W: Milestone in Food Business

Investors during the analog time might be familiar with Electronics Industry Public Company (EIC) as an electronic components equity that has been listed on the stock market (the SET) since 2003 with an initial public offering (IPO) price at 10 baht per share. However, the core business of electronic components was quite unsuccessful, apparently the company has been struggling with loss for years. 

 

In 2016, EIC experienced a net loss of 134 million baht from a total income of 216 million baht. In 2017, the core revenue was at 241 million baht with a net loss of 131 million baht. Anyhow, in 2018, the performance rebounded to book a net profit of 5 million baht, but a year later, in 2019, EIC turned around to lose again to record a net loss of 21 million baht.   And recently, the financial statements for the three-month period ended 31 March 2020 remained loss of 31 million baht.

 

EIC once was monitored by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET), causing the price to shrink heavily to trade only 0.2-0.3 baht and the price has just recovered in the past 3 months, which skyrocketed to over 200%.

 

The business restructure to focus on food and beverage businesses and name changing to Wow Factor Public Company Limited (W) might be the reason of stock price rising, but might not be as well…

 

W budgeted approx. 400 million baht to acquire  “DOMINO’S PIZZA” in Thailand in order to enhance strength in food business group of the company…“DOMINO’S PIZZA” is an American pizza restaurant chain, now has about 27 stores in Thailand.

 

The acquisition of “DOMINO’S PIZZA” is expected to contribute to a portfolio of food business group of W to grow rapidly. Previously, W had 6 brands of food business, totaling 14 stores, after the acquisition of American pizza house, W will have 7 restaurant chains 41 stores in total.   

 

Despite having an objection from the independent financial advisor (IFA), the Board of Directors still approved to enter into the assets acquisition of “DOMINO’S PIZZA”.

 

The advisor determined that the growth of business is at 5.5% per year, unlike the projection by W, which saw an average weekly order count (AWO) growth at 15% per year during the year 2022-2023

 

The IFA also projected that in the initial period, W will have operating losses and will start to have profits (EBIT) in the 5th year after the investment

 

By the way, the Board of Directors insisted to propose such issue to the shareholders’ meeting to consider and approve the acquisition of “DOMINO’S PIZZA”. Let’s wait for the result until this Auguest 24.