The Punter is clearly no hipster. He has never drunk kombucha, a fermented, non-alcoholic drink based on tea. Some say it’s good for you, and it is apparently making the transition from trendy cafes to supermarket shelves. It is certainly doing no harm to the Food Revolution Company (ASX code FOD), an ambitiously named fruit and vegetable processing company based in Victoria. With the market for kombucha forecast to triple from $100 million to $300m over the next two years, the FRC people are extending their Bucha Shop brand of kombucha to five flavours, including lemon and ginger, orange tumeric and pineapple and mint.
FRC has only been publicly listed since February 2016, after taking over Crest Minerals. The year ended June 2017 was a ripper, with sales up 72 per cent to $36m, 25 new products launched, loss-making subsidiaries disposed of, and the previous year's statutory after-tax loss of $6.2m turned into a $1.7m profit.
The big squeeze on the company is the need to pay $6.99m by the end of September, the final installment of the cost of its juicing and bottling plants. The company hasn't got the cash: its short-term liabilities at the end of December of just under $20m greatly outweighed its current assets of less than $14m. Sales in the six months were up 11 per cent but net profit after tax was only $34,341.
Two directors, Hong Wang and Norman Rong, have specific responsibilities for China, and the company has been working for months to get serious access to that market. Two other directors, executive chairman Bill Nikolovski and Mattew Bailey, have been adding to their personal shareholdings (admittedly at 3.3c and 4.3c a share, before the recent price rise.). Firmly crossing his fingers, the Punter has squeezed $1,820 out of his bank account to buy 30,000 FOD at 6c each.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
