RFG - Retail Food Group

[greggles]

I actually feel sorry for the employees when I walk past a "Michelles Patisserie" or "Donut King".
It just feels like they are stuck in 1999

Man, Donut King. What an out-of-date concept. I remember getting half a dozen cinnamon donuts from Donut King back in the late 80s at Capalaba Park shopping centre. Back then, Woolworths didn't sell them by the truckload for next to nothing so there was some reason to get those artery cloggers from Donut King.

Donuts generally have had their moment. Remember all the hype about Krispy Kreme about a decade ago? People were driving across entire cities to load up on that crap. Now nobody cares. Krispy Kreme Australia went into administration about eight years ago although there are still stores around. Doughnut Time went into liquidation a couple of months ago.

How do they keep Donut King going? Who's buying all their damn donuts?

 

[greggles]

RFG plumbing new lows in the last couple of days after yesterday's FY18 Earnings Update which stated that the company expects FY18 underlying NPAT to be approximately $34.5 million and statutory NPAT to be a loss of approximately $87.6 million.

FY17 underlying NPAT was $75.7 million so the financial impact of the events of the last 12 months are becoming clearer.

RFG currently trading at 72.5c.

 

[McLovin]

RFG plumbing new lows in the last couple of days after yesterday's FY18 Earnings Update which stated that the company expects FY18 underlying NPAT to be approximately $34.5 million and statutory NPAT to be a loss of approximately $87.6 million.

FY17 underlying NPAT was $75.7 million so the financial impact of the events of the last 12 months are becoming clearer.

RFG currently trading at 72.5c.

Big deterioration in H2. Underlying H1 was $24.5m, uFY is expected at $34.5 so uH2 tracking at $10m. If that is what we can expect for the next few halves then a cap raising is all but assured or the bankers will be knocking on their door.

Sidebar: And WTF is with them bringing out a doughnut with V energy drink inside it. That feels like something that belongs only in a state fair in America. Filthy. No wonder Australia is full of fatties!

https://www.pedestrian.tv/bites/donut-king-v-energy-donut/

 

[greggles]

Big deterioration in H2. Underlying H1 was $24.5m, uFY is expected at $34.5 so uH2 tracking at $10m. If that is what we can expect for the next few halves then a cap raising is all but assured or the bankers will be knocking on their door.

H217 NPAT was $42.2 million, which was stronger than H117 NPAT of $33.5 million, so by comparison FY18 results are looking particularly bad. That debt is hanging over them like a black cloud and their ability to service it is also deteriorating. The vice is continuing to tighten on RFG.

And WTF is with them bringing out a doughnut with V energy drink all over it. That feels like something that belongs only in a state fair in America. Filthy.

Looks like a desperate gimmick designed to attract attention to the Donut King brand. It doesn't look appealing at all and at 442 calories for the combo it's a nutritional nightmare. I can't imagine how much sugar must be in there.

https://www.donutking.com.au/vdonut/

 

[McLovin]

Looks like a desperate gimmick designed to attract attention to the Donut King brand. It doesn't look appealing at all and at 442 calories for the combo it's a nutritional nightmare. I can't imagine how much sugar must be in there.

https://www.donutking.com.au/vdonut/

I'm surprised it's only 442! The people I see drinking V never seem to look as though they are short on stored energy.

 

[greggles]

Retail Food Group removed from the S&P/ASX 200 Index, effective from the Open on 18 June 2018.

 

[Faramir]

RFG deserves to be kicked out. I know how the feeling of being naive and then being talked into a “business opportunity”. Poor Franchisees, made to carry the load for the d%}}#d management. RFG is not the only ones to do this to their Franchisees. RFG should never been rewarded for screwing up their staff. No one should have ever put a cent into their business model. Call me bitter but that’s how I feel. I may have not looked into their numbers, annual reports etc but I know how it feels to be conned. That’s enough for me.

 

[Faramir]

Don’t worry, I have never held any RFG. Feel sorry for those who got sucked into the hype.

 

[greggles]

Volume has been picking up again in the last couple of weeks. Sellers obviously outnumbering the buyers as the share price has been declining.

Even if they did do a capital raising, who would take it up? The smell around RFG is so pungent that I can't imagine there would be many takers.

 

[greggles]

RFG has been copping a hell of a pasting in the run-up to the end of financial year. A year ago this was around $4.75. Today it closed at 43c. With very few buyers, the sellers have now completely taken control. This may even end up sub-40c by the end of the week. Ugly.

 

[galumay]

Yep, happy to get out when I did. Got better at making the decision to sell out of dogs. Still left it too long, but I am a slow learner!

 

[So_Cynical]

(Mar 26, 2018) Sold my RFG today

Yep, happy to get out when I did. Got better at making the decision to sell out of dogs. Still left it too long, but I am a slow learner!

A dollar sumthin is better then 45c - i never did sell my little position, oh hang on its not as little as i thought...yikes!

 

[notting]

When a 24% spike only looks like this on the daily chart - there's money to be made!
After they announced their not going to be marked to market by the finances who must feel there is enough in it to manage the debt!

 

[kid hustlr]

A dollar sumthin is better then 45c - i never did sell my little position, oh hang on its not as little as i thought...yikes!

It's amazing how a little position can play on your mind and it becomes 'not that little'. Has happened to me once or twice!

 

[luutzu]

I thought Mermaid Marine crashing from $2+ to 20c was bad. Wait, same proportion I suppose.

With MRM, the oil can be cyclical so there's a chance the stuckholders can regain after a long while.

This one... donuts, overpriced coffee and the coming property crash and credit crunch... And that's not including the lawsuits. Hard to see how this one could survive.

Sorry, don't mean to rub it in. Just my opinion. I bought into ANQ and MRM if that's sharing any pain... though I think MRM is due for an uplift, ANQ is circling round the tube.

 

[McLovin]

When a 24% spike only looks like this on the daily chart - there's money to be made!
After they announced their not going to be marked to market by the finances who must feel there is enough in it to manage the debt!

They're talking about potential asset sales. Looking at their brands, aside from Gloria Jean's what could be sold and to whom that would get them out of the hole and leave a stable of brands that actually have any meaningful mid-term value?

I have to say I don't understand the price pop. This is the banks putting their hands around RFG's neck. And a cap raise is on the way if they can get one away.

 

[notting]

Yeah but, don't forget they were using the franchise operators to take the pain. Now that that's harder their closing them down. They can save a lot from not paying dividends and when it's 'hard to see,' but when they aint going to go under then the turn around can be pretty spectacular! As in FMG, LYC, QAN, WHC, AGI, STO.
Near death experiences are the best!!

 

[kirtdog]

What is the worse case scenario here? Would banks let RFG go bankrupt or would it be forced to sell off all of its assets? In the event of a sale, what price share holders get?
Looking at the most recent book value ~$2, and minus the reported loss, hypothetically if it was all liquidated immediately wouldn't it still return ~$1.50 per share?
Was looking at it yesterday at $0.427, thinking how could a business plummet from $7 less than 2 years ago to that. I am not taking the risk as I don't have a good enough understanding, but I can't help but think there must be some value at the current price.

 

[galumay]

but I can't help but think there must be some value at the current price.

Have a look at the amount of debt, it basically makes the business worthless.

 

[notting]

Have a look at the amount of debt, it basically makes the business worthless.

It's priced at that by the market, but if it can manage the debt with cashflow which the creditors are signaling that they can, and this is a bottom in terms of cleaning up the mess, then you have a business with solid brands being primed.