HelloFresh (HFG GR) Germany

Consumer Staples

Forensic Alpha

StockViews' machine intelligence system (Dragonfly) identifies two working capital red flags following the publication of HFG’s interim report - 1) Inventory Days have risen sharply. Having a month’s worth of inventory on the books for a company offering highly perishable goods should raise concerns. 2) Increase in Days Payable was responsible for a massive cash inflow of £120m (this represents over half of the £232m FCF in H1). Furthermore, it appears HFG is stretching out payment beyond 4 weeks for many suppliers. Considering management’s pride in the sustainability of its supply chain, this trend is worth watching closely.

- 20 August, 2021