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Seems to be only you and me fighting the corner here! True - I think there is definitely a scenario here where the whole group is in play.
I still think they will look to build GRC for 2-3 more years but I’m sure a price at the top end of that range would work for most shareholders.
Fully agree. The rise is only due to the short close. The rate rise is very worrying here. No more M&A now this is full focus on cash generation. As I’ve said I’d support a 10% equity raise at this price for sure
I think they should look to sell the group as a whole. I know as two parts it’s worth a lot more but let PE have that. Get us shareholders out of here at £10 - £12 and I’m more than happy
Price has settled at £635m market cap or c.£800m EV - so 8x the 24 run rate ebitda. Given tic bolt ons cost 7x,platforms e.g Hydro-X cost 10x, then would expect a deal for a £300m revenue division would go for at least 14x ebitda. So, the market is currently pricing in a low chance of a deal. Alternatively, if a deal gets away at 14x, then Marlowe would unlock 5x worth of tic’s £45m run rate ebitda I.e £225m, thereby raising the EV by c25% to £1bn.
I think a deal will be done - the CEO has a career history of M&A and will have a deep pipeline of GRC deals / look to reposition the business away from TIC.
On this basis, there is significant upside awaiting in the short term and a few days before results is a great time for a new / top up investment.
Does anyone have a different view (or want to challenge my bull case?)
I’d have though GLG and Blackrock would follow they will both be at a loss now on their shorts
Hopefully we can surprise in terms of cash generation and then the shares will fly
Hoping the article attracts a bid for the whole group
Jp Morgan’s short position (c. 1m shares) is now closed. I’m not 100% clear on the mechanics of closing out a short position but the overall volume on Friday was 1.3m, so my assumption is that their closure was a significant feature of the rise last Friday, as volume yesterday was fairly normal. c2m shares remain on loan
Yes, I agree it is a shame but this potential deal does unlock some value quickly. I have held the shares for years and will wait until 2026 / end date of the new strat targets. Once directors and senior management have been paid out, for me, will be the time to sell. Until that point, I think this should continue to roll well and like you mention re Ideagen, there will always be the possibility of a PE bid in the background….
Let’s hope they can get something away. Ultimately £650m isn’t a huge cheque in PE world. My only slight annoyance was a sold a handful at 590p. I was nervous around interest rates and didn’t want to waste the chance to de-risk but at the time I did it I was happy
It’s a shame to split the group as I do think there’s a great story in software and service delivery combined but x-sell is always harder than envisioned
Interesting news on Friday - a sale would provide the financing to pivot more quickly to the advisory and digital spaces via M&A, avoiding the need for a placing. I sense that this strat review is part of the wider strategy that will form the basis for the next medium term plan, through to when the executive LTIP matures in 2026. Expecting most of the existing targets to have been met when results announced before end of June.
Clearly, if a deal is done for TIC (note the £650m quoted figure includes debt and is based off a multiple that is slightly out of date given the current climate), then the remaining business will be much lower revenue, higher margin, higher growth and should also benefit from a higher multiple. A significant rerate from here would therefore be possible.
All the other points remain: no evidence that shorts have reduced yet (so potential upside if they start to close) and upcoming results should be good (TIC will be shown as a mature division, generating high ROIC - so ideal time to sell).
It doesn't say much
https://www.thetimes.co.uk/article/making-650m-sale-could-tick-all-the-right-boxes-for-marlowe-l02bnzf5j
Can anyone see the Times article just out?
I'm only here as my partner is partaking in the companies SAYE scheme, and the first offering matures in August or September, so I'm sure there will be a number of very happy people with these events, although there may be higher number of sales during that period .
Things starting to happen …….
Agreed golden, certainly seems to have a greater value if split into two, hopefully the next few months will prove that. I imagine todays rise may get the attention of a few people, sometimes that then becomes self fulfilling with a SP rise as retail investors take a punt and even the ‘herd’ has a look……hopeful stuff. I would happily be a medium term holder for the software business…
My first few buys were around that level. I’d previously been selling up near £8 and was trying my luck again
My thought here was always that this was worth more in the PE world. I therefore averaged down (but didn’t grab the bottom and I’ve lightened the load on the way back up)
Ultimately this is what the fire business should be worth. The software side then (hopefully) is valued like Ideagen which got taken private for £1bln on a £30m EBITDA
I did think someone would like the group as a whole tbh
£650m is just above the current market cap.
Great news if anything happens with a part sale around that price…I bought in here at 7.40 and would be delighted to have my financial ‘pain’ relieved !!!
Bring it on….please
They will have to RNS now
Brilliant news!
The software platform then can get valued the same as Ideagen! Which would be near £1bln
Could be fireworks if there is any truth
https://news.sky.com/story/lord-ashcroft-backed-marlowe-tests-appetite-for-650m-inspection-arm-12903057
Agree with all the below. The business needs capital and PE have it to deploy. PE multiples are those numbers but on EBITDA
I have to admit I got a bit excited today when google incorrectly quote 993p share price. I thought a bid had landed
Pretty high volume today on a flat price - interesting to see tomorrow when the interest is updated if this is shorts closing?
Yes, true. The scenario analysis ran through the upside from cross sell, for example, and just reiterated that absent a one off event, this business should just keep compounding its growth year after year and generate 10% fcf margin and 15% roic (18 months out). The multiple will ebb and flow with the market but if they keep growing organically the share price will gain momentum.
Question for me, and you regularly note this, is that the CEO is clearly a buy and build person and that if the public market doesn’t return to a level where he can execute on this strategy in a material way (I.e. not just bolt ons) then does he look for a sale / PE involvement etc and some point in the medium term? Note that the LTIP pays out in 2026 and c£11 is needed to maximise.
Interesting that it's on EBIT and not EBITDA given how high those figures are but I guess that then accounts for future M&A spend ie amortisation of acquisitions
Investec split the business into TIC, Advisory and Software with respective values of £350m, £417m and £171m (total £938m) less net debt £170m and other £25m = £743m (£7.75/share). Multiples are respectively 14x ebit for Tic, 15x advisory and 4x £43m ARR for software. Wacc 10% growth 2.5% in the model - so conservative.
It’s a 44 page detailed note but the theme re the forecasts is very prudent / probably more realistic short term than the house brokers e.g berenberg, where £10+ target has been maintained. Investec are also very clear that the rating is undemanding given the contracted revenues and demonstration of margin progression from integration etc.
Let’s wait for the results but from the time of the last CMD I am looking for a slight beat of the consensus for fy23 and an outlook that run rate org growth is around the 10% mark i.e accelerating further
770p seems low for a SOTP valuation. Can you provide some insight into that and any other points
I agree a raise isn’t needed but there is more than a £50m drag on the equity due to the debt and rising interest rates therefore a raise will drive a rerate it my view