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Moa shares crash 28% on sales warning

Moa Group is the worst performing stock on New Zealand's benchmark index, dropping to a record low, after the boutique beer maker said it will miss its 2014 sales forecasts as volumes sold in New Zealand and Australia lag expectations.

LATEST: Moa boss Geoff Ross fronts on sales miss

Shares [NZX:MOA] slumped as low as 80 cents, and recently traded at 85 cents, dropped 28 percent on the day - slicing its market cap to $25.5 million. [UPDATE: In late trading, shares had recovered to close 22.03% down for the day at 92c]

Four months into the 2014 financial year, Moa expects to miss its full-year target of 195,000 cases by 30 percent, largely due to a shortfall in the New Zealand market where it is negotiating a new distribution model, the Auckland-based company said in a statement.

"It's quite a big shock because it is a large decrease in what their guidance was and the market has reacted very badly to the announcement," said Grant Williamson, a director at Hamilton Hindin Greene. "It is quite an illiquid stock so movements can be exaggerated somewhat but probably the decline is warranted given the very disappointing sales figures."

Moa, headed by the founder of vodka maker 42Below Geoff Ross, has bought its Australian sales agency rights and intends to manage that business directly after sales volumes lagged forecasts, the company said. Meanwhile, the US and other global markets are performing in line with volume expectations, the company said.

"They are taking action, they are looking at distribution and they are making changes," said Hamilton Hindin Greene's Williamson. "Geoff Ross has a very good history of growing these types of early start companies so I think there obviously is room for a lot of improvement.

"You would hope the company can turn things around from here but it is going to be a relatively long process," Williamson said. "You wouldn't expect too much improvement in that share price until there is a clear sign that they have got sales growth on the right track."

(BusinessDesk)

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Comments and questions
20

Looks like what many sophisticated people said on this site back at the time of the IPO is coming to fruition...

"Although this offer is a complete crock you can't help but admire their marketing skills. These types have got the blueprint nailed down pretty well actually:

- invest as little of their own money as possible, as late as possible before the IPO so not too much of their own cash is burned
- float the crappy business and get plenty of cash in the door at a ridiculous valuation so they won't need any more for a while (key: use brokers with network of retail punters for clients who don't know anything about how financial markets work)
- rip out heaps of fees in the float to recoup some of their previous investment
- set aside some cash to prop up the share price over the first 12 months so no-one feels too bad about life
- appoint themselves as the CEO at a whopping great salary
- on the business side of things, spend a heap of money buying market share and burning cash
- in 1-2 years time when the cash pile gets a bit low, buy a much better existing business in the same space that, when combined with the initially floated business, disguises how crappy the original business was (think Trilogy/Ecoya, and think Phoenix/Charlies)
- use this acquisition to raise more cash at another ridiculous valuation so they don't get too diluted
- sit back and pray that some idiotic corporate (i.e. Bacardi) will have a strategic shocker when someone with an ego gets to the top and wants to complete a public takeover for their CV

That about right boys?"

That's about right. I just wish I could see who is trading today to see who is supporting it back up. We need more immediate transparency from NZX if material shareholders are in supporting, as opposed to normal market forces and confidence. Just wait for the Shareholder notices in a few days.

Where's the tick box? Or rather the "big tick - yes I agree with your comment 100%" box?

I couldn't have put it better.

Problem with criticising the plan is that it is going to pan out in the end,,, Chris Ross is still basking in the foame (that's not a typo, I just invented the word for vacuous fame) of 42Below. There are stll enough mugs out there who didn't think that beer drinkers would baulk at $15 bottle of porter. ANd to be sure... there's still a lot of other foame-ists in the guise of egotistical CEOs who will do the buy-out. But maybe not on these sales figures which I'll bet continue to slide... or be rejuvenated by massive discounting to acheive actual cahsflow. For Ross to blame his distributors is just bunk... HE's the marketing guru ! But he's come up against the genuine reality check here. Note to shareholders; It's just frikkin beer. Ecoya similarly is mindless pap with huge margins with psycho-babble-feel-good effect..er... "aromatherapy" anyone?. Or should I rephrase that... I-P-O-rapy.
As for the "suits at a bar in Wellington" analogy... Jeezuz wept.. if there's an investor left standing who swallows that wad as a market basis, he's probably one of those said suits... at 1am on Saturday morning. Now... back to my Boundary Road IPA at 1/3 the price and twice the flavour.

Right on! Add in a good dose of arrogance as a major overriding factor. speaking of which, I notice Mr Ross' giant cardboard cut-out of himself in the Moa office window looking out over his subjects of Takutai Square has disappeared.

cheers

lucky they've got someone else to blame though.

Or as Tower's Sam Stubbs famously said in 2012:-

"You could be looking back in five years' time and this thing could be worth nothing or it could be worth a tremendous amount of money.

"It's very, very difficult to know which side that will fall on."

This was always clearly pitched as a high-risk, and half of the pitch was based on gaining consent and building a new plant and international markets. Said consent came through earlier in the month. "As for the real bloke wanting real beer", the same thing was being said about "aspirational" beers in NZ 20 years ago, now the same green-bottled garbage is the biggest selling product in supermarkets by a country mile. NZers are still up to their eyeballs in that hype, we love it.

Correct me if I am wrong but isn't this another Forsyth Barr fizzer?

The real bloke wants a real beer, not some pansy imitation with excessive marketing. Moa was never going to make it in NZ as NZers can see through the hype.

Yep . STOKE has got the market covered with quality craft beer at good prices. If you want high-end, then Yeasty Boys POT KETTLE BLACK is very hard to beat.

Dont forget gussy gold. Handcrafted right here for 25years. Nzs best session beer

What marketing "genius" would name a beer after a long extinct flightless bird? The very same guy who pondered long and hard, agonising over his alternative brand name -- Dodo.

Wow 30% target miss...massive fail...note to self...beer is not wine so don't try and dress it up to sell it to a market that doesn't want it at a price that it doesn't want to pay.

Actually don't be too quick to dismiss their outlook.....the market talk is that Lion Nathan may be sniffing around...they're thinking of launching a new brand of Lion Moa

Lawn Moa?

said Hamilton Hindin Greene's Williamson. "Geoff Ross has a very good history of growing these types of early start companies so I think there obviously is room for a lot of improvement."

Ross only did it once to significant degree - BIG FLUKE I say

Agree with you.

Williamson probably meant Geoff Ross has a good history of raising funds from investors on marketing & PR hype?