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HOME BISTRO, INC. (OTC – HBIS - $1.11)
Home Bistro is a leading online platform, www.homebistro.com, that provides for the creation, production, and distribution of direct-to-consumer, heat-to-eat, celebrity chef inspired gourmet meals, which currently include inspirations developed by "Iron Chef" Cat Cora, "Hungry Fan" Chef Daina Falk and soon to launch celebrity chefs Ayesha Curry, Roblé Ali and Claudia Sandoval. Home Bistro's Model Meals lifestyle brand www.modelmeals.com is a Whole30 & Paleo approved, ready-to-eat, meal prep service, offering a weekly rotating menu that is prepared by professional chefs, and delivered in sustainable, eco-friendly packaging.
Home Bistro, Inc.
The Bottom Line: Home Bistro has executed a series of major moves that position the Company for hockey stick-type growth ahead, which could drive the shares toward our $3.40 price target.
Enviable Moves Serve as Key Differentiators. In the last several weeks, HBIS has enhanced its consumer experience with new packaging from flash frozen to fresh meal delivery, closed a strategic acquisition, and added new chefs/influencers.
New Acquisition Adds Revenue and Offers Marketing Leverage. The Model Meals transaction adds millions in potential revenue and a healthy recurring revenue meal prep service. Plus, since sales have been made in only 3 states, the sales footprint is ripe for major expansion.
Now Numbering 5--The Celebrity Chef/Influencer Adds Are High Profile. HBIS has added Claudia Sandoval, a popular chef in Hispanic and non-Hispanic communities known for Mexican cuisine, and Ayesha Curry, a high profile 2x NY Times winning author, chef, and philanthropist.Great Entry Point; Trading at Discount to Bellwether. Based on the major improvements to its infrastructure and enhanced reach, we believe our financial forecasts could be due for an upgrade. Meanwhile, HBIS trades at a substantial discount to the price/sales multiple afforded the industry bellwether, a gap we believe will narrow during 2H21.
Latest Steps Position HBIS for Major Growth
Since our update in early June 2021, Home Bistro, Inc. (OTC – HBIS) has executed a series of milestones that are primed to position the Company for major top-line growth, in our view. And, we believe HBIS is just getting started. These achievements include:
In late June, the Company engaged in a partnership with celebrity chef Claudia Sandoval to create a co-branded line of traditional Mexican ready-made, gourmet meals, to be marketed exclusively on the Home Bistro platform. Chef Claudia is a popular and highly regarded celebrity chef with expertise in Mexican cuisine. In our view, this a great addition to the HBIS group of celebrity chefs given that Mexican food is the 3rd most popular cuisine in the States. Not only does it diversify the menu offering for customers but it also fosters exposure to the influential Hispanic consumer market. Chef Claudia’s meals are expected to be available for purchase on the Home Bistro platform by the end of September. (https://finance.yahoo.com/news/home-bistro-inc-adds-celebrity-120000377.html)
Just yesterday, HBIS announced that it has begun shipping Chef Daina Falk "Hungry Fan" meals—the second celebrity chef (after Cat Cora) to have meals shipping via the Home Bistro platform. Chef Daina is well-known for her “Hungry Fan” meals and her media work in and around the professional sports and the Olympics. Her recipes are a fresh take on classic tailgate food, influenced and inspired by the sports legends with whom she has met. Clearly, Chef Daina’s selections expands and differentiates the Home Bistro culinary experience from other market participants. (https://finance.yahoo.com/news/home-bistro-begins-shipping-meals-120000262.html)
Earlier this month, the Company executed a licensing agreement with TV Host, best-selling cookbook author and philanthropist Ayesha Curry. Further to the transaction, Home Bistro, Inc. acquired Ms. Curry's Homemade Meals LLC, a weekly-delivered service of her family inspired recipes, which were sold direct to consumer as well as in major grocery stores.
Curry is a two-time New York Times best-selling cookbook author, television host and producer, and co-founder of the Eat. Learn. Play. Foundation and boasts over 10 million total social media followers. Famous for her no-fuss cooking techniques, Curry will be providing the Home Bistro platform with ten of her culinary specialties to be sold online. Ms. Curry’s signature recipes have proven to be a hit with her fans and we believe her popularity and influence could have a materially favorable impact on sales. It should be noted that a portion of every meal sold will be donated to a cause helping to fight hunger in the US, which dovetails with Ms. Curry’s philanthropic efforts and may serve to raise the Home Bistro brand as well. Home Bistro expects to begin shipping Ayesha Meals direct to consumers by October 2021.
With the addition of Ayesha Curry to the Home Bistro celebrity chef and influencer platform, HBIS will soon offer meals from a total of five leading chefs, with others slated to join in the coming quarters, thereby fostering enviable revenue and market share growth ahead. (https://finance.yahoo.com/news/home-bistro-signs-licensing-agreement-120000269.html)
In late 2Q21, HBIS acquired Model Meals, a California-based ready-to-eat, healthy meal service. The transaction was valued at approximately $2.1 million with the majority of the purchase price paid in shares of the Company's restricted common stock. In our view, this transaction is a game-changing event for Home Bistro and therefore, the most important direct catalyst in driving the overall company and share value considerably higher than current levels. In one fell swoop, HBIS has acquired a highly regarded lifestyle brand in the healthy meal space, customers, production, along with distribution and marketing leverage—at a reasonable price.
The most obvious benefits are revenue and customers. This strategic transaction adds material revenue and an underlying, loyal customer base from which to cross-sell other offerings on the Home Bistro platform. Moreover, by incorporating the Model Meals into the Home Bistro family as its own operating entity, HBIS management can broaden the subsidiary’s reach far beyond its current three-state West Coast footprint. Separately, HBIS now has dual geographic fulfilment centers which can lower distribution costs and perhaps shorten delivery times as well.
Model Meals was co-founded by college friends Camille May and Danika Brysha, a fashion model and wellness coach, who, through research and personal experience, focused on developing dietary solutions that enhance the health and vitality of individuals while helping to increase energy, mental function, and support a thriving lifestyle. Model Meals generated $2.2 million in revenue in 2020, including revenue by delivering to just three states - California, Nevada and Arizona. Ms. May and Ms. Brysha will be retained as CFO and CEO, respectively, of the Model Meals subsidiary and we believe will serve as great additions to the overall C-suite.
Going forward, we believe HBIS may incorporate the Model Meals model and other features as it expands its national footprint with the on-boarding of new customers across the US along with continued M&A. (https://finance.yahoo.com/news/home-bistro-inc-acquires-model-203000128.html)
New Packaging Process Enhances Customer Experience
Earlier this month, HBIS commenced delivery of fresh meals utilizing a packaging process known as "vacuum skin-packaging". Vacuum skin-packaging seals the product like a second skin while eliminating air, providing package durability and optimal product presentation, improved flavor and shelf-life extension. Home Bistro meals were previously shipped flash-frozen to consumers which required defrosting prior to heating. I
In our view, this change is significant as this proven, popular delivery system, which, when combined with the underlying delicious celebrity-chef-designed meals, takes the overall consumer experience to a new level. As a result, we believe this shift alone can attract a larger audience than its previous packaging and delivery method. The Company made a significant capital investment in the equipment and technology required for the production of fresh, skin-packaged meals that can now last up to 14 days in the refrigerator or, if the customer prefers, can be frozen at any time for future enjoyment. (https://finance.yahoo.com/news/home-bistro-begins-fresh-meal-120000253.html)
Finally, the Company recently announced that it has relocated its east coast operations to a 5,000 square foot state of the art culinary facility in Pembroke Park, FL. This larger facility is a state of the art commissary capable of producing the highest quality and a much higher volume of meals. Clearly, having an increased capacity utilization to produce greater quantities is the next step in the evolution of a company set to enjoy hockey stick-type growth. (https://finance.yahoo.com/news/home-bistro-relocates-east-coast-113000168.html)
Operating in a highly fragmented market dominated by DIY meal kit companies and firms offering unexciting basic recipes, HBIS offers a diverse menu of dozens of single or combo, high-end gourmet meals which include those inspired and created by celebrity chefs and an array of healthy, lifestyle meals. The flurry of milestones in the past six months are both enviable and impressive for a young firm on the cusp of a major top-line and customer growth spurt. The aforementioned recent events and upcoming milestones provide us with confidence that the stock is poised to reach our $3.40 price target, perhaps as early as the Fall of 2021.
With five chefs on the platform, an M&A transaction in the process of being integrated into the HBIS family, we plan to review and update our current forecasted financials for a potential upgrade. At current levels, the shares trade at a substantial discount to the price/sales multiple assigned industry leader DoorDash (NASDAQ – DASH)---a gap we believe will narrow in the second half of 2021, aided in part by the fact that HBIS trades above both its 50 and 200 DMAs—a bullish technical characteristic. Clearly, HBIS is still in the early innings of its infrastructure-building and digital marketing campaigns, which translates into a favorable entry point for opportunistic investors.
Recent Trading History For HBIS
Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 25 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
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