Musicmagpie Share Price (MMAG)

If you can't even get the debt position right given it was explained months ago. I would strongly advise putting your money in a bank and stick to the interest rate gains only

TYLO - care to discuss or acknowledge any of the many positive aspects of the research I have done or insight I have brought to the table?

I'm assuming not - as it does not fit your agenda

TYLO - You amy or may not have any bias to this company.

But your post is nothing but a de-ramp - very obvious and you must be up the 'worst dermaping post of the year' award and the competition is high.

As tedious as it is - I will address your scare tactics

1. Bad debt, wear and tear etc are all built into the margin. The CFO confirmed that bad debt was running at 10% and that the fulled loaded prodit margin is ~50%. The vast majority of the profitability of the rental business will be based on the 12mth rental payments - the residual value of the device at the end of the agreement represent a minimal amount of the profit. (note that the rentals comes with free case and screen protector which do make a bi differemce)

2. Not sure what your third paragraph is trying to get at. MMAG are continuing tthe rental model - but there is an opportunity, having agreed deals with Paypal and Klarna to effectively outsource the finance and risk to a third party. This includes a 'buy now, pay later) customer offer which will be a win-win. It will work well for customerds, but work well for MMAG as they will get all the revenue upfront.

3. 6% of rentals sit with Corporate customers. Corp business tends to be lumpy and have a long lead time. It would be nice to see this grow - but whist Corporates pay their bill they do negotiate hard.

4) There are many reasons that business are put up for sale - it does not mean the business is not performain well or have no long term potential. It would benefit from oweners with deep pockets. Arguably you sell your business when performance IS in a good place and the lng term outlook does look great

5)The Director step-down is not strange. She was a non-exec and unlikely to be required if/when MMAG is acquired.

You are discredired yourself in your own email - nobody is going to 'take a small position' if they have the 'percieved' concerns you shared.

Disclaimer ive decided to open a small position so i may have a bias toward the company, for those saying the debt after the "rental water fall" will only be 3.6m. that is assuming they get the devices back at all, they get the devices back in appropriate condition, no warranty send backs( ie, the battery malfunctions while the device is out for rental) and it also assumes the person pays off their complete rental agreement. all of these including the revenue forecast are not certain. This is one of the main risk areas. similar if you were to buy a house and rent it, if you are dependent on the tenant paying the mortgage and keeping the house in good nick, with no fall back cash you are already fuked. if rental impairments spike they wont have the cash flows they need to meet interest payments. however lets say the outright sales side still generates enough cash, if impairments go higher this will cause an asset right down. the other part of the lending agreement is an asset to debt ratio. this is similar to CRE where if the value of the asset goes too far below the loan value the bank may decide the risk is too high and just takes the property back off you. ask yourself this question, why is this business so cheap? are you a genius who is seeing something everyone else is missing? or is the business cheap for a reason and the share price reflecting the very real risks?

With all that being said i do believe this business is highly liquid and able to move consumer technology fairly quickly, i also believe the valuation is pricing in all the risk and therefore leaving room for huge reward if said risks do not materialize. another thing to note is that the rental products range is more than just phones, its also watches, laptop and games consoles which should have a longer rental life due the lower probability of damage and the slower generation cycle (new iPhone model every year, new xbox model every 4-5 years)

this is my one key thought im stuck on, the business can just completely stop the rental side, allow the cash flows to come through on the existing rentals and allow the device to come back in for outright sales, the only flaw with this is it relies on consistent demand and as we saw with last January and February demand can fall off hard, this will cause a decline in cash flows and maybe spike in inventory.

the corporate rental side was also started over a year ago and they seem to have only been able to get one decent contract with stage coach. they talked about a solid pipe line but as of yet no news on any deals. maybe a red flag

putting the business up for sale is also very strange, steves has owned the business since 2007, why sell now if things are going great?? why not hand it off to another ceo of your choice and hold a business that you believe is worth a billion mcap in the future?

the direct step down is also strange, she held the least shares, jumping a sinking ship maybe?

The more i research and think about the value in this business, the more confident I become in my conviction to take a position here and hold for as long as i need to

I could pick any of the big Comms companies tobh - but here is a link to the recent BT Interim Results

https://www.lse.co.uk/rns/BT.A/half-year-report-cq94ehyzj2etz92.html

I draw your attention to the 15th paragraph below the 'boxed' CEO statement

"net working capital movements includes £359m from the sale of cash flows of contract assets relating to mobile handsets"

i.e. In the same way that MMAG have a £30m fixed facility to fund the working capital for their rental business, BT borrow SIGNIFICANT amount of money (debt) against the future revnue flow from their contract handset dales'

ANd it is not just the big companies that do this either. The company that runs the onlinebusiness https://www.affordablemobiles.co.uk/ have debt against it's future revenue stream too. (see link below)

https://find-and-update.company-information.service.gov.uk/company/04455131/charges/DPX_0Ni4ZhCpFPuiNVUhL03CW_w