It’s been over a year since GYG IPO’d on the ASX, to a lot of fanfare, and it initially performed very strongly, more than doubling from the IPO price of $22 that many called “expensive” at the time. The stock hit a high of ~$45 in February; however, it’s been one-way traffic since. Their 1H25 results were softer than hoped, with declining margins as they grappled with cost pressures, while last week’s full-year numbers cast a shadow over their ability to meet aggressive growth targets.
If we simply look at the numbers in isolation, there is no doubt they are strong. Every store we go to is packed at peak times, and the product remains great. It’s just that the market wanted more.
- Revenue of $436mn was below the $550mn expected.
- EBITDA of $65.1mn, up 45% trailed the $86mn tipped.
- NPAT of $14.5mn was weaker than $22mn expected.
- The dividend of 12.6cps announced is almost a white flag – why would a growth stock like this pay anything?
Comparable sales grew 9.6%, buoyed by 24/7 store openings and a successful breakfast menu ramp-up. They added 39 new restaurants this year, ending FY25 with a global footprint of 256 outlets. However, operating losses in the US doubled to $13.2 million and they’ve had a slower start to FY26, with comparable sales only up 3.7% in the first seven weeks —well below the 7%+ levels seen this time last year. Further, the forecast margin of 5.9–6.3% disappointed markets expecting more.
Still, management remained upbeat, pushing ahead with 15+ new US openings and targeting 1,000 stores in Australia over time, though, this seems like a big stretch. The other aspect on the horizon is its place in the ASX 200. It’s right at the bottom of the ASX 200, and while it’s unlikely to lose its spot in the upcoming rebalance, it is at risk in future quarters, meaning index fund selling.
- All that being said, we are drawn to the growth on offer, and we ultimately think GYG is a great business; it just comes down to price.
