Originally posted by jlo2012
@MMWA
As mentioned above - Of the $15m of expected outflows for the current quarter $12m relate to COGS.
There most recent gross profit margin was at 17.5% and they indicating it would continue improving towards 20%.
Based on the above this I would expect the current quarter sales to be somewhere in the $14m to $15m mark and be close to break even (They have suggested break even will be during FY19 and earlier in FY19 than they had originally anticipated).
Thanks Jlo!
That's a reasonable point... however I am still skeptical that their growth in sales is going to be that strong. Please don't confuse me for a mindless downramper, I certainly don't want to see anyone lose money on this stock and I really hope that AU8 does well.
This company just doesn't instill a lot of confidence in me. Most the products/companies they have acquired are small, unknown and untested brands that lack any real market presence of their own and everything else they are selling can be found in other stores (online or in shop) for the same or better prices.
Add to this the fact that retail shops are closing down left right and center and one of the key selling points of their original model (daigou shop with chinese speaking staff) looks more like a liability!
The other factor that no one talks about is with the China/Australia FTA progressing a lot of producers (like the one I work for) can now sell direct to China with ZERO tariffs. This means they are setting up supply chains that allow them to deliver them product from "field to plate" direct to the Chinese consumers.
We are moving further and further away from these grey channels and intermediaries so we can capture more of the profit ourselves, which doesn't bode well for companies like AU8.