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If i was buying Currys for £700m+....
I would, with no hesitation, consider buying Music Magpie to go with it for £50m
I think it would truly compliment the Currys asset and provide plenty of synergies
Bidding war brewing for Curry's, I could see the same happening here.
Great work Tylo - sounds very encouraging.
Putting the debate aside about how great an asset they are: these machines are certinaly very clever!
Stopped by Trafford Asda before and luckily the kiosks was being emptied by one of the employees. I was
Able go explain to the guy who I am, that I’m invested in the company etc etc and he was nice enough to show me how the internals of the kiosk work, how many devices it can hold and how the collection process work, the machine was full of phone I believe we counted 15, he was saying how this kiosk and the one in Trafford centre across the road have to get emptied every couple days because they are some of the most popular locations. He explained how he’s employed by a third party company who is then in contract with musicmagpie, he also explained that he himself drops the phones to musicmagpie head quarters but other workers in other areas essentially box up the devices and post them to musicmagpie for processing. Just thought I’d share this little anecdotal experience
Another thing to note here is Damian has bought £150,000 worth of musicmagpie shares with an average price of around 10p. He’s not exactly Elon musk so that amount of money is not peanuts to him, he also doesn’t strike me as the kind of individual to gamble on things. If he’s buying it’s because he believes in the value and prospects of the business. it wouldnt surprise me to see another RNS of him acquire more shares, someone has clearly been loading up recently. December has 1.4 million website visits, January had 1.5 million website visits so that’s stable and in line with previous years. we have had all the investment in kiosks, website and IT improvements, corporate and domestic rental assets. these investments are well above the current market cap and that’s without all the pre existing infrastructure. They have the musicmagpie brand, Asda partnership ( Asda has also been buying up local co-ops and petrol stations and converting them into mini Asda stores, could be great locations for another kiosk roll out) these have intangible value to them. 10m mcap is pricing the business for failure and severely underestimating the true value of the business . Refurbished tech is very on trend, consumer technology is only becoming a greater part of our lives, phones are essential an extension of ourselves. idk I don’t want to convince myself or you guys that this is all sunshine’s and rainbows because it isn’t, the business has a lot of work to do and the environment is tough and is only getting tougher. time will tell.
JD.com has also enter an offer for curry’s. Looks like many players see the fact that a lot of uk businesses are undervalued at the moment. This could improve sentiment around musicmagpie and encourage other payers to look around and make offers for other uk businesses like msuicmagpie.
Someone still loading at around the 10p mark.
Lets see if news comes this week. ;)
Spiked guns ? Waffle waffle
You can’t have it both ways. We have demonstrated that Rental is profitable and delivers a better end to end ROI on the device when combined with the post rental sale.
Rental does need funding and has been the cause of the net debt. The upside however is it helps MMAG increase EBITDA
You have to play fair.
As I have shared before, all the MNOs fund their subscription models with debt too. Private Equity will be focussing on Gross Margins and not be concerned with the debt.
EBITDA only grew because of the disingenuous margins on rentals of @70%. What nonsense. Who pays the interest and picks up the amortisation costs?
15% EBITDA growth while the higher margin side of the business which is in decline therefore off setting some of that growth. Looks like the business is currently priced for failure and the disc media, kiosks and corporate side are completely discounted.
I've said it before and I'll say it again - you need a combination of three things to get rich investing; Be smart, Be Patient, Be Lucky.
Time and lack of updates is not a concern here at all; MMAG are in an 'offer period' and takeovers or MBOs take time
80% of shares remain in the same safe hands in which the resided last year; the vast majority have been in the same hands since the IPO at c£2. (A large chunck of Schroder's holding was acquired from Liontrust at a lower price)
The number of shares in publich hands was abour 6% before xmas and now up to 20%; most of which have been bought between 9p and 14p.
I firmly believe that any share price movement at this level is irrelevent for the 80% in sticky hands; the movement is more the smaller public holders who have bought recenty (at sub 20p) or in the last 12 months for anyything between 20p and 40p Increasing or decreasing the price by a 1-3p is quite material and likely to tempt a few into selling or buying.
I'm sitting tight and rememberring all the reaasons why I bought shares here:
- The decline in share price is overdone and is currently 'priced to fail'
- Whilst hard to find direct comparisons for what MMAG may be bought for - there are some similar candidates that have sold for £50 to £150m
- The company has emerged from a challenging two years with stong H2 performance in which: (1) It reduced net debt, (2) grew EBITDA 15% in 2023, (3) Grew Revenue from Consumer Tech by 7.5% in H2 (important as this is their future - as opposed to the CDs/DVDs) and (4) Demonstrated their ability to pivot and adjust their sales mix to manage cashflow to stay comfortably within its Bank covenants.and more rectly (5) We saw new investment from a very successful local entrpreneur who took 1% at 11p in one foul swoop and followed up last week with another 0.5%.
They have not failed - they have momentum from a strong H2 and record black friday
They remain in an 'offer period'
The current share price values the business at just £10m - bargain basement. This is a good business and with a bit of tinkering and when in the hands of someone with deeper pockets it will thrive IMO.
I think there is lots more that can be done to sweat their assets, I believe there will be significant opportunity to reduce Admin costs, Interest costs are expected to come down this year. Finding just £10 per device transaction would go a long way in making MMAG ore profitable.
Nulla nuova, buona nuova
Been watching this on takeover expectations and hoped to see some fireworks but high a year ago and low this month?
6 trades all day and now less than 10p.. crazy when there was BT interest In a buyout
Why would I want a dividend when they have debt. I would much rather them use the cash to pay down the debt and not have to continue to pay interest, especially in this environment.
Thoughts on a Dividend Declaration, used to increase MCAP?
As a result... consultant DEVs headcount at MMAG reduced by up to 10 - £1m+ salary saving?
Looking into it abit more, looks like music magpie partnered with a company called utilize when they first launched there corporate rental program know as magpie circular. Looks like magpie circular, utilize and Damian hansons circle loop are all similar. Damian Hanson may have heard about musicmagpie through connections with untilize. Over the last couple years music magpie has spent over 10 million on website and IT development. Some of this will of course be maintenance cap ex but some of it will also be spent on the new corporate service side, including the new magpie circular website developed in partnership with utilize. This and the Disc media side seem to be completely discounted in musicmappie market cap. Disc media will probably make around 11 million in gross profit this year and I expected continued corporate rental contracts.
As with many investments - patience is the key here
Lots of evidence to suggest significant buying
Despite all the 'doom and gloom' that the haters try and project - the company continues BAU and all the major shareholders holding firm; obviously with the exception of the 11% Cannacord stake which has changed hands - but not clear who's hands yet
GLA
Another day closer to a nice trading update or bid for the company. :)
Me either, I’ve been in the industry for a few decades now. I saw ICT reverse/Mazuma was mentioned earlier in this chat, I remember when MMAG went to ICT back when it was SHP close to 15 years ago for them to do their processing. Times have moved forward since then!
I have only briefly looked at it but the rentals work, desperate consumers pay high, nearly a pay-day loan model. It is though risky, as recently shown, so I can only imagine this particular rental model was started to prove it worked with a view to securing a different financial model when the trust was there. When MMAG first started renting, banks wouldn’t look at supporting with finance due to it being used equipment and the risks of manufacturer warranties not being there. With all the sustainability pushes, that has very much changed over the last few years and I see the risk of a large revolving credit facility reducing as a leasing offering will be at the forefront of their marketing very soon.
Whether its acquired, delisted or otherwise, the valuation is low and I see a value rise soon, a cutting of costs and staff will show increased margins in the July interim results
Never got why they changed their name from Brightstar to Likewize!
I assumed they get the vat margin sale on the eventual sale of the rental asset. That’s why i am concerned about how they are booking and managing rental assets on the balance sheet. I fear they may not be depreciating them or booking an @ market accrual on rental assets.
You have pointed out a major factor why the BT would not work. B* lost Voda a while back and Ee are probably also set in a path which would integrate trade in with their supply chain. SBE/B* integrated trade in and refurb makes sense for Ee and I think they do that for the most part already.. Sort of like Voda and ANOVO.
Mmag does not really fit. However Likewize, New World, PCS might be ‘out the box’ options. Assurion would be the most obvious I’d have thought. All that Vat margin product for insurance fulfillment would work and they could probably integrate declutter with that repair retail outfit they bought a while back … was it ubreakifix or something similar? I would not know but maybe assurion are using Hanson’s software for some of their processing….
That said, my favourite is still manamgement lead move to delist…get off the exchange and work to some better valuation/exit down the line.
BT/EE have a strong brand, if the main reason to acquire MMAG was to increase throughput of second hand devices then wouldn't they have looked to strengthen their offering that's already set up? Their own recycling website isnt competitive on pricing and isn't on comparison websites. The service is backed by Likewize, a Multi-Billion $ company who are primed for any increase in volume. I've seen their Northern American facilities stock upwards of 150k devices valued over £60m. So my thinking is there was more at play.
Saying all that, it's not relevant now, but perhaps, MMAG had interest from BT/EE due to it's undervaluation throughout last year alongside MMAG ability to assist with what I mentioned earlier, the potential of white goods being introduced into their product stack. Now with a failed acquisition MMAG is perceived as weaker still, dropping the valuation further.
A rebound is very likely, any guess to where is just that, but fingers crossed mid-20s post results in early March!
On another note, does anyone know when renting a device from MMAG how the VAT works. Buying used mobile phones from consumers qualifies for Marginal VAT. (pay VAT at 16.66% on the margin rather than sales price). So VAT due on a device that was purchased at £150, and sold at £200 would be £8.33 (16.66% of £50) - just curious as it may also have some impact on why B2B markets aren't considering acquisition here.