Moa Group (“Moa”) held its annual meeting today and announced plans to raise up to $5.75m of new capital via a $5.25m rights issue and $0.5m placement.
Moa listed on the NZX in November 2012 with high growth plans, seeking to become “New Zealand’s beer, globally”. Moa intended to build a brewery in Marlborough with the $16m of proceeds from the IPO and build a considerable business in the US – taking advantage of the growth in the US craft beer market.
The experience for Moa’s shareholders since the IPO has not been pleasant. Moa has had very limited success in the US and has also failed to build the brewery in Marlborough. Sales have been considerably below IPO prospectus targets (see below). Instead the IPO proceeds have been spent on covering the overheads of the business. Moa’s share price has fallen from $1.25 at IPO to 55 cents today.
Moa Group (31 March year end)
|
FY12 |
FY13 |
FY14 |
|||||
|
Actual |
Prospectus target |
Actual |
Difference |
Prospectus target |
Actual |
Difference |
|
|
Volume (9 litre cases) |
49,552 |
97,496 |
102,600 |
5,104 |
195,100 |
136,300 |
(58,800) |
|
Sales ($m) |
|||||||
|
NZ |
2.0 |
3.1 |
2.0 |
(1.2) |
5.0 |
2.7 |
(2.3) |
|
US |
0.2 |
0.6 |
0.1 |
(0.5) |
1.8 |
0.8 |
(1.0) |
|
Australia |
0.1 |
0.5 |
0.2 |
(0.2) |
1.0 |
0.6 |
(0.4) |
|
Other |
0.1 |
0.2 |
0.2 |
(0.0) |
0.9 |
0.6 |
(0.3) |
|
Total sales |
2.4 |
4.4 |
2.5 |
(1.9) |
8.6 |
4.6 |
(4.0) |
|
Net profit after tax ($m) |
(2.9) |
(3.5) |
(1.9) |
1.6 |
(2.5) |
(5.8) |
(3.3) |
At the annual meeting, Moa announced a new strategy to refocus its sales effort on the New Zealand and Australian markets and a repositioning of its core product range between the local boutique craft beers and international premium beers (such as Heineken, Stella and Steinlager) with the aim of selling higher volumes. In doing so, it will be taking on larger breweries with bigger marketing budgets. It appears Moa has largely given up on the US market.
With only $2m of cash remaining, this capital raising is required to keep Moa alive financially and provides a second chance for the business to succeed. However, Moa’s progress to date as a listed company suggest this will be an uphill battle.
Sam Trethewey
Investment analyst
Disclosure of interest: Milford does not hold shares in Moa Group on behalf of clients.