The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Danl,
Good post, THG is a decent long term investment, especially as you point out if they utilised Ingenuity to focus purely on their own business/ platform and move into other sectors as you mention.
In the near term it’s just at what Rev value the market places on the current structure ?
Is it 1X Rev plus X ARR Ingenuity stand alone as they demerge?
Of course non of us know as the market will decide but suggest based on market metrics we will stay in a range of £2.15 to £2.50 for the next few months?
What’s your call ?
They have a platform which can compete. Also fashion has “brand equity” as you know people won’t be seen dead in Primark clothes
What THG has done with beauty has built a platform which is more efficient and faster to market to retail other products. Augmented by data and sector knowledge which makes the experience personalised. This is part of ten difference to Amazon which just has lots of products. Cult, lookfantastic etc are places people go to learn about beauty and products. As well as great service
This why pet food etc could be disrupted as again “premiumisation” leads to a shopper experience where they want more than just product. They want experience, content and community which is what THG have with Cult and Lookfantastic
It would help if you had some basic business acumen tbh
I posted this - 7.37am this morning
‘E: Update26 Oct 2021 07:37
If the market places same value as other online ?
£2B for core business (1X Rev )
£1B Ingenuity
£3B tops ( market cap today £4B)
Will be interesting to see who wins this tussle, the bulls or bears, £2B value gap between the two forces - based on the markets current value for web site business’s / SaaS ARR’
I didn’t quite expect the bears would Mail the stock to £3.1B m/cap same day
I guess the question is will we see £2B m/cap for the websites - as per on line peers - and what value for Ingenuity without knowing it’s R&D requirement?
Gut feel £3B m/cap is the floor and we are close to that, so it’s down as much to Ingenuity value do we stop the rot around the current price?
Will be interesting to see what the market does.
From the capital markets day we know they capitalise less than peers
I wonder if part of the problem is that one hand they say R&D is 2.6% but they are also capitalising as much as they can ?
Analysts can see the cash burn / relatively low R&D for a tech business?
but can’t get an angle.
It then makes it extremely difficult to value the overall business ?
on EBITA so the market reverts to 1X Rev as it’s peers
Fully agree , keep it all together, but be more transparent
I’m not saying there is no moat. The moat is in having a huge platform which is agile and efficient. Which very few businesses have outside of one country (seen post I’ve just wrote for you re revolution)
The point why THG have an advantage is a platform comes with high level of fixed cost which you have to cover. Once you do you’re in promise land as the platform scales and scales
The beauty with THG is that big expensive platform is in essence free (or will be in time) so if THG stayed together the pricing potential would be insane as they would not have to price in overhead
It’s a bit like Primark renting out half the store for a higher rent than they get so the cost of running the store is a lot lower so you make more profit
Europe's largest online pet retailer being bought for £3.7bln making £65m EBITDA
This for me should be the THG strategy. Screw spinning stuff off. Keep together. Have ingenuity as a self funding profitable bazooka which THG use to destroy online markets
Beauty done - now it funds it's own M&A with it's own cash flow
Nutrition - a world leading brand. organic growth supported by ingenuity will be great
Pet food/ pet care - fits just like to above. High growth market which is like the above under going "premiumisation"
THG need to make a tough call here and say to softbank. Look just stay with the whole group. You can still have access to Ingenuity all the same but we are now going to destroy pet care
Imagine a business that is no 1 for those three sectors! The three sectors that Private equity are paying through the nose for
This business isn't broken they are just telling the wrong equity story. Needs a re-cut