybe this is why they couldn't get Foster to stump up over 50c/share.

Still think this is a great company, with great potential and great ideals but already priced at $70m, this is probably a bit expensive for some tastes. I certainly wouldn't call it a bargain.

Just been checking this company out so thought I would share my back of napkin analysis.

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Your numbers are completely flawed and not researched. To say WALMART will only sell on average 42.5 units per week per store is absolutely insane. If a small chocolate store can sell 35 - 40 units consistently (expensive price tag, too) at the early stages of release where there isn't the brand recognition or demand for collectible status, then Walmart will sell far beyond those numbers. They have been selling out in Walmart stores.. Are you telling me they only stock 40 or so yowies a week? Also, the 30c profit margin will increase as more and more units are brought into production. So this figure can increase, or the product can become even cheaper which ultimately means more can be sold so it's a double edged sword.

In investor presentations, some displays in Walmart had 240 yowies sitting there. Do you honestly believe Walmart would even bother selling Yowies if all they could get was 40 or so units sold per week? That's valuable space they are wasting if that's the case. Numbers in the hundreds is more realistic.

In Australia they were selling at a ratio of 3 to 1. That's right, 3 units per person (65m units in year 1). That would mean the US could sell about a billion yowies per year if it took off like it did in Australia.
http://www.yowiegroup.com/fileadmin/public/assets/Research/YOW280314.pdf
Page 4 states that Europe is a comparable population the the US and Kinder sells 1.2 billion eggs per year. Keep in mind I think Europe has something like double the population that of the US but it's a good indicator. Also keep in mind Yowie have no competition where Kinder does.

If you're going to do some research on a company, I suggest spending some quality time digging through the information in front of you. Heck just go to that link and look at page 6, Fosters did the numbers for you. Also take note that they worked the figures out on an exchange rate of 0.85 where it is now 0.79 so the figures are actually higher in AUD.