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Well this mornings news seems to be a bid for Keyword Studios by EQT of Sweden
It comes after 4 unsolicited offers from them in recent weeks, so this is the 5th and a significant improvement on previous bids and likely to be recommended.
Not a #NoThanks Linkedin post and door shut promptly in their face like THG did with Apollo.
How many bids is that in recent weeks for UK companies?
*Not a #NoThanks Linkedin post and door shut promptly in their face like THG did with Apollo.*
Apollo saga wasn't resolved particularly promptly from my memory of it. And THG provided them with a further chance to improve their offer, which they were unable to do it seems.
The truth of the matter is we'll never know why the deal was rejected, but if it significantly undervalued the company as the 65% suggested then I'm pleased with the outcome. That the share price is where it is today doesn't mean much. What matter is where it is on the day we sell. Could be this year, or 5 years from now. Doesn't make any difference to me or my life. I just want the best possible price and remain prepared to wait for that day.
GLA
Well said @knowbody. I don’t get the outrage on the Apollo bid rejection. MM put a clear note out saying the bid was rejected by the Board because 1) it undervalued the THG’s prospects 2) Deal structure didn’t allow existing II shareholders to role without being subordinated to Apollo on nutrition and Beauty 3) Too much leverage. Majority of shareholders backed that decision, so that why the outrage?
The share price has fallen back, but that doesn’t mean it wasn’t the correct decision. Shareholders need to be patient here and back the Board, value will out in the end
Yesimabeliever, I think also one of the main issues is that they were clear to Apollo that they wouldn't get controlling stake right from start and the impression I got was that at the last minute they decided to go for 51% or something, and it didn't go down well with the 65% , could be wrong but that's how I read the messages.
And one year on (2 years since the Belerion King Street bid at 175p), so "significantly undervalued" and here we are at 74 / 75p.
Perhaps the "fast money" 35% should all get together Crafty and form a syndicate with greater than 10% then they can have a greater say.
No doubts about it THG is grossly undervalued but where has been the strategy to deliver shareholder value and where has been the delivery of an increase in shareholder value towards anywhere near those bid prices.
£15 Million spent on a seperation agenda and here we still are on the LSE.
90p to 55p after the Iain Mac debacle
£30Mill in shares created and dished and seemingly unlinked to share price KPI's
How much spent on Ingenuity chasing whales - and still none.
£50 Mill spent on keeping prices low for customer retention. Yet Nutrition revenues down 9%.
I can go on and on.
The fact is that it's alright rejecting bids if you are as they say "significantly undervalued" but you as a BoD have to have a plan to deliver shareholder value and get somewhere near the value that you are rejecting. Remember both UK and US markets btw are at all time highs.
It would be interesting to see if the approach would be different now if up popped Apollo or another Private Equity ensemble with another bid.
Again with Keyword Studios - a publicly quoted offer price - and a share price rise to not far off that offer price. Something that for some unknown reason we don't seem to want to do.
Rant over for the day and I shall be voting for change at the top come AGM.
@osg your frustrations are noted. The Board doesn’t have forever to get the share price up, and moves will have to be made to get the value up to maintain the support of the 65%. I don’t believe the money spent on separation has been wasted, it’s is part of a long term plan. Can or will we be in the same situation in 12 months time, no I don’t believe we will. MM and many of his investors have spent 10+ building value in the group, so they aren’t going to be in a rush to carve up/refinance group at a discount in a tough macro environment, they aren’t after all in distress as FCF+ and able to rescue leverage this year. I’m still confident MM will make his moves this calendar year, and PI’s that stick in will see their rewards.
Reduce leverage sorry
Correct Cong, Apollo wanted controlling equity interests in both Beauty and Nutrition and from memory existing shareholders could rollover into the new venture and CEO was being retained and incentivised.
Forgive me for saying it but taking a controlling equity interest is actually what you are paying good money for in any takeover.
The present BoD didn't want to relinquish "control" that is what it boils down to, so here we sit in the meantime with an undervalued and depressed share price probably 1/3 to 1/4 of what it could readily have been and waiting for somebody to stump up hundreds of millions / billions for a non controlling partnership interest. Can you honestly see that happening.
Time for a complete change of mindset and a focus on delivering shareholder value.
@osg but isn’t the point that Apollo weren’t offering good money. Say it was £2 offer, fine for me and PI’s in at low averages - a quick buck. But rubbish if you are one of the II’s that wants to roll and Apollo then has priority rights on the Beauty/Nutrition assets which your prior investment built. Don’t see how the 65% were ever going for that
Yesiamabeliever you are 100% right which is why it was voted down by the 65% club from the getgo
Yiab its been over 2 years since the Belerion / King Street Bid of 175p and over 1 year on from the Apollo bid valuing THG Ingenuity alone at significantly higher than probably the present sp. No doubting its grossly undervalued and Peel Hunt have recently also pointed out that undervalue - but we are nowhere near fair value.
So how long are I, you and others prepared to give it when in the interim, apparently recession proof businesses, and the BoD's strategy are not delivering as they should on the THG share price and other companies share prices and stock markets are trending at all time highs. Are you seriously happy with the present share price, last £30Million pound incentive shares dish out with the share price so low, a non existent IR department for a supposed FTSE 250 elect company etc, etc, etc.
Who for instance spends £50M on keeping prices low to retain customers and then on the other foot decides to "Rebrand" THG Nutrition and which is now in part of the reason for a 9% drop in Nutrition revenues.
A complete change in mindset or fresh blood at the very top with new ideas is needed and one also with an emphasis on delivering shareholder value. Other Chairs, CEO's or COO's would by now have fallen on their own swords, stepped aside and moved on imvho.
I've made my sentiments known and the way I shall be voting come AGM so I'll leave it at that and get on with following the rest of my portfolio and revisiting only on decent and semi-decent news.
GL all.
@osg, do I believe the share price is massively undervalued. Yes I do. There is the investment opportunity. I believe it will correct, and suspect it will be this calendar year. How long will I give it, as long as it takes unless my view on the business changes.
I don’t buy into the narrative that MM and the Board are muppets, and don’t second guess every decision on limited information. Happy to be aligned with the long term II’s who have a lot more money at stake than me.
Fair value for THG's whole business including My Protein should be in the region of £5 to 6 billion one assumes if Applied Nutrition is going to IPO circa £500 million plus. Statistics show THG's entire business is turning over more than 20x that of AP, so a value of £5 to 6 billion for THG is very conservative to say the least considering the £billions that have been poured into R&D alone. JMO Adyor
And we've just hit the £1bn mark again
The feeding frenzy continues..
https://shorttracker.co.uk/company/GB00BBQ38507/
MARKETS
UK stocks are outperforming the U.S.
https://www.cnbc.com/2024/05/20/uk-stocks-are-outperforming-the-us-and-one-cio-says-they-look-very-cheap.html
THG is in a much better position than when it IPOd at £5 a share and consequently rose to over £8.
If the business is in better shape and heading for cash flow positive guidance in 2024 why is the SP 76p
Is it the company's fault that the market is not reflecting this?
LSE is not the place to grow business hence the £15M spent on separating the divisions to make them USA ready.
MM doesn't dislike the LSE he loathes it. All he has to do is announce that THG is reviewing a possible USA listing for one or all divisions and the SP will double. WHY? Because EVERYONE knows the comp is grossly undervalued.
ROLL ON THE AGM
A reminder of what MM said in his latest LinkedIn:
https://www.linkedin.com/feed/update/urn:li:activity:7190962420062855168/
It’s sooo easy, with no fear of action from the LSE or the onlooking Financial Conduct Authority. But the LSE is now a barren wasteland - a poorly managed, unsafe ”market”. Naturally, investors and companies have taken flight in record numbers. It's a basic consequence of decades of foul play.
15 years ago, there were 3,305 companies on the LSE. Today the number is half! At the same time, all other global markets have exploded in size.
Year after year, investors have demanded their cash back from UK fund managers, tired of being subjected to UK market abuse. These record withdrawals force fund managers to sell most LSE companies, only able to hold those paying dividends.
Companies re-investing profits instead of paying dividends are now tricky investments for most UK fund managers, who need dividend cash to help fund the investor exodus.
The impact is stark. Last week, Google, Meta and Microsoft confirmed that in 2024 alone they will invest a combined $140bn in Tech/AI, while Nasdaq companies as a whole will invest up to c$1 trillion!
By contrast, all the LSE’s remaining Tech businesses together will likely invest no more than $5bn in 2024, of which THG is c$125m.
Enough said.
Come on, let's be honest here. The IPO price etc., was almost entirely down to a false perception of Ingenuity and subsequent vastly inflated valuation of the division based on the deal with Soft Bank.
In today's market, no way THG would have IPO'd at anything like £5.
However, I do agree that:
1. the company is in much better shape than at IPO;
2. the market has failed to recognise true value here; and (finally);
3. MM and Co haven't done the best job in assisting the market in valuing the company.
DYOR/GLA
Another good start to the week.
Keyword just yet another example of the premiums that can happen. But also a reason I’d like to see the THG SP recover before any ‘events’ otherwise simply far too cheap. Keyword itself was over £32 back in 2021 so one could argue it’s a cheap deal at today’s offer, if dealt that is.
Seems noise around LSE is getting louder by the minute and they’re all the same noises MM has been making for quite some time, but too little too late really. maybe we see the current actions and recovery will quicken up but I remain unconvinced at the LSE, and think London is going to a long forgotten exchange unless the planned changes go much further.
For THG, I can’t see anything other than going over to the U.S. or simply going private. But I’ll not be happy with anything less than £2 really and that’s with a lucky v low average for myself
As always GLA, and patience really is key
Problem is the lady who runs it and takes it all like an "exam question" seems to be in cuckoo land says actually there isn't a problem. She ain't convincing anyone!
Wake up.....rage against the machine!!
USA shorts have no shame. blatant
KBYK we will have to agree to disagree on this one.
Split the divs, which has already been done, then the SOTP has to be near £5 a share.
AN IPO is gonna be £500M that has got to value Nutrition at 3 billion. What price Beauty? And what price Igenuity after all the billions already spent?
Add it all together and £5 a share wouldn't be of the table.
RBC has Ingenuity on its own at 4 billion if it hits 500m revenue over 5 years and that forecast was 2 years ago so they still got 3 years to go.
What on earth can a green box be saying now?
Is it the usual premature comments because we’ve dipped a little?
GLA
Ste (who else?) is crying a river about US shorts. Exact quote is: "USA shorts have no shame. blatant"
I can think of at least one poster on this board who also has no shame. Blatant.
Summed up nicely Novice
We all know there is plenty of inherent value in nutrition & beauty, but THG only gets back to £5 a share with significant 3rd party Ingenuity "whales" IMO. I still believe this is possible as no doubt the market opportunity is there, hopefully Crane and his new CEO can sell the solution better than we have the last 2 years.
But lets no beat around the bush, 75p is nowhere near fair value for this share even without quick Ingenuity winds.
Rate cuts, LSE rule changes, capital events all on the table. Baffles me why anyone would be short here.