Here's a quick summary, and my reflections, from Mike's presentation at the Sharecafe small caps webinar on Fri 16 June. Big picture, not a lot has changed. There were some confirmations, some positives, but also some likely misses on the way.

• Targets: Mike reiterated his belief Stealth can achieve $200m+ revenue and 8%+ EBITDA in 2025 (to be conservative I assume CY25 not FY25).

• Profit: The bet on Stealth is all about margin growth. Even a small margin growth will make the share price look cheap. My thesis has been that Stealth will achieve at least $1.5m NPAT in FY23 and 3%+ NPAT within 5 years. Mike discussed expectation of additional $1m+ in profitability this year, and one of the slides stated "Net profit expected to exceed FY2022 result" (FY22 statutory NPAT was $0.6m). At the time of announcing the H1FY23 result of $0.3m NPAT Mike said H2 profit will be higher. It sounds like that may still be the case. In which case my thesis of a minimum of $1.5m NPAT for FY23 is still in play.

• Revenue: Here was some disappointing news. My thesis has been at least $115m in FY23. However, Mike gave guidance of $107m-$112m revenue for FY23. Given pro rata revenue (taking into account acquisitions) for FY22 was $108m, that's little or no growth for FY23. In previous comms Mike reported $2m loss of revenue from closure of unprofitable stores. If I'm trying to be generous, maybe some more of that rationalisation happened in FY23 which has not been communicated? To Mike's credit he has consistently shown a willingness to drop unprofitable revenue. Nevertheless, revenue for FY23 will miss Mike's previous comms. In discussing FY22 results Mike communicated "$120m+ consolidated revenue run-rate for 2023." That won't be achieved. Mike has also repeatedly talked about "inflationary tailwinds", and how Stealth's products are non-discretionary. But FY23 revenue will be going backwards compared to inflation. And there is a growing disconnect between current revenue and Mike's consistent communication of $200m+ revenue for 2025 - this would require 27% CAGR over the next 2.5 years, it is hard to see that happening. It would be great if Mike could provide investors with some insights into the revenue challenges.

• Supply chain consolidation: One possible path to achieving $200m+ is through capturing a significantly greater share of the procurement of the independent stores in Stealth's network. Mike said the independent stores spend $160m annually directly with product manufacturers, of which Mike believes Stealth could capture $80m spent with a small number of manufacturers by becoming a bulk purchaser and distributor. I'm not clear how realistic this goal is, and Mike didn't provide a timeframe. If it can work, it is a very big chunk of new revenue. We'll have to wait and see.

• Pricing: Mike has previously talked about how Stealth's products are non-discretionary and that Stealth was undertaking a "price reset" in response to inflation. However it is not clear if this has occurred. If it has, then volume must have dropped given revenue has lagged inflation. If it hasn't occurred, it suggests Stealth doesn't have strong pricing power. I have personally raised the question to Mike about whether the price reset has occurred, but I was told that information is confidential market-sensitive information.

• Headcount reduction: In regard to cost containment, Mike explained that headcount had reduced from 249 to 219 through natural attrition. This reduction may explain some or most of the $1m+ additional profitability Mike mentioned. Mike suggested this reduction won't have a negative impact on processes and service quality.

• Dividend: Curiously, given it was a prominent announcement in Mike's previously couple of comms, Mike did not mention the possibility of a dividend in FY24. I won't jump to conclusions, but given the purpose of this presentation was to attract new investors, it's a surprising omission if it is still planned.

• Debt: But Mike did reiterate that Stealth will repay its acquisition-related debt in FY24. It was this repayment that provided the grounds for a future dividend. So I'll assume the dividend is still planned. As a reminder, Mike has previously said the dividend will be 30-40% of FCF at the end of FY24.

In summary, investors need to be prepared for less exciting revenue growth stats coming our way. The reason for lack of growth is unclear. I have asked Mike but he declined to provide an explanation on the grounds of it being market sensitive information. So be it, I'll interpret this as him playing a straight bat and not wanting to give one shareholder an edge over others. Perhaps he'll be more willing to publicly provide some insights to shareholders at the next AGM.

But ultimately Stealth's valuation rests on margins, and my thesis here can still be achieved. If Stealth can steadily work towards >3% NPAT over the next couple of years, even with slow revenue growth, then a market cap of $12m would be an extremely low PE of around 3. I'm looking for $1.5m NPAT in FY23 as evidence that Stealth is moving in the right direction. If so, then it's easy to make a case for a valuation of 3x current price.