what's the go with step one, page-6

I wouldn't be worried about the MD, he sold $41m of his holding to the retail shareholders of Morgan's at $1.53/share on the assumption of $15m EBIT (16x) which very quickly became $8.5m due to losses in the US and reduced profit in the UK.

That said, they also raised $40m in new capital at the same price ($1.53/share), and still have the bulk of this on balance sheet in the form of cash (~$30m) and excess inventory (~$10m).

So assuming a normalised $40m cash the core business is being priced at $15m or 2x downgraded/US loss making EBIT. This is the opportunity.

The absolute key issue here is the assumptions around marketing spend and resulting new customer acquisitions. STP will spend ~46% of sales on marketing this year ($34m) and roughly 54% in 2H ($19m) as they got excited with all their money for the US launch.

Going forward this spend should result in new customer sales, and added to existing customer repeat sales, higher sales & earnings. If it doesn't, then in theory STP could spend much less as a % of sales just targeting existing customers and see an EBIT jump to say $20m but be a little more mature in its growth profile. THEY WILL NOT KEEP SPENDING AT THE CURRENT LEVEL FOR MINIMAL ADDITIONAL CUSTOMERS.

My view, the starting point is $40m cash + 6x a mature $12m EBIT from Oz alone = $112m or 60cps.