Financials
The share price plummets nearly 75% after forecasts are slashed. Earlier this year, Alumbra Research had published a report highlighting numerous red flags in CABP's IPO prospectus. Most notably, they found the timing of its IPO to be highly questionable given 1) 26% of FY22 revenue and up to 51% of EBITDA would likely dissipate very soon due to changes in Nigeria’s currency policy and 2) CABP did not present a credible plan on how it was going to replace this lost revenue / EBITDA. Furthermore, CABP’s growth leading up to the IPO had benefitted significantly from volatility in other African currency corridors, which they believed was unsustainable. Other recent successful shorts from Alumbra include Alstom, Cerence and Doximity.
Edition: 172
- 27 October, 2023
Materials
The can-maker’s equity is expected to come under further pressure - the main concerns cited in Gradient’s 13-page report include: 1) Volume and profitability headwinds. 2) Inventory growth higher than targeted and has outpaced forward sales estimates. 3) Growth in receivables suggests a pull-forward of revenue. 4) Accrued compensation fell to a five-year low relative to adjusted operating expenses. 5) Despite the recent share-price correction, BALL still appears expensive. Other active shorts Gradient have initiated coverage on this year include ADT, Cerence, Lamb Weston, Owen’s & Minor and RingCentral.
Edition: 140
- 22 July, 2022