MFB - My Food Bag

[Dolcile]

Sorry I should have added, also disappointed that the NPAT didn't increase after such an aggressive debt reduction and OCR cuts.  Perhaps that was mostly toward the end of the FY in which case we should see the full impact of it in FY26.

I would also point out that the improved operating cash flow was partially because they increased creditors year-on-year so it is quite hard to tell what the position would be on a stable working capital position.

Still a lot to like.

[KW]

Sorry I should have added, also disappointed that the NPAT didn't increase after such an aggressive debt reduction and OCR cuts.  Perhaps that was mostly toward the end of the FY in which case we should see the full impact of it in FY26.

Due to most mortgages being fixed rate terms, OCR cuts take a long time to filter through to households.  Additionally, even when people are coming up for mortgage renewal, they are choosing to go floating at a higher rate, so they can wait to lock in a lower rate later.  So all up, not much difference in terms of consumer disposable income.  That has apparently only just begun to change, as the weighted average mortgage rate across existing mortgages begins to drop.

The peak yield across all mortgages was 6.39% in October 2024.  By December the yield across all mortgages was down to 6.29%, by March 2025 the yield was down to 6.00%.
The peak yield on floating rates was 6.99% in August 2024. It was 6.03% by December 2024, and 5.63% by March 2025.
For fixed rate yields the peak was 6.34% in October 2024. In December 2024 it was down to 6.33%, and in March 2025 it was 6.06%

[Ferg]

What do you think Ferg?

What do I think?  I think thinking is important.....

I haven't looked at this in any detail whatsoever.  I did a review on the other site back when it listed.  It is a high volume low margin logistics business.  Per your notes they seem to have weathered the storm and possibly turned a corner...that's your take?

[Basil]

What do I think?  I think thinking is important.....

I haven't looked at this in any detail whatsoever.  I did a review on the other site back when it listed.  It is a high volume low margin logistics business.  Per your notes they seem to have weathered the storm and possibly turned a corner...that's your take?

Yes.

[winner (n)]

Big volumes going through this month

Today was over 2 million

Maybe somebody getting ready for a takeover at 50 cents ....but pleased there seems to be some keen sellers

Interesting You cannot view this attachment.

[Otago K]

Big volumes going through this month

Today was over 2 million

Maybe somebody getting ready for a takeover at 50 cents ....but pleased there seems to be some keen sellers

Yes, I had tried to get a read on what is going on here also, in end concluded that at least in the interim the likelihood that it is yielding well enough the SP must be underpinned somewhat and that a 100 000 shares at current levels would be worthwhile at current price. 1c uplift will = to a + $1k capital accretion so picking no likely sleep loss possible arising here.

[Basil]

https://www.chrislee.co.nz/market-news   Its a shame they don't do a little bit more for their clients and work out the gross yields as its not that hard to do and I have done it for them in the various threads.
Disc: I have been adding MFB, ARG and KPG in recent days, all exceptional dividend payers and all presently trade cum a dividend in June.  I am expecting the RBNZ to cut 25 bps today, and again by 25 bps in their July and August meetings.  By the end of August term deposit and call account rates will be VERY low.  Cash at times in recent months has been king in the recent extreme volatility but we are entering a period where cash and short term deposits will give truly pathetic returns after tax, probably not enough to keep up with inflation.

[Basil]

RAWZ other channel

I think it is the fundamentals. I think people are looking at the deliveries chart decline flattening off and are thinking wow this business is producing a heap of cash for its market cap at the bottom of the cycle. When the economy improves and deliveries increase the cash this bad boy produces will increase with scale.

And while we wait to see this theory play out we are rewarded with a nice dividend even at current levels.

Agree 100%.  It was interesting to note in the Turners call they called out trading conditions last winter was being worse than during the GFC.  Underpinning my investment in MFB is the stabilization of deliveries post Covid, in arguably not just the bottom of the economic cycle, but the worst bottom in several decades.

[Basil]

Chart certainly looking encouraging now with a clear breakout on much higher volume than normal.  I'll leave others to post an image if they want to.  In the short term we could see a test of last August's high of 28 cps.

[Basil]

https://api.nzx.com/public/announcement/453707/attachment/446001/453707-446001.pdf

Interesting disclosure.  Getting up there.

[Basil]

https://announcements.nzx.com/attachment/447370.pdf

Hello Fresh plead guilty to tricking customers into renewing their subscriptions, paywalled https://www.nzherald.co.nz/business/companies/retail/hellofresh-pleads-guilty-to-five-charges-after-subscription-traps-tricked-customers/7RZZAJMTMRHXTM2AKI6YM4POZA/

[Basil]

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" ?

Maybe I should have tucked in properly and had a main meal and desert....never mind I have a decent sized entrée under my belt and its been a very "tasty" experience and has definitely whet my appetite for more..  Maybe soon is the time for the main course ?  Updated trading conditions at the annual meeting tomorrow will be very interesting.  No question we're right at the bottom of the current economic cycle.  More interest rate cuts coming starting next week with the RBNZ cutting.  Interest.co.nz article reckons about 50% of mortgage holders fixed mortgage rates are due for a big reset lower over the next 6 months.    2.777 cps gross is still more than a 10% gross yield at 25 cents.  Hmmm  A positive update tomorrow could see recent high's of 28 cents tested and served up on a hot platter, quite quickly.

[winner (n)]

Maybe I should have tucked in properly and had a main meal and desert....never mind I have a decent sized entrée under my belt and thinking about whether to tuck in for a main meal.  Updated trading conditions at the annual meeting tomorrow will be very interesting.  No question we're right at the bottom of the current economic cycle.  More interest rate cuts coming starting next week with the RBNZ cutting.    My investment in MFB has been a pretty "tasty" experience so far and its whet my appetite for more.

Growth momentum is building Basil ..... lower mortgage interest payments coming through already and many more households feeling pretty chirpy and buying meal kits

Expect YTD orders I up 10%

And don't forget overhead cost is essentially fixed meaning most of the increased margin flows straight through to cash flow ..... higher dividends

I reckon F26 divie will be over 3 cents ...jeez 25 cents is cheap eh

You going to ASM .... I migh5 nt even watch as Carter is so unenthusiastic about life it puts you off

[Basil]

Yeah, I might wander along, see how I feel tomorrow morning.  11.00 a.m. is a reasonable hour for this old dog.
Downsides - Have to listen to Tony Carter's slow methodical speech drawl.
Upsides.  The view out over the Waitemata harbour from the 30th floor of the PWC building should be very good on a fine day and I can wander down to the boat and have a celebratory drink or two afterwards if the trading update is good and still be home in time for my dog's afternoon walk.  You would hope that being a food distribution company and the meeting ending at lunch time there would be a reasonable feed on offer afterwards.  I've more or less finished the big job I've been working on so why not.

P.S. Just grabbed a 50 gram sausage roll at the bargain price of 25.5 cents, very tasty.  Need to get something extra under my belt just in case there's a huge rush at the banquet to tuck in tomorrow.. I'm feeling ravenously hungry for more but will try and hold out for the meeting tomorrow just to make sure the extra food is hot, fresh and tasty.

[lorraina]

The issue of more performance rights saw me sell on the 7th July.

"there are now 13,274,338 Performance Rights on issue"