ASX Live | ASX looks weaker, Wall St Closed for Holiday, Big news in mining

In its strategy review presentation, Bubs said it has 12 months of cash flow funding available after reducing monthly cash burn from $5 million to $2 million.

Actually, that $2 million may not be wholly accurate. To calculate it, Bubs excluded legal and EGM costs and admitted the figure won’t be reached until FY24 Q2.

Despite having 12 months of cash flow funding available, Bubs said its ‘current growth plans are fully funded’.

Should investors interpret that as Bubs saying, ‘We’re going to run out of cash in a year, but that’s more than enough time to fund our growth plans’? Or as Bubs saying, ‘We’re going to run out of cash in a year because of our growth plans’? Or is it saying, ‘All the growth initiatives we’ve planned will be achieved in the next 12 months, which just so happens to coincide with when our cash runs out’?

Source: Bubs

In its strategy review presentation, Bubs said it has 12 months of cash flow funding available after reducing monthly cash burn from $5 million to $2 million.

Actually, that $2 million may not be wholly accurate. To calculate it, Bubs excluded legal and EGM costs and admitted the figure won’t be reached until FY24 Q2.

Despite having 12 months of cash flow funding available, Bubs said its ‘current growth plans are fully funded’.

Should investors interpret that as Bubs saying, ‘We’re going to run out of cash in a year, but that’s more than enough time to fund our growth plans’? Or as Bubs saying, ‘We’re going to run out of cash in a year because of our growth plans’? Or is it saying, ‘All the growth initiatives we’ve planned will be achieved in the next 12 months, which just so happens to coincide with when our cash runs out’?

Source: Bubs

Bubs Australia [ASX:BUB] has released the findings of a strategic review centred on its business operations in the US, Australia, and China.

The review sets out a ‘five-point plan to responsibly manage capital and to grow and maximise shareholder value’.

Source: Bubs

The five-point plan is more goal than plan, with Bubs affirming to ‘grow further into the major US retailers’ and ‘focus[ing] on where Bubs has a clear competitive advantage’ in China — goat infant milk formula and goat adult milk powder.

One of the five points also mentioned ‘sweat[ing] existing assets’. Bubs said its manufacturing facility in Victoria is underutilised, operating at 31% capacity.

Again, the ‘plan’ to sweat this asset actually involves more reviews:

‘To boost utilisation and improve shareholder returns, Bubs is assessing State Administration for Market Regulation (SAMR) registration for China, toll manufacturing and selective private label opportunities.’

The release of the strategy review also came with an admission that shareholders have suffered ‘significant value destruction’ over the years.

It seems Bubs isn’t just undergoing a strategic reset in China but with investors, too.

Bubs independent non-executive director Reg Weine said:

‘We must immediately arrest the decline in shareholder value and get Bubs back on track. Capitalising on our first mover advantage in the US and resetting China are two significant components of our strategic plan. We have a clear competitive advantage in goat infant and adult nutrition, and we need to focus our efforts on this part of our portfolio. With a greater focus on working capital, and tighter control on costs, we will quickly reduce the monthly cash burn, extend the runway, and deliver sustainable shareholder value.’

BUB also provided a brief FY24 outlook.

The firm expects FY24 net sales revenue to be $80 million, a 35% increase on the previous year. Bubs expects to book these revenues on a gross profit margin of 40%. Meaning gross profit is forecast at $32 million.

As for its continued cash burn, Bubs expects to be cash flow positive in FY25.

$BUB's stark admission to shareholders in strategy review presentation.

Since its IPO, Bubs raised capital 7 times, 'with investors in each of those capital raisings suffering a material decline in the value of their investment, ranging from -59% to -81%'. $BUB.AX #ASX pic.twitter.com/VQdj0eF149

— Fat Tail Daily (@FatTailDaily) July 6, 2023

Bubs Australia [ASX:BUB] has released the findings of a strategic review centred on its business operations in the US, Australia, and China.

The review sets out a ‘five-point plan to responsibly manage capital and to grow and maximise shareholder value’.

Source: Bubs

The five-point plan is more goal than plan, with Bubs affirming to ‘grow further into the major US retailers’ and ‘focus[ing] on where Bubs has a clear competitive advantage’ in China — goat infant milk formula and goat adult milk powder.

One of the five points also mentioned ‘sweat[ing] existing assets’. Bubs said its manufacturing facility in Victoria is underutilised, operating at 31% capacity.

Again, the ‘plan’ to sweat this asset actually involves more reviews:

‘To boost utilisation and improve shareholder returns, Bubs is assessing State Administration for Market Regulation (SAMR) registration for China, toll manufacturing and selective private label opportunities.’

The release of the strategy review also came with an admission that shareholders have suffered ‘significant value destruction’ over the years.

It seems Bubs isn’t just undergoing a strategic reset in China but with investors, too.

Bubs independent non-executive director Reg Weine said:

‘We must immediately arrest the decline in shareholder value and get Bubs back on track. Capitalising on our first mover advantage in the US and resetting China are two significant components of our strategic plan. We have a clear competitive advantage in goat infant and adult nutrition, and we need to focus our efforts on this part of our portfolio. With a greater focus on working capital, and tighter control on costs, we will quickly reduce the monthly cash burn, extend the runway, and deliver sustainable shareholder value.’

BUB also provided a brief FY24 outlook.

The firm expects FY24 net sales revenue to be $80 million, a 35% increase on the previous year. Bubs expects to book these revenues on a gross profit margin of 40%. Meaning gross profit is forecast at $32 million.

As for its continued cash burn, Bubs expects to be cash flow positive in FY25.

$BUB's stark admission to shareholders in strategy review presentation.

Since its IPO, Bubs raised capital 7 times, 'with investors in each of those capital raisings suffering a material decline in the value of their investment, ranging from -59% to -81%'. $BUB.AX #ASX pic.twitter.com/VQdj0eF149

— Fat Tail Daily (@FatTailDaily) July 6, 2023

When all is said and done, what will Threads be to Twitter? A zero-sum game rival? A failed upstart? A tangential distraction?

a) Will Threads be to Twitter what Google was to Yahoo?

b) Will Threads be to Twitter what Windows Phone was to Apple's iPhone?

c) Will Threads be to Twitter what … Instagram is to Twitter? #ThreadsApp $AAPL $GOOGL $MSFT $META

— Fat Tail Daily (@FatTailDaily) July 6, 2023

Meta’s version of Twitter is live.

Threads, as the platform is called, can now be downloaded on mobile.

From a competitive standpoint, should Twitter be worried?

Is Threads a complement to or a substitute for Twitter?

In other words, will we see users toggle between the two apps or will users abandon one for the other?

By the way, here’s us trying out Threads.

Meta has unveiled an app to rival Twitter called Threads, appearing to target users looking for an alternative to the social media platform owned — and frequently changed — by Elon Musk. https://t.co/uRLC6in0W2

— The Associated Press (@AP) July 5, 2023

Wall Street legend Bob Farrell once distilled all his decades of market experience into ten rules (he beat Buzzfeed to the listicle).

His seventh rule concerns us here:

‘Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.’

This rule applies heavily to what’s happening in the US, with the ‘Magnificent Seven’ mega-cap stocks propelling the S&P 500 higher. For instance, the top ten S&P 500 companies accounted for about 13% of the broader index’s 16.9% gains in the first half of 2023.

Many bearish commentators echo Farrell’s seventh rule when calling the current bull run deceiving.

But some are pointing out that the rally is broadening globally.

The Financial Times just noted that if you assign equal weights to the MSCI Europe, Japan and the US indices, the first half of 2023 has been the best start to the year since 1998.

And the stocks driving the internationally rally are not the AI-hype tech stocks, either.

According to SocGen, in Europe and Japan, value stocks have notched the largest gains.

FT then reposted this collection of charts from SocGen.

Check out the one in the top right.

Even though the Nasdaq is zooming — it’s only 14% from all-time highs — many constituents are well down. About 30% of stocks are down more than 75%!

Source: Financial Times

 

If you’re interested in copper and want to watch a quick video guide on it, how about watching this?

We’ve just uploaded a copper investment guide.

I am a little stilted in the delivery but I hope the content is informative.

The US Federal Reserve released the meeting minutes for the June policy decision to maintain the federal funds rate at a target range of 5-5.25%.

The biggest takeaway?

The Fed thinks more hikes this year ‘would be appropriate’. The full relevant passage:

‘In discussing the policy outlook, all participants continued to anticipate that, with inflation still well above the Committee’s 2 percent goal and the labor market remaining very tight, maintaining a restrictive stance for monetary policy would be appropriate to achieve the Committee’s objectives. Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate.’

Given that almost all Fed participants think more hikes are in the offing, why did the central bank decide to hold off raising rates in June? Why bother with a pause if you plan to raise more this year?

To buy time.

‘Almost all participants judged it appropriate or acceptable to maintain the target range for the federal funds rate at 5 to 5.25 percent at this meeting’. The reasons:

‘Most of these participants observed that leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability.’

It’s an intriguing situation.

Most Fed officials expect to raise rates further. But most officials also think a pause in June was warranted to see if … the expected further hikes turn out to be unnecessary?