YOW - Yowie Group

Ves said:

Lol... I just noticed that myself.

So you've got a contract announcement of sorts on the same day as an update on the legal dispute (which sounds more complicated than they are making it out to be).

I'd actually feel sorry for them if they made headway in the USA and it all unravelled due to patent / legal issues.

edit: I think it's too much of a possible torpedo (even if it is remote) to risk a long-term hold for me even if I was convinced re their competitive position.

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Pretty much of the same opinion. I really don't understand how you can cite patent protection as one of your core competitive advantages then start manufacturing using your own capsule design. Will the existing patent holder not find someone else to license to? If it's that easy to create a legal design that doesn't breach patent then what's to stop everyone doing it, or why haven't Kinder Surprise already done it? There seems to be a lot going on that hasn't been made public.

My thesis entering this stock was that contracts needed to come on line quickly and I could more or less ride the revenue momentum. That hasn't eventuated and the legal stuff going on means I'm happy to not be in there anymore even with Walgreens on board.

Starting to see some movement in google trends and facebook followers, advertising seems to be working. Interested to see if it correlates to increased sales.

risk of loss by new joined executive, high risk of huge loss history from previous company

Rob Cheema said:

risk of loss by new joined executive, high risk of huge loss history from previous company

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the new joined one created over USD4m due to lack of commercial sense, inventory control also some business ethics. hope this is not carried over to YOW

skc said:

Has anyone followed this company? I have been looking at its recent announcements and for some reason just feels like it is some sort of a satiristic joke (I am not saying it is, but it feels that way to me). The only thing they do (or intends to do) is so sell some chocolate branded "Yowie". But does the market really need to know when your marketing department has finished with the 3D characters (see announcement 15 Jan). Share price is up 400% in Feb by the way .

Yes it looks like they are steaming towards actual production and sales... but a $63m market cap you'd need to sell a $hit load of chocolates.

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This was my post from early 2014, when strong share price gains in YOW caught my attention.

Almost three and a half years later, YOW has a market cap of... $66m, almost exactly the same as before. In the meantime, they have gone from no sales, no product and no distribution to now selling ~$20m worth of chocolates in FY17. Yet the share price has gone exactly no where, with most holders underwater.

This situation happens a lot in the share market... the price for the bluesky phase can often be much higher the price when actual reality comes. YOW has managed execution reasonably (to a certain extent), but hasn't managed expectations that well.

YOW is now forecasting a 55-70% growth for FY18, with H2 being profitable. So may be it's worth a look soon.

skc said:

This was my post from early 2014, when strong share price gains in YOW caught my attention.
YOW is now forecasting a 55-70% growth for FY18, with H2 being profitable. So may be it's worth a look soon.



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I dare say that the team at YOW struggle to forecast - '
According to the release, Yowie delivered revenue growth of 23% in the fourth-quarter.

Whilst this is a strong level of growth, it fell well short of the 37% growth guidance given on June 21 when there were only nine days remaining in the quarter.

As a result, full-year revenue grew 51% on FY 2016, compared to guidance of 55% growth.' (From the fool, because I only quote reputable sources...lol)

I want to like yow, but I really can't.
I love a low sp and NTA to match, but I just can't seem to like a company.

Feels like it will be a bang or bust.

Bad news for Yowie Group and its shareholders today.

Yowie shares dive as guidance slashed and CEO Bert Alfonso departs

greggles said:

Bad news for Yowie Group and its shareholders today.

Yowie shares dive as guidance slashed and CEO Bert Alfonso departs

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time for take over - weakest situation for any organisation and SWOT analysis shows the threat for YOW and opportunity for others.
DNH

Yowie Group now at all-time lows after more bad news.

The company reported that US net sales quarter to date in Q3 have been materially behind the same period last year. The decline was attributed to the result of launch activity by a competitor into the US market in January.

Nothing but bad news for Yowie Group recently and not much to look forward to IMO. Today's announcement sent it down another 20% to 11.5c.

Yeah this stock will hand me the wooden spoon in the yearly comp I reckon. Still, Keybridge have increased their interest so maybe they know something we don't.

Maybe some of those Yowie characters could use a bit of medicinal pot in the choc for all the right reasons of course

PZ99 said:

Yeah this stock will hand me the wooden spoon in the yearly comp I reckon. Still, Keybridge have increased their interest so maybe they know something we don't.

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Yowie Group has dipped below 10c today and is currently down around 14%. Hard to predict where the bottom will be, but I imagine it can't be too far away.

This is interesting > Class action surrounding the original 55% sales growth guidance.

https://classactions.gadens.com/Actions/Details/9

It looks like a turnaround/cigar butt stock for those brave enough. The latest quarterly report shows positive free cash flow generation of around $200,000 U.S.D. and if you look at the projection for next quarters cash outflows, with a very small amount of smales growth they could be cash flow break even next quarter. If the company forecatss are to be believed they will be profitable in FY2019. When you look at the net cash backing cash minus total liabilities) of around $16 million U.S. dollars and compare to the current market cap of AUD $24 million the stock looks very cheap. The board and management reshuffle of recent times appears to be a step in the right direction.

But there are massive risks:
1) The lawsuit against the company by its former manufacturing partner.
2) A potential shareholder class action supported by Gadens.
3) Management and directors are of questionable character. Too much mention of EBITDA, regularly trying to gloss over the negatives while talking everything up. Literally on the same slide of an investor presentation the slide is titled
"Appendix: One-Off Stock Adjustment Claim"
Further down the same slide it states: "Periodic stock adjustments are a regular
occurrence in the confectionery industry". Management seem confused as to whether it is genuinely a one-off occurrence or a periodic occurrence (I would suggest the latter).
-Trumpeting a decrease in marketing expenditure as smart cost saving initiatives. For a small company that still needs to increase its brand recognition that seems rather short-sighted to me.
Excessive promotional attitude (and share price focus) by the board and management:
"Your
Board
has been disappointed that the
Company’s share price does not reflect what has
been achieved in the last six months. As indicated above, costs have been brought under tight
control on all fronts, headcount has been reduced, gross margins have been maintained and
the revenue decline has been arrested and modest growth restored."

"We still have US$19.5 million in cash and profitable trading is in sight. We strongly believe that
these are grounds for the stock to be rerated. The current share price is
approximately 70% of
the cash backing per share."

Meanwhile in the same breath as implying the shares are extremely undervalued not a single director has stuck their hands in their pockets to buy shares in the company on market. In other words they have not put their money where their mouth is. Also if the shares are so undervalued why is the company diluting shareholders and paying directors/management by giving them shares in the company instead of paying them cash?

Verdict: Given how cheap the stock is and the current sales/business momentum the stock could end up being a 5+ bagger over a 3 year period. However given the litigation risks and the shady directors/management I personally would stay away from the stock.

Great analysis VH, I had my attention drawn to YOW again by a post on twitter by someone I follow and a link to an article about the potential turnaround. The overhang of the leagal actions was the first thing I noted - they had missed that. I also let it through to the keeper after a cursory glance.

Miner said:

time for take over

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PZ99 said:

Still, Keybridge have increased their interest so maybe they know something we don't.

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Accurate predictions and observations gents.

Keybridge Capital has advised this morning that it intends to make an off-market bid for all of the fully paid ordinary shares in Yowie Group for a consideration of 9.2 cents per share.

I wonder what the response of the YOW board will be.