Lets not forget Qube increased their short position after Apollo news. They will have a team of analysts who specialise in M&A activity and weigh up if a deal is likely or not.
In their case they have 'bet' that the deal will not transpire or collapse hence their increase in short position.
Keeping it real Moulding seems to be getting more irrational and unhinged at the moment, his emotions are making decisions and that's not a great place to be when for us PI's making a judgement call on whether he will be professional and do a deal or at least THG can announce a price which will lift the SP.
Whats everyone's thoughts on Qube increase?
OKE - The premium would be based on the SP prior to the Apollo bid news, so you need to work on 66p + premium.
If you take a look at the Apollo press release on the Wood Group you will see how they work their bids.
Woods final offer was 59% above the last 'clean' SP.
So we are at 1.05.
If you (as Sparta suggests) an 'extra' premium should be paid for THG then lets say circa 80% you get to just under 1.20 which I think will be the final offer with MM plus possible others carrying.
Obviously hope for more.
Only danger is of course that Moulding refuses the offer without advising the market what the refused offer was, can that happen?
Hi Hosai - I was working on 70p as you cant really add in the uplift on bid news?
Either way a 129% premium just on the SP just isn't something I have ever see, or close, have you seen something similar in the past ref: premium of over 100%?
Just would love to hear you say you have!
OKE - 40% up this year is obviously brilliant but lets remember the context. The share is still 91% down since listing.
Added to that many/all of the esteemed posters here would be holding shares higher, or very much higher than the current share price.
40% growth from 30p is better than no growth of course but we should not be recalibrated by this and still expect £2+ a share in the short term (next 6 months to 12 months), and £4+ in the next 2-3 years.
I am not writing this to dampen anyone's spirit but that's how I feel about it.
To be fair Hosai Ultra Beauty in their last quarters earnings posted a 10.5% EBITDA FYI.
So perhaps THG if they achieve 9% will not be far off Ultra, certainly based on the quarter in terms of valuation, albeit Ultra is 6 x's larger in terms of revenue.
Firstly the share price movement today is shocking.
I am waiting until the 18th no matter what and seeing what Moulding has to announce but seriously the market is an absolute car crash since late Feb.
What I would say to you all is that NOONE has inside 'bad news' or leaked to the market ahead of the 18th so I would put those concerns aside immediately.
If the SP doesn't tank 20% before the 18th then hopefully see you all there...
Kando - BUT just think that for all the reasons that you mention that the SP has been decimated (all true incidentally), with corrective action the SP WILL rise again, and may surpass the £5 or £8 per share in time.
Even Moulding must see that Kelso is right and if he wants to get any value from this 'baby' his mindset and strategic actions MUST change or he will be relegated to a 40p to 65p per share company for the indefinite future which, as he must be a logical man, is not a desirable outcome.
If you believe that value can be unlocked then the time to buy and buy heavy is now (well, maybe after the 18th), buy when the market is fearful etc etc...
Pearls - I can understand your sentiment but for me its macro and human phycology.
We all love the next new shiny thing and THG at IPO was just that. Prospectuses were whipped up showing stratospheric growth and world domination, who know THG may have been touted as a potential UK Amazon.
The macro was amazing for this narrative, 0% interest and people with time and money on their hands.
Roll forward and THG has failed to deliver, at least in peoples minds, the growth and excitement they invested in. The II's are human and they too would feel that the company has really underperformed and fowled itself with MM and his briefings.
Add on top of that the Macro, which is the worst in decades, and you have a 'risk off' psychology with people either battering down the hatches or selling out with the doom and gloom of a global crash and/or a new world war.
You can then see why we are where we are I think.
Logically we can see that the SOTP's are worth more than the current market cap but other private investors may not. The II's are in their bunkers sitting on the largest dry powder cash reserves in 50 years just waiting.
That's my take anyway.
Anyone who thinks that MM would deliberately crater his own companies SP needs to rethink. Firstly he would need support of 51% of the voting shares, which whilst he would be close if you included Qatar he still doesn't hit the required percentage. The II's left in from the highs will 100% not agree to a cheap private deal.
Secondly I am certain MM/THG would be exposed to legal action by shareholders given the fact a bid of £1.70 was viewed as 'significantly undervaluing the company' only a year ago.
Thirdly, lets say he does take it private at 35p, he would only unlock value for himself if he could self a privately held company for say £3/£4. Listed companies will always attract higher bids than privately held entities so actually staying listed would always give a better deal return. In any case a company with a struggling public share price does not suddenly increase by 10 fold by taking private.
Forth - THG's access to cash and funding will be massively reduced if he takes private, and by definition the opportunity for growth would be impacted so better to stay listed.
Lastly, if THG was to go private I can only imagine that the current debt it holds may well breach a covenant and the lenders would probably look to massively increase the borrowing rate or re-negotiate the funding.
Anyway, just wasted 5 mins of my life writing this, conspiracy theorists need not apply.
ROCK - I have to say I cant agree with you more. Its screams that the board is like the keystone cops, no-one really knew what the hell was going on with the numbers in the projected 6 weeks after the October, postal strike should have had contingencies in place AND I cant see that impacting revenues as much as some here think. If you order MyProtein and pay for it before the strikes all that happens is that the delivery gets delayed, ok a few people may cancel the order but honestly I saw this as a massive excuse by MM.
The company has been too slow in many many key strategic areas, for example the Manchester Airport warehouse was left hanging for most of the year and only cancelled relatively recently, OnDemand left running for too ling whilst haemorrhaging cash, limited/no detail about where the CAPEX for Ingenuity is actually going, whats it for? The generic answer of 'developers' is BS.
MM, a trained accountant, must have been in the ice bath and frozen his brain if he couldn't see/update the market with a profit warning RNS (which again should have happened but didn't) the the weeks following the October guidance, I have to say this is absolutely unbelievable from a PLC and should have seen many heads roll at the board, including MM.
So why am I invested I hear you cry? Well, all the above means that I could pick up the shares for what I believe is a good price given the fundamental nature of the companies activities and offerings to customers, not to mention the solid and proven market demand for such products.
|I still say this is a capital play, I don't see organic growth going anywhere if I am honest, in fact the elephant in the room could be a reduction in sales not any growth whatsoever. BUT the SOTP and the recent events with Kelso et al plus what feels like MM is finally waking up to the reality that all he has built could be worth actually a few 100 million, his life's work, just gives me a glimmer of hope that we may be on the turn where a solid strategic update will shove this share back into some reasonable shape.
Something will happen with THG Sp as the GS heads towards expiry and it is within MM gift to implement all of Kelso's basic recommendations to turn the oil tanker around and really get the company taken seriously by new investors.
Sadly I still think that MM must go in order for the past sins to be forgiven and a credible bright future for the company to emerge.
Golden - You make a good point, are THG biting there own hand that feeds them re/; beauty?
Not sure, its a massive global market worth $253bn per annum and growing at 3.8% (I attach link below):
https://www.statista.com/outlook/cmo/beauty-personal-care/worldwide#:~:text=Revenue%20in%20the%20Beauty%20%26%20Personal,(CAGR%202023%2D2027).
So, THG is circa £1bn which gives me some comfort that there is plenty of headroom for organic growth even with Ingenuity helping smaller rivals.
Other option is to sell the Beauty division, reduce debt and finance Nutrition and Ingenuity?
I am also liking the 10 year contract, I assume that this will be the standard offer now so locking in accretive growth and new clients are on boarded.
Maybe the future for Ingenuity is aiming at the mid cap size opportunities such as Maximo whilst fishing for the whale, as Ingenuity grows the more chance of someone like Boots coming on.
Actually on Boots if the are broken up/sold the whale becomes a little more manageable to digest so a future deal would be more likely IMHO.
Say Ingenuity delivers £30m EBITDA then its got to be a multiple of between 10 and 15 x's
This would give that division a value of between £300m and £450m which is on average half of the entire groups current market cap.......
KACH - Yes, frustrating the RNS did not mention the % of GMV that is THG fee. I have guessed around 3% so £5m.
The costs are locked in already with some recent job cuts and I wouldn't expect any more cost to run this contract so its only beneficial.
HOWEVER its a far cry from the £1bn GMV which would make a material circa £30m income too THG, lets hope the sales pipeline described as strong in the RNS falls in....
Marp - Yes the GMV (Gross Merchandise Value) is £150m but that's the total value of Maximo goods passing through the Ingenuity platform.
Actual revenue that flows to THG is probably circa £5m from this deal, maybe less, maybe a little more.
CANARY - The bit I think you missed is that of course the recent wins will not be posting significant revenue but if the analyst or moulding offers up the following:
Analyst - Great to hear about the recent wins, how will that impact revenue and margin in the next 12 months?
Moulding - We expect xxx growth and xxx net EBITDA contribution etc etc
That puts a different slat on things, of course if you hope the Mould doesn't pick figures out of the air and then miss them in a spectacular fashion in 12 months!
Manc - If he spent as much time delivering strategic benefits to THG as he does moaning about being a listed company then we would all be in a better spot.
He is a man baby running what is and could be a great success around the world. Two words for MM - JOG ON!
This is exactly why THG is failing as a listed company, in Mouldings own words:
''An essential way we do this is by maintaining a 'start-up mentality'. Irrespective of how big THG is, we still run it like we’re in our first year. It’s THG against the world''
This is exactly wrong. A listed company MUST move from the start up mentality to a mature business, this is why I personally cant wait until the GS expires and MM goes to be replaced with a more focussed, talented, experienced CEO to move the company on from a 'start up' to a proper international leader in its field delivering shareholder value.