Moa Shareholders Will Be Sad :-(

A few days ago I wrote about Moa and their latest Annual Results. There have been a few articles analysing these results (see below), and commentary from the investment industry.

Since then Moa shares have continued to drop on the back of sharebrokers downgrading their recommendation on Moa stock from “neutral” to “underperform

Moa Sour BlancThe questions the media have raised seem to be around:

When they run out of money what happens next?
– do the existing shareholders get called on for more cash?
– will there be another issuing of shares, diluting current shareholders?
– will it be debt that is taken on to continue fund the company?
– will the Business Bakery and Pioneer Capital provide funds as a loan?

How will the new brewery be funded? Are they even going to build a brewery?

Will the main shareholders the Business Bakery and Pioneer Capital turn around, make an offer and buy out all shares and delist the company?

Will Moa merge with Stoke and Hancock’s to form the largest craft brewery in New Zealand? Or even Tuatara?

The questions I am currently thinking about:

With many people having Moa as their top of mind “craft / boutique brewery” in New Zealand does their current predicament and negative media attention cast a shadow over the whole craft beer industry?

Has this ultimately reduce the appetite of the public to invest in the (craft) brewing industry in New Zealand. i.e. if a brewery wanted to do an IPO, would they now be overly cautious and less likely to invest in a craft brewery, based on Moa’s performance?

On the flip side, even though we are seeing this negative angle, does it really matter as Moa have pretty much single-handedly raised awareness about breweries and craft beer in New Zealand to the general public. As much as the beer geeks might hate on them, the mainstream beer drinker in New Zealand now thinks about beer as more than just Lion and DB now.

Taking it to a random place, should the industry rally together and support each other to raise the awareness of craft beer which includes Moa. Do we (craft brewers) all have more to lose if they fall from grace in the eye of the public? Maybe this is something the Brewers Guild of New Zealand discuss on behalf of its members.

 

Moa shares tumble to new low
– 3:42 PM Thursday May 29, 2014

Shares in Moa Group, which raised $16 million when it went public in 2012, plunged to almost a third of its listing price after the boutique beer maker posted a wider full-year loss

“If you look at their cashflow statement they appear to be some way away from generating positive cashflow.”

Moa “unappetising” – analyst
– 1:00 PM Wednesday May 28, 2014

Sharebroker Forsyth Barr has downgraded its view on Moa Group, saying the company is an “unappetising investment case” and is expected to burn through its remaining cash reserves over the next 12 months, which may lead to a capital raising.

“However, we continue to struggle with the investment case in light of slow growth in key offshore markets and a trend towards lower margin products.”

Moa has turned a corner: boss
– 5:00 AM Wednesday May 28, 2014

“The company is looking at a range of financing alternatives and timing, and we will keep the market abreast of plans as soon as they are finalised,”

 

Moa Shareholders Will Be Happy?

Bit of a soft article this morning the NZ Herald about Moa signs deal to use Nelson brewery . Might as well have just posted the link to the post Moa has with the NZX – Moa secures capacity for growth

(the article was convenient as it just cut out the key points from the official release, so therefore saved time in reading the whole thing, thanks. I’m told journalists have to become experts 5 times a day as they write a lot on topics that are wide and varied, it must be hard work.Maybe cutting a pasting would be easier since Moa had already done the work of writing the release)

The release was put out yesterday about contract brewing, one day before the release of Moa’s Annual Results.

Moa Can Bottle
Moa in a can bottle on Air New Zealand.

After reading the good news article about contract brewing at Stoke/McCashin’s Brewery (funny how things change, remember when “IT HAS A TRUE BRICKS AND MORTAR HOME“? UPDATE 31 May 14 : Moa has deleted this page so this link no longer works. Google Cached Link for now) * I read the Moa Annual Results. Maybe there will be an article tomorrow covering the following.

[UPDATE 27 May 14: d’uh I just found this – Moa widens losses, gets shareholder backing ]

I’m not a Moa shareholder but I’d possibly be thinking “that is a pretty big loss”, but the reasons for it seem pretty legit, right?  $5.8 million loss on $4.6 million revenue. The biggie though is only $4 million in cash left. Will there be enough left to buy that bigger brewery, which was I thought one of or the main reasons for the IPO?

The following couple of quotes from the Annual Results caught my attention:

 

 

 

 

“As a consequence, the planned brewery expansion has not been undertaken and the anticipated capital expenditure has not been incurred…”

 

“The company is looking at a range of financing alternatives and timing to ensure adequate capital resources are available to support the Group’s growth plans and capitalise on opportunities…”

The contract brewing at Stoke maybe good news, but it was the only option at the end of the day since they haven’t built their own bigger brewery. The tough part is going to be funding the aggressive growth plan in this highly competitive global craft market.

Moa Share Price to 27 May 2014
Moa Share Price to 27 May 2014

I must say the Moa IPO has been fascinating for me, and watching how you have to keep feeding the media positive spin, in during the not so good times. Being a small publicly listed company, in a very fast changing, dynamic market is harder work than being a private company. Moa is living in the public eye, and what they are experiencing (read all the challenges in their Annual Results) is what I was alluding to in my Craft Bubble post. Craft beer isn’t all rosy and good times, there are many challenges for all sizes of craft breweries. Don’t get me wrong, it is a lot of fun, and the challenges keep it interesting. If it was easy everyone would do it…

Maybe I should write something about the challenges I’ve experienced and have seen others have to deal with in the growing craft beer market? . I’ll sleep on that for a bit.

 

 

* This was my favourite part. Even though the water part of beer is highly under rated.
IT HAS A TRUE BRICKS AND MORTAR HOME

[*The following has been retracted: The following A craft brewery does not contract brew at different breweries around the country or allow its beer to be brewed under licence overseas. The most important and influential ingredient in beer is water and you cannot accurately replicate your water supply in a different location.]

UPDATE 31 May 14: Looks like I am going to have to do screen grabs in the future. I wasn’t expecting Moa to delete the page from their website which I linked to.