VIL - Veritas Investments Limited
Thought we might like to start a new thread since the last one refers to SSI and on the first day of a SPP for the Mad Butcher. As we all know, Veritas has acquired the Mad Butcher and is looking to raise up to $25M in capital. Here is the announcement today:
Mad Butcher Acquisition and Offer update
Veritas advises that it is finalising its offer documentation in connection with an offer of up to a maximum of $25 million of shares (the "Offer") to part fund the acquisition of the Mad Butcher franchisor business (the "Acquisition"), and expects to register a prospectus in respect of the Offer later this week. The Offer will comprise:
(a) a retail offer, consisting of:
(i) a broker firm offer, which will be available to New Zealand resident clients of NZX Firms who have received an allocation from that NZX Firm; and
(ii) a priority pool of up to $3 million of shares, which will be available to New Zealand resident Veritas shareholders who were on Veritas' share register as at 5.00pm on 22 February 2013 and to existing Mad Butcher franchisees; and
(b) an institutional offer, which will consist of an invitation to bid for shares made to selected institutional investors in New Zealand.
Shares will be offered at an Offer price of $1.30 per share. This price represents a 14.8% premium to the volume weighted average price for the three month period prior to the announcement of the Acquisition on 20 December 2012. Veritas has commenced a bookbuild process, under which selected institutional investors and NZX Firms have been invited to lodge bids indicating the number of shares they wish to apply for under the institutional offer and the broker firm offer. The bookbuild is being undertaken by Craigs Investment Partners Limited as lead manager to the Offer. Full details regarding the Offer will be released following completion of the bookbuild and registration of the prospectus later this week. The Offer will open during April and may remain open until early May or such earlier date that Veritas may determine.
The Offer and the Acquisition are subject to Veritas shareholder approval, which will be sought at a special meeting of shareholders to be held in late April. Further details will be contained in the notice of meeting to be despatched to shareholders in early April.
For further information contact:
Mark Darrow
Chairman
Veritas Investments Limited
Phone: 021 88 88 58
As a previous VIL investor, I am interested, but I can see a big red target for the SP to hit $1.30 and stay there for quite some time from it's previous close of $1.82. Don't think people who bought in over $2 as of late will be very happy, but oh well!
From the Mad Butcher to the Burger King
Veritas have bought half of a 'meat patty' producer:
https://nzx.com/companies/VIL/announcements/245509
sort of makes sense.
Best Wishes
Paper Tiger
Veritas - A meaty proposition
My interest in Veritas perked up when they made their recent acquisition of the Meat Patty Business. At the time there was no sellers, so I could not enter. Since then there has been a little more liquidity. Directors have been buying as well (up to 1.45).
The thing I like about analyzing this company is that it is so simple. They have a core Business, Mad Butcher Franchise, and this other new Meat Patty Business. The financials and growth are easy to understand. They grow by expand stores (around 4 per year). They say that they have 32 proposed locations, so that is 8 more years of growth.
So lets look at the financials
PERIOD |
EBITDA |
eps |
FY12 - actual |
4,800 |
|
FY13- actual |
5,900 |
|
FY14 - forecast |
6,200 |
0.112 |
The first thing to note is good growth in historical EBITDA. Secondly, management reaffirmed FY14 forecast at the AGM
So at the current price ($1.30), they are on a pe of 11.5. Not really super cheap, but given historical growth, it would have a PEG < 1.
The acquisition of the patty business in Dec 2013 will add $550K NPAT in FY15. This will add 1.5c eps. It should contribute to FY14 as well, but i'll ignore it for now.
The prospectus stated that for every 4 new stores added, EBITDA would increase by 600K. This equates to 1.1c eps.
So we can now calculate FY15 eps of 11.2 + 1.5 + 1.1 = 13.8
So now we have a FY15 pe = 9.39. Starting to look cheap? And still the company will grow the following year opening 4 new stores (and so on and so on).
I think on this analysis alone, there is a good reason to buy. But I think the directors may have been buying for other reasons as well. Also in the Dec announcement...
"The purchase price for the acquisition is made up of three elements; $2.8
million in cash, $0.6 million of Veritas shares issued at $1.38 per share,
and an earn-out calculated by reference to Kiwi Pacific Foods' net profit
before tax attributable to export sales over the three years following
acquisition. Under the earn-out, the purchase price will be increased by an
amount equal to 25% of Kiwi Pacific Foods' net profit before tax attributable
to export sales in each of the three years following the acquisition."
This tells me that there is potential to supply other Burger King chains outside NZ. It is hardly blue sky stuff, but it may provide upside surprise to earnings going forward.
Anyway, I've brought some.
Usual disclaimer: This is not advice or a recommendation to buy and some of figures may be accidentally inaccurate.