Inderes Coffee Room (Part 11)

[Pohjolan_Eka]

@Ituhippinen

Buying:

• Dellia group opening position. Now I’m part of the Mango story! I’ve been thinking about buying for many months, and by good fortune, I managed to hold off until after the latest earnings report. The market interpreted the report as complete garbage, and it’s been much more comfortable to look at the stock over the last few weeks. I’ve been trying hard to think about what I’m missing. What does the market see as a risk at this valuation? Very roughly, with this year’s forecasts, P/E 13x… EV/EBIT 8.4x…

Okay, forecasts are always just forecasts. What about TTM (Trailing Twelve Months) numbers? P/E 16x, EV/EBIT 9x. Will growth hit a brick wall? Do new openings fail to take off? Is the battle for shelf space getting even tougher, and are margins going down the drain? IS THERE NO MANGO-AS-A-SERVICE COMING?!

The stock’s price behavior has been really peculiar in my opinion, which is why I’m starting with only a ~1.5% portfolio weight. Enough that a potential bankruptcy won’t cost me any sleep, but there is a realistic possibility of 10x returns if the international expansion continues and the people keep enjoying these mangos. I don’t know why, but in all my scenarios, I feel the downside with this stock is quite small. Perhaps that should ring some alarm bells?

It has become clear that I don’t understand the stock’s valuation or the most significant risks associated with it (or at least I don’t see them the same way the market does). What about the positive scenarios? First off, I’m a simple man, so let’s use that current investor laughingstock: the P/E ratio. If we trust that analysts are actually good predictors and the 2028 result is realized, with an EPS of 4.4 NOK. At that point, Dellia would be slightly more of a known brand, but not a Coca-Cola (which usually trades between P/E 25-28x). Let’s give the mangos a moderate accepted multiple of P/E 12x, as there should still be growth ahead. 4.4 NOK * P/E 12 = 52.8 NOK. The share price is currently 22 NOK. So, through some “math porn,” that’s over 130% return in a couple of years. (I hope these figures aren’t taken too seriously.)

ps. I’m also breaking the rules of all investment wizards by buying a falling knife. This is what it costs now, and I’ll have to bear the consequences myself.

Another well-known forum member has turned to the mango cult