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Yesterday Berenberg raised their target price to 205p (from 185p) and said Buy:
Https://investing.thisismoney.co.uk/broker-views/
It's worth reflecting on Zeus's increased forecasts and where they might take the share price (translated at $1.25 exchange rate):
Dec'26 : 29.6p EPS
Dec'25 : 25.2p EPS
Dec'24 : 22.8p EPS
Dec'23 : 18.6p EPS (actual)
And that's without any further acquisitions or share buybacks.
Edison state that TIG's global ad-tech peers trade on average P/E's of 12. And TIG's Online Presence peers trade on P/E's of 25.
If you value TIG on a relatively conservative P/E of 15 based on those numbers, and apply them to the 29.6p EPS you get to a 444p price target which could be achieved in say winter '25/spring '26 with the market looking forward as usual.
So almost 200% potential upside in around the next 18 months to two years.
Assuming TIG continue to perform smoothly, merely meeting those forecasts without surprises as they've been doing, then there should be a strong re-rating from the miserly current year P/E of 6.9 at 156.6p.
Zeus's research summary today has now been posted elsewhere, so here's some useful extracts:
"Q1 results
Revenue grew 8% organically in the trailing twelve months (TTM) to March. The Online Presence division continued to benefit from price rises and the shift toward alternative Top Level Domains (TLD), whilst the Online Marketing division continued to see declining click prices offset by visitor volumes. The company remains confident in meeting expectations for 2024, supported by new products, vertical integration initiatives and international expansion plans. We update our forecasts for the acquisition of Shinez, completed on 26 April, and lower tax rate assumptions marginally, which increases FY24 Adjusted basic EPS by 12%. Team Internet shares trade at a very attractive 5.3x FY24 EV/EBITDA, 6.7x P/E with a 15.1% FCFF yield. We believe the Group is considerably undervalued for its levels of earnings quality, growth, and cash generation."
"Shinez acquisition and forecast upgrade: On 26 April, Team Internet Group completed the acquisition of Shinez I.O. Ltd. The deal diversifies Online Marketing division revenue and expands its traffic monetisation options and capabilities (discussed on pages 4-5). The $43.2m initial consideration, funded with existing cash reserves and debt from its RCF, is equivalent to 4.2x adjusted FY23 EBITDA of $10.4m. An additional $12.3m of contingent consideration is tied to ambitious financial targets over two years, which we would expect to enhance earnings accretion if met. The deal is expected to create high-single digit percentage EPS accretion on combined pro-forma numbers for FY23, before accounting for potential synergies. As a result, we upgrade Adjusted EBITDA forecasts by 7% to $105m for FY24, by 10% to $115m for FY25, and by 16% to $131m for FY26, not including any impact of potential synergies. We also reduce effective tax rate assumptions in all years from 27.5% to 25%, driving an even greater uplift in EPS.
Valuation: Team Internet is well positioned to take market share with a full suite of products that uniquely addresses all stages of the advertising funnel from ‘Awareness’ (Shinez) to ‘Consideration’ (TONIC) to ‘Conversion’ (VGL). Despite its strong market position, its shares trade at only 5.3x EV/ EBITDA 2024 and 6.7x PE, with a 15.1% FCFF yield. In comparison, Online Presence peers trade at 10.3x EV/EBITDA 2024 and Online Marketing peers trade at 6.5x, 94% and 22% valuation premiums to Team Internet."
They've only just completed the $43.2m acquisition of Shinez, so I'd be surprised if there are any more material acquisitions for a little while.
The AGM last month renewed the authority to purchase their own shares, so I'm sure there will be more buybacks in due course.
Bit surprised that there has been no follow-up buyback scheme announced.
Wonder if they might be eyeing up more M&A. Was sort of alluded to in the recent presentation the CFO gave.
Very encouraging Q1 results just out, with Q1 EPS up 20% to 5.35c, or around 4.3p.
Plus organic revenue growth up 8%, and a huge 19% increase in Online Marleting visitor sessions mitigating a predictable 10% decline in revenue per thousand sessions.
Above all, the outlook is confident in temrs of at least meeting expectations for the year, and EBITDA margins have increased nicely by 4%.
Zeus have now incorporated the Shinez acquisition into their forecasts.
They've raised this year's forecast to 28.5c EPS, or 22.7p EPS. That's still a crazy low P/E of just 6.7.....
Every set of results is slowly and steadily better..... 4 years here and wish id lumped x10 more in..... oh hindsight is a wonderful thing 😁
I am a newbie to TIG but these seem a decent set of results to me.
Share buybacks favour the very long term holders such as IIs and Directors. It certainly doesn't help anyone investing short to medium term. That's why I think they do it.
A bit like tender offers, most the time structured to tempt shorters term holders, usually RI's, to sell up and leave.
Interesting how the mere suggestion of a takeover has done far more for the share price than months of Share Buybacks.
Really not sure that companies should bother with buybacks.
Either use surplus cash in the business or return to shareholders by way of dividend.
There have been a few articles and mentions in the last few weeks highlighting the potential for a TIG takeover, and also one that was suggesting it being taken stateside.
Not sure if there's any substance or simply that it's such an obvious candidate given the cash generation, technology boom and the ad market starting to show recovery.
Https://www.ii.co.uk/analysis-commentary/four-aim-shares-are-potential-bid-targets-ii531587?
"Team Internet Group (TIG)
Share price: 138.6p
Market cap: £346.7 million
Domain name and online marketing business Team Internet Group remains modestly rated despite the strong growth exhibited in the past couple of years. Most of that growth has come from the online marketing division, and it may be that the earnings are not thought to be high quality. Even if that is so, a prospective multiple of seven appears mean, particularly given the strong cash generation.
Acquisitions have been important in accelerating growth, but there is organic growth. In 2023, revenues were 15% ahead at $836.9 million, including organic growth of 13%. Underlying pre-tax profit improved from $70 million to $77.2 million. Net debt increased to $95.3 million because of share buy backs and acquisition payments. The company has also commenced paying dividends.
This year nearly $90 million in cash is likely to be generated by operations. Team Internet has spent $41.8 million acquisition of Shinez, which creates and promotes content across social media and search engines.
First-quarter figures will be published on 13 May. These are expected to show continued growth. The acquisition of Shinez was not completed until the end of April so will not be included. If the valuation does not improve then Team Internet’s strong position in the domain names sector and the cash generative growth of the business would make it an attractive bid candidate for a private equity firm."
Team Internet will be at Mello2024 on Wednesday 22nd and Thursday 23rd May 2024, 9am-6pm at the Clayton Hotel & Conference Centre in Chiswick, London. The annual flagship in-person investor event will feature over 40 companies and keynote speakers such as Lord Lee; Christopher Mills; Georgina Brittain; Gervais Williams; Ed Croft; and many more! If you are new to Mello, you can get a ticket for just £30! Use code NEW2MELLO24
Https://www.tickettailor.com/events/melloeventslimited/1201351
Get 50% off your ticket with code LSE50OFF
Https://www.tickettailor.com/events/melloeventslimited/1201351
For more info: Https://melloevents.com/mello2024/
Good to see the Shinez acquisition completed.
Note that:
"this acquisition is expected to significantly enhance earnings per share (EPS), with a forecasted adjusted EPS growth in the high single-digit percentage range for the pro forma fiscal year 2023, not accounting for potential synergies":
Https://uk.advfn.com/stock-market/london/team-internet-TIG/share-news/Team-Internet-Group-PLC-Completion-of-Acquisition-of-Shinez-I-O-Ltd/93728895
Very interesting/intriguing news today that TIG shares have begun trading in the USA on the OTCQX, which is the premier tier of the OTC market:
"Trading on OTCQX will significantly enhance Team Internet's visibility and accessibility in the world's largest capital market"
Apparently TIG "has received interest from numerous US investors in the past and, in recent months, has hosted several meetings with US investors".
Given the CEO's comments below, perhaps this will presage an eventual move to a full US listing either away from AIM or a more premium market listing on the NASDAQ?
I wouldn't blame TIG for looking in that direction given the substantial discount compared to its US peers:
Https://uk.advfn.com/stock-market/london/team-internet-TIG/share-news/Team-Internet-Group-PLC-Commencement-of-Trading-on-OTCQX/93628568
"Michael Riedl, CEO, of Team Internet, commented: "As we mark the beginning of our trading on OTCQX, we are not just opening a new chapter for Team Internet. We reinforce our commitment to enhancing shareholder value and expanding our footprint in the United States, a market that represents nearly 50% of our revenue. This move reflects our robust performance and the investor confidence we have been fortunate to build, especially within the US, over the past year. We recognise the importance of making our shares more accessible and appealing to US investors, and qualifying to trade on OTCQX is a strategic step in that direction. We are eager to welcome new investors and invite them to join us in this exciting journey."
Just noticed that in the last 2 days RNS filings that they've started to cancel shares (which were held in treasury). Not sure why they would cancel some each day rather than in one block. Seems a bit strange.
Continuing the move up - buying coming in at the full 145p offer now.
CEO and CFO are continuing to focus on the business and accounting. The sketchy part of Adjustments (non core opex) continues to reduce. AMORTISATION should remain fairly stable you despite the shinez acquisition which imo really moves the needle specially on reducing the reliance on google.
Reported profitability is firmly anchored.
Last year was a tough macro backdrop but still TIG delivered double digit organic growth.
All lights turned to green. I am very bullish over the next 12 to 24months.
Moving up again this afternoon, up 3.2p, and at the highest it's been since last March.
Up 2p to 141.5p, and on lots of volume too with 212k shares traded already. Looking good. Yet still ridiculously cheap imho.
It's about time. The great mgmt and value they are building have been evident for some time, now the numbers are reflecting the progress that has been made.
Now up 3.5p on over 2.4m shares traded. Looks like the dam is breaking....
Up 2p on almost 1.3m shares traded already today. Perhaps the excellent recent news flow is finally seeing the message and value here hit home.