Artisanal Sp.co Share Price (ART)

Https://www.proactiveinvestors.co.uk/companies/news/1045073/artisanal-spirits-company-targets-new-markets-as-it-expands-global-whisky-experience-1045073.html

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.