ADVFN post...5 Jan 2022 09:24
Its always a VERY good sign when the muppet brigade arrive.. I do love the "factual ramping" accusation.
Have you ever been near NCYT, MTRO, GKP threads? Its sometimes 100 posts a day of "ramping"..
Yes I am bullish here, but a few posts a day - sometimes none.. If that is literally the best criticism you can come up with.
I know how to value brands, and I look for undervalued companies - people can disagree on levels of valuation - that's what is called a market, but I will try and explain the basics to you.
You cannot value "a brand" based on just a P/E. There are a lot of costs to setting up and establishing a "well known" brand... You cannot just transplant knowledge of a product into the general population via some sort of cost free method. Yes some brands go beserk and that is great but generally speaking you build a brand over time, using a combination of capital, time and commitment. Clearly you also need a relevant and attractive product.
Now IDP have for me a great "brand", and great product, but in recent years the focus has more been on the chairman sorting himself out and the business has been a side issue, he just wanted the best possible return. But the brand investment did continue. If you look at the marketing spend IDP have made over the last 5 years what would it be? 10 , 20m? Thats all brand investment.
Skinny Tan is now a highly recognised brand, and that is getting stronger. Those are sunk costs but they are building a product and a brand, that will be very attractive to a number of suitors or clients (IMO)
The problem for IDP and to maintain the brand value, they basically need the brand to cover the costs of the business for me. The reason the shares went so low is because a cash raise (placing) was required. If they can make the brand self sustainable - which I am very confident they can, then the brand becomes worth multiples of the market cap. Whilst the brand is still growing and requiring capital input greater than the business have, it will be vulnerable to low ball takeout activity.
Growing a business to this "next level" and then getting the 30 - 40 p/e in place is the phase we are now in. The mgmt need to show they are on a net profit / flat trajectory and that the business is sustainable - I believe this is being demonstrated. The market is waking up to this, and I am telling you, it will wake up to the fact that this is worth a lot of money right here...
I use the THG Beauty example a lot because I think it is a good fit, but (for me) THG buy this and they push sales up minimum x 10, they drive down costs and they turbo charge the marketing and they have a super product on their hands.
This is all about building a great product that someone eles can take to the next level. I say THG but there is any other amount of companies that could do this.. IDP then create another superstar offering. Or they get taken out completely and make products for the new incumbent. Either way we as shar
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