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Morning, the 16.2 multiple is cash ebitda, which falls to 13.7x on an accounting basis (which is comparable to the numbers Marlowe publish). Working that back explains the difference you reference.
Thanks for the £710m EV - yes broadly looks about right to me, too.
Agree. Alex was the key driver of the strategic vision and growth and with him gone, a new CEO (basically a corporate manager) would have no skin in the game and would be focussed on running for cash, dividends etc. As a stock, I think this has now gone ex-growth (no new platforms, cross sell between OH and TIC being fairly low, like you say), so the multiple will be lower? We still have a 5% CEO stock overhang, at some point, too?
I think they should get both businesses running sweetly, with all integrating finished, and then look to sell. Certainly I will be holding to see how this plays out in the coming months.
Goldenyears - It’s behind a paywall, but if you can get access to twitter, and search for “Conor maguire Value situations” he has screenshot the article. It doesn’t say a huge amount more than has been posted on here tbh
Bloomberg report posted on X that they are in exclusive discussions with French PE house re sale for £300m
Smkr, I agree. Looks like a double bottom from
250 at end of Nov and then again last week.
I think it is also useful that commentators with large retail followers are also positive on pmi and the wider sector:
1. Paul Scott and the stockopedia team called out pmi last week, saying oversold, strong balance sheet, high yield (see small caps podcast last Saturday).
2. Paul Hill said he has recently bought for exactly the same reasons (see stockpickers from yesterday)
I also thought the presentation was good. The leading indicator point for me was around the level of interest they had had for some presentation recently - they said they needed to hire out double the size conference facility vs 12 months ago. With the annual dividend (current 10% yield) effectively covered for 2 years by unrestricted cash (£18m), coupled with future fund inflows and a potential rising market, this share is strongly positioned for 2024. I tripled my initial q4 investment in PMI at the back end of the year and also broadened out into LIO. Sector AUM comps over the last week or so also confirm the trend. Fingers crossed here but signs are good…..
So results will be on Tuesday- I take the fact that there will be a virtual presentation, rather than a webcast (which is how they usually deliver results) suggests there is something additional going on
Well the only and latest fact we had was that they were happy running leverage at 2x in July per the IMSM announcement. That was months ago so let’s wait and see what the numbers look like at the end of the month when they issue interims and then reconvene.
Either way there can’t be much downside at £5 and heaps of upside if a divestment comes good. The market at the smaller end has been good the last couple of weeks and there is plenty of M&A about, which has to mean we are at or near the bottom, in general terms.
Thanks for the info Paul, appreciate you posting this. I will take a look tonight
Hi, I am a new holder here (£40k over last few days) as see a significant opportunity to rerate over the next year. Rationale for buying is: as a play on small caps oversold; aum outflows moderating; strong balance sheet; potential share price turn ahead of the results in a few weeks; oversold chart vs listed peers
I’m working on the basis that they said they would be comfortable operating at 2x proforma leverage I.e £190m (ex leases) when they acquired IMSM. Net debt ex leases was £160m at Mar, therefore adding back £20m of Fcf for half a year (£40m fcf for 24 per broker notes), leaves £50m out of the door on the other bits of non fcf and acquisitions to date.
At some point they are going to get a TIC deal away (surely when not if) and be in net cash.
I’m probably slow to spot this, as am sure you industry people will know more, but just noticed that Inflexion PE set up a new vehicle, Celnor, to invest in TIC businesses in October. I noticed their exec team includes the M&A director (until Oct 23) for Marlowe.
Looks like Celnor aren’t focussed on Fire and Water but can’t see why they wouldn’t be interested in Marlowe? Also, clearly indicates there is no current/expected Tic M&A by Marlowe?
FYI inflexion own Alcumus (direct competitor of Marlowe in grc).
Any thoughts anyone?
Ah ok, I misunderstood your earlier message, apologies. I thought you were saying that a fall against the rise of the aim market over the last week or 2 was because there was rumour in the last week or 2 that a TIC deal was off. Whereas you are saying it’s just general debt and interest concerns.
I agree re the rate cycle. Markets pricing in the first cut in H2 24 feels too late. I think the data will weaken through to the end of the year sufficiently that markets will price in an earlier cut.
Interims are due at the end of the month or so. Not sure why the price is drifting at odds to the wider AIM over the last week. Interesting that you are hearing that the TIC deal is off; I remember you saying you had an industry contact.
I would imagine we are not too far off some strategic action and update of targets, given latest run rate numbers. Let’s see once the results are out….
Interesting that all 3 shorts are amending their positions this week and a net increase overall / more bearish view for longs like me.
Therefore, we have to assume they view a TIC deal as increasingly unlikely. From a financial and macro view, I understand this. However, I think strategically Marlowe will look for a deal.
In terms of potential impact on share price: By my numbers and assuming 14x for a deal, the shares would rise to £8.66 ( this assumes no upward revision to rating from having a rump business with net cash, software focussed etc). A no deal scenario and tough macro on the downside and the price could fall to £5 (mainly through multiple compression, not poor earnings numbers- I think earnings should hold in line).
So, potential 50% upside vs 20% downside in the next 6 months or so.
Been quiet on here for a while - anyone any views?
Key for me is the bank debt / covenants despite the maturity being long dated. Per the 22 auditeds, max permitted leverage covenant is 4.5x net debt to ebitda.
Given debt post deferred consideration will be c£200m, then ebitda can fall to £45m before they breach.
Given the operating leverage, will be waiting to see the q3 update in mid Nov and their guidance for the full year at that point, before taking a position.
If the guidance is maintained, I feel that this will rerate significantly.
If they maintain £100m ebitda guidance or thereabouts, then a 5.5x EV looks good value.
GLG short has just increased 80,000 shares to 0.70%.
Anyone know if they are increasing on any other small cap or roll up stories?
So a very high level trading update, with, unusually no detail around run rate info, strategy, cash flow etc. IMSM is the only acquisition made since FY results late June.
Therefore, my working assumption, like I’ve said before, is that a more detailed announcement re next strategy etc will be made following a TIC sale. Surely if a TIC sale wasn’t happening, then this would have been the opportunity to update the market as a bridge between June FY and Dec 23 interims?
Note the YouTube video posted on linkedin this morning re Phil Greenwood overviewing the TIC division. Given the timing of this, would suggest that they are not selling. They are clear to highlight they have big (£30m+ EV) deals to make in future, in addition to bolt ons