Retail Food Group Ltd

Collins St Value Fund continues to hold Retail Food Group Ltd (RFG) after identifying significant potential in the company's post-Covid recovery. While RFG faced challenges in recent years, including the fallout from poor management, Covid-related setbacks, and regulatory scrutiny from the ACCC, Collins St Value Fund believes that the market is overestimating the risks associated with these issues. The Fund sees an opportunity in RFG’s undervaluation, especially considering the strength of its brands like Gloria Jean’s, Brumby’s, and Donut King, which have shown resilience post-Covid. With the company’s share price at just 6.5c, the Fund acquired a 5% stake, confident that RFG could meet earnings expectations and reinstate dividends within two years. If RFG achieves these milestones and the ACCC's actions are reasonable, the Fund believes the company could be worth more than twice its current value. While the timing of the market’s realization is uncertain, Collins St Value Fund remains optimistic about RFG’s long-term prospects.

Collins St Value Fund continues to hold Retail Food Group (RFG) based on its successful turnaround and the removal of regulatory overhang. When first purchasing the stock in 2020, the Fund saw potential in RFG’s recovery from previous management issues, driven by two key factors: the return to post-COVID normalcy, especially the revival of local coffee and cake shops, and the resolution of the ACCC litigation. Despite challenges, RFG’s brands, such as Gloria Jean’s and its pizza offerings, demonstrated resilience and growth, even during lockdowns. The significant regulatory overhang, which had deterred investors, was finally cleared in December with a settlement costing less than $10 million, well below earlier concerns. With this issue behind them, Collins St Value Fund is optimistic about RFG’s continued growth and believes the company's share price will now be driven by its strong fundamentals rather than external factors. Despite uncertainty about future performance, the Fund believes RFG remains undervalued at its current price, with profit potential still ahead.

Collins St Value Fund continues to hold Retail Food Group (RFG) with optimism, having first invested in 2021 when the company was priced cheaply due to lingering concerns over an ACCC case related to previous management’s actions. The fund saw potential in the company’s recovery as the impacts of Covid-19 began to subside, with RFG’s strong brand portfolio (including Donut King, Michel’s Patisserie, and Crust Pizza) positioned to benefit from a return to normalcy. Since then, RFG has made significant strides, particularly under new management, who have implemented smart adjustments, such as launching a virtual ribs business, “Rack’em Bones BBQ Ribs,” to capitalize on idle oven capacity during off-peak hours. This move has created additional cash flows and profits. Collins St Value Fund is pleased with the cultural shifts within the company and the prospects for both domestic and international growth. Trading at just 7.5x 2024 earnings, the Fund believes RFG is undervalued, with significant upside potential as the company continues to execute on its growth strategy.

Collins St Value Fund continues to hold its position in Retail Food Group Ltd (RFG), reaffirming its belief that RFG is a fundamentally strong company despite its past challenges. The Fund has long argued that RFG’s intrinsic value was underappreciated by the market, and recent developments have further strengthened this thesis. Over the past six months, two significant investors, Thorney Investment Group and United Petroleum Group, have entered RFG’s registry. United, in particular, holds a 19.9% stake and is seen to have synergies with RFG's brands through its petrol stations. While there are no guarantees about the future, Collins St Value Fund is optimistic about the potential for RFG and other portfolio holdings in 2025, remaining positive about the company's outlook.