MFB - My Food Bag

[Getty]

It may stag ger

[Rawz]

Oh it trades at 11am. Was hitting the refresh button over and over wondering why the trades were not matching off.

IPO's in general i stay away from due to the winner's curse. Still remember putting money into Marlin and watching that sink to $0.70

[Blendy]

I'm curious about this one. I know years ago on this thread I felt that they've kind of reached their peak. When this offer came out I assumed their growth strategy was to expand to new countries, but no, it's not.

They have done well to create a whole new ecosystem and it likely helps smaller manufacturers who don't get as much supermarket space. This is a new style of shopping and cooking, and many people have embraced it. They've even got the Made meals for people who don't like to/are unable to cook, which is a really fabulous option.

Will this be a huge share success? Who knows. There is new hype amongst people who are new to the sharemarket, so maybe that's a good thing? At least it's a brand that everyone knows.

I have been a MFB customer since the very beginning. Over the last year I have been alternating weekly between MFB and Hello Fresh to experience the difference. I still prefer MFB for value and content. I have now cancelled HF and will be doing MFB every week since now I'm a shareholder.... and strangely I got 100% of my request! How did I not get scaled?

[Sir Ten]

Looking at the depth I actually think it will trade at a discount today.

Not a great day to list, alot of people distracted by tsunamis unfortunately.

I've been wrong plenty of times before but not looking like a stag to me.

The sharsies crowd might be pumped, but surprisingly alot of people very negative about this listing on that platform too.

Proof will be in the pudding I guess.

Depth looking very soft for sellers. Couple of punters willing to buy a 'massive' 4,000 shares at $2.30.

According to Direct Broking, buying volume at or above the issue price of only about 25,000 shares vs. 120,000 shares willing to sell at or below issue price.

I'm not even ashamed to be taking pleasure in what looks like an inevitable flop as it is just a very average offer, particularly for those Foodie "investors".

[Beagle]

Further to the good work done by nztx and others, I decided to crunch some numbers.

My concerns (as others have also mentioned):
- Insiders cashing out
- Involvement of private equity
- large Intangible Assets (note some of this INCLUDES capitalised costs. Per the supplementary notes on the Companies Office website, where people costs go up partly due to less capitalised costs)
- Negative NTA
- High P/E
- Massive current liabilities versus current assets with no cash in the bank (as nztx says, what are the dividends being paid from?)
- The numbers are hard work; they being clever clogs working in millions has resulted in a myriad of rounding differences

• Is it $16m or $17m in dividends being paid out on the FY22 results? One document says $16m but 242m shares at 7c per share is $17m. This feels sloppy.
• Also of concern is they leave some marketing costs in COGS. Freebies fall into COGS when they really should be taken out and disclosed under marketing, otherwise margin reporting becomes distorted.
• Forecast cashflow statement has been prepared on a GST exclusive basis. This feels naïve.

- massive variable cost savings to be achieved to land on FY22 NPAT numbers:

1. COGS per meal to reduce 6.1% in FY22 from $66.33/meal to $62.27 (2020 was $69.90)
2. Assembly per meal to reduce 0.8% in FY22 from $14.42/meal to $14.30 (2020 was $15.20)
3. Distribution per meal to reduce 2.9% in FY22 from $11.99/meal to $11.64 (2020 was $11.52) - hard to see how reductions are achieved with a contract with NZ Post locked in for 5 years
4. Total reduction in variable costs of $4.53/meal in FY22 for a saving of $6.8m (yes you read that right) - I will believe this when I see it.

- Average Sale Price per meal dropped in FY19 and FY20. The forecast prices for FY21 and FY22 are back to where they were in 2018.
- Whilst there was a boost in volumes due to the COVID lockdown, where is the momentum into FY22 that we are seeing in other retail sectors?
- External marketing A&P costs were reduced from $5.9m in FY19 to $3.7 in FY20. This reduction exceeded the increase in reported NPAT. This is typical of private equity organisations to cut marketing spend to shore up profits, but at what long term cost to the business? Given the spend is forecast to increase $0.8m in FY21 this effect may be somewhat mitigated, when combined with publicity surrounding the float.

Some numbers if others want to pick over them:

My Food Bag	FY18	FY19	FY20	FY21	FY22	$ Change	% Change
Meals Delivered	1,200,953	1,244,187	1,250,408	1,525,765	1,503,226		-1.5%
Volume Change		3.6%	0.5%	22.0%	-1.5%
Average Price	$124.07	$123.21	$122.60	$124.20	$124.00	-$0.20	-0.2%
Price Change		-0.7%	-0.5%	1.3%	-0.2%
Revenues $m	$149.0	$153.3	$153.3	$189.5	$186.4	-$3.1	-1.6%
Cost of Sales	$83.6	$84.8	$87.4	$101.2	$93.6	-$7.6	-7.5%
Gross Margin	$65.4	$68.5	$65.9	$88.3	$92.8	$4.5	5.1%
GM %	43.9%	44.7%	43.0%	46.6%	49.8%
Assembly	$19.6	$20.3	$19.0	$22.0	$21.5	-$0.5	-2.3%
Distribution	$15.9	$15.8	$14.4	$18.3	$17.5	-$0.8	-4.4%
Marketing	$5.9	$5.9	$3.7	$4.5	$4.8	$0.3	6.7%
Overheads	$12.5	$13.8	$12.0	$14.5	$14.7	$0.2	1.4%
Adj.		-$0.8	-$0.1		$0.1
Operating EBITDA	$11.5	$13.5	$16.9	$29.0	$34.2	$5.2	17.9%
Depreciation & Amort.	$3.3	$2.3	$4.3	$5.2	$5.3	$0.1	1.9%
Interest	$1.4	$1.2	$1.3	$1.8	$1.0	-$0.8	-44.4%
Restructure				$14.6		-$14.6
NPBT	$6.8	$10.0	$11.3	$7.4	$27.9	$20.5	277.0%
Tax	$1.8	$2.8	$3.1	$6.6	$7.8	$1.2	18.2%
NPAT	$5.0	$7.2	$8.2	$0.8	$20.1	$19.3	2412.5%
				FY21	FY22
Shares (m)				242.4	242.4
Earnings per Share				$0.00	$0.08
PE Ratio @ $1.85				560.6	22.3
Normalised Ratio @ $1.85				29.1	22.3
Dividends $m					$17.0
Dividend per Share					$0.07
Yield @ $1.85 - Nett					3.8%
Yield @ $1.85 - Pre-tax (33%)					5.6%
			FY20	FY21	FY22
Equity			$58.2	$52.7	$66.4
Receivables				$1.2	$1.2
Inventory				$0.8	$1.5
Others				$0.9	$1.1
Current Assets				$2.9	$3.8
Fixed Assets				$3.2	$3.6
Intangible Assets				$85.9	$85.4
IFRS Junk				$8.8	$6.3
Non Current Assets				$97.9	$95.3
Total Assets				$100.8	$99.1
Payables				$11.1	$8.7
Deferred Revenue				$3.5	$4.0
Tax				$0.8	$4.9
Others				$1.3	$1.1
IFRS Junk				$2.9	$2.4
Current Liabilities				$19.6	$21.1
Loans				$16.2	$1.3
Provisions				$0.3	$0.3
Deferred Tax				$4.5	$4.5
IFRS Junk				$7.5	$5.5
Non Current Liabilities				$28.5	$11.6
Total Liabilities				$48.1	$32.7
				FY21	FY22
Current Assets / Current Liabilities				0.15	0.18
Debt/Equity				0.91	0.49
NTA $m				-$31.6	-$17.4
NTA/Share				-$0.13	-$0.07
Return on Equity				1.4%	38.1%
Return on Equity Adj.				26.5%	38.1%
	FY18	FY19	FY20	FY21	FY22
COGS/Meal	$69.61	$68.16	$69.90	$66.33	$62.27
Cost Change		-2.1%	2.6%	-5.1%	-6.1%
Assembly/Meal	$16.32	$16.32	$15.20	$14.42	$14.30
Cost Change		0.0%	-6.9%	-5.1%	-0.8%
Distribution/Meal	$13.24	$12.70	$11.52	$11.99	$11.64
Cost Change		-4.1%	-9.3%	4.1%	-2.9%

EDIT P.S. I forgot to mention that given the values are disclosed in millions to 1 decimal place, the actual costs per meal can vary by up to $0.05m or 3.3c per meal - with a total possible distortion of plus or minus 10c per meal in any 1 year for the cost per meal. The maximum variation will be +/-$150k so the $6.8m savings is not far off their workings.

Excellent caliber of work Ferg. (A+) I really appreciate your analysis and insights.
Extremely creative forecasting by the vendors in my opinion. I wouldn't touch this with a 40 ft barge pole.

I'm curious about this one. I know years ago on this thread I felt that they've kind of reached their peak. When this offer came out I assumed their growth strategy was to expand to new countries, but no, it's not.

They have done well to create a whole new ecosystem and it likely helps smaller manufacturers who don't get as much supermarket space. This is a new style of shopping and cooking, and many people have embraced it. They've even got the Made meals for people who don't like to/are unable to cook, which is a really fabulous option.

Will this be a huge share success? Who knows. There is new hype amongst people who are new to the sharemarket, so maybe that's a good thing? At least it's a brand that everyone knows.

I have been a MFB customer since the very beginning. Over the last year I have been alternating weekly between MFB and Hello Fresh to experience the difference. I still prefer MFB for value and content. I have now cancelled HF and will be doing MFB every week since now I'm a shareholder.... and strangely I got 100% of my request! How did I not get scaled?

Good luck Blendy. Ferg (who impresses me as the brightest newcomer from the class of 2020) did some stellar work on this on 15/02/2021.
Plenty of warning signs for those who ran the ruler over this properly.

[JohnnyTheHorse]

Depth looking very soft for sellers. Couple of punters willing to buy a 'massive' 4,000 shares at $2.30.

According to Direct Broking, buying volume at or above the issue price of only about 25,000 shares vs. 120,000 shares willing to sell at or below issue price.

I'm not even ashamed to be taking pleasure in what looks like an inevitable flop as it is just a very average offer, particularly for those Foodie "investors".

Never a great indication until a couple of minutes before opening. In saying that, especially with the market weakness currently I don't see this outperforming.

[winner69]

Plenty of warning signs for those who ran the ruler over this properly.

I recall you saying much the same at the time Oceania debuted on the NZX

[Baa_Baa]

Never a great indication until a couple of minutes before opening. In saying that, especially with the market weakness currently I don't see this outperforming.

For sure not a great indicator is Depth but interesting at this stage there's only 44k bid vs 609k ask, and some 300k of that ask is at $1.83

Better check again closer to 11am.

[trader_jackson]

ouch not off to a good start, down 5% on the open

[Getty]

$1.76

Indigestion or malnutrition?