Redeye briefly comments on Maximum Entertainment’s announcement that the chairman of the board has announced his intention to resign, while an EGM will be held on 9 September for election of a new chairman.

Maximum Entertainment

* Lack of recurring revenue model and inability to scale up without expensive reinvestment.
* Not positioned to grow five-fold in a decade or capture the greatest market value.
* Industry's 10-year median ROIC is below 15%, indicating potential profitability challenges.
* Products do not have long lifespans (over a decade), and the market is not dominated by few players.
* Inconsistent returns on invested capital compared to cost of capital, suggesting potential competitive disadvantages.

* Strong growth potential with meaningful reinvestment opportunities and successful geographic expansion.
* Benefits from secular tailwinds supporting growth and core business unlikely to be disrupted.
* Easily identifiable sustainable competitive advantages.
* Diversified and wide revenue base with minimal regulatory interference and independence from key individuals.
* Proactive customer engagement for innovation and focus on creating value for customers and suppliers.

* Poor profitability metrics, including low gross profit margin, operating margin, return on equity, and return on assets.
* Weak historical growth in earnings per share (EPS) and stock price since IPO.
* Concerning financial health indicators, with unfavorable current ratio and high debt levels relative to operating cash flow and free cash flow.
* Low operating cash flow and free cash flow conversion rates, suggesting potential issues in turning profits into actual cash.
* Lack of dividend payments or growth, indicating limited shareholder returns and possible cash flow constraints.

* Revenue growth consistently above industry average over the last five years, indicating market share gains and competitive strength.
* Cash and short-term investments cover expected cash burn for more than two years, suggesting financial stability and resilience.
* Efficient inventory and accounts receivable management, with both ratios below 20% and their 5-year averages.
* Low occurrence of one-time charges, averaging less than 3% of sales over the past five years, demonstrating financial transparency.

* Senior team and CEO tenure under five years, potentially indicating instability or lack of continuity in leadership.
* Management has not consistently delivered on promises, which may erode investor confidence and trust in the company's ability to execute its strategies.
* The company lacks a clear, consistent, and affordable dividend payout policy, which could be a concern for income-focused investors.
* There's weak commitment to sustainability reporting, potentially exposing the company to reputational risks and failing to meet growing stakeholder demands for ESG transparency.
* Board members do not hold sizeable personal stakes in the company, which may reduce their alignment with shareholder interests and commitment to long-term value creation.

* Strong founder involvement and significant insider ownership (>10%) demonstrate commitment and align interests with shareholders, fostering long-term focus and potential outperformance.
* CEO demonstrates deep industry knowledge, focuses on successful capital allocation, and has a history of value creation, indicating strong leadership potential.
* The board promotes gender diversity in leadership and appears to have directors who deeply understand the value creation process, enhancing decision-making and governance.
* Management owns a significant stake in the business and there's a controlling owner with long-term commitment, further aligning interests with shareholders.
* The company maintains direct and timely business updates, focusing communication on long-term business value, which fosters trust and transparency with investors.