The Youfoodz Holdings Limited (ASX: YFZ) share price has had a very disappointing start to life as a listed company after completing its initial public offering (IPO) this morning.
At the time of writing, the ready-made meal company’s shares are down 25% from their listing price to $1.12
The Youfoodz IPO.
Youfoodz listed on the Australian share market after raising $70 million via the issue of 46,725,779 shares at a price of $1.50 per share. This gave the company a market capitalisation of approximately $202 million.
The company revealed that it launched its capital raising to provide it with access to capital markets, which it expects will provide funding and financial flexibility to pursue its growth initiatives.
These initiatives include marketing, product development, the fit out of a new purpose-built manufacturing facility, and other growth opportunities.
In addition to this, the IPO will allow it to repay its shareholder loan, broaden its shareholder base, and provide a liquid market for its shares.
What is Youfoodz?
Youfoodz generates revenue from the sale of its fresh, ready-made meals, snacks, and drinks. The company operates a complementary omni-channel sales model whereby products are distributed through both B2C and B2B channels.
Its B2C offering is facilitated through a user-friendly online and mobile application platform. This platform allows customers to select from the full product range of Youfoodz’ products to create an order.
In FY 2020 the company generated revenue of $127.3 million and recorded a loss after tax of $6.2 million.
Whereas in FY 2021, Youfoodz is forecasting a 17.8% increase in revenue to $149.9 million and an improved net loss of $0.6 million.
This is still only a small slice of its overall market opportunity. In FY 2020, the Australia and New Zealand market for ready-made meals was estimated to be worth $3.2 billion at retail prices.
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Returns as of 6th October 2020
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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