MFB - My Food Bag

[Dolcile]

Over the last couple of days I've accumulated a small holding at 21c. I think MFB could benefit from a general recovery in the overall economy and I'm happy to collect a modest dividend while I wait.   

Accepting that results haven't been great of late, I'm impressed with how they've done relative to HelloFresh.  This gives me confidence that with the operational efficiency they've implemented, they'll be able to deliver value for shareholders. 

[Shareguy]

https://www.1news.co.nz/2025/03/11/criminal-charges-filed-against-hellofresh-nz/

[Basil]

The problem as I understand it is they often bring in specialist teams of contract cold callers.  Each cold caller gets paid an agreed rate for each person they re-sign to the program so it's no surprise that deceptive conduct is used by unscrupulous cold callers to earn their commission.

Good to see action being taken against the company.  I tried for several months to cancel my subscription to Spotify premium and in the end had to cancel that credit card and get another one.  Be very wary of paying subscriptions to overseas companies, its often very hard to cancel them.

[KW]

I tried for several months to cancel my subscription to Spotify premium and in the end had to cancel that credit card and get another one.  Be very wary of paying subscriptions to overseas companies, its often very hard to cancel them.

Most online banking apps now allow you to lock your card, rather than cancel it.  So you can stop payments for a month or two until they cancel your account, then unlock it again to resume using it. 

[Shareguy]

Positive update with better second half (revenue up 5 percent). Costs controlled and margin maintained.

Looks like another profit for the full year around $6m (same as last year).

https://www.nzx.com/announcements/449357

[Shareguy]

Latest Craig's

Discontinuation of coverage
 
Due to changes in team structure we discontinue coverage of My Food Bag with immediate effect. Our previous ratings, forecasts, and price target should no longer be relied upon.
 

[Crackity]

Latest Craig's

Discontinuation of coverage
 
Due to changes in team structure we discontinue coverage of My Food Bag with immediate effect. Our previous ratings, forecasts, and price target should no longer be relied upon.
 

Why don't Craig's link to stocktalk or the other place for informed or uninformed comment eh?


Our musings are probably much more use than their muzzled analyst comments anyway I reckon


Lest we forget - from BusinessDesk many years ago when BG was there

My Food Bag has followed a long and winding path to the IPO since having brought Bowler onboard in 2018 to help the company go public.

The first order of business was not being blown out of the water by global rival Hello Fresh which launched in New Zealand that same year. In September last year — having proven it could at least hold its own and amid a covid-boom for food delivery — it appointed PwC to explore options for listing or selling the firm. In the lead up to Christmas, it was revealed investment bank Jarden was involved and had set up meetings with fund managers to pitch them the company.

 During this phase, an informal valuation would likely have emerged prior to the more formal process. An investment bank or brokerage firm running an IPO is called the 'lead manager', one of their key roles is to set the price at which shares will be sold. In this case, Jarden and Craigs Investment Partners are the 'Joint Lead Managers', sharing the role between them. Generally, the lead manager will set a valuation range for the company and invite fund managers to bid for shares at a price within that range. Those bids are collated in a 'book' to settle on a price at which all shares on offer would be purchased — in this case, $1.85 per share. 




Jeez - $1.85 eh 😎 I understand why they don't cover this though maybe they shoulda stopped way earlier 🤔

[winner (n)]

Maybe Craigs are 'working' on new corporate activity which involves MFB

Just speculating

[Waltzing]

sweeties....  havnt the big players been making tiny ones for ages...

how do these corner store huts even get listed...

https://en.wikipedia.org/wiki/Mars_bar

[bulltrap]

Latest Craig's

Discontinuation of coverage
 
Due to changes in team structure we discontinue coverage of My Food Bag with immediate effect. Our previous ratings, forecasts, and price target should no longer be relied upon.
 

Interesting. I'm not a client, but from their recent public announcements, 'changes in team structure' is likely related to implementation of their strategic partnership with TA Associates.

That doesn't tally so well with their Dec '24 announcement:

Client outcomes remain our top priority, and there will be no change in the people or our approach to providing outstanding service to our clients.

Can you say, if other NZ companies lost coverage, and what their guidance for MFB was like?

I'm aware that Jarden bullied analysts to give positive coverage of MFB post-IPO. Wondering if Craigs is also guilty. Symbolic handwashing?

Disc: Still holding

[Basil]

Some very good and astute comments from Rawz on the other channel here.  (Nice bright young chap I had the pleasure of meeting at last years end of year gettogether in the Viaduct).

https://www.sharetrader.co.nz/showthread.php?9084-MFB-My-Food-Bag&p=1096845#post1096845

Rather than stealing any of his thunder as he deserves the credit, I'll just add a bit of my own perspective to explain why I have taken a modest position.

Firstly, sales have stabilized and its good to see that have established a baseline level of business in what is inarguably the bottom of the economic cycle.

New initiatives should drive some momentum, annualized effect of My food bag shop which commenced in Nov 2024 with ready made meal kits and other gift packs.  I see this driving some new momentum but haven't factored anything into my forward estimates.

Debt being reduced by $4.9m to $6.9m...this is HUGE...its almost impossible to overstate how much of a better footing this puts the business on going forward.

Cash flow has increased half on half for the last 2 years as mentioned by RAWZ and is very strong now.  Additionally I note profit increased half on half last year from $3.0m to $3.3m.

eps for FY25 was 2.59 cps a historic PE of 7.7 which is below the standard yardstick I use of 8.5 for a no growth company so you are paying nothing for future growth, in fact quite the opposite.

Looking ahead and being very conservative about it and not factoring in anything for what is hopefully a gradual improvement in the economy, consumer cost of living pressures easing as most face significant mortgage relief this year, and nothing for the new initiatives underway, I see saving from the huge debt reduction and interest rates coming down of circa $500K and lower depreciation this year and am forecast an estimated net profit after tax of $7m in FY26 just from those two changes.  That's 2.78 cps, forward PE at 20 cents 7.2

Turning to dividends, they should be able to pay at least 2 x 0.85 cps divvies, total 1.7 cps fully imputed while contemporaneously paying down debt at a very fast pace but close to 2 cents would not surprise me, certainly by FY27.

Just looking at the gross yield at the 2 cent divvy level which i think is probably coming sooner or later, that's 2.0 / 0.72 = 2.777 cps gross and on a 20 cent share price that's a gross prospective yield of 13.9% !

On top of all that, we've already heard demand in the first 8 weeks of FY26 is growing so I have not factored any demand growth into my forecasted net profit increase.

I think this is worth a modest speculative punt and I think the key factors here are the very strong cash flow and very, very impressive debt reduction which both put the business on a much stronger footing going forward.  If they have done well during the worst recession in decades, maybe its not unreasonable to think they will do better in the years ahead ?

Maybe now really is the time to "tuck in" ?

[Ferg]

Maybe now really is the time to "tuck in" ?

Have you tucked in? Or are you still thinking about it?

[Basil]

400,000 shares.  That's not really tucking in for my sized portfolio but its a decent sized entrée      Might go for a "main meal" over the course of the next year if the business keeps performing well, and maybe desert after that 😉

[Dolcile]

Agree with all you set out Basil.  the only disappointing thing for me was that the NPAT only increased because the effective tax rate was lower this year.

[Basil]

Agree with all you set out Basil.  the only disappointing thing for me was that the NPAT only increased because the effective tax rate was lower this year.

Yeah I noted that in my review but also noted depreciation was $500K more, presumably a full years depreciation in FY25 on the plant and equipment capex in FY24.  Its been brutally tough for the average consumer out there.  I think MFB have weathered the deep recession very well indeed.  Its highly commendable they have reduced debt to that huge extent in such incredibly tough times.  I agree with the statement in the company presentation that the business is "well positioned", something you definitely couldn't say with a straight face this time last year.  I think the business has been considerably de-risked. n On a 3 year view they could have no debt and be paying circa 2.5 cps fully imputed dividends per annum.

What do you think Ferg ?