Why I spent more pocket money on Candy!, page-15

Ok, fun over, lol
What I did for my world-class research is look at the relationship between the 2 main variable costs for CLB which are good predictors of future sales, namely:
1. product manufacturing costs.
2. Advertising and marketing costs.

Now we all know to be wary of future vs past, plus assuming stuff can make an ASS out of U & ME. So this is just the extra piece which gives me confidence to invest when combined with all the other points I gave listed.

To make it look even higher quality for MJ, I coloured in some cells. I’m good at colouring in, even if I have to work on my research quality : )



Explanation:

The top part is the actual up to 2021 Q1, with all the percentages of firstly how Product Manufacturing (“PM”) and Advertising & Marketing (“A&M”) spend has changed.

More importantly, though, I mapped the correlation between these and receipts. It’s a rough guide for sure, as we don’t know the terms, but if it’s been a 60-90 day term then it shows the trend. What’s important is that it’s consistent and you have to look over the longer term (more than just one quarter) to pick up the more accurate trend.

To the far right I have taken the average of these multiples (averaging out to be conservative) to arrive at a receipts figure for 2021 Q2 based on PM in Q1 and then based on Q&M.

There’s a massive spread between the two, so again I averaged them to give me a more scientific figure (what’s that, MJ, it’s not scientific? Ok, you’re right, so I did this …)

On the bottom part I calculated what each of my predictions would have been using this average in the past. (Fraught with danger now as the business is changing, but it’s a guide.) I then took the average and calculated what the difference from the actual ended up being. That kind of gives a top and bottom range. What was more interesting was that the two more recent quarters gave the same figure (-4%).

Now, since we know that the more recent company strategy
has been working and they are even using the CR/loan funding to ramp up this strategy even further, that gives me comfort knowing (feeling) it will be way beyond this. The jump in the Q1 A&M in Q1 alone should lead to a big jump in Q2, I’m thinking.

But to continue with the conservative ‘base’ logic, we arrive at a range of $3.3m to $5.3m, averaging $4.350m. That’s an impressive rise giving an annual run rate of $17.4m in receipts.

I am hoping that they will be above the $5m receipts. It’s definitely a possibility although Q2 tends to be quieter, but they have seen the success of their A&M strategy. They know that from what they put in, they get a good return out. It’s a system and I have used Google ads myself to know the power of the online marketing tools available. You test and refine and then have confidence on the return. They extrapolate this out and
can therefore predict the future with a high degree of faith.

And of of this, my friends is why the Directors have the ‘inside’ advantage. They can’t under this kind of information - trending and planning. They share it but we mostly don’t analyse the data as we should, we as retail investors fear and are sceptical, even when we see Director buying up at 23c on the CR and all the was down to 13c or so.

There’s a limit as you get close to results release, with lock out or just when too much buying might attract attention. It’s quite a grey area, but I looked at all of this information and I have bought up … and I’m not even in the know as a Director. I therefore carry more risk, but that’s the name of the game.

Good luck and see you in the 20s. If it gets there before results and the 4C is good I can see CLB going back to mid 20s and then some as confidence will return that these guys know what they are doing. I’ll be reducing my position as it rises or if my assessment changes, naturally. I put too much in and so I will be ridiculously heavy if we go up!

If the light went on for you, you know where the switch is