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.
Wonder who is selling all these shares - what is going on any ideas, doesn’t look too great does it??
Why would you sell at an all ready low SP - maybe a fund raise from one of the large shareholders…… don’t like it though
Regarding gross profit and gross profit margin. CNIC works with several media buyers, publishers, and advertisers like Google, resulting in significant pass-through-costs therefore it's more accurate to look at EBITDA / Gross Profit rather than just Gross Profit Margin (Gross profile / Revenue). For FY23 I forecast 48.2% (FY22: 48.4%) this compares to a peer group median of 43% and average of 44%. Thus CNIC is better.
Regarding the NED selling - keep cool - nothing to read here.
• He still holds 15.5m shares or > 5% of the company!
• His holding are back from an original investment in 2003, pre-IPO, so an he has a proven tracl record of backing CNIC and can’t be blamed for some occasional trimming here and there. He also sold a chunk in 2021 and few small sales in 2020 but that's all.
CNIC remains a cash generative machine - FCF is what matters.
My base is for FCF 5yr CAGR to be 10%.
At less than 8x fwd EPS - it's a steal.
The OM model is vertically integrated which gives it flexibility.
CEO expects a 20%+ CAGR for OM revenue over the next 5yr.
BUY!
Exactly
I'm not entirely sure why so many people here are obsessed with GAAP profit numbers...it is honestly a terrible way to invest to be looking at those numbers. Free cash flow is the sole valuation determinant of a company...people need to get this into their heads and for it to be firmly front and centre. No other metric matters I'm afraid...can be good to pick up stuff on cheap earnings multiples but earnings can be completely manipulated and they in many cases are useless.
CentralNic excels on the FCF front...it is a scandal where it is trading right now...only way I'm looking at it is that its such a steal that I'm viewing it as a gift to pick up as much as I can at this level.
Business could potentially do $1bn in revenues this year...will have to wait and see but it's not out of the realms of possibility. Also on margins...this is something that is reasonable currently but should ramp up significantly. The business really benefits from operational leverage so volume growth should exponentially improve them.
I don't know what the catalyst is here to get these to a fair price...but I can safely say as someone who every few months screens the entire AIM and FTSE markets that I have yet to come across anything so undervalued.
cruncing numbers will show that without the impairment - CNIC would have break even. Next year CNIC will be profitable on a reported basis.
Talking with executive, OP medium term CAGR is "high single digit" and OM is 20% !
The gross profile and cash generation of this company is incredible. Yes, margin are not sector leading, but what matters is the FCF generation and it's huge. On my numbers CNIC trades on a 9% FCF yield with a 3yr forward FCCF CAGR 10%.
CNIC IS WAY TOO CHEAP.
Make or break time. Long term trend line off the lows of 40p now in play. I hope it has bottomed here.
Monty
Agree with your view on profitability, doesn't change the fact that there's been a significant seller since last year's 120p placing though.
However, 120p does seem to be the floor so I'll continue see how things go.
I did reduce on the last spike (I was seriously over invested) so overall I'm still up a smidge at 120p.
I’m the same as you mate - been watching this for a long time and heavily invested. Thinking maybe I should have got out when it hit 1.55 not so long ago. Good luck, you never know might come good……usually when you least expect it
Is it really a conspiracy theory or net loss of around £3.2m then a net loss of £2m this year. Hyped a lot but not profitable, looks like they are buying revenue. (Revenue is vanity, gross profit - sanity, net profit reality…….So the SP is maybe having a jam tomorrow reality check. Let’s see some bottom line net profit then it becomes a more compelling investment.
Dean
Quite simple really. We have (a) seller(s). Once again today, as most days, there are more reported sells than buys, often this is by a significant multiple.
I don't know who and I don't know why, I just know it's in someone's interest to keep this as close to 120p as possible. Worse, they seem inexhaustible. Every now and then they have a few days off but they always come back.
Nearly 30% down in the last three months despite, as we all know, constant great news.
I often think it would be easier to sell and concentrate my efforts elsewhere but I hang on in the traditional belief that, one day, true value will assert itself. No idea when though.
Results good, general vibe with the company good…….and yet the SP going ever so gently south, any ideas why?
Will this ever get to where it deserves, should be up at £1.80-£2.00 all day long…..surely
Any ideas/words of wisdom welcome
I see someone on Adfvn posted about their presentation on Mello last night. They are at pains to explain the business to potential investors. This has been the big difficulty for the market to understand how they make their money and how they make so much! There is no obvious comparison or competitor in the uk. So long as they keep reducing debt, piling up the cash and paying a dividend there can be no doubting their success for much longer hopefully.
Conservative forecasts in a troubled world like this seem eminently sensible to me. Far better to er on the side of caution however confident they are about the prospects and the tiny market share it has taken blood sweat and tears to get so far.
The problem with the CEO reconfirming "market expectations" is that the analyst forecasts are far too conservative (reflecting their conversations with management) to the extent that they are not a credible basis for forecasting the current years financial performance, and as such, the guidance reconfirmation is meaningless as a share price driver. For example, if you strip out the step-up in revenue expected from acquisitions closed in the last year (i.e. due to having a full year of ownership) and from acquisitions closed in the current year, the implied organic growth rate that the analysts are assuming is pretty much zero. i.e. the company is already meeting their forecasts without requiring any revenue growth.
I would be extremely concerned as a shareholder if the organic growth rate went to zero from 60% in one year. The analysts should use their judgment based off their discussion with management, their independent research, and the current momentum of the business to come up with credible forecasts for the organic revenue growth. Even using the Company's internal budgeted organic growth rate (which is in "high single digits") lacks credibility given the current run-rate of growth and managements record of sand-bagging budgets so that they can be exceeded.
I guess I'm making the point that the market (and share price) would probably benefit from management communicating more realistic guidance to analysts which actually reflects "market expectations" rather than try and create easy to exceed, sand-bagged, earnings beats for the purpose of maintaining their record of exceeding analyst forecasts at each earnings release
Buried in the formalities of today's RNS are the following encouraging extracts - note that the Q1 trading update will be on 24th April:
"The Directors are also pleased to confirm that the Group continues to be confident in its ability to meet market expectations"
"Michael Riedl, CEO of CentralNic, said:
"CentralNic's 2022 results reflect the Group's most outstanding year to date. The combination of record organic growth with accretive acquisitions executed in 2022 positions the Group to carry on executing on its strategy and delivering value to our audiences while continuing to achieve success."
last year there was a trading update on 25th April
Dormus
Morbox it is my fault ,yes it is Monday
CentralNic
Mar 27, 2023, 8:00?AM
Sorry, they have one! And it’s up to date it is Monday, I was thinking of another company!
I’ve got the results for Monday “ The audited annual report and accounts for 2022 is expected to be published on 27 March 2023.” but could be wrong. Did they change the expected date?
I don’t like that they haven’t got a financial calendar page, but saying that others have them and never update them, what’s worse!
Seller having a day off? Nice SP progress today.
results tomorrow
I said FCF is whats relevant....exactly what Buffet said is sole fundamental driver of value...I repeated it like 5 times in the comment. FREE CASH FLOW - just to be clear, something which CNIC print like the Germany hyperinflation.
gg - You know more than Warren Buffet and other proven successful investors. Actual retained profit and cash are irrelevant and the wrong focus…..Really???
Very very nice to see Slater topping up...perhaps taking advantage of these RIDICULOUS levels we are at...wouldn't surprise me as the son of famous small cap growth investor, Jim Slater. His book, the Zulu principle...almost defines CNIC down to the tee. And the Slater's don't look for 5 baggers....invest with an aim to find the 100 baggers of the future.
It's a great testimony to the opportunity here who we have as shareholders....Kestrel, Herald and Slater...very different to the usual large institutional who I would pay absolutely no attention to...all boring and undifferentiated. However, the three in cnic are all very small sub sector specialists who look for real asymetric risk-reward on the upside and have a good record of delivering...particularly Herald.
Cannot believe we are down at these levels...but a god given gift for those with cash on hand.