Friday, October 12, 2012

Moa Beer IPO: A Closer Look

I have to admit, I haven't drunk it but Ive heard so much about it I just have to try a drop - if my wife will let me - Moa Beer Ltd [MOA.NZX

If you can get past the hilarity of the first half of the prospectus - it has an advert for a car in it? - you can get down to the meat and potatoes - the facts and figures.

Moa Group's chief executive, Geoff Ross, yesterday announced the IPO was going ahead on November 13, but had already been over-subscribed by four institutional groups and retail "mum and dad" investors, so expect the deal to be done and dusted already.

The $6.1m brewery extension project is a vital step to take the company's Blenheim-based brewing and bottling capacity from 14,000 to 50,000 cases a month in under a year, which shouldn't be too hard considering the popularity of the drop.

They will offer 38.4 per cent of the company to the public at the price of $1.25, with another 3.6 per cent already having been allocated to existing shareholders who include Ross' Business Bakery, Pioneer Capital, Allan Scott Wines and company executives.

I never really understood the value of such company's it does not seem to bare any relationship to the profit or sales.

Moa sold almost 50,000 cases, mainly across New Zealand, Australia and the United States, in the 2012 financial year and has shifted 35,000 cases in the first six months of the 2013 financial year, so all looks to be on track for a good 2013.

In their healthy looking prospectus - it has a picture of a naked woman in one - the company expects to sell 97,496 cases in the full 2013 year, rising to 195,100 in 2014. However it will still not be running at a profit in that time frame.

The new brewery has been meticulously planned by Scott and his head brewer, Dave Nicholls, who worked at Heineken, alongside Ross and a board committee.

He is not taking the sharemarket float lightly - it was his aim since before he met brand-builder Ross over 2 years ago.

"It's great to see it grow because there was no way I could ever grow a company like this, this quickly," he said from Blenheim.

Scott's "executive brewer" role has been to develop the brand's presence and distribution overseas, under the guidance of Ross who sold his vodka brand 42 Below to Bacardi for $138m in 2006 and we all know well he is noted for that.

The prospectus puts revenues at $2.4m for the 2012 year to March 31, with negative earnings before interest, depreciation and amortisation at minus $2.8m.

The company made a net loss of $2.8m. The company forecast revenues of $4.3m for the year to the end of March 2013 - leading to a $3.5m overall loss.

Its all immaterial anyway, set your gun to off and target someone else this ones for fun, and it just might well do it.

I will be having a word to my broker about setting some aside - a 1000.

Moa @ Share Investor

The Prospectus
Talk Moa Beer @ Share Investor

c Share Investor 2012