beer margins, page-7

My very much "back of the envelope " attempt at calculating the possible effect of
GRB winning the tender to supply the new stadium.

I'm told the cost per keg of beer to a pub, from the major breweries is around $250
49.5 litres in a keg.
For the back of the envelope calculation, let's call it 50 litres to work out how many kegs they may sell.
This $250 per keg would include GST of ~ $22.70 which GRB would have to send to government
But there would be some offsets from some purchases attracting GST which Gage Roads
themselves paid.
Much of these purchases for raw ingredients would not attract GST so let's say the offset was only
$2.70 leaving Gage Roads to send the Government let's say $20 per keg.

And don't forget, all the excise and additional GST is collected from the customers
at the point of sale, so GRB would not pay excise at their end.

So the gross amount or cash flow to GRB would be around $230 per keg.
1.2 million litres of beer is 24000 kegs
24000x $230 = ~ $5.5 million gross revenue
From this they would need to deduct their cost of production to come up
a net profit figure.

As tiger points out :

They already have excess production capacity which would help to offset the
additional cost.
Obviously there would be some additional wage and power costs.
Their transport costs from the brewery to the stadium would be low.

So now I really do start guessing,
as I've no idea what the raw ingredients would cost.

Some of you may have a better idea here, but would the actual all up cost of
production be less than half of the $5.5 million.
So let's say $2 mill for cost of production ( and even this might be too high )

But using this figure it leaves profit of $3.5 mill

This would be ADDITIONAL profit over and above anything else.

It is reasonabke to assume the rest of their operation, with increased distribution and consumption
of their packaged beer, plus opening new taps along the eastern seaboard will increase the net
profit over the next fiscal year, compared with the present one
So we then add to this the additional profit as above, from the stadium deal ( if they get it)

So the 2018 fiscal year profit could be multiples of their 2017 year reported profit.

Some of you may well have a better knowledge of the actual production costs involved.
Anyone/ everyone ....please feel free to pick holes in my thinking.
But I reckon right now, even without the stadium deal, the shares are undervalued.
And with the stadium deal, they are seriously undervalued.

Caveat emptor