Showing posts with label Ecoya Ltd. Show all posts
Showing posts with label Ecoya Ltd. Show all posts

Thursday, July 21, 2011

Share Price Alert: Ecoya Ltd



When we last visited fragrance/candle maker and marketer Ecoya Ltd [ECO.NZX] back in November 2010 its shares were trading at 75c each and the company had yet to make a profit.

Nothing much has changed since then in regards to making a profit but the company is now trading at 95c after reaching an all-time low of 65c back in early 2011.

This is almost completely related to the inclusion of Trademe founder Sam Morgan appearing as a substantial investor with a 2.45% stake on the Ecoya share register.

Now I have been wrong twice in terms of growth companies like this that don't make money panning out for investors, beverage maker and marketer Charlies Group Ltd [CHA.NZX] and the former listed baby of Geoff Ross, the vodka maker 42 Below, so what do I know.

42 Below had never made money at time of its sale to Barcardi and Charlies had made a small return since it was sold last month.

Investors would have to question whether this company is or will be in the league of the two examples above but Sam Morgan knows more about business and investing than me so you might want to follow the money rather than my fat mouth.

Having said that I cant see how the inclusion of Mr Morgan on the ECO register justifies the 27% increase in share price in 8 months, especially considering the lack of black ink on the books or the prospect of black ink any time soon.

If you are interested in investing in Ecoya, you might want to wait for a pull-back in share price rather than buying at the current premium, especially given the dire economic macro situation and the associated poor retail environment - it has got to be impacting on sales growth for the company.

Be patient and don't let the candle burn you at both ends.

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Ecoya Ltd @ Share Investor


Chart of the Day: Ecoya Ltd
Ecoya Ltd: Trilogy Purchase Dumps on small shareholders
Share Investor Q & A: Ecoya's Geoff Ross
Share Investor Q & A: Questions for Ecoya's Geoff Ross
Ecoya 2010 Full Year Profit: More of the same to come?
Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

Discuss ECO @ Share Investor Forum
Download ECO Company Reports


From Fishpond.co.nz

Every Bastard Says No: The 42 Below Story

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

Fishpond


c Share Investor 2011


Wednesday, November 17, 2010

Chart of the Day: Ecoya Ltd



Ecoya Ltd [ECO.NZX] listed on the NZX on May 3 after an IPO price of $1 per share with two warrants attached to each share.

With a high of $1.01 shortly after listing, the share is now thinly traded at 75c per share as of close of business, Tuesday 16 November 2010.

The company and its shares were never going to set the world on fire because much of the company's future prospects lies in the possibility that the company will be a major player in the body and bath and home fragrance sector currently occupied by a number of global giants.

It is therefore a very risky investment for investors but many ECO shareholders have put their faith in CEO Geoff Ross, who has a track record of success with start up companies like Ecoya.

If you were initially interested in buying into some of Geoff's business cache' but baulked at the high valuation the company put on themselves in their IPO , now might be the time to start looking if you think the company is going to be a good long term bet.

I am picking the market is going to lose patience if they do not see some tracking towards a profit or at least a good sales story, so there could be some further weakness in share price.

Having said that, as this stock is very thinly traded any positive news will see a very good upside in share price as mums and dads want to share in the success of a possible future star.



Ecoya Ltd @ Share Investor

Ecoya Ltd: Trilogy Purchase Dumps on small shareholders
Share Investor Q & A: Ecoya's Geoff Ross
Share Investor Q & A: Questions for Ecoya's Geoff Ross
Ecoya 2010 Full Year Profit: More of the same to come?
Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

Discuss ECO @ Share Investor Forum
Download ECO Company Reports


From Fishpond.co.nz

Every Bastard Says No: The 42 Below Story

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

Fishpond


c Share Investor 2010

Wednesday, September 15, 2010

Ecoya Ltd: Trilogy Purchase Dumps on small shareholders

I seem to have developed an even more keen sense of moral outrage than I usually do and have expressed it over the last few months but there is just so much dodgy stuff out there when it comes to business, financial markets and investing in general.

The rushed purchase last week and subsequent capital raising of Trilogy Skincare by Ecoya Ltd [ECO.NZX] raises some questions about shareholder rights and the responsibility of the NZX as the regulator of the New Zealand stockmarket to protect those shareholder rights.

In a statement to the market yesterday Ecoya management gave the reasons why they "had to act swiftly" and applied and received a wavier from the NZX to make the purchase of Trilogy without obtaining shareholder approval:

"The Proposed Acquisition needs to be executed swiftly as ECO is part of a competitive bid process. If ECO is required to obtain a shareholder vote in respect of the Proposed Acquisition, there is very real likelihood that this would compromise ECO’s position in the competitive bid process, by making ECO’s proposed deal a less competitive option for the vendor."

All well and good but smaller shareholders in ECO didn't have the opportunity to say yey or nay to the deal and the NZX, once again, allowed ECO management and big shareholders in ECO to have rights above the small investor.

Ecoya management say the deal will be good for the company and provide a good platform for growth where Trilogy has markets and Ecoya doesn't but shouldn't it be put to a vote so the owners of this business can have their say?

I think so!

Why bother being a shareholder in a company if you don't feel you have some sort of ownership in the company, albeit a small one.

That is part of the rights of being a shareholder and half of the fun of owning a share in a public company.

If Ecoya management want to run the business in this way why the hell did they go public at all. Complete control of this public company would have been more appropriate if they didn't list.

I asked CEO Geoff Ross in a Share Investor Q & A in July 2010 why he listed such a small company instead of raising private capital and he gave the following reasons:

"We chose to list on the NZX because even though a small raise, it provided a good structure for our capital requirements – a fair valuation and the warrants to raise further capital as our business grows. Being a listed company also gives a credibility when operating in international markets. You are taken with a degree of seriousness when dealing with large clients such as department stores and also your key suppliers".

All credible reasons but how about looking after the shareholder by adhering to NZX shareholder rights?


Ecoya Ltd @ Share Investor

Share Investor Q & A: Ecoya's Geoff Ross
Share Investor Q & A: Questions for Ecoya's Geoff Ross
Ecoya 2010 Full Year Profit: More of the same to come?
Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

Discuss ECO @ Share Investor Forum


From Fishpond.co.nz

Every Bastard Says No: The 42 Below Story

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

Fishpond


c Share Investor 2010

Monday, July 5, 2010

Share Investor Q & A: Ecoya's Geoff Ross

Ecoya Ltd [ECO.NZ] was listed on the NZX on May 3 of this year after an IPO and prospectus that kicked off in November 2009.

Its 2010 full year results, a loss of NZ$2.35 million, is on track according to management and sales are going according to plan.

The company has stated that it doesn't expect profit for at least the next 3 years.

Ecoya will be heavy on marketing and image and expect these two elements to help them establish a strong brand and hopefully sales and profit will eventuate.

I am naturally skeptical of a company that isn't making money from the get go and wanted to know more.

I didn't have to go looking for a contact as a mistake that I made with some figures from the 2010 result analysis got Ecoya's PR person onto me and I hooked up this Q & A with Geoff as a result.

The Q & A was conducted via email while Geoff was in North America on a sales trip for ECO and I want to thank him for taking the time to do this while he was busy with his business.



The Q & A

Share Investor - What was the primary reason you decided to buy into Ecoya and why list on the NZX when the money raised was only comparatively small and could have been found privately?

Geoff Ross - We choose to invest in Ecoya for many reasons. We saw a growth category, an ability to scale up relatively easily, a global opportunity, high margin, and a business that fitted with our skill set in high end consumer brands. Also the CEO of the business was a person we had worked with before and we rated highly. He had created a good product and got the business off to a good start.

We chose to list on the NZX because even though a small raise as it provided a good structure for our capital requirements – a fair valuation and the warrants to raise further capital as our business grows. Being a listed company also gives a credibility when operating in international markets. You are taken with a degree of seriousness when dealing with large clients such as department stores and also your key suppliers.

SI - You seem to be satisfied by the 2010 full year profit out earlier this month, is it fair to make any comparisons, good or bad, with previous years given the youth of the company and the rapid growth of Ecoya from a very small base?

GR - I think it is very important to make comparisons with previous years, even when young. Our goal is to double the size of the business each year. That is the trajectory we want to show in a high growth business such as this and that is what we want to report to our shareholders.

S I - How well did you think the Ecoya IPO was received by investors and the market in general?

GR - I would say OK. Previous shareholders of 42 Below had a good experience with us and were positive toward Ecoya because of our prior relationship. Investors outside this group are still pretty cautious at present. I would say that we got a better response from Institutions than I thought. And a weaker response from retail than I thought we would get. I would say this year is a very tough one for IPO’s. We got ours away, but I would suspect that further IPO’s, if any, will be slim on the ground this year.

SI - How was the value of the company arrived at, at just under $45 million it seems high given the company has yet to turn a profit and has sales of just over NZ$ 4 million?

GR - We did a huge amount of work on this. Our Investment Banking partners – Cameron and Partners were involved and we created various models. We have internal forecasts out 10 years. These were used in our valuations. We also looked at like valuations in this category – a useful one is a company called L’Occitane which just listed in Hong Kong. Typically valuations in this category are multiplies of Revenue. In our view we believe the value is fair for a growth proposition.

Growth Stories are relatively unusual in this market. A company such as Xero Ltd [XRO.NZ] listed with virtually no revenue. Rather the value is set on the combined prospect of the strategy, the opportunity and the ability of the the management to execute with the capital they now have. A growth company cannot be valued in the same way as say an old established Telco with limited growth prospects.

SI - Do you think the company has raised enough cash to allow it to pursue its stated aims and will it need more, apart from the exercising of the 2 warrant tranches, as the company develops?

GR - Yes.

SI - Why were pro-forma financial results used in the Ecoya Prospectus instead of the actual results, isn’t that misleading investors?

GR - By law you have to put in financial statements through to the end of the financial year you are in (Pro-forma statements) and then prospective numbers for a complete year following this. Which is what we did. We registered our prospectus a little before the end of our financial year – so that remaining period legally required prospective statements (which I understand you are calling pro-forma in this case)

SI - You built up 42 Below and sold it within a very short time-frame before any profits were realized. Is it going to be the same scenario with Ecoya and if not how will it be different?

GR - We will also grow Ecoya very quickly. We have a strategy which is about building the size of our revenue generating asset. In the years ahead we may simply ease off the growth pedal and allow the business to start generating a profit. At 42 Below we had several countries running profitably. However rather than easing off on the growth and allow the company to show a profit we continued with an aggressive growth plan and invest into new markets. If offers are presented, we will entertain them.

SI - The sector in which Ecoya operates is highly competitive, with quite a number of established players, what makes you confident that you can play them at their own game or, as you have stated in the Prospectus, that they would be interested in purchasing Ecoya sometime down the track?

GR - The challenge will not be play them at their own game – rather take a different approach. The battlefields really are brand and sales. We need to build a better looking brand, a better performing brand and a brand with a more compelling consumer story. And in sales we need to be better at it than the rest. We use our own people rather than reps or agencies. We think having your own people accountable to daily targets is a stronger way to build presence than leaving your sales in the hands of another group.

SI - What key elements will allow Ecoya to make inroads on its competition?

GR - Brand design is critical – we need to look great on the shelf and then in peoples living rooms and bathe rooms. Our environmental story is strong – using sustainable soy wax is also strong (most other candles are paraffin based – and lighting a paraffin candle in your living room is like starting a car in your living room) . We will also be doing a lot of the PR and marketing techniques that got 42 Below noticed.

SI - What are you doing to contain costs considering the current economic environment and the focus by other businesses on this important factor or is that not possible given the growth path factored into the company?

GR - It is absolutely important and is of course possible to contain costs. We run a very strong back office. We have an on line system that runs from a cellular hand held in our sales peoples hand through to head office, management accounting and then through to the orders of raw materials. This system allows us to look at any moment what is being sold, what the margin is and what our results are showing at that point. Everything is tracked by the minute.

SI - How has the introduction into the North American market been received and which retailers are selling your range?

GR - I have just come back from the US where I was selling up there. It is very early days, however I would have to say it has been received very well. It is a competitive market with out doubt – however the brand was received very well and the great thing about the US is that it is that much bigger. On my first call the Store (25 Park) agreed to take the brand on and we filled out the order form. The store owner then said – oh we have three more stores, can you replicate the same order for each store. The US has that much more scale to it.

SI - The global body and bath market is estimated in the ECO Prospectus at around US$22 billion. How much of a market share of that revenue do you expect to be selling within the next 5 years?

GR - We haven't released that to the market. I would say that we are not going for a share of the global market – rather a share of some specific markets. These being Australasia (where we aim to be have a significant share within the next 5 years), The US, and parts of Europe. Australia is currently our biggest market and will be for some time as we utilize the ‘home ground’ advantage.

SI - When is the company expected to turn a profit?

GR - Again this timing hasn’t been released to the market. We can say that the company will be investing in growth and that our current plans do take the company into profit. However this date is outside the years prospective financial statements and therefore has not been released.

SI - Marketing seems to be your area of expertise and you have used it to achieve some good results from companies that you have been previously involved with. How much will good marketing play in the growth of Ecoya and is it great word of mouth from current customers who will do most of the marketing for you?

GR - Marketing is vital. And word of mouth a big part of it. However our challenge is to make sure our customers want to talk about the brand to their friends – and their friends want to talk about it when they see it in peoples homes.

SI - Why are you lending shareholder money to directors to buy shares in Ecoya and isn’t there a more appropriate way to incentivize management to do better?

GR - We don’t have big director fees. In fact I would guess that we pay our directors less than any other listed company. In stead we want our directors interests aligned with shareholders – so that means shares. And we want to do this in a way that makes it attractive for very senior people to join our board. To get people of the calibre of Rob Fyfe from Air New Zealand Ltd [AIR.NZ], or Rich Frank, ex head of Disney, you simple can't offer them a small directors fee alone. We looked at ways of rewarding them with shares (rather than big directors fees) and the best solution seemed via a loan to them to purchase those shares. It is a meaningful way to reward directors and it does so with a currency that is the same as all shareholders.

SI - There is a considerable sum of money flowing from Ecoya to related parties for consultancy work and management fees on an ongoing basis. Is that practical given the relatively small capital base that was raised in the IPO?

GR - Yes there are two consultancy fees. One covers myself as Executive Chairman, Stephen Sinclair as CFO and Grant Bakers involvement. We are all on the board and we are all active in management. Currently Ecoya is 100 % of my time. This fee covers all our time and all our directors fees for all three of us. I consider this a nominal fee for three people who are both active in the business and on the board. The other consultancy fee covers our CEO – all of his time and his role on the board. Again it would make him one of the lowest paid CEO’s on a listed company. All of us are there to grow the value of the business and shareholdings, not by pulling big fees. So this is why there are consultancy fees – it covers senior management who aren't being paid by any other means.

SI - Is Ecoya capable of footing it with the big boys, especially as the company gains some sort of scale in terms of customer base and revenue size?

GR - Absolutely. We have paid a lot of attention to our systems and built a platform we can now grow from. You need this in place before embarking on a high growth strategy.

SI - What are your biggest challenges as the company expands?

GR - The challenges will be typical to those in any high growth business. When you double the size of your business each year you need to continually make sure you have the right organizational structure, you are re negotiating contracts to get the benefit of scale, you are watching stock control to make sure you don’t run out and you keep up with demand and you keep listening to your customers.

SI - Any business has inherent risks, especially a start up like Ecoya. How do you manage those risks in the normal business operating environment that changes due to economic cycles and other outside and inside influences?

GR - This is a huge question and could take pages. In short - I think this is part of the role of our board. We have monthly meetings where our results are tracked. We are continually reviewing our FX policy, our financial position VS plan, our product offering VS key competitors, performance of sales people etc.

SI - How much, if at all, has the founding and growing of 42 Below influenced your approach to Ecoya, how it operates currently and how it will operate in the future?

GR - It has been a huge influence. There are a lot of similarities between high end spirits and high end home fragrance and bath products. We learnt a lot at 42 Below. We want to use all those learning's going forward.

SI - Do you still have any financial interest in 42 Below?

GR - No.

SI - Who are some of your business mentors/heroes and why?

GR - I think Rob Fyfe at Air New Zealand has done a great job. You can feel and see the improvements in that company, to have done this in a company the size of Air New Zealand and done it so quickly is very impressive – they have now been named best Airline in the world. I think Richard Branson because the Virgin brand always feels fresh and young despite now having been round for a while and being a very large organization. I think John Key is doing a pretty good job (mostly) of running New Zealand as a company.

SI - What company or companies do you admire the most (apart from Ecoya)that you don't have a financial interest in and why?

GR - Wow – heaps. From Apple and Stationary company Smiggle for great use of design. To local success stories like Les Mills, Ice Breaker, and Eco Store.

SI - Are there any particular books , periodicals or websites that you have read that you would recommend to Share Investor readers in terms of business and investing?

GR - I like Wired and Fast Company magazine out of the US. Both usually at the front end of new business and especially at the front end of technology. I also like magazines like Vanity Fair or fashion magazines like Nylon as you keep abreast of popular culture and get a sense for where the next consumer trends are coming from. I like reading stuff that keeps me in touch with what is happening in popular culture and what will therefore drive the next consumer trends.

SI - In my investing experience I have found the level of business leadership in New Zealand wanting – with a few very notable exceptions - when it comes to making good long-term decisions based on sound business skills, the basic understanding of running a business and accountability when it comes to making mistakes and this is often reflected in businesses hiring from an overseas talent pool. What are your views on how we can get good shareholder representation in the boardroom?

GR - I think companies are putting the wrong people on their boards. The two most important qualities in a board I believe are:

  • Have people on them who have actually built and run companies. At 42 Below all our board members had built or run their own company. The same is true at Ecoya. Too many boards have people who have never run a company – they are lawyers, accountants or management consultants. These people may have great skill sets, but they should not dominate a board. When this happens then only a narrow set of skills are being deployed at the board. No one is on there who is hungry for growth – rather they are on the board simply as a watch captain, not a driver.
  • Have board members who are comfortable challenging each other. A piece of advice I got from Mark Weldon was “Don’t build a board where everyone is the same and therefore likely to have the same opinion – you and the other board members need to be challenged” Too many boards I have seen have career board people and all cut from the same cloth. I can’t imagine there is a great deal of debate going on at their meetings.

SI - What do you see as the strongest and weakest quality of your leadership style?

GR - Strongest – I hope I am a good listener. Weakest – give people a bit much rope.

SI - Where do you see yourself and the business you lead over the next five years?

GR - Ecoya to be the most respected brand in Home Fragrance, Body and Bath. Globally.

SI - Thanks for your time.


Geoff Ross Bio
- From various sources

Geoff Ross has an advertising background and started with Saatchi & Saatchi back in the early 1990s. He most famously developed and grew and listed vodka maker/distributor, 42 Below , and sold it to Bacardi in 2006 for NZ$ 138 million.

Along with his wife Justine Troy he tells the Story of 42 Below in the book out this year, Every Bastard Says No - The 42 Below Story.

Geoff bought into Ecoya in 2008 and is currently helping run The Bakery, a platform from which Geoff and others are helping fund high growth business start-ups.

The Bakery has helped underwrite the Ecoya business.


About Ecoya -From 2010 Prospectus

The business operated by Ecoya was established in April 2004. It has experienced strong growth since the 42 Below founders invested in February 2008. During this time a skilled management team has been assembled, along with a platform for continued growth.

Ecoya manufactures and sells a broad range of body & bath and home fragrance products.

Ecoya uses natural ingredients to create environmentally friendly products that perform for the consumer (e.g. soaps, hand & body lotions and hand wash) and their home (e.g. scented candles and diffusers).

Worldwide, many consumer groups are becoming more house proud, paying more attention to their home style and also entertaining more at home. The Ecoya brand, packaging and merchandising will utilise a strong sense of design and aesthetic, which is an important part of meeting the needs of this developing consumer characteristic.

The term that Ecoya uses for a brand with an environmental platform that contains strong design with luxury elements is “Eco Luxe”. Ecoya expects Eco Luxe will be a growing segment within its home fragrance and body & bath categories.

Ecoya is also proud of its origins in Australasia and the Board believes that this provenance adds to the brand story as Ecoya expands into the Northern Hemisphere, as Australasia is perceived as a fresh and ‘New World’ region for fragrances and body & bath care.

Ecoya plans to maximise its international market opportunity. It is already selling its products across Australia and New Zealand in selected gift stores, home stores and department stores (such as David Jones’ 37 stores in Australia and Ballantynes in New Zealand) and in Nuance Group Duty Free in Australia.

Sales are being made in Shanghai (China) and Ecoya currently expects to have its first sales in the USA in May 2010.


Ecoya Ltd @ Share Investor

Share Investor Q & A: Questions for Ecoya's Geoff Ross
Ecoya 2010 Full Year Profit: More of the same to come?
Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

Discuss ECO @ Share Investor Forum

Share Investor Q & As

Xero's Rod Drury
Mainfreight MD Don Braid
Burger Fuel Director Josef Roberts
Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Share Investor discusses Convention Centre proposal with Sky City CEO Nigel Morrison


From Fishpond.co.nz

Every Bastard Says No: The 42 Below Story

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

Fishpond


c Share Investor 2010

Wednesday, June 9, 2010

Share Investor Q & A: Questions for Ecoya's Geoff Ross

I have been very critical of Ecoya Ltd [ECO.NZ] since their early May 2010 IPO because of the over inflated value that ECO management put on the company and the scant financial information revealed to the investing public leading up to the IPO. The full year 2010 profit result out a few weeks back does nothing to sooth my critical soul.

Many of you have also had critical things to say about the company (it is more interesting to read someone sticking the knife in)and I have seen little positive written about the company except from the company itself and organising brokers for the IPO.

I think it is time we heard from management directly to get some issues hopefully cleared up and maybe put me in my place.

The ECO PR company contacted me over a mistake that I made with some figures from the 2010 result and one thing led to another and I managed to jack up a Q & A with Executive Chairman, Geoff Ross.

With this in mind, I would like my readers to submit questions that they might have surrounding the company and its IPO.

I will give you a week to submit them and I will include them with mine in the Q & A.

Please submit them here where they will appear at the bottom of this post or email them directly to me here.

Read the ECO Q & A here.


Image

Ecoya main shares are sitting at 89c on extremely low volumes, its low for the year.


Ecoya Ltd @ Share Investor


Ecoya 2010 Full Year Profit: More of the same to come?
Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

Discuss ECO @ Share Investor Forum

Share Investor Q & As

Share Investor Q & A: Ecoya's Geoff Ross
Xero's Rod Drury
Mainfreight MD Don Braid
Burger Fuel Director Josef Roberts
Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY


From Fishpond.co.nz

Every Bastard Says No: The 42 Below Story

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

Fishpond


c Share Investor 2010


Monday, May 31, 2010

Ecoya 2010 Full Year Profit: More of the same to come?

Ecoya Ltd [ECO.NZ] had its IPO listing on May 3 2010 and its 2010 full year profit snuck out to the market late last Friday isn't going to blow out all the candles on your celebratory cake.

For starters the loss indicated by management in its prospectus, at $2.35 million, is almost $100,000.00 more than forecast on revenue of $3.9 million.

The loss is around 250% more than the previous year.

These forecasts were stated in the Ecoya Prospectus just 2 months ago.

The differences in forecasts and actual results were explained variously as unexpected stocktaking and variances in customer receipts.

There is also some more expense for shareholders down the line with up to $675,000 to be lent to "employees" (see directors) to buy ECO shares. This sum is 6.5% of the $10.1 million raised.

To be fair the company is in its listed infancy but it has been operated by the current management for a number of years as a private business so they should have an accurate handle of the way the business operates by now and quite clearly they don't.

I would rather have seen the company under promise and therefore over deliver but the current result would put a sout taste in the mouth of shareholders, especially considering ECO shares are down more than 10% thus far.

Having been a negative bugger, their first profit report as a listed company shouldn't rule out any sort of recovery in company fortunes sometime in the future but to kick off business in this manner isn't a good look.


Image

Ecoya main shares are trading at 89c on extremely low volumes, its low for the year.


Ecoya Ltd @ Share Investor


Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

Discuss ECO @ Share Investor Forum

From Fishpond.co.nz

Every Bastard Says No: The 42 Below Story

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

Fishpond


c Share Investor 2010

Monday, May 3, 2010

Ecoya IPO lights only one end of the candle

Ecoya Ltd [ECO.NZ] lists on the NZX this morning, Monday May 3 2010, but it begins its public life with an underwhelming IPO that only just lit one end of a scented candle.

There was NZ$10.1 million raised out of a possible $13 million (if you include over-subscriptions) with 2.5 million shares allocated to insiders topping up the money raised.

The economy isn't exactly firing at the moment so it could be that overall negative feeling having an effect on capital raising.

Having said that, in the thick of stockmarket and economic turmoil in 2009 many capital raisings were done by NZX listed firms and most if not all were well sort after and heavily oversubscribed so it proves where quality and stability of earnings is on the positive side of the ledger there is an appetite for investors to plunk down money.

There has been a dearth of high quality IPOs for many a year on the NZX, and in the absence of Fonterra or some of the taxpayer owned electricity companies listing, the future for investing in public companies looks a little bleak.

Don't get me wrong there is room for the riskier investment proposition that Ecoya is, but everyday investors in the stockmarket like myself want to see good medium to large companies coming to market with a proven track record, good balance sheet, a good economic advantage and reasonable future prospects.

The market has proven that Ecoya is not one of those companies thus far and it will be interesting to see market reaction this morning at 10.00am when selling of Ecoya shares goes live.

I am betting a southerly move in shareprice based on my negative outlook for the company and a severe correction in the DOW last Friday.

The IPO price was NZ $1 with two warrants per share.

NB: First bids up this morning at 10.15am is one for 83, one for 45c and one for 25c and sellers at $1 - $1.15. No trades have yet passed.


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Ecoya Ltd @ Share Investor


Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

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