Shriro gave a trading update at their AGM today, which for some reason they don't think is price sensitive but is.  The headline number is +38.3% revenue growth vs pcp (Jan-Apr).  It's a big beat but a little misleading given how sales fared in Mar-Apr 2020.  The +11% revenue growth vs pcp (Jan-Feb) they revealed earlier in the year is a more sustainable comparison and is still an impressive number for a business of their type and maturity.

They also gave a forecast on international sales growth for Jan to Jun, which was revenue growth of 128% vs 2020 and 271% vs 2019 (they are changing fin year end in 2021 so Jan-Jun will be the full fin year).  It's impressive - albeit off a low a low base - and gratifying given international markets is one of the levers they will be pulling on once housing construction slows in Australia (probably FY23).  Being so confident to forecast international sector growth and not domestic (by far their biggest sector) seems a little selective and opportunistic, but they're not Robinson Crusoe in that regard.

Speaking of transparency they gave updates (commentary) on each of their product segments but as usual gave no indication of relative size of those segments, nor any metrics at all.  This isn't new for them but is still a frustration.  They don't own all the brands they sell and it should be possible to risk profile those they don't differently to those they do, but unfortunately they don't allow you to do this.

One other point to note was the Chair highlighting $17.6m cash and zero debt and stating "To further facilitate growth and as previously advised, the Board and Management will explore inorganic growth opportunities where they complement the strategic direction of the Company and can be value accretive. However, in the absence of that occurring, the Board and Management will reconsider the Balance Sheet position later in the year".  I hope they find the acquisitions because that's the second big lever at their disposal once housing construction inevitably softens but if they don't acquire I read this as saying they'll provide a special dividend or share buyback.

[Significantly held]

***

Shriro Holdings Limited (Shriro) (ASX:SHM) has become aware today that Shriro Pacific, a substantial shareholder in Shriro, has sold 4,088,763 shares in Shriro.   

Following the sale, Shriro understands that Shriro Pacific has a 19.89% shareholding in Shriro.  A substantial holder notice will be lodged with ASX and Shriro within two business days.

***

Volume traded today represents more than 5% of the total shares on issue.  Shares are down 7% today.  You would like to see a tidier exit but such is the risk when trading in illiquid microcaps.  The new shareholding means Shriro Pacific can't automatially appoint a board member and means non-market disclosed information cannot be shared between Shriro (ASX:SHM) and Shriro Pacific.

[Held and accumulating]

Shriro released a year end (31 Dec) guidance today.  The SP has popped as a result.  A bit unsure why as it's only a little higher than they'd previously indicated.  I still think there's plenty of SP upside in this one and it's worth hanging around for a healthy dividend in the new year.

***

TRADING UPDATE AND OUTLOOK Shriro Holdings Limited (“Shriro”) (ASX: SHM) provides guidance to the market on its full year forecast results.   Previously Shriro has communicated its first half profit and growth in revenue for the third quarter driven by the demand for household related goods.  This growth in revenue and profit has continued into the fourth quarter and Shriro informs the market that in FY20: ? Revenue is expected to be in the range of $180M to $185M ? EBITDA is expected to be in the range of $29M to $31M; and ? NPAT is expected to be in the range of $15M to $17M.   The result has benefitted from government wage subsidies of $3.7M and the head office lease exit benefit of $2.3M.  Covid?19 also resulted in management making decisions to reduce costs relating to marketing, staff hours, travel and the organisation delayed its move to a new head office premises until 2021.  These factors resulted in further efficiencies of approximately $4M.    These decisions assisted in offsetting the negative impact of the Covid?19 related lockdowns on revenue in the months of March and April 2020. Shriro is not providing any forecasts of earnings for FY21.

***

[I hold SHM shares]

Shriro is my highest conviction holding in my actual - not Strawman - portfolio.  I bought into this after seeing an article on Livewire (https://www.livewiremarkets.com/wires/the-best-value-stock-to-own-is-a-growing-value-stock) and then started looking into it. This is purely a value play so if you are exclusively about growth let me sell you a Tesla share.

What I like:
- $20m cash (and $28m inventory) for a company that had sub-$60m market cap when I bought in
- has started growing revenue.  This was curtailed somewhat by COVID but I don't see this as being structural and it was partly shielded as its diverse range includes some of the consumer discretionary items that got a boost from COVID.
- has gone through a cost out exercise in H1 already
- simple balance sheet with no debt, no intangibles, no funky financial instruments 
- it converts profit to free cashflow and pays it out as dividends ( I have mixed feelings about the value of dividends but if they can't find a better use for the money I'm ok for the to give them to me and I will). 

What am I cautious of:
- is COVID impacted
- the cost out is great but that's a one trick pony and you don't cut your way to sustained profit
- is dependent on maintaining licensing deals
- it's very tightly held