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8.16%

5.3¢ gage roads brewing co limited

Ann: Appendix 4C - quarterly and Progress Report Q4 FY17, page-10

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bendigo

6,277 Posts.

112

25/07/17

17:45

Post #: 26070975
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Originally posted by Fire Bull ↑

hmmm npat for the year is $2m so presumably a big chunk of that cash flow is from working capital and therefore not sustainable.

Also, HY showed $1.4m npat including $0.8m compensation from equipment supplier. Presumably this is non-recurring and so underlying npat for the year is actually about $1.2m?

Finally, the following comment suggests next quarter might not be quite as good as this one.

"Similar to FY17, sales into the national retail chains are expected to be seasonally soft in Q1 FY18 as stock levels are being cleared..."

Still, they seem to be moving in the right direction and profits should keep rising simply from continuing to move away from contract brewing towards own craft brands but price looks a bit full to me.

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Originally posted by Fire Bull ↑

hmmm npat for the year is $2m so presumably a big chunk of that cash flow is from working capital and therefore not sustainable.

Also, HY showed $1.4m npat including $0.8m compensation from equipment supplier. Presumably this is non-recurring and so underlying npat for the year is actually about $1.2m?

Finally, the following comment suggests next quarter might not be quite as good as this one.

"Similar to FY17, sales into the national retail chains are expected to be seasonally soft in Q1 FY18 as stock levels are being cleared..."

Still, they seem to be moving in the right direction and profits should keep rising simply from continuing to move away from contract brewing towards own craft brands but price looks a bit full to me.[/QUOTE

Hi FB
I
A fair summary of the latest result.
And maybe right now the price is a little ahead of itself.
Bu equally, the current profit taking by some of the punters who took up
the hundreds of millions of shares issued at 2.5 cents in the capital raising is holding the
price back.

Regarding your comment that
" some of their earnings are from working capital"
I assume you mean the interest earned on that working capital.
True.
Probably there is no need to reduce their working capital,as they should be able to
fund ongoing activity from cash flow anyway.
So that interest may still be available as earnings on future profits.
But in the overall longer term picture, it is not a major point.

For me, the attractions of the stock are :-

The craft beer market as such is growing strongly.
They have recognised and awarded products.

So the key now is promoting these products and increasing consumer awareness,
and their products on the shelves, and on tap.
They are now really paying attention to marketing with appointments of staff.
( read their earlier announcements regarding this)

They still have a virtually, as yet, untapped very large potentially consumer base on the
eastern side of Australia, .....which they are working on.

And this is most important:

Unlike most of the other craft beer breweries,
they do have considerable unused capacity to increase production.
(For example.. see earlier article on these threads regarding potential to
supply new Perth stadium)
So no significant capital outlay required to achieve this.

At some stage, they will probably be very attractive for one of the major breweries
to take over.
A very good "bolt on" for a major brewery that already has taps and national distribution.
And they would presumably pay a premium for this.

I realise all this is conjecture on my part.
But looking ahead a couple of years, I believe GRB
is a stock worth owning at around the current price.

DYOR

Caveat emptor

bendigo
Sent from my iPad

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GRB Price at posting: 4.1¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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