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FFI

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galumay:
15/9/20

Purchased a small parcel of FFI, Fresh Food Industries, a WA business that manufactures and distributes confectionary products.

Further, the company owns industrial and commercial property for investment purposes. It serves bakers and pastry cooks, and supermarkets, as well as ice cream and dairy, confectionery, chocolate, and food services industries. The company was founded in 1979 and is headquartered in Jandakot, Australia.

Its typical of the sort of company I like to uncover, deeply illiquid, owner operated, very tight registry, profitable over the long term, hidden unrealised assets. I paid up for this, probably more than my range of intrinsic value, but I think businesses like this never look cheap.

Its consistently paid a dividend for the last 10 years, has steadily grown revenue, and has had a steady and high ROE, ROC & ROIIC.

Its never going to be a fast growth business, but its hard not to see it still around in ten years, and there is the potential for significant value to be unlocked from the property portfolio. A Strawberry jam REIT!

I am struggling to think what could go wrong with this business, its recession proof, its disruption proof, its boring, its got no debt, and management seem competent. The biggest risk is probably liquidity - might not be possible to exit.

Why will this business be around in 10 years? -Because people still going to be eating cake & chocolate! Been around for 40 years too.

galumay:
H1 2021 update - ticking along nicely, increased earnings and dividend, divestment of the small goods division paying off already. Probably going to benefit from the property boom in WA. Bought some more at $5.50 this week.

galumay:
FY 2021 very strong result, adjusted for the benefit of the land acquisition by the WA government the business still grew NPAT by about 16%.



Dividend up by about 8%

galumay:
Its been a tough half for my little cookie maker/REIT, they will survive and thrive, but Covid has not been kind, nor the supply disruptions. FCF remained strong, divvy cut a small amount. I do love their no nonsense reports, no EBITDA or other bullshit earnings so many others carry on about. Simple, clean financial.

galumay:
Full year continued the very difficult business conditions for FFI, now no final divvy this year and a huge drop in profit. I am comfortable they will weather the storm and there will be a reversion to mean in business conditions. Just have to be patient. Once again, a lovely, clean report, no photos no bullshit earnings, just the financials and some brief commentary.

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