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  1. #1
    moosie_900
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    Default 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!

  2. #2
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    Will be interested to hear what the growth story is.

    Though I got TME completely wrong on that.
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  3. #3
    Senior Member pierre's Avatar
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    I might be interested - depends how many free snags they're serving up with each share - and whether they come with tomato sauce as well!
    "Don't be afraid to take a big step if one is indicated. You can't cross a chasm in two small jumps." David Lloyd George

  4. #4
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    Quote Originally Posted by SparkyTheClown View Post
    Have not yet read the prospectus, which I will need to download soon.

    Here's the upside. Tim Cook and Mark Darrow are good guys with good reputations, and the Mad Butcher is a great retail brand running under a franchise system.

    Here's the downside: Reverse listings are almost never as good as traditional IPOs. Abano is an exception, I am sure there are others.
    Agree with you, STC.

    Backdoor listings imply something to hide - not a good look right from day 1.

  5. #5
    An Awesome Cool Cat winner69's Avatar
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    Interesting prospectus

    In theory an easy peasy business model eh .....organise things with only a few people on the staff and clip the ticket where you can .... In MAD case 4 mill or so on 150 mil of sales by the franchisees.

    MAD don't take the traditional franchise fee on all sales ...they buy and sell the meat ( nicer term than carcasses) and make 23% on the way through and leave all the risk with the franchisees


    Bit of a worry that same stores sales are forecast to grow at inflation ( when they been flat for a few years) and GROWTH is coming from new stores when not one has opened for a while. I know they have been trying to get new franchisees on board but finding a butcher who has enough capital to set himself as a butchers shop is pretty hard. Don't think the welfare ..profitability or ongoing viability ...of their franchisees is listed as risk

    Anyway nice prospectus ....some getting their dosh out and good on them .....punters want to invest in IPOs at the moment cause of the excitement around them ....but prospectus to glossy for me

    Good luck to those who give it a go .... You'll prob be happy and if nothing else become customers

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    Quote Originally Posted by SparkyTheClown View Post
    8. Not keen on the franchise system. The Club Physical/Jolt Stoush that played itself out shows what can happen when franchisees go awry. They have not updated Peter Leitch's page on the website to show he now has a knighthood, which is rather pertinent, I would have thought.
    http://www.madbutcher.co.nz/about_th...cher/index.cfm

    I'm not wildly crazy about this one, but it does seem cheap.
    There are hundreds of franchises in NZ and in the past 5 years, I can only think of a few issues :
    - the club physical one who, incidentally, won in courtand proved that the franchisor has all the power
    - Hell pizza terminating some franchisees (it was on 60 minutes and was a bit one sided)
    - home acres where some guy was selling 'franchises' to asians when he wasn't really

    I only skimmed the prospectus - does SIR Peter Leitch have anything to do with it anymore. I know he has sold but have they locked him in from an advertisings perspective??

    Seems cheap when compared to BurgerFuel but the growth potential seems lower. How are they going to attract new franchisees?
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  7. #7
    An Awesome Cool Cat winner69's Avatar
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    Quote Originally Posted by SparkyTheClown View Post
    A source close to the process has told me there has been heavy interest, anticipating over-subscriptions by a level of 3.

    .
    Excitement abounds in the market eh sparky. Everything is a sure fire winner, esp IPOs eh.

    I think that even if BLT floated their icecream disk on that would be over subscribed as well

  8. #8
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    look at the vil chart - what do you see, moosie?
    sudden death cross perhaps
    I can only get a 60 ma and 180ma on asb
    yikes it just dropped another 5
    Last edited by Minerbarejet; 23-05-2013 at 01:55 PM.

  9. #9
    Reincarnated Panthera Snow Leopard's Avatar
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    Question 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
    om mani peme hum

  10. #10
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    Default 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.
    Last edited by noodles; 26-01-2014 at 01:44 PM. Reason: changed NPAT to EBITDA
    No advice here. Just banter. DYOR

  11. #11
    percy
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    Do any posters buy your meat from Mad Butcher?
    If so please comment on store presentation,service , quality of meat purchased, and value for money.

  12. #12
    An Awesome Cool Cat winner69's Avatar
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    You probably go to real butchers like what this young woman's one - good on her for keeping the old business going

    http://www.stuff.co.nz/business/smal...butchery-trade

    I go to real butcher in Island Bay .... real meat not injected with water or whatever. Maybe I not really the MAd Butcher target market

    Mad Butchers I have been in to seem pretty tidy - clean and well laid out and would you believe it full of meat and stuff all at pretty good prices. Good place to go if you want bulk sausages and meat patties for the staff bbq.
    Last edited by winner69; 25-01-2014 at 07:59 AM.

  13. #13
    percy
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    Quote Originally Posted by winner69 View Post
    You probably go to real butchers like what this young woman's one - good on her for keeping the old business going

    http://www.stuff.co.nz/business/smal...butchery-trade

    I go to real butcher in Island Bay .... real meat not injected with water or whatever. Maybe I not really the MAd Butcher target market

    Mad Butchers I have been in to seem pretty tidy - clean and well laid out and would you believe it full of meat and stuff all at pretty good prices. Good place to go if you want bulk sausages and meat patties for the staff bbq.
    Used to shop there when we lived around the corner from it.Very good meat,and excellent ham at Xmas.Did not realise it had changed hands.

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    Quote Originally Posted by percy View Post
    Do any posters buy your meat from Mad Butcher?
    If so please comment on store presentation,service , quality of meat purchased, and value for money.
    Percy, I don't buy meat from the mad butcher. I don't bank at Heartland. And even though I buy Coke, I'm short CCL.AX.

    I don't let personal preference cloud my investment decisions. I only care about earnings and the sustainability of those earnings.
    No advice here. Just banter. DYOR

  15. #15
    percy
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    Quote Originally Posted by noodles View Post
    Percy, I don't buy meat from the mad butcher. I don't bank at Heartland. And even though I buy Coke, I'm short CCL.AX.

    I don't let personal preference cloud my investment decisions. I only care about earnings and the sustainability of those earnings.
    I try to use personal experience as much as possible,as it is the only indicator I know is right.
    You look at Pumkin Patch.Hallensteins, and Postie you can judge a lot quicker, than waiting for figures to come out,how they are trading.
    My wife comes home with some very nice things from Briscoes.No surprises they are doing well.
    I asked about Mad Butcher as I brought a leg of lamb they had on special from their shop at the Woolston .I thought the store was a dump.It was the only time I have been in a Mad Butcher's shop. Had other posters answered my questions positively I would have then looked at the financials.Sustainable earnings will only come to any business who offer good products at fair prices in well laid out customer friendly store.Woolston store did not measure up.
    Last edited by percy; 25-01-2014 at 02:10 PM.

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