Member Info for Okehurst1

Agree it would make sense on one side for THG as 70% of Rev b Rev is from the high street and 50% ROW, opens new markets ?

Although I can’t see THG having the cash to buy Rev B and would the management team take THG paper ?- they have 30% plus why swop for THG who are not fully in beauty ?

A USA beauty operator however looking for a U.K.operator who has a manufacturing plant and Worldwide market ?

Agree JP

What is the inventory £value ?

Restructuring the LA business they bought in H1 resulting in H1 loss, update ?

Full benefit of the manufacturing plant they bought last year for £27M confirmed?

We know they have £40M cash to access

What we are looking for guidance wise when results out ?

£value of inventories ?

Annual revenue and gross margin confirmed

Restructuring complete USA

If the inventories are high and the above all confirmed then we get a serious upwards rerate.

No way will it be £55M m/cap, it’s not inconceivable the stock value could be that or even higher if they have tried to secure 6 months forward chemicals ?

The market values ElF at £1.6B
2023 Rev is forecast last week at £370M on an increased gross margin of 67%

Rev B , will have bedded in their LA based USA acquisition and they are forecasting £200M income and I am speculating due to them acquiring their own manufacturing plant for £27M their gross margin will move to 60% plus - has to they have the full vertical model

So for £200M revenue and quite possibly similar gross margin
Rev Beauty is valued at just £55M vs ELF @ £1.6B

It could be argued 50% of Rev B revenue is U.K. balance ROW
but £55M vs £1.6B, it’s all down to Jupiter and their investment committees MO

I had no shares in Rev B before a couple of days ago but been following for quite a while ,I took quite a slug for me, am kind of hoping that Jupiter keep selling and I can get more at an even lower price, short term pain at these levels, average is 19p so currently underwater.

Took the view to average down as I don’t know when Jupiter will stop selling, they could be done now they are at 10%
Once they are finished, coupled with results released and hopefully they clarify gross margin / revenue / cash then we will see the upwards rerate

£55M m/cap unbelievably cheap for what’s in their balance sheet

Agree Bob

Big thanks to Jupiter, am hoping they dump more next week
this is definitely a mean average play at the moment - hard to call the bottom

When they stop selling the share price should go up, you need some exposure at these levels just in case they have stopped

Hi Ben
Management own a good slug so a hostile style takeover looks out the question without them on board

A knockout price off Elf ? As an example ?Maybe ?

Or management buy out once the private funding route opens up ?

Maybe in the meantime on a good day we bag from here back to £100M m/cap after the results ? IF H1 losses are associated with the LA beauty brand ?Gross moves to 60%?

As Golden rightly points out we need clarification how they will go to H1 loss to £18M to £20M EBITA gain, my take is as below but I could be wrong, either way it’s dirt cheap at £55M in my opinion

Good point Golden, I’ve been trying to get my head around that one, could it raw materials rather than inventory?
One off acquisition costs ?

Touched base on this the other day, see what you think ?

As their products don’t have a shelf life then inventory shouldn’t need to be written down - fair to say they don’t have a short shelf life

However, the BoD bought in chemicals in bulk to ease supply constraints, the cost of these chemicals have dropped in price? May not be a big number but it has to be accounted for under IFRS

Then they have the integration of the LA Beauty platform, they nicked that out of Chapter 11 but it would have needed restructuring, the cost for that was in H1 - ditto IFRS /doubtful it could be capitalised
Look at ELF numbers , USA booming for cost effective beauty products

With the recent acquisition bedded in plus the extra margin on manufacturing they feel comfortable with the margin in trading as they move from 47% to maybe as high as 67% IF they replicate ELF

Hopefully we get more detail with results but the above is my take.

E.L.F has a market cap close to £1.6 Billion , good £numbers this week
Revenue forecast 2023 is circa £400M
Gross margin 60%

Rev B , operating/ growing in USA has a market cap of just
£55M
2023 forecast sales £200M and that’s saying no growth
margin of 47% but that was before we owned our own
manufacturing plant bought for £27M
Rev B should be looking at a 60% plus gross margin

No idea on the actual value of Rev B today but based on the Data we know / market conditions USA, ROW , think it’s fair to say £55M m/cap for Rev B is a total steal for us PI’s and it’s thanks to Jupiter we have this opportunity - they invested £90M, bathed near on 90% cash and paper even though Rev B has delivered operationally

Anyone from Jupiter looking in to measure sentiment, on behalf of all new shareholders I would just like to say thank you

https://finance.yahoo.com/news/e-l-f-beauty-announces-200500228.html

For the three months ended June 30, 2022, compared to the three months ended June 30, 2021:
Net sales increased 26% to $122.6 million, primarily driven by strength in our national and international retailers.
Gross margin increased approximately 390 basis points to 68%, primarily driven by price increases, cost savings, and product mix, which helped to mitigate the impact of higher transportation costs in the quarter.

The m/cap is so cheap today when you think they bought this manufacturer for £27M

Acquisition of skincare producer Medichem Manufacturing Limited (now named Revolution Beauty Labs Ltd) for c.£27m (subject to completion accounts), to vertically integrate the Group and improve productivity, cost base and margins over the long-term’

Assume there is value in the business above - for the discussion point

That means the U.K. division is worth £15M (m/cap) for £110M of sales and USA £15M for similar

The gross margin before manufacturing brought in house was 47%, am guessing but we must be high 60s now ?

Mentioned earlier, am not that fussed if Jupiter dump more stock, cheaper the better, nice to see us little guys feed off the Whales

The Times on line this evening

‘The United States recorded unexpectedly strong jobs growth last month, allaying fears of a slowdown in the labour market before crucial midterm elections in November.

A total of 528,000 jobs were added last month, far above expectations of 250,000 from economists polled by Reuters, and the best performance since February this year, according to official data from the National Bureau of Labor Statistics. The figures mean the US has exceeded its pre-pandemic employment numbers and is generating jobs growth at record levels.

The strong growth will quell fears of a full-blown recession in the world’s largest economy, where quarterly GDP has contracted for two consecutive quarters and interest rates have been aggressively raised since March to fight inflation’

70% revenue via stores
30% on line
Manufactures own brands, high gross margin
Growing at 42% p/a

So £30M value for USA / ROW
£30M value for U.K. including manufacturing plant

The opportunity to buy is only there due to Jupiter being all over the place and it’s created an opportunity for us Pi’s

‘Revolution Beauty is a global mass beauty and personal care business which operates a multi brand, multi category strategy and sells its products both direct-to-consumer (DTC) via its e-commerce operations, and in physical and digital retailers through wholesale relationships.



Today, the Group has a retail footprint of c.15,000 doors across leading retail chains in the UK, USA and other international markets. Revolution Beauty has access to a wide customer base, predominantly aged between 16 and 35, through its digital partners and own DTC platform. It has established and invested to streamline its supply chain with its own manufacturing facility in the UK, and third-party warehousing facilities across the UK, USA and Australia. The Group has offices in the UK, USA, New Zealand and Germany. Revolution Beauty currently employs 411 people.’

……Comforting bit of data

‘US Stores: The USA is now Revolution's biggest single market at c. 20% mix of our business, delivering sales growth of c. 27% for the full year. This growth was achieved against a strong FY21 comparator, where Makeup Revolution was rolled out across Target for the first time.



· ROW Stores: The Rest of the World bounced back in FY22, with strong sales in the year, up c. +79%. ROW is now c. 35% of Revolution's global business.’

The market is valuing USA division generating £120M a year at just £30M

The U.K. Arm same

Totally nuts

Kind of hope Jupiter dump more stock due the m/cap of Rev below their investment committee MO
Been adding this afternoon, picked up 18p to 18.3p,

Steal of a price in my opinion

Market got Rev B all wrong
We saw in ELF Beauty numbers this week

Rev B has decent size operation in USA, this is a steal at 19p

Big shout out and thanks to Jupiter for making it possible for us PI’s to buy almost 90% lower than they did and giving us liquidity in the process

https://www.theguardian.com/business/2022/aug/05/us-jobs-report-july-2022-unemployment-rate

One thing we can say …

The Company keeps it’s sensitive information tight, there was a decent spike the day before the RNS in question

If they maintain this stance then the ‘ long ‘ funds won’t be able to glean information out of the BoD and cross the Chinese wall to let their ‘ short ‘ funds take advantage

Doesn’t stop the shorting but it keeps them on their toes

RNS releasing the results, forecast holds, confirmation cash is adequate, advise on inventory, there will be rush to close out short positions

Nb either way can’t see the II’s carry a trade on a short at 18p past next week, too much risk at this £m/cap

Been buying last 2 days this looks over done
Thought process:

Ok the BoD have over stocked to avoid supply chain issues
The Auditors are getting their head around the £value

Beauty products / chemicals are not like fashion /clothing etc
they don’t generally have a short shelf life

Can’t see there being Inventory right down, it’s stock in hand, hence the BoD are advising they see the £40M liquidity sufficient, they know the stock will eventually turn to £cash

Gmcc and yourself, thanks for sharing your research

Agree this message Board / Twitter, balanced stuff to be learnt off knowledgeable people

Certainly a risk here but looks over done, 65% drop over 2 days ? Understand it could go lower but this is sitting ridiculously cheap
Picked up £40,000 today, average 20.6P all in

Kate/ Captain

Can’t argue with Captain, m/cap exactly where it should be until the £4M confirmed and £2.5M DHSC settled

Looks like the market wants to see the £4M banked and £2.5M DHSC claim settled before it can calculate the risk reward as they don’t trust the BoD

Assume they get FT to £10M Rev then they should based on last years accounts generate £2M Pre tax - they have plenty on losses on the balance sheet to use up

Touched on this before - based what’s in the audited accounts - sales /marketing spend is 16% of gross, with £6M to £8M cash the £2M could command X 6 ?

£20M m/cap ?

Seems fair ? IF the last two items above come off ?

‘ Chemo no side effects ‘

Having seen family go through chemo this element is amazing on its own

Throw in ‘ it works’ and it’s difficult to see how we don’t get a big Bid for Avacta, not sure how any of the Big Pharma crew can allow a competitor to get their hands on the Platform

As inferred by Avacta a licensing deal for Ava3996 would be smart, we get a big rerate upwards on the back of it and we have £cash to exploit Ava6000 and the rest of the platform, Big Pharma then has to have a £bun fight to take control

How’s them shorts going for the TW team :-)