Hey @Tom73, if you squint hard you can read the first page ;)

You can sign up to MST Financial for free and download some of their reports including those for Stealth. I'm hesitant to post here in case there are any IP issues. Maybe DM me for more info.

I'm reluctant to read too much into this report because MST provide paid-for analyses. Of they assert that fees from their customers in no way influence their valuation. But every one of that reports that I looked at had a valuation noticeably higher than current share price. Hmmm.

Their valuation in this report assumes Stealth stays largely on track for Mike's $300m grand vision for FY28.

Thanks @DrPete , I signed up (Home - MST Financial) and read the analysis - it's a good read and look at the various moving parts SGI needs to get to it's FY28 targets.

The road map they have is similar to what I have forecasted, but I have lower sales expectations and as a result I see a conservative valuation in the 70c-$1 range but built on the same underlying value driver of increased operating leverage from scale and focus on higher margin business - even at the expense of organic growth, with inorganic growth and additional business segments or brands providing's sales growth. Something they have done for many years now, which MST also point out.

Cheers

Agreed, not earth shattering news, but certainly encouraging. Always good to lock in exclusive rights, especially when you're trying to build differentiation in a crowded space.

That said, these products (cases, chargers, mugs) are fairly commoditised. So i'd be curious to know how management sees ~$7m upside in revenues. Maybe people really do go out of their way for branded items like these?

At any rate, nice to see some reiteration of the FY28 targets. And the fact that these brands were happy to partner with Stealth does say something.

One of the important parts of SGI growing into its current valuation is the expansion of its margin. One of the questions I have had with this announcement and the previous exclusive distribution agreement announced a few months ago is how will this help to expand its margin? I am running on the assumption here that SGI have had to give something away to secure exclusivity, and most likely this is a bit of margin. So I can believe it will grow revenues but how much of it will actually drop down to the bottom line? Maybe they pick up the margin on efficiencies, but surely most of the in house efficiencies have already been implemented? Not knocking the announcement just pondering how it actually gets them to the FY28 targets.

It's a really strange drift from their stated goals in 2023...

To this...

I know I probably sound like a broken record that no one wants to hear, but you have to wonder why they have style drifted from industrial supplies to tween consumer products in the space of 18 months all while not hitting their own organic growth targets.

Keep calling it @UlladullaDave , we need a clear head view on this - thanks.

Also, FYI - I just got the below email from stealth that attached the announcement and had the below (first time... interesting... are we at pumping now?)

Good afternoon all,

Stealth is pleased to announce that its Consumer Division, Force Technology, has secured exclusive distribution agreements in Australia and New Zealand for a suite of globally recognised brands including CASETiFY, Belkin, Ember, and extended its long-standing partnership with D3O®, the proprietary material used in Stealth’s own-label mobile accessories brand, EFM.

·        Exclusive Brands: Stealth now holds exclusive distribution rights for some of the world’s most in-demand and innovative consumer brands.

·        Existing Sales Channels: These partnerships complement Force’s existing 3,300 store reseller network, online marketplaces and direct-to-consumer footprint.

·        Expanded Sales Channels: These partnerships unlock access to new high-value retail and marketplace channels including David Jones, Telstra, Costco complementing Force’s existing reseller network and customer base.

·        International Expansion: The new agreement with D3O® proprietary material used in our own EFM-branded accessories, now includes sales of the EFM brand in new markets of Asia and Middle East through in-store resellers and online marketplaces.

·        Financial Contribution: The Casetify, Ember, Belkin, JB Hi-Fi and new market expansion agreements is expected to contribute $7.0 million in incremental revenue in FY26, with expected material margin upside over the multi-year term of each agreement.

Please find attached the full media announcement. Should you have any follow up questions please let me know.

JESSICA RICH

General Manager – Corporate Affairs

M: +61 402 002 028 O: +61 8 6465 7802 E: [email protected] 

You must be on their naughty list @Tom73, that email came through mid-morning to my email address!! ????????

It's concerning @UlladullaDave and well done for picking this up.

I have always found it easy to be impressed by the almost always positive and optimistic ways management communicate how they've done and what's ahead, at half year and annual results time. If you're not following closely or it's a new company you're tracking, then recency bias (i.e. current messaging) kicks in for me at least.

So, to combat this I now make a habit of reading the last 3 years of annual reports before I invest in a business. In particular the Chair and CEO letters at the front. What I am looking for is firstly who are they trying to communicate with (could be shareholders, could be staff, could be customers, could be regulators or a combination). And then are they generally consistent with what they are doing, how it's working and what the key metrics/goalposts are.

I have so many examples where the goalposts or strategy shifts to suit the current results and the majority of these haven't worked out well for shareholders.

It doesn't mean the business can't adapt or test and take advantage of new opportunities but the foundations and key metrics certainly shouldn't change much over a few years in my view.

Such a great point @Karmast. On one hand you want management teams to innovate and explore avenues for future growth, but at the same time you don't want them shifting the goal posts from a core strategy. Can be such a fine line, imagine selling PME 15 years ago thinking the Visage acquisition was a step too far from their core business!

Yes great example @Wini

I haven't looked that far back but I suspect Sam Hupert was still talking about the same long term vision for the business and what they were trying to solve though, even when they announced Visage...

I had to go back and take a look @Karmast @Wini and from what I can see in the old announcements, the Visage deal actually lined up pretty well with PME’s strategy. They were already talking about expanding their RIS platform and growing offshore at least a year before it happened. So it seemed to fit very well with their stated goals.

I forgot the details, but the acquisition was paid for using existing cash, and while they didn’t say exactly how much they paid, management called it a "modest" amount. Visage was only doing about $8 million in revenue at the time.

They bought it off Mercury Computer systems. Bet they're kicking themselves now..

Thanks @Strawman and that’s what we usually see from a quality company with trustworthy management. Appreciate you checking and congrats on being on the PME train so early.

Is it just me, or does Stealth look like a good price at the mo ?

I'm overweight in it already.......but it's tempting to put some cash to work.

With any luck the drift is just a bunch of retail investors rebalancing, having done well over the past few years. Something similar happened last year (it went from 30c to 18c briefly). It's hard not to rock the boat given how thinly it trades.

Hi Slide up, the products may not expand the margins but when the customers come in they usually don't just buy those products. Good retailers will build the products around that which do provide high margin. I'll use fishing retailers as an example. they drag the punters in with a cheap price on a rod and reel may make 20 % on that, but then sell them extras line for the reel 70 % plus, lures 70 %, hooks 70 % etc. No different to printers at no margin then the ink gets sold at crazy margins. Might be wrong and time will tell but worth thinking about.

ASX Announcement:

@topowl if you wanted to buy more, I hope you got some before 10:40, it's up 17% on the announcement of iPhone 17 accessory presales of $6m (up 50%)

All high margin stuff @Slideup and @pdevries .

It's good news, I think the size of the bump is a bit of love coming back after the price drift @lastever talked about - market loves some news.

My take: it's good news, perhaps a bit promotional, borderline price sensitive - but it points to improvements in the weak consumer side of the business that is yet to show promise.

Just an anecdote in response to the margin question: Those Otterbox phone covers are solid and worth a bit extra for tradies in rougher environments. I had one and while it was too chunky for my office-centric lifestyle, having lived in a house with a bunch of tradies coming and going for six months I could see why they like them.

Good phone covers are less of a commodity product than you might think, because they are chunky but need to fit well and be functional button-wise which you can't do without quality control. I make no assumptions but I wouldn't be surprise if the products Stealth distribute have a sustainable market.