Distil Share Discussion Threads

[janekane] 05/12/2020 08:15

Morning Daz my understanding is if he gets 30% then he must make a bid for the whole company to take full control he needs to get 51%
His bid price would be based on the highest share price over the previous 12 month trading period
The share price will rise if the market improves and we get lots /many more buyers and importantly sellers.

[daz1712] 04/12/2020 20:32

Clermont definitely just My opinion, have been watching this unfold and gaining an extra 9% will be enough to take full control, which won’t take long.

[clermontace] 04/12/2020 19:00

If RG wants a higher %....will he have to find his next 10% though the open market?

Oh I do hope so!

[clermontace] 04/12/2020 18:27

Daz.....in your VIEW. Unless you know something we don't.

1)If we're bought out, the big question is, at what price.

2)If growth is to continue organically, then I'd say someone who is 'invested' in the drinks market and who buys 20% of the business, could be exciting for existing holders.

As Berny speculates, one permutation is that RG's interest is passive in that he sees value and/or the potential to help grow the business through what he can offer, or benefit from an envisaged buyout, later down the line.

A delayed 625K buy after the bell finishes the week.

[daz1712] 04/12/2020 17:43

Hi Clermont, all of your points are valid and could come true, but the main Diageo man will soon be replaced with a fresh BOD after an offer for the remaining shares(before the January update I would imagine and the Redleg Rum journey will continue in the EU and Australia without us on board.
Dis has come a long way with the Existing team but now needs a bigger market to drive revenue, which means new investment and management.

[berny3] 04/12/2020 17:38

CA - I don’t know how that side of the drinks business works. Where a larger player wants to acquire a growing brand. I can only look at it on a business perspective. Larger firms would have acquisition teams and it would be logical that Redleg Rum is on their radar.
Value is very hard to determine. It is not just the number of case sales but the strength of the brand and the story behind the brand. Look at Grey Goose for the most famous example of that. An interesting comparison is Bulldog Gin. Google that acquisition by Campari. That started off with a distribution agreement then moved into a full purchase.

The Redleg Brand is what is interesting. Outside of the Rum it has its own value as a trademark. Look at Jack Daniels, Guinness, Playboy, Ferrari etc. All these are much more than just the drink. The brand means something more than the underlying product. I see an opportunity here with Redleg for something like that under the right infrastructure.
Time will tell.

RG’s acquiring a stake it may well just be passive as he sees it under value. Anything that does happen requires scrutiny to see it I sin the best interest of all. It is good to know there are a fair few on here with significant knowledge in a wide area of business to contribute to that discussion.

[clermontace] 04/12/2020 15:47

The question is, what value do you attribute to the Rum, thus far?

It hasn't put a foot wrong (jury still out on banana variant)and has been the fasted growing rum brand for several consecutive years.

Diageo will be more than familiar with it, given our top man is an ex-Diageo executive.

[clermontace] 04/12/2020 15:42

If the January figures are strong and show increased cash generation and Rum showing another set of good yr on yr growth I don't rule out a bid. I'm not sure what else a major would want to see. And cash generation would mean DIS is entirely in control of strong incremental growth and a self-fulfilling brand. THAT'S when sales take off.

[clermontace] 04/12/2020 15:37

Berny3 thanks for your view.

My thoughts are on upside potential through an initial collaboration through shared distribution. I think we'll find out soon enough as I expect operational developments to arise shortly.

Any predatory interest further down the line should force anyone watching the company to show something of their hand. I would genuinely be absolutely astonished if the Rum wasn't on several watchlists of the major corps.....who are always scanning the market for smaller brands gaining traction.

The management team here is small (not a bad thing in the slightest) but I would like to see them acquiring more stock. Any other increases in positions can be viewed as favourable.

A string on 200K trades this afternoon, all with the same time stamp would suggest possible duplicate trades....although someone has come in for almost 500K and paid full ask @ 2p.

More blue before the weekend?

[waterloo01] 03/12/2020 17:01

Berny3, very insightful. Thanks. One hopes Don is also aware of the implications of the 'mergers' as you suggest. I would expect him to be looking at an exit , so would hope if this on the horizon, he'd start a bidding process.

After all the end game has always to build and then sell.

[janekane] 03/12/2020 14:09

Nothing happening in the back office regards the bid looks that any thing over Sp of 1.8000p are buys that's about even Steven bid offer trades

[berny3] 03/12/2020 12:13

CA 2 points you raise:

H2 figures and RG:

H2 figures: These are pretty much known going into the end of H1 as supermarkets pre ordered ahead of Christmas sales. Hence we received guidance for estimated sales Q3. we will not know whether these are significantly higher until after Christmas and expect we will get an update in January. It would appear sales are strong but the Q3 estimates were stroking as well so I anticipate we will remain within those figures. Banana Rum will be quite small in my opinion the up lift there will come in if we get a supermarket listing in Q1 2021 (Q4 finically year)

RG is completely different. I am cautious. He has a number of interests in unlisted business. If you are aware of the term boot strapping there is the opportunity for him. For those who do not know what that is I will explain. The PE ratio of a listed firm is higher than an unlisted firm. If you have an unlisted firm and merge it with a listed firm you immediate recognize and uplift in value in the unlisted firm and a devaluation in the listed firm as the PE ratios equalize. I am therefore not as enthusiastic as other posters on here concerning his holding. If he makes a bid for the whole company that is fine and as shareholders we can consider that. However, if he forces a position on the board and directs the business to enhance his other assets that is in my opinion not necessarily in the best interests of current stakeholders in Distil and his moves need to be monitored. I can see synergies in Australia for instance. If we can ship liquid to Australia rather than finished bottles and cans, enabling a firm in Australia to do the canning and bottling, that is attractive. Even more attractive if we can ship concentrate. Currently we ship finished bottles as I am not aware that we have a bottling partner in Australia and that adds a lot of overhead expense in transportation. Secondly to that is the access we would then have into the Eastern market if we had a distribution hub in Australia that we could send concentrate to.

RG’s main profitable business is whiskey distribution I believe. This would be a sophisticated market which I am not sure Redleg Rum fits into. East London Liquer Company I do not understand, it appears to be hugely loss making and within the structure has 100’s of shareholders all making small investments. Getting access to a listed company gives these investors an exit. I am not a great fan of ELLC from what I have seen but I do not have all the information.

In summary I remain undecided whether RG’s involvement is good or bad. What is needed is an informed approach from all of us. There are many shareholders on here albeit with what they may consider small percentage holdings. However, collectively we can share good knowledge and allow us all to make a more informed decision if the shareholders are called upon to do so.

[janekane] 03/12/2020 11:12

Berny3 Exelent responce thanks my 3p figure was a very low estimate and as with all Aim shares the projected P/E ratio can be out of sink with reality
End of January will be a game changing outcome but again with cautiom I've been here for a long time another year or so is ok with me

[clermontace] 03/12/2020 10:42

Hi Berny3 - thanks for the figures, estimates and guesstimates.

Solid figures and a good foundation now built, with the cash generation a springboard to future growth.

I am interested to learn if we'll see any stocking figures for the new lines fall into H2.....could bolster the numbers further. I am expecting a strong H2, especially as we have since had another period of lockdown and we can already see from H1 that the rum was heavily purchased. I expect repeat sales as we move into the holiday period.

Because of the way the portfolio is split over multiple brands, pinpointing case sales for any one is not possible, however the Rum is clearly the leader, followed by blackwoods. I'm happy to pretty much dismiss the others for now......even though 20 odd years of cumulative sales for the black vodka must be considerable. There was a time when that was selling swiftly with some fairly hefty sales in the US.....albeit the company was loss making back then. Diva and Jagos negligible. The latter has potential but can not (and should not) be a focus for the company at present.

What are your thoughts on Roland Grain's involvement?

I think he is able to see considerable potential here and ways in which he personally can add value and quickly, and so drive up the value of his investment quickly. This could come through shared efficiencies and enhanced distribution.

I also wonder if he can assist in pushing into the US.

DIS just needs to keep growing the Rum as they are.

In my opinion it alone is already worth many times the value of the whole business on a buy out multiple.

[berny3] 03/12/2020 10:00

Berny3 - 02 Sep 2020 - 08:54:49 - 8571 of 9116 Distil PLC - Here's to a spirited future! - DIS
JK,

3p would give a market cap of circa £15mln

profit for the year was £258K

market update was a 75-85% growth in HY Revenue

HY 2019 - £824K exp 2020 = £1,483

2nd part of the year is the strongest:
2H& 2019 £1,617K assuming 25% growth £2,021K

Total Revenue: £ 3.5mln
Gross margin: 59% = £2.07mln
30% increase in admin expense: =£1262*1.3 = 1.640

profit = £430K = 166% growth on previous year

market cap of £15mln would be on a p/e ratio of 34

Is not a difficult calculation to make and is not in my opinion an idiotic prediction. It is very achievable.

[berny3] 03/12/2020 09:56

CA post 8813

Berny3 - 17 Oct 2020 - 07:14:12 - 8813 of 9115 Distil PLC - Here's to a spirited future! - DIS
DC - assuming no change in net profit margin at 8%. That means for every £1 in revenue equates to 8p on the bottom line.

2 scenarios
1. No change in 2nd half revenue growth from last year
£3,685,000 revenue Net profit £278,807 current pe 23
2. Same growth rate in sales over H1 translated tonH2
£5,563,340 revenue Net profit £445,460 current pe 14

My thoughts somewhere in between. I think margins will improve in H2 due to costs being lower as there has been investment H1 which will take until H2 to translate to revenue.

I think sales will increase yoy H2

On first case we should be trading at 9-10mln market cap
On second case we should be trading slightly better 20-25mln market cap

Any buyout premium would be a multiple of those numbers.

Either way trading at 6.5mln market cap is an opportunity to fill your boots. Good luck all and a good week ahead.

[clermontace] 03/12/2020 09:07

Case sales figures for the Rum.

Does anyone here have an idea on that?

[clermontace] 03/12/2020 08:52

Small and agile brands with potential.

These are the lifeblood of major drinks companies.

Although well established and with once strong branding, there is something rather tired about some of the existing Rum brands.

Redleg is well positioned on the shelves, has a premium feel and is nicely differentiated.

[clermontace] 03/12/2020 08:41

Glad to hear it JaneKane.

A good platform to grow from now. It's reliably producing cash and the Rum brand hasn't stopped growing.....in fact, according to the research I posted, it has been THE fastest growing Rum brand over recent years.

I think when you consider WHO Roland Grain has replaced, in terms of percentage holding and then you scrutinise his business interests, you begin to get an impression of what he might be motivated to do here.

In my reckoning he's certainly going to be more of an actively involved shareholder than those who have departed.

He will bring value I'm sure.

[janekane] 03/12/2020 08:32

This is one not stale bull who will run with this new major holder who must have the same thoughts as I
We can do better and we will do better and I like this new blood think our board are stale and need a push in another direction
As with the likes of green and his empire he's old hat,has been now let's see this company grow and add more proven products to the table
Question
What happened to our promised move in the United States of America market

[clermontace] 03/12/2020 08:19

Some stale bulls will bail and take the first sign of any relative strength in the share price - in fact I'd imagine many have. But buying in as a fresh and unjaded position here off recent progress could well bring handsome rewards.

[clermontace] 03/12/2020 08:15

As ever, it's all about timing folks.

If you discovered the company at this point, and were working off the recent interim results and how the brand is now positioned (ie cash generative, growing net profit, debt free, with increased distribution, a recently expanded range, partnering with other brands to provide increased product offering / convenience to consumers, cash at bank.....AND....with a significant investor taking 20% of the business and who is likely to be highly motivated to drive sales and build value in the near term................then you'd probably feel pretty warm towards the management.

There is the potential for this company to be trading in an entirely new range within the next few months.

I am looking for news on:

* Roland Grain's intended influence upon the business (which could be significant).

* A trading update on H2 (including either a pre Christmas stocking RNS or a post Christmas update).

* Further innovation re. the portfolio of brands.

We are quick to jump to the potentially predatory aspect of someone taking 20% of the business, but you might find that this person feels the company is too cheap and 1) can almost immediately offer good cross-over and synergy and grow the value of his investment and 2) recognises Redleg has momentum and, like some of us, can envisage a buyout multiple by a major.

After all, that's why many PI's will have bought in.

He is simply working with vastly larger numbers.