#LVCG Green Shoots of Recovery! (PART 1)10 Jun 2020 09:45
Last nights news that zoos are to reopen is a catalyst for recovery and change for LVCG. What any investor looking in from the sidelines needs to recognise with this company is that this time last year they were trading at 70p with the same number of shares in issue (give or take some small additions). The free float is very small and the move north can be very quick or steady and sustained. Below are some key points shared by a good friend from the LVCG twitter group.
Directors Interests Aligned with shareholders
?Chairman and Directors have serious skin in the game. Chairman holds 34% and added £250,000 @65p in February 2019. 71.28% of shares are not in public hands and the rest of the shares are in the hands of a small number of private investors. The free float is tiny.
?There are no complex incentive schemes - they are incentivised to make the share price go up.
?They own all the IP in this fully integrated business. A lot of the cash used in the last 2 years was used to secure those rights. That’s important as the Chairman plans to sell the group and retire; he has a £4 a share target price with an initial timeframe of 18 months. Building the business and the global partner network has taken longer and his new target date is sometime next year. Importantly this give an exit strategy for investors who build large positions.
?Growth has been funded by equity raised over the last 18 months, and each one has been for a specific growth target. First raise was @35p to buy a single touring set instead of renting one for their events. Next raise was @65p to procure Brightbricks. They they raised @65p from existing investors (Feb 19) to accelerate the build of touring sets for zoos.
They are growing fast
?Number of events are increasing year on year, and they are rapidly increasing the content for their events.
Scaled the business up from their start of a single event to being able to put on 11 simultaneous events around the globe.
?They have worked to put a partner network in place around the globe. Its the partners that source and run the events with LVCG providing the content.
? They have been signing up content providers for multi year deals, especially IP directed at children. They have a 5 year global deal with Viacom to produce paw patrol, nickJR and spongebag squarepants, they also have deals to produce touring sets based on Peppa Pig, Paddington, the Snowman, and Beatrix Potter. Its quite some thing for a global billion pound business to trust an AIM tiddler with their most valuable IP.
? They have already build models that have an asset value of circa £20 million; the current market cap is just over £10million.
They are generating cash.
?Trading EBITDA profitably since Q2 2019 and recorded a £700k EBITDA profit for 2019. They recorded losses for 2017 and 2018 (mainly due to start up costs, buying out bright bricks, paying for IP and model building costs), but are around break even for 2019.
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