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Techinvest in their recent issue three weeks ago said Buy, and that was at 90.75p:
In a brief update, CentralNic reported that it has been trading comfortably in line with market expectations for the six months ended June 30. Revenues for the period is expected to be in excess of US$110m and adjusted EBITDA in excess of US$15m. This compares to US$49.7m and US$9.2m respectively in the same period last year. Cash increased to US$27.6m from US$24.1m three months earlier, whilst net debt debt decreased to US$76.4m from US$76.8m over the same period.
CentralNic has recorded more revenue in the first half of 2020 than in the full financial year 2019. This has been achieved through a combination of earnings accretive acquisitions and steady underlying growth across its businesses. With ample potential for further acquisition-led growth in a sector where opportunities for consolidation abound, we feel that the medium-term outlook for the company remains strong. Continue to buy."
Good to see confirmation of the new acquisitions being unconditional to be completed on October 31st.
This sentence sounds promising for CNIC:
"The Company is pleased to announce that the Acquisition Conditions have been satisfied or waived and substituted with adequate or better completion deliverables"
The price has been creeping up almost every day this week. There's presumably decent buying interest out there - buying now coming in at the full 90p offer price.
For the record, here's a transcript of the interview with Zeus's analyst above which reads very well:
Up a nice 2p so far - sells being absorbed nicely, whilst institutional buying (AT trades) is pushing the price higher. Promising.
New interview with Zeus's analyst about CNIC's Codewise acquisition:
Also, there's a significant and unrecognised benefit from the Codewise acquisition. In Zeus Capital's note, they confirm that the acquisition is structured as an asset purchase, where related amortisation is significant and tax-deductible over the next 5 years - so CNIC may not incur any tax over that period on Codewise's earnings.
Zeus Capital have increased their forecasts today. They now go for (at $1.27:£1):
this year : 8.9c EPS, i.e 7.01p EPS
next year : 11.1c EPS, i.e 8.74p EPS
At 85.25p that's a P/E of 12.2, falling to just 9.8 for the year starting in four months' time.
For a global leader, with very high recurring income, with .com domain name prices increasing by 7% soon, and having just assimilated a major competitor, I can see the share price doubling or even more in the next year or sooner assuming CNIC continue to deliver as they have.
Positive review by the respected Techmarketview - "another smart purchase" by CNIC:
"Friday 11 September 2020
CentralNic acquires Codewise for $36m
CentralNic Group, the London-based AIM-listed provider of internet domains has grown significantly over the last couple of years fuelled by multiple acquisitions as it looks to both build global scale and broaden its range of value added services (see here, here and here).
CentralNic announced today that it has raised £30m through a private placing to acquire the assets of Krakow-headquartered Zeropark and Voluum. The businesses are known collectively as Codewise and together serve over 6,000 customers across 190 countries. In the 12 months to 30th June, Codewise generated revenue of $60.3m and adjusted EBITDA of $7.4m. CentralNic also beleives they is has spotted $1m worth of “synergies” to be made.
Zeropark is an Ad Exchange platform offering real-time-bidding solutions, connecting marketers with domain investors and publishers via its marketplace. The platform provides monetisation revenues to its customers, as well as marketing solutions for small/medium businesses and brands to acquire traffic and customers online.
Voluum is a SaaS online marketing management suite for small/medium businesses and brands, enabling online ad analytics, tracking, and media buying.
The Acquisition is all about moving the Group up the "food chain" and providing higher value/higher margin services designed to enhance the Group’s montetisation service line which has been growing rapidly since the acquisition of Team Internet last December. The company will also be able to provide online marketing tools to existing domain name customers which should help the objective of growing revenue per client. Overall looks like another smart purchase for CentralNic."
At 83.5p mid-price the price is up 3.75p already today, so it would seem that the market likes it.
Excellent news. I always love to see an acquisition when it's "significantly earnings-enhancing" :o))
"The Acquisition is expected to be more than 20 per cent. earnings accretive for CentralNic"
The placing has already been done at 75p - considering the price had already slipped from 90p at the start of September the price could have been better imo.
Nevertheless, the placing was "significantly oversubscribed", so there should be a very good aftermarket.
And great to see Kestrel buying another £8.3m of CNIC shares. With the immediate and large earnings enhancement this news should be very well received.
Majorboy, read back on the thread and you'll see the attractions here - including over 90% recurring revenues, terrific cash flows as customers pay up annually in advance to retain their domain names, big share price discount to larger players which should now start to close, etc etc......
Never heard of this co before until I saw today's RNS. They are paying 36M for some entities that do domain sales? Does anyone really pay for internet domain names? Someone here will be able to tell me what kind of money is available for selling internet domain names. I'm genuinely interested to know M
This looks a good acquisition long term, but there may be a short term impact on the share price as they look to issue £30 million of new equity to fund the deal. Placing is due on 30th Sept so it will be interesting to see the price set for this.
Thanks for posting Rivaldo. I've added to my holding again this morning. The Directors Talk interview with the Zeus Capital Technology Analyst Bob Liao is also pretty bullish - some extracts below. I remain convinced that this dip is a good buying opportunity to get into a well run company with good growth prospects. GLA
Q2: How is that strong topline growth translated into EBITDA growth and cash generation?
A2: We saw an equally strong performance at the EBITDA level, EBITDA increased by 16% on a proforma basis compared with the 18% in the topline and the company achieved this strong growth even whilst investing in a lot of sales and product management and new leadership. We haven’t even started seeing the benefits of that but they’ve made those investments in H1.
In terms of cash generation, the company has been able to convert 138% of EBITDA to cash in the second quarter and that’s a return to very strong cash generation compared to some of the one-off outflows in Q1. The company expects cash conversion to remain at about 100% so all there very solid.
Q3: How have these strong results impacted your outlook on CentralNic Group?
A3: We’re definitely more optimistic, we’re raising our revenue forecast by 7% for the 2020 year, that assumes about 6% proforma growth in H2 which is down from the 18% growth that we just talked about with H1. That’s because the monetisation division and the new products we talked about were already introduced in the second half of 2019 and so the year-on-year comparison are naturally going to be much more difficult. We’re still looking at solid growth and, if anything, my view is that we’re looking at conservative assumption in the second half and if we do see some continued momentum in the business, like we’ve seen in the first half, we could see some further upgrades.
In terms of EBITDA, we’re leaving those estimates unchanged and relatively conservative there as well, we’ve raised our expense forecast to account for some for that increased investment that they’re going to continue into the second half. We’re not factoring in any of the benefits from that so we think we’ve got some potential upside to the numbers we’ve put out there and the prospects for the company, if anything, are looking brighter than ever.
New 13 minute presentation with slides from the CEO on Directors Talk is worth a watch:
"CentralNic Investor Presentation Sept 2020 – Building a better global digital economy
4th September 2020
CentralNic Group plc (LON:CNIC) Investor Presentation Sept 2020 presented by CEO Ben Crawford.
CentralNic Group is a London-based AIM-listed company which drives the growth of the global digital economy by developing and managing software platforms allowing businesses globally to buy subscriptions to domain names, used for their own websites and email, as well as for protecting their brands online. Its core growth strategy is identifying and acquiring cash-generative businesses in its industry with annuity revenue streams and exposure to growth markets and migrating them onto the CentralNic software and operating platforms."
Transcript of an interview with ************* worth reading for the very positive vibes:
"CentralNic Group Q&A: Record organic growth of 18% (LON:CNIC)
Article by: Amilia Stone 3rd September 2020
CentralNic Group plc (LON:CNIC) Chief Executive Officer Ben Crawford caught up with ************* for an exclusive interview to discuss delivering record organic growth & how that was achieved, cash conversion at 138%, monetisation and new management.
Q1: Half year results published and you delivered more revenue this period than the whole of last year. Ben, you must be pleased with these results?
A1: Yes, absolutely. I can’t say they came as a surprise but on the other hand, I guess, there aren’t many companies that are able to say that in this kind of time, this economic difficulty and uncertainty so very happy.
Very good results as a result of two forces at work. We did make four acquisitions in the second half of last year so that obviously made a healthy contribution but we’ve also performed the exercise of doing the proforma numbers, looking at what it would’ve looked like if we’d owned all four of those companies for the first half year last year and comparing to this half. We found that the underlying organic growth rate of the company is 18% on the revenue line which is a much higher number than we’ve ever quoted to the market.
So, we’ve got record organic growth plus the four acquisitions has delivered very satisfying numbers this year.
Agreed Chestec - imo the current hiatus is a buying opportunity.
Recurring revenues comprised 96% of H1 revenues. Customer stickiness is huge and renewal rates highly predictable. As a tech business with large and global growth potential there's not much more you could want in the current climate.
Nice summary here from a sector specialist reviewer:
"Ad revenue soars as CentralNic turns in strong first half
by Andrew Allemann — September 2, 2020
Domain monetization contributes to strong first half at CentralNic.
Are ad markets suppressed due to Covid-19?
Not at CentralNic (London AIM: CNIC), owner of domain name monetization companies ParkingCrew and Tonic.
The company reported revenue of $111.3 million for the first half of 2020, up 124% year-over-year. This was, in large part, due to the acquisition of Team Internet’s monetization services. The monetization segment contributed $48.5 million in revenue.
CentralNic says that revenue per thousand (RPM, the opposite of CPM) increased by 33%. This is a surprising result given that many ad platforms saw decreased bidding because of the pandemic.
The company also credits SSL monetization with part of the boost. By SSL monetization, the company is referring to how ParkingCrew enables SSL on domains that receive a lot of traffic.
The report also states that the monetization segment has one customer that represented more than 92% of the segment’s revenue during the period, amounting to USD 45.0m. This is most likely Google, which provides the main advertising feed for ParkingCrew. The number is higher than I assumed and shows that traditional PPC parking — not Tonic’s zero-click network — drives almost all of the revenue."
Great set of results. 2H forecasts good. Share price nosedives. AIM market is a mysterious place!
I’ve added to my holding this morning. Good buying opportunity IMO.
New interview with the analyst at Zeus Capital, emphasising that their new forecasts for this year are "conservative":
They currently forecast 9.1c EPS this year, or around 6.84p EPS.
At 83.5p that's a current year P/E of only 12.2 - for the year ending in only four months, when the P/E will reduce even further.
The H1 results led to Zeus Capital INCREASING their revenue forecasts by 7% for this year.
And they'll review their forecasts after future updates.
good interviews eveywhere and sp retraces back 10pc- what's going on
Cheers Trojan re the Pro-active interview - and here's a second interview:
Both interviews cover similar ground, with record 18% organic growth in H1. CNIC are being "appropriately cautious" at present, given the global economic climate, in not rushing out yet and saying they'll beat estimates for the year - despite the excellent H1 results and prospects.
The most interesting point for me was that CNIC have patented a solution for their domain monetisation technology for SSL-certificated web sites/domains, which apparently had been a barrier to the industry before CNIC acquired Team Internet last year.
Apparently this has "really taken off" - this reflects really well on CNIC and shows their innovation and resourcefulness.
Very good review just out on the respected Techmarketview:
"Tuesday 01 September 2020
CentralNIC rides wave of digitisation
CentralNic Group, the London-based AIM-listed provider of internet domains, continues to reap the fruits of its acquisition strategy with strong growth in the first half of the year.
2020 half year results out today, have Group revenue growing 124% to $111.3m (H119 $49.7m). Profitability also saw a significant improvement with operating profit up 12% to $3.2m (H119 operating profit of $2.9m) and adjusted EBITDA up 64% to $15.1m (H119 $9.2m).
Much of this growth can be attributed to the Group’s shopping spree last year which saw four acquisitions added to the stable – (see here, here and here), as the company looks to build a global business and access growth markets. Results remain impressive even once the impact of the acquisitions are stripped out with organic revenue increasing by 18% to $111.5m (pro forma H119 $94.7m) and adjusted EBITDA increasing 16% to $14.9m (pro forma H119 $12.8m).
Given the state of the wider global economy, the organic growth looks particularly impressive and shows the underlying demand for the Group’s two largest service lines, Wholesale domains and the monetisation of services.
Indeed, CentralNic remains very well placed to see out the current coronavirus crisis with a profitable business model well suited to serve an increasing proportion of businesses relying on electronic communications and webservices. Financially, the business is cash generative, subscription based, growing organically and has the majority of its revenue recurring (79% of .com domain names renew each year - 95%+ for older ones)."
Excellent H1 results, with revenues up 124% and EBITDA up 64%. The organic growth numbers are also good. Cash conversion is very good, up to 138% in Q2.
With 4.4c EPS in the bag in H1 there's confidence that full year forecasts of 8.7c EPS per Zeus Capital will be achieved.
This is very good news considering that H1 at least has been a period of big investment in growth and the full integration of Team Internet. H2 will see the bigger benefit of cost savings and synergies etc.
The huge recurring revenues are the big attraction here, along with the successful track record of acquisitions.
It's encouraging to see that CNIC are still suggesting that more acquisitions are on the cards.
CNIC remain at a huge discount to its sector comparators, which trade at ratings more than double CNIC's. Some will focus on the large adjusting non-cash items, i.e amortisation, share-based payments, but the core profitability and prospects here remain very attractive.
Hello all - I've bought in this morning at 86.75p having seen a solid set of results for H1 and expectations for a strong H2 performance. Stop loss @75p and looking to exit at 100p+. This looks to me like a well run outfit with solid financials and undervalued by comparison to other tech companies.