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Zeus Capital are very bullish about today's new acquisition - extracts:
"Online Marketing bolt-on
Following the record FY23 results announced yesterday, Team Internet announced an accretive bolt-on acquisition for an initial consideration of $42m. The Group is continuing its strategy of making accretive bolt-on acquisitions, aiming to diversify its revenue model and expand its traffic monetisation options and capabilities. The deal is expected to complete in late May 2024, at which point we will incorporate the impact into our forecasts. We continue to believe that Team Internet’s strong track record, cash generation and growth opportunities are not reflected in its 4.8x 2024 EV/EBITDA multiple."
"¨ Transaction details: The $41.8m initial consideration, funded with existing cash reserves and debt from its RCF, is equivalent to 4.0x adjusted FY23 EBITDA of $10.4m and generates a FCF yield of over 20% based on FY23 figures. The deal is expected to create mid-single digit percentage EPS accretion on combined pro-forma numbers for FY23, before the impact of synergies. An additional $12.3m of contingent consideration is tied to ambitious financial targets over two years, which we would expect to enhance the accretion if met. With the Group currently trading on an FY24 EV/EBITDA multiple of 4.8x and generating a FCFF yield of 16.9%, we think this acquisition presents better returns to shareholders than further share buybacks at this time.
¨ Forecasts: Shinez reported $100m in gross revenue $17.2m in net revenue and $10.4m in Adjusted EBITDA for 2023. On a pro forma basis, Team Internet estimates the enlarged Group would have generated gross revenue, net revenue and Adjusted EBITDA of approximately $948m, $208m and $107m, respectively. The impact of the accretive acquisition will be incorporated into Zeus estimates upon the transaction’s completion, expected in late April/early May 2024. For FY24, we expect to add approximately half of Shinez’s $10.4m FY23 adjusted EBITDA to the Group forecasts for FY24. The deal is expected to create high-single digit percentage EPS accretion on combined pro-forma numbers for FY23, before accounting for potential synergies.
¨ Valuation: We continue to believe Team Internet shares are very attractively valued. The shares trade at only 4.8x EV/ EBITDA 2024 and 6.7x PE, with a 16.9% FCFF yield. In comparison, Online Presence peers trade at 9.2x EV/EBITDA 2024 and Online Marketing peers trade at 7.2x, 95% and 53% valuation premiums to Team Internet."
Https://www.proactiveinvestors.co.uk/companies/news/1043414/team-internet-celebrates-milestone-year-with-strong-2023-financial-performance-doubles-dividend-1043414.html
https://www.proactiveinvestors.co.uk/companies/news/1043454/team-internet-group-swoops-for-online-advertising-specialist-in-41m-deal-1043454.html
Blimey, this could take us close to being a Billion dollar business in 2024! Exciting times.
TIG is making major strides. We need the SP to catch up quickly or the BoD will be fighting off low-ball take over offers.
Wow.....major news out of strategic acquisition
Big acquisition news this morning - $41.8m paid for Shinez on a bargain multiple of only 4 times EBITDA.
Plus:
- "this acquisition is expected to significantly enhance earnings per share" by around 8%-9%, i.e high single-digits, this year
- substantially increases diversification away from Google, which is excellent news
- there should as always be loads of synergies in diverting traffic via TONIC etc
Hopefully this should excite the markets.
Team Internet Group plc posted solid audited FY23 results this morning. Revenue increased by 15% to $836.9m adjusted EBITDA increased by 12% to $96.4m, operating profit increased by 26% to $42.3m while PBT increased by 98% to $29.3m. Adjusted EPS for the year rose 32% to 23.22c while a final dividend of 2.0p was proposed, up 100% as the group continues to pursue the progressive dividend policy launched in 2022. Net debt increased by 31% to $74.1m primarily due to $39.7m of cash share repurchases. Valuation remains compelling with forward PE ratio at just 7.5x in the top decile for Software & IT Services companies. The share price lacks some positive momentum and has been drifting sideways in range for a couple of years. There is no rush to buy at the moment, but the share is certainly worth monitoring and will be well worth owning once it does start moving....
....from WealthOracle
wealthoracle.co.uk/detailed-result-full/TIG/833
I wonder if the struggle TIG has to grow its share price is because it’s a bit of a confused story? By combining Online Presence and Marketing it can’t be compared neatly to its competitors. And is it a growth or an income stock? Clearly neither at the moment. A further increase in dividend to say 4p might make it more attractive to income funds, but it won’t be at the moment. Even as a “hybrid”, at some point a satisfactory level of dividend EPS growth will inexorably lead to a share price response but how long? Any merit in separately listing the Marketing and Presence businesses? Or a NASDAQ listing?
A completely bizarre start today, presumably caused by short-term traders. And an opportunity for those wishing to buy!
Zeus have raised their forecasts for this year yet again and acknowledged the beating of their already raised expectations for last year:
They now forecast 25.4c EPS this year, rising to 27.3c EPS next year.
The dividend is also now forecast to rise to 2.2p this year. And net debt is to fall dramatically to £23.2m.
Brief extracts:
"Assisted by share buybacks in the period, adjusted basic EPS increased by 17.2% to 23.2 US cents, 3.6% ahead of our recently upgraded estimate. With these results, Team Internet extends its track record of upgrading and outperforming expectations."
"Record results
Team Internet’s FY23 results confirmed another strong year of trading from its
Online Marketing and Online Presence businesses. Both revenue and EBITDA growth remained in double digits, margins on net revenue continued to improve, and cash conversion remained strong. We continue to believe that the Group has substantial long-term growth opportunities including international expansion, new partner development, and vertical integration. In our view, Team Internet’s strong track record, cash generation and growth opportunities, both organic and inorganic, are not reflected in its 4.8x 2024 EV/EBITDA multiple."
"Outlook: Management remains confident in meeting market expectations for FY24. With Zeus estimates at the bottom of the consensus range, we increase FY24 EBITDA by $1.0m (1%) to $98.3m, which may still prove to be conservative. EPS growth, now +9.5% yoy, is enhanced by the full year impact of share buybacks. We increase FY24 DPS from 1.8p to 2.2p. Forecast changes are summarised on page 3. FY26 forecasts are also introduced today, showing 6% net revenue growth and further margin expansion.
Valuation: We continue to believe Team Internet shares are very attractively valued. Despite the strong operating performance and financial results, the share price is broadly flat on 12 month basis. The shares trade at only 4.8x EV/ EBITDA 2024 and 6.8x PE, with a 16.7% FCFF yield. In comparison, Online Presence peers trade at 9.2x EV/EBITDA 2024 and Online Marketing peers trade at 7.3x, 91% and 52% valuation premiums to Team Internet."
"For the year ended 31 December 2023, there was one customer that represented more than 10% of the Group's revenue, amounting to USD 566.9 million (2022: USD 492.8 million) across two segments, Online Marketing: USD 558.9 million (2022: 483.2 million) and Online Presence: USD 8.0 million (2022: USD 9.6 million). The customer is an aggregator who does not procure the services for its own use but provides access to an estimated three to four million end customers who order and consume the services."
I always assumed that this was Google but doesn't quite tie in with the 3-4m customers line. Any ideas?
Good results but as usual share price is down , why?
Wow
Everything Company has to find true value in the end or it'll be taken over.
There's a good return to be made, it's just how and when.
It's Monday morning don't worry. So will price go up after results as usual and finish in the red by end of day. So used to this happening now, don't expect anything different
Grrr
2p as a percentage of 36p when it should have been 136p. I think I'll go have a cup of coffee and reboot the brain.
Sorry, early morning brain!
Thinking 2% of 36p rather than 136p. Still gratefully received :-)
Fantastic results, but 2p dividend isn't 6%. More like 1.5%.
Excellent results today, which are nicely ahead of both Zeus's and Edison's forecasts for all of revenues, EBITDA and EPS.
The 23.22c adjusted EPS is well ahead of Zeus's 22.4c forecast.
And the 2p dividend is double that of Zeus's 1p forecast.
The CEO is already confident about meeting expectations for this year.
Given TIG's track record and prospects the current share price is just far too low.
An excellent set of results, and a dividend of 2p which is pushing 6%.
Now, we just need to get the share price to where it should be, which in my view is 2 to 3x where it is at the moment.
You may get all you wish for but I bet the share price won't go up. This is my largest holding and I have been waiting 2 years. I can't believe it is not at least double this price. Good luck to us all and maybe a miracle will happen
What do we hope to hear on Monday, folks? I’m hoping we get a new share buyback programme for 2024, cancellation of the shares in Treasury, an increased dividend and a bullish forward looking statement. Please Santa.
Tipped by Midas in the Daily Mail today as one of "the Great British businesses that lead the world":
Https://www.thisismoney.co.uk/money/investing/article-13176813/MIDAS-BUDGET-SPECIAL-time-shout-rooftops-invest-Great-British-businesses-lead-world.html
"Team Internet, formerly CentralNic, is another winner, recently announcing record sales and profits from helping firms to bolster their online presence and protect themselves from cyber criminals. Shares have almost tripled over the past five years to £1.36, but City analysts reckon they are still far cheaper than they would be on America's Nasdaq exchange."
Https://masterinvestor.co.uk/equities/wanted-by-interpol/?mc_cid=daf0130fb1&mc_eid=db9f9bbaf2
"Team Internet Group (LON:TIG) – Another Couple Of Weeks
The Share Buyback programme continues to help to push this group’s shares higher, with purchases of around £200,000 worth of stock being made each day, the latest being 150,573 shares @ an average 140.12p per share.
At the current progress rate, it should be completed by the end of the first week of March, just ahead of the company publishing its audited annual report for the financial year ending 31 December 2023 on Monday, 18th March.
After hitting 141.80p yesterday, the shares closed last night at 138p.
Hold very tightly to the shares, I feel that my next (156p) Target Price could soon be achieved."
Good to see the buybacks continuing at over 140p.
Loking good chart-wise too at the highest for around a year.....
Great listen. Sounds like for 2024 the Company will generate in excess of $50m free cash which it will deploy, in no particular order;
-increase in divided (1p in 2023)
-continued share buybacks
-M&A with the bar raised as to profitable targets
- reduction in debt.
All sounded very positive and look forward to hearing more on March 18, year end results.