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"the growth disappointment is ‘new info’ "
what's new info when we already had 3Q like this?
Also what matters is where consensus is, and currently it's low for FY23 and beyond
Agreed that the FCF generation still looks amazing, and the drop off in cash conversion last quarter looks like ordinary quarterly volatility.
The combination of the FCF generation and absolute valuation level vs run-rate FCF still suggest that CNIC is extremely cheap, and provides a good amount of ‘margin of safely’ to absorb the organic growth disappointment.
However, the growth disappointment is ‘new info’ which creates a headwind which is slowing/stalling the share price re-rating. Over the medium term the attractive FCF and entry valuation should drive a significant return for investors, with upside if it can demonstrate track record of good cross cycle organic growth with resiliency to advertising market downturns
• Maiden reported profit still well in sight
• Sequential growth is flatish as your rightly said but i'd qualify to "good" in the current macro environment
• on organic growth, I calculate 1H23 yoy organic growht +7.4% (1Q23 was 12.2%) but the microsft deal has not hit the numbers yet (expected in Q3)
• good cash level supporting buy back and dividends
• outlook: AT LEAST IN LINE
• deep discount to peers provides downside protection on what seems a very easy to beat consensus for FY23 and FY24
STRONG BUY
Fair points. However we are told the company has increased its market share in both main divisions, so that speaks to your resiliency point - clearly the market is tough right now. It would be good to get a better handle on industry and company dynamics when results are announced. Still, one cannot really complain about ongoing levels of cash generation.
I think some people here risk creating a self reinforcing echo chamber. The most interesting and often the most valuable opinions are the ones which are contrary to one’s own as they provide an opportunity to test your underlying investment thesis and potentially uncover more information to refine it further and confirm it’s still valid.
Let’s be honest here. These results were not great: - The company has effectively posted flat quarterlies for the last four quarters on a gross profit and EBITDA basis.
- The Companies preferred way of calculating organic revenue growth using TTM pro forma company full current perimeter obscures and dampens both the real underlying level of organic growth as well as the most current information about run-rate organic growth rate.
It’s still very cheap, and flat organic growth may actually represent ‘resiliency’ given wider advertising macro spend trends, but relative to where we were twelve months ago, CentralNICs has significantly decelerated and certainly underperformed my expectations of where I thought it would get too by here, and the absence of an inflection point in the rate of organic growth (ie no evidence of a re-acceleration) is a disappointment
The fact the Management team hasn’t really acknowledged the stalling of organic growth and still emphasises organic growth of 30%+ is also very worrying, as it suggests they are ‘spinning’ the performance and ‘glossing over’ a significant change in the level of company underlying performance
That's it in a nutshell, Trek.
Yep outstanding results here especially if you read in parallel with SFOR’s this morning!
I don’t hold CNIC but it’s been on my buy list for ages. I tipped it on TECAN to recover from 110-115 to 140. Looks like 140 is pessimistic with these numbers!
Some would prefer the debt paid down, however, given the rates it makes sense to buy stock. Underwrite the divi then hit the debt. This one should go a long way!
Usual caveats
Trek
Fully agree that CNIC is bucking the trends seen elsewhere. The market will at some point catch up but across the UK markets good results are often being ignored with fewer private investors ready to get back into equities never mind small/medium caps. The tide will turn at some point probably when it is clear that interest rates have peaked and inflation is under some level of control. In the meantime our management team will continue to grow the business organically and inorganically and buy back cheap shares if no-one else wants them!
I mean is no one sending this company the memo about the extreme downturn in ad spend and consumer confidence?? I thought there performance should at least correlate directionally with those macro factors...
it really is astounding...i was expecting a drop from Q1 given the environment and would have been happy with anything over 170mm...but they just keep absolutely smashing my expectations.
just think for a minute - we still have the rewards to reap from the Bing partnership that will be sparked through Q3/4...
I don't know...many congrats to people who hold big here. really think this is the kind of share which may help with early retirements.
See what Monday brings.
Let's go team - let's close above the 200 SMA !
Very easy buy for me at 110 or there abouts. I think this is one of those strong stocks they say is first to show strength at the beginning of a bull run, and goes on to become a market leader. We only just hit the 200MA, we only just getting started here..
Lest we ever forget the spiv who wouldn’t stop going on about the other comprehensive income line!!!! Jesus wept….at least we have those morons that we can pick up shares on cheap from.
Well done guys - conviction and fundamentals don’t lie.
I’ll have a drink with you mate…..
Hoping the TU on Monday sends it further….
Haha very much so...as we always said....value - or in this case FCF yields - will always win out. Absolutely hoovered up shares at the 1.11 mark.
Hopefully in for a strong H1 update on Monday.
Raising a beer to all the retails who sold in the hole. Thanks for your shares.
Apparently on Monday 24th, according to chap on advfn who contacted the Company.
Not today then
I love to see such block trades!!!
Similarly, I have it down this week but not absolutely certain. Someone has just invested £2.6m today or at least it looks like purchases just ahead of the anticipated update which is either pure coincidence in anticipation of strong trading outlook, or they have inside information. Of course it must be the former as no-one ever gets convicted of being an insider do they? I am heavily invested here so looking forward to some good news so we can re-rate.
I've got it down on my calendar for this week (sometime) based on last year. Q1 April 25th in 2022 - April 24th 2023, H1 July 18th 2022 - w/c July 17th???
I read on Master Investor that CNIC is providing a trading update tomorrow but can’t find any confirmation of it…..
Anybody know this is a certainty………
Date for the diary - CNIC are presenting online via Sharesoc on 6th September:
Https://www.sharesoc.org/events/sharesoc-webinar-with-centralnic6-sep-2023/
Good stuff rivaldo - thanks for sharing