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Taste Holdings TAS


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#1 Saints

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Posted 08 June 2018 - 09:27 AM

I have changed my view to tread with caution. I need to be more convinced of the new management before taking a punt here.


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#2 Saints

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Posted 08 June 2018 - 09:27 AM

I have changed my view to tread with caution. I need to be more convinced of the new management before taking a punt here.


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#3 Bullhunter

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Posted 31 May 2018 - 06:02 PM

Re-opening this thread and further to my post under the Famous Brands thread, let me say that this is my current pick for the brave investor who is willing to take a risk and a punt on the turn around strategy of the new investors.

 

Between Taste, Famous Brands and Grand Parade each are struggling and my question who has the money to execute a recovery, and to me Taste may be ahead here.  

ZEENAT MOORAD: The trouble with Taste Holdings 31 MAY 2018 ZEENAT MOORAD
One wonders at what point global brands Starbucks* and Domino’s will start getting uncomfortable about their local "partner" Taste Holdings and their future in the SA market.

We have, by now, become accustomed to Taste’s disastrous trading updates and its habit of taking the begging bowl to shareholders.

How many rights issues is it now? Five, I think — the first of which was in August 2014.

Taste said its HEPS loss for the year would be between 40.6c/share and 43.1c/share. Given the number of shares in issue, the FY2018 loss will be between R366m and R388m.

It’s tough going in the fast-food sector. Sure, consumer confidence isn’t as depressed as it has been in the past two to three years but the outlook for the macroeconomy and household finances is only slightly more positive. When it comes to Taste though, that’s just part of the problem.

It is constantly running out of cash because it is funding the expansion of Starbucks and pizza chain Domino’s and it has had to deal with jittery bondholders. To tide it over, it shored up R398m in its latest rights issue, R273m of which went towards repaying term debt.

Remember that at one point Taste tried to sell its loss-making jewellery businesses NWJ and Arthur Kaplan but couldn’t find a willing buyer.

Two things quickly: in its latest rights issue (in January) minorities basically abandoned the Taste rights, taking up only 13.84% (R55m) of the issue, and New York-based hedge fund Riskowitz Value Fund (RVF) ended up taking the bulk of the unwanted rights issue, giving it and its JSE-listed affiliate, Conduit Capital, a combined stake in Taste of 66%. RVF still has the jewellery business earmarked for sale — this despite middling demand for luxury goods.

Vunani Securities analyst Anthony Clark — who has had an "avoid" on the counter since it hit 257c, and recommended avoiding all Taste’s rights issues — says that if RVF were not there as a 66% shareholder propping up Taste’s share price "to their own means" Taste would be in business rescue. He calculates around R720m of accumulated losses over the past three years, if you include the last trading update.

"Think on that number — R720m — in light of the capital raised to date to fund this folly [R1.06bn] and the current Taste Holdings market capitalisation," he says.

Taste’s market cap is R514m, if you’re wondering. The share is trading at 65c, down 71.5% in the year to date.

Iced caramel macchiato to go?

Though Taste management has never disclosed the terms of its Starbucks or Domino’s agreements, the royalty fees it pays or what it puts out to buy the local rights, there is precedent, in the case of both brands, for either exiting a market or buying out a local partner. At Taste’s interim results, the business recorded an operating loss of R73.3m, of which the food side lost R70.6m.

Taste needs to get its food division firstly to a cash breakeven and, ultimately, to an operating profit status.

It can only do this if it a) rolls out more stores; and the stores are actually profitable.

To do this, Taste will need more cash than it has.

By the way, the price tag for a new Starbucks store is roughly R6m and it takes R1.8m to set a Domino’s up.


Edited by Bullhunter, 31 May 2018 - 06:03 PM.

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#4 Saints

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Posted 25 May 2018 - 01:46 PM

Re-opening this thread and further to my post under the Famous Brands thread, let me say that this is my current pick for the brave investor who is willing to take a risk and a punt on the turn around strategy of the new investors.

 

Between Taste, Famous Brands and Grand Parade each are struggling and my question who has the money to execute a recovery, and to me Taste may be ahead here.  


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#5 PlatinumWealth.co.za

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Posted 11 April 2017 - 07:41 PM

If they target volumes on the lower LSM market then it should do well. I just don't like the pizza market as it is a well covered space, leaving no room for aggressive growth. Starbucks is well liked so that brand equity should help but not just 8 Starbucks stores. You need at least 100 Starbucks outlets to see its real contribution in EBIDTA. The Dominos will be a trailer behind Zebros, Fish & Chips and other brands within TAS so if they can use the sale proceeds of the jewellery business to aggressively roll -out Starbucks then we are in good prospects of growth. 

That is my concern they are not targeting lower LSM, dominoes is helu expensive zebros and Fish & chips is too small.


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#6 Dividend Master

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Posted 11 April 2017 - 06:39 PM

If they target volumes on the lower LSM market then it should do well. I just don't like the pizza market as it is a well covered space, leaving no room for aggressive growth. Starbucks is well liked so that brand equity should help but not just 8 Starbucks stores. You need at least 100 Starbucks outlets to see its real contribution in EBIDTA. The Dominos will be a trailer behind Zebros, Fish & Chips and other brands within TAS so if they can use the sale proceeds of the jewellery business to aggressively roll -out Starbucks then we are in good prospects of growth. 


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#7 PlatinumWealth.co.za

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Posted 11 April 2017 - 09:02 AM

That is what I am afraid of, this junkstatus would affect them since they target middle class and new middle class.

Yeah I agree with you that they should separate the jewellery from the restaurant so the share should gain traction. In the current climate carlo gonzaga would have to do exceptionally well to steer the company to profitability. I don't see it he wasn't doing good before. Under the junk status he might not be able to expand the Dominoes brand fast enough let alone Star Bucks. He might have to down size TAS to.

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#8 hedge Fund

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Posted 11 April 2017 - 08:10 AM

Yeah I agree with you that they should separate the jewellery from the restaurant so the share should gain traction. In the current climate carlo gonzaga would have to do exceptionally well to steer the company to profitability. I don't see it he wasn't doing good before. Under the junk status he might not be able to expand the Dominoes brand fast enough let alone Star Bucks. He might have to down size TAS to.

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#9 PlatinumWealth.co.za

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Posted 10 April 2017 - 02:24 PM

Let's just hope consumers have the money to eat out the next 7 years given our current predicament.


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#10 Dividend Master

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Posted 10 April 2017 - 08:42 AM

I think with the execution of the strategy to separate the food business from the luxury jewelry business the share is gonna gain some traction in that the sale proceeds will offset the debt, focused management attention on the roll-out of Starbuck and Dominos and other growth strategy.
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#11 hedge Fund

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Posted 10 April 2017 - 07:38 AM

Yeah I thought so myself but. TAS has taken a lot of debt n they are not rolling out the dominos chain fast enough. On top of everything dominoes is not generating great returns for now. Could take a very long time.

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#12 DividendTycoon

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Posted 07 April 2017 - 11:59 AM

 

 

Did think it might be worth selling some now at round R2 - to buy the rights @ R1.50 and at least get the avg cost down a bit.

 

But all in a bit miffed at the statment - was hoping for an upbeat, we've turned the corner and starting to make cash kinda of TU.

Yes rather sell some at above R1.50 to make sure can buy rights at R1.50, otherwise you lose out. (unless price declines below R1.50 in short term). 

 

Think next trading statement likely too be bad, but it probably in the price.


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#13 MrDividend

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Posted 07 April 2017 - 07:45 AM

 

 

ps. You will lose out if you do not take up your rights as Riskowitz funds will take what you do not want and your existing shares will be further diluted.

 

True, but for me, that is a bad reason to further add to my holding. Watched a bdtv setgment with Carlo (  ) and he uses the description "doubling down" - not a fan of that term when evaluating a share!

 

With the doubts creeping in, i should probably sell TBO - but still think Starbucks, and to a lessor extent, Dominos can do well.

 

That said, might have to sell some thing else to fund my rights - and nothing is putting it's hand up.

 

Did think it might be worth selling some now at round R2 - to buy the rights @ R1.50 and at least get the avg cost down a bit.

 

But all in a bit miffed at the statment - was hoping for an upbeat, we've turned the corner and starting to make cash kinda of TU.


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#14 PlatinumWealth.co.za

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Posted 06 April 2017 - 06:20 PM

Been buying TAS for quite some time below that initial 211 dip, So very excited to see how this pans out.


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#15 DividendTycoon

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Posted 05 April 2017 - 09:49 AM

When I first bought Grand Parade in 2010 they had about 450m shares and TAS about 190m. After this TAS will have about 458m shares, and GPI after recent buy-backs still around 450m shares. Very telling regarding capital allocation skills.

 

Having said that I think this will perhaps be positive for TAS, actually bought a few thousand in closing auction yesterday after sens, although maybe just for a small trade if price spikes.

 

ps. You will lose out if you do not take up your rights as Riskowitz funds will take what you do not want and your existing shares will be further diluted.

Personally. not really happy about this. Although the business are "different" they both are retail business that are found in malls - are different is that? Companies house these in different divisions all the time - not hard. 

 

Management should really just be honest and say that they have run out of money - piss poor planning I guess and now they going to sell their cash cow.

 

So although I like Starbucks and Dominos ( I did like the jewelry side as well) - I am now starting to question management. I was was worried at how slow the Starbucks rollout has been. They also said a year or so ago that they would not need any more cash.

 

So I like the product, but now mistrust the management as they seem to burn through cash without a plan. Probably won't sell, but not sure if I will participate in the rights offer.


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#16 MrDividend

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Posted 05 April 2017 - 09:15 AM

Personally. not really happy about this. Although the business are "different" they both are retail business that are found in malls - are different is that? Companies house these in different divisions all the time - not hard. 

 

Management should really just be honest and say that they have run out of money - piss poor planning I guess and now they going to sell their cash cow.

 

So although I like Starbucks and Dominos ( I did like the jewelry side as well) - I am now starting to question management. I was was worried at how slow the Starbucks rollout has been. They also said a year or so ago that they would not need any more cash.

 

So I like the product, but now mistrust the management as they seem to burn through cash without a plan. Probably won't sell, but not sure if I will participate in the rights offer.


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#17 Jack5

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Posted 04 April 2017 - 06:10 PM

Interesting SENS out today, seems like they want to focus only on the food business and sell off the luxury goods business.

 

I think this is probably a good idea in the long run as these are two very different businesses and don't really have any synergies that can be worked off. They never really seamed to fit together for me.

 

Short term though might suffer due to loss of profits from luxury goods, but the biggest thing is their "claw back" offer which is essentially a rights offer. Investors don't usually like these, and the offer price is also well below the current price.


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#18 soutie

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Posted 04 December 2015 - 04:26 PM

Re: Taste...If you look at Wednesday's volume,  today's SENS confirms 2 directors were the primary cause of the spike in volume coupled with the drop in price. Same type of volumes through today also...Had time to do some more research & reckon they has bitten waaaaaay too much more than they can possibly chew in the given time frame. They will be back to market for more funds in 18mths me thinks.

 

Always stinks when directors "dump" scrip.... :( Glad I held off this one so long.


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Anyone need a heads up...!


#19 Queen B

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Posted 04 December 2015 - 04:08 PM

GPL just the same by the way. Falling knife :o


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#20 Queen B

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Posted 04 December 2015 - 04:06 PM

Sales going through at R2.55

I'm catching a falling knife!

Enough averaging down. Im gonna forget about these and look for rewards in 5 years time


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