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The Artisanal Spirits Company (ASC) has announced an important acquisition in the US. Effective 3rd January 2024, the company has acquired 100% of the trade and assets of Single Cask Nation (SCN), which is an independent bottler and distributor of both Scotch and American whiskies. An accompanying trading update for ASC confirms recent guidance and we leave our forecasts unchanged. Our assessment of fair value remains 100p per share.
ASC states that the SCN acquisition, which includes all of its assets and global operations, will be funded out of existing borrowing facilities. Furthermore, it is expected to be EPS accretive in the first year of ownership. Consideration includes an up-front payment and the potential for up to US$0.5m (£0.4m) to be payable as an earn out, dependent on FY2024 and FY2025 financial performance. Importantly, the deal is consistent with ASC’s sustained ambitions for overall business quality, premiumisation, profitability and cash generation.
Link to report: https://www.equitydevelopment.co.uk/research/single-cask-nation-acquisition-uplifts-us-prospects
My understanding of the Ferovinum deal is that it’s essentially a deal where SMWS can choose to sell stock at a discount of 30% to the agreed B2B trade value. It provides fast access to £15m of cash flow without raising debt or having to fire-sale stock.
It’s not the retail value, which includes VAT, duty, bottling, shipping.
Just to provide confusion, the agreed valuations look to be above the asset values in the accounts - suggesting the stock has been “prudently” valued.
New report with audio summary available here: https://www.equitydevelopment.co.uk/research/a-year-is-a-short-time-in-scotch-malt-whisky
The Artisanal Spirits Company (ASC) announced on Friday that it expects both sales revenue and EBITDA to be lower than previous market expectations. Effectively the company is now on track to achieve our former FY2023 forecasts in FY2024. However, the underlying growth messages remain strong, supported by both membership growth and fresh strategic initiatives. While the FY2023 outcome is disappointing, our counter argument is that, given the long duration to maturity of the product, a year is but a brief period in Scotch malt whisky.
Despite its strength as a membership organization and substantial intrinsic value in relation to the maturing whisky mentioned above the ASC’s relative valuation is subject to a negative impact from international headwinds also being faced by its key distilled spirits and luxury brand owning peers. A 100p share price implies 3.8x EV/sales and a £70m market capitalisation.
We revise our fair value down from 150p a share to 100p, which still stands well above the current share price.
Im trying to do the maths ; if they have in effect forward sold £15m of maturing stock at 70% of final retail value. that equals about £70 per bottle now. = 214,000 bottles = 800 casks to be sold in 2 years. Out of 17,000 casks at Masterton, = just under 5% of current stock in casks. So in return for forward sales of only 5% of stock in 2 years, SMWS get £15M now. That values forward stock at > £300M minimum at only 70%. If they have plenty of stock for 2 years time ( they do), and they can lay down more casks to replace these pre-sold 800 ( they certainly can much cheaper than that), then it might just be brilliant. Am I wrong ?. anyway just bought a few more at 48p. DYOR. also have a hunch that Ferovinum must have conducted some sort of due diligence on SMWS and liked what they saw.
I was wondering that too - is it that Ferovinum have essentially pre purchased whisky, i imagine at a discounted bottle price (to sell to whom??) meaning the facility somehow has a net zero balances sheet effect? Seen this just this morning:
...other areas of the Group continue to trade well and further progress on strategic objectives has been made as detailed below. The Group's stock-backed balance sheet is strong, even more so since recently agreeing its partnership with Ferovinum which has allowed ASC to convert maturing stock into a just-in-time asset at a truer valuation without increasing its overall debt level, giving the Group financial flexibility and optionality. Under the current arrangement ASC can draw up to a further £12.4 million providing ample cash and liquidity.
Could be 250,000 shares traded yesterday under Delayed Notification. Guess somebody sold a lot, and still selling today. if so, we will see more delayed notifications come through tomorrow or Monday. Could be that recent refinancing with Ferovinum for £15m is not liked by someone. Inc me, don't understand why they need all this money. Despite the fact that they have raised access to this new £15m, apparently this doesn't increase their debt. ! wow, wish someone would give me access to £15m and it doesn't increase me debt mountain. What on earth do they want this for ? lack of detail could be worrying, but on the other hand perhaps they are acquiring some new retail premises. On any trading terms, are the shares worth squit ? Becoming just a play on them be taken over. And then there is the recent report that premium whiskey prices dropped this year, and Diageo shares are fallers. Yuck, thank heavens for RR. DYOR.
Anyone know why the 8.87% drop / 5.5p , still it’s getting closer to my buy in target of below .50p
The Artisanal Spirits Company (AIM: ART), the owner of The Scotch Malt Whisky Society (SMWS), conducted a investor presentation following the release of their Interim Results for the six months ended 30th June 2023.
Andrew Dane (Chief Executive Officer) and Billy McCarter (Chief Financial Officer) discussed the growing opportunity in the Far East, including Taiwan and Korea, a new route to market in the form of casks, and their confidence in reaching EBITDA profitability at the full year. Management also answered a wide range of questions from investors.
The full video has been dividend into chapters as below:
0:00:03 Introduction & key points summary
0:04:05 KPIs and Financials
0:08:48 Pioneering Model
0:15:02 Long term global growth opportunity
0:16:25 Robust business primed to deliver
0:21:12 Current trading & Outlook
0:23:24 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/the-artisanal-spirits-company-investor-presentation-interimresults-sept2023
Interim Results published today - new research note from Equity Development is here: https://www.equitydevelopment.co.uk/research/western-growth-enhanced-by-eastern-promise
The Artisanal Spirits Company (ASC)’s FY2023 H1 results reconfirmed a strong Q2 as well as showing potential for sustained sales growth both domestically and overseas. Profits at EBITDA level remain on track to be positive in FY2023. With further membership expansion, resilient demand for ultra-premium Scotch and important Asian developments in place, we reiterate our view that fair value for the shares is 150p.
New research report out today: https://www.equitydevelopment.co.uk/research/taiwan-subsidiary-uplifts-asian-growth-outlook
Today’s announcement by The Artisanal Spirits Company that it has successfully launched a new subsidiary in Taiwan is important. The country is the world’s third largest market for Ultra-Premium Scotch Whisky globally, and thus one which should welcome the ASC’s unique offering of single cask malt whiskies. Moreover, the action is consistent with the ASC enjoying significant headroom for incremental revenue growth – notably through Asian expansion. We continue to argue that fair value for the shares is 150p, and Asian strength supports this view.
Post results webinar : if planning your post summer diary, save the 20th Sept at 11.30 am.The CEO and CFO of ART will discuss their interim results and outlook.
All are welcome, simply register here
https://www.equitydevelopment.co.uk/news-and-events/artisanal-results-presentation-20sept2023
The Artisanal Spirits Company (ASC) FY2023 H1 trading update reported 1% sales growth with 7% growth in the second quarter and, importantly, a 9% increase in membership numbers to above 38,000. In addition, the statement reconfirmed the benefits of the company’s ultra-premium distilled spirits positioning, its focus on Scotch whisky, and the benefits of not only being international but also in control of its supply chain and distribution system.
While the ASC’s H1 sales growth was beneath our full year expectation of 14%, the company was lapping a particularly strong growth in the same period a year earlier when sales advanced by 25%. The company itself remains confident that full year market expectations for sales and adjusted EBITDA will be met. We leave our own forecasts unchanged at £24.7m and £1.3m respectively for these two measures.
We draw a positive read-across from Diageo PLC's investor presentation in Edinburgh on 1st June (“Delivering sustainable long-term growth – our vibrant Scotch portfolio.”) Diageo’s central investment messages focused on premium Scotch as a growth category and its value creating qualities relative to other distilled spirits categories. In our view ASC is already a clear beneficiary from these trends and opportunities.
We base our 150p fair value/share, which implies a 4.8x FY2023 EV/sales ratio, on a relative valuation comparison with other international distilled spirits companies and luxury providers.
Link to report: https://www.equitydevelopment.co.uk/research/investing-in-ultra-premium-scotchs-global-growth
Today’s Annual General Meeting trading update from The Artisanal Spirits Company (ASC) confirms that the positive underlying sales momentum enjoyed in FY2022 has continued into the current year. The group remains confident of delivering both sales growth and EBITDA in line with expectations. Moreover, sales growth is expected to be at least double digit % in the second quarter after a relatively flat Q1.
We base our 150p fair value/share, which implies a 4.9x FY2023 EV/sales ratio, on a relative valuation when compared with leading listed distilled spirits companies and luxury goods providers. ASC is simultaneously exposed to both these categories given its emphasis on ultra-premium-and-above Scotch malt whiskies.
Furthermore, the £493m updated notional retail value of the company’s maturing whisky stocks is currently over 6 times today’s market capitalisation.
Link to report: https://www.equitydevelopment.co.uk/research/agm-statement-confirms-growth-momentum
Glad I went with other tip , this price feels to high, maybe if drops again to 50p - 60p I will buy a few, good luck to who just invested.
Midas
Thanks - had to be a reason.
Share tip in Mail on Sunday
Investor presentations and results didn't seem to make much difference to the SP recently. Now today there has been a significant increase in buying activity. Was there something in the media over the weekend?
The Artisanal Spirits Company (AIM: ART), the owner of The Scotch Malt Whisky Society (SMWS), conducted an online investor presentation following the release of Full Year results for the period to 31st December 2022.
Andrew Dane, Chief Executive Officer, and Billy McCarter, Interim Finance Director ran investors through key FY22 metrics, the long term global growth opportunity for Artisanal Spirits, and their pioneering model. Management also touched on current trading & outlook and answered a range of questions from the viewing audience.
The full video has been divided into chapters for ease of viewing, as below:
0:00:40 Introduction to ASC
0:03:46 Key metrics for FY22, growth & financials
0:12:55 Pioneering Model
0:17:18 Long Term Global Growth Opportunity
0:18:46 Robust Business Primed to Deliver
0:24:07 Current Trading & Outlook
Link to video: https://www.equitydevelopment.co.uk/research/the-artisanal-spirits-company-investor-presentation-fy-results
19% revenue growth, a 12% increase in membership numbers and a £1.0m favourable swing in adjusted EBITDA were key features of today’s FY2022 results statement from The Artisanal Spirits Company. With the Masterton Bond facility fully operational and group trading having started well in the current year, ASC appears well placed to deliver medium term sustainable profitable growth. As a membership organization which boasts substantial invested facilities and valuable whisky stocks, we reiterate our 150p fair value for the shares.
This implies a 4.9x FY2023 EV/sales ratio, largely on a relative valuation when compared with leading listed distilled spirits companies and luxury goods providers. ASC is simultaneously exposed to both these categories given its emphasis on ultra-premium-and-above Scotch malt whiskies. Furthermore, the £493m updated notional retail value of the company’s maturing whisky stocks (mentioned above) is currently over 7 times today’s market capitalisation.
https://www.equitydevelopment.co.uk/research/delivering-robust-profitable-growth
The Artisanal Spirits Company (AIM: ART), the owner of The Scotch Malt Whisky Society (SMWS), the leading curator and provider of premium, single cask Scotch malt whisky and other spirits for sale primarily online to a discerning global membership, is pleased to conduct an online presentation for retail & private investors following the release of their Full Year results for the period to 31st December 2022.
The event will take place at 2.00pm on Thursday 30th March.
Andrew Dane, Chief Executive Officer, and Billy McCarter, Interim Finance Director will be hosting the presentation and answering questions submitted by investors.
This is open to all existing and potential shareholders - you can sign up to register below.
Link: https://www.equitydevelopment.co.uk/news-and-events/artisanal-fyresults-presentation-30march2023
New research report & audio summary from Equity Development: https://www.equitydevelopment.co.uk/research/sales-and-membership-growth-drives-momentum
Sales revenue for the year ended 31st December 2022 increased by approximately 20% from £18.2m in FY2021 and is expected to be slightly ahead of our £21.6m forecast when the full audited numbers are announced in March 2023. A 12% increase in global membership numbers to around 37,000 drove the business forward. While we leave FY2022 forecasts unchanged at this stage, our confidence in these numbers is enhanced by today’s announcement.
ASC announced that Andrew Dane, previously the company’s Executive Finance Director, will become CEO with immediate effect. He replaces David Ridley who had been Managing Director for six years. In our view, his appointment should be seen as endorsing the group’s growth strategy both for the Scotch Malt Whisky Society and ASC’s ambitions elsewhere in distilled spirits – e.g. J G Thomson & Co. An update regarding the Company’s American whiskey proposition will be made with full-year results.
The Masterton Bond Facility was the standout operational news in FY2022. It will provide production, cask storage, fulfilment and distribution of ASC's whisky and other spirit stock, and is expected to add around 200 basis points to group operating margins, probably as early as in FY2023. It became operational on time and on budget in FY2022 Q4. Other international expansion moves included an inaugural franchise agreement in South Korea and a new partnership with Drinks Alliance in Malaysia.
We base our 150p fair value/share for the Artisanal Spirits Company, which implies a 5.4x EV/sales ratio, largely on a relative valuation when compared with leading listed distilled spirits companies and luxury goods providers. ASC is simultaneously exposed to both these categories given its emphasis on ultra premium and above Scotch malt whiskies. Furthermore, the £455m notional value of the company’s maturing whisky stocks currently stands at around 7 times today’s market capitalisation.
The Artisanal Spirits Company conducted an investor presentation following the release of their Interim Results for the 6 months ending 30 June.
David Ridley, Executive Managing Director of the Company, and Andrew Dane, Finance Director, ran viewers through their pioneering model, financials, the global growth opportunity, and the framework to double sales by 2024. They also touched on current trading & outlook and answered questions submitted by investors.
If you missed the live presentation, the full video recording is available below, divided into chapters:
0:00:03 Artisanal Spirits corporate video
0:01:54 Introduction & Company Overview
0:13:42 Pioneering Model
0:22:55 Long Term Global Growth Opportunity
0:31:57 Robust Business Primed to Deliver
0:37:12 Current Trading & Outlook
0:40:29 Questions & Answers
Video: https://www.equitydevelopment.co.uk/research/investor-presentation-september-2022
Here's an update video from the management for todays results:
https://youtu.be/C0RVHQAXbV0