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On the growth I think this just needs to be better explained
Steve on the call said Dermstore isn’t a growth asset (it’s a margin play). When you take out dermstore and also the vertical integration assets the growth rate is the same as before
Also consider that 25% was set at ipo and those ipo forecasts were beat by £500m! So you can roll back some of that over performance
Oohaah, I pretty much agree with everything you have written. I’ve done the same and there is not too much in there that troubles me. So many companies reporting Q4 are feeling pain from inflationary / exchange rate issues, so I can forgive the EBITDA shortfall. After all we are still in the turbulence of a pandemic. The wider financial market is not quite so forgiving sadly. The reduction in % growth is not ideal, but the comparative number is still strong (inc organic growth). I’m also personally comforted by the Liberum research, as they took close contact with the company after the CMD. I don’t think there will be a fast return to the £2’s, but longer term, i feel it will push well past that. SoftBank, MM Taking it private, Private equity interest, Beauty Spin-off and further II buying will all be catalysts to watch for in the short / medium term. If they can sort the corporate governance issues in good time too, that will help things along.
Listened to the whole call and the Q and A
I believe there are things happening behind the scenes, Poss SoftBank taking a larger stake and going private, ironically the lowest the SP the more attractive it looks for them
Going forward markets hate lack of clarity so they need to
1. Announce New Chair
2. Confirm strategy for spin off if at all for the brands
3. Softbank clarity
4. Spell out the value of Ingenuity
The SoftBank Question was defo interrupted and dodged by MM which makes me think there are defo talks of some sort are happening
Goldman sachs were defo confused what Ingenuity actually does .....
I don’t often post but like to hear what the views are - I have listened 3 times to the webcast update on THG and for the life in me I do not hear any medium or long term issues. Current supply chain issues/inflation. Ingenuity a slight miss but amazing growth and sign ups.
If you look at the valuation at the levels of growth achieved it’s currently very cheap the shorts are simply milking the current switch to value and recovery play stocks which in the main will not deliver long term growth. Dyor
For any LTH who has not yet listened to the Q4 call and feeling a bit uneasy at present, I suggest you listen to it as other than the FX and whey protein headwinds it was all pretty vanilla and inline or above IPO guidance of what was stated in Q4. In fact they explain neatly the EBITDA bridge and at CCY would have been ahead (therefore they need to review their treasury hedging function to see if they missed a trick as they explain whey ok). They even say that revenue excluding M&A was c £2bn vs £1.75bn per IPO guidance so clearly organic growth and EBITDA just above 9% less 50bps for inflation/whey and 90bps for FX get you to c.7.6%
All questions answered well... even on Ingenuity which is tracking ahead based on my interpretation and 60% EBITDA margin
SOFTBANK - they cutely sidestepped the question as MM jumped in to answer a question and then they moved on. May have been genuine or maybe there is some corporate action or re-negotiation going in the background...
Lots of pemutations but the one I prefer is take private with big chunk with Softbank, spin off Beauty and then Nutrition and the re-list in US. I cannot see how they can do the spin offs even with a full listings given all the noise - they need to get out of the spotlight
As for Goldmans think they are just trading their shares rather than anything loss of confidence, they too that in lots of companies given they have so many different trading desks.
GLA genuine LTHs