Member Info for Hosai

THG did miss targets (like almost every company last year) but were also disproportionately targeted by the media. They performed better than Ocado, Boohoo and ASOS last year in terms of revenue growth and EBITDA but had the most press criticism.
These other companies also didn't have the Numis debacle or the Telegraph hit piece that was later retracted.

Numis were only exposed for that because an employee there was dumb enough to include Iain Mcdonald in an email:

"A sales person at investment bank Numis fired off an incendiary email to clients last November. The message urged investors to sell shares in the troubled online beauty retailer THG, citing alleged “accounting irregularities”.

It is fair to assume the author failed to check the recipient list before hitting “send”. If they had done, they would have seen the name Iain McDonald, a board director at THG for 12 years.

Unsurprisingly, McDonald took umbrage at the email. Numis subsequently sent a corrected version, apologised and reported itself to the Financial Conduct Authority."

https://www.thetimes.co.uk/article/2bn-thg-bid-battle-tests-matt-mouldings-resolve-lwk9th69j

I agree I actually think this was very well written. The only annoying thing is he writes quite openly about some things but other more material to shareholder aspects such as the main THG strategy moving forward we have been waiting on for over a year, let's hope something comes soon.

The whole market dropped.

CPI data comes out at 13:30.

Can't ignore Dominic Murphy was previously an NED at THG and as far as we know still owns his 1.2% stake in THG. He is on the board of directors of Walgreens Boots Alliance.

"He is a private equity heavyweight and, as a partner at US giant KKR in 2007, led its £12billion takeover of Boots. He is co-head of UK investments at private equity giant CVC.

Murphy struck up a relationship with Moulding while he was KKR’s London partner, and was a key player when the US business bought a 20 per cent stake in THG in 2014."

https://www.thisismoney.co.uk/money/markets/article-10898047/Fresh-blow-Hut-Group-board-supremo-Dominic-Murphy-quits.html

New very subtle City Spy tweet - https://twitter.com/TheCitySpy/status/1625206099388338198

"I know one could argue they could have bought in the market at those prices but at the volume of the SB trade, and given tjg low daily volume this would have rocketed the SP so in reality they couldn’t".

When you think this through though, if this is the case surely they should just start buying here in the market and get the share price back up to £3 - £4 for the sake of their holding.

I agree Pearls, surely Matt M is aware that getting rid of golden share could double the price today? Some argue however with his holding and general support he doesn't need the golden share currently. But in that case it could be a move if he did want the sp to double.
You get the sense he might not want the sp to rise in the short term. The time when he did fight for the sp was in the initial stage of the fall from 600p probably because at that stage the softbank option was still in play and the fall was jeopardizing it.

To me Matt's last couple of posts seems quite...chilled? For better of worse (obv I'm hoping better).

"THG share price rising 8% on low 1M volume
Still, 56M shares on loan and 60M will be needed for the THG listing at 5%.
That's 116M shares required from a very small float
If 8% upward movement on 1M how much movement on 116M - WHOOSH!!"

This part of the post is interesting. Makes you wonder if it could be a challenge for Kelso to actually gain shares if they did want more without quickly moving the share price.

Enjoyed this advfn post from Billionaire Bob:

"Also posted some bullet points to help you with your research.

The market demands THG cut costs and increase margins.

From latest RNS - 50M Free Cash Flow H2

2000 staff reduction

100M cost savings with a further £30M to come 2023

Capex reduction

Cash flow positive FY 2024

EBITDA margins in excess of 9.0% over the medium-term

Plus:
Record sales of GBP2.25 billion in FY

Shorts reducing

Whey Prices falling

Group bids of 3.9B and 1.7B rejected

Plus:
Several, that is between 3 and 5 whales in the pipeline

1 billion GMV for 2023

Ingenuity is currently priced at zero

WWP copy Ingenuity and failed badly

Ingenuity space for 14 billion GMV

CEO - ex Salesforce

8 of the top 20 Global FMCG Clients, including Coca-Cola, Nestle, Modalez

New fulfillment centres in New York, Dubai, and Melbourne

Iceland Strategic Partnership

Plus:
THG Beauty and THG Nutrition
Both No1 pureplay globally in their own market

Cash Acquisitions £900m+ in 2021

Qatar Sovereign Wealth Fund is a major holder

CEO has bought £38m worth of shares in the last 18 months

Chairman appointed in March 2022, has bought 2.4million shares

Valued at x0.3 in USA valuations in 2022 for similar 33 times more

MBO rumours are rife in the City

Analyst values THG Beauty more than the whole group.

FCF by 2024

Numis caught red-handed spreading FUD about accounting

10 Million apps downloaded

80% returning customer rate

Plus:
THG share price rising 8% on low 1M volume
Still, 56M shares on loan and 60M will be needed for the THG listing at 5%.
That's 116M shares required from a very small float
If 8% upward movement on 1M how much movement on 116M - WHOOSH!!

Plus:
Kelso shares are up nearly 250% in just a few months

THG shares are up 100% since the recent ATL

Kelso ALL IN on THG

Kelso looking for undervalued comps & reverse TOs

Kelso CEO knows and respects MM

I agree with The Bank Of America's buy signal and there statement

The Hut Group business could offer one of the highest returns in online retail."

THG down 3.61% today, kelso group up 1.67%.

If Matt M sees THG as worth £12-£15 a share (which presumably he does hence not selling any between £6-£8 when he had a year to sell) then why does he not make the case for it more? He has gone very quiet other than non-material updates on instagram and linked in.
If he doesn't believe it in anymore he should give up golden share, the price will like rise to £2-£3 equivalent on sum of the parts valuation and takeover likelihood. He would get a very decent rise in his current net worth and could re-invest in other currently cheap business'.

THG said this the last update update - "In Q3 2022, the Group announced a re-positioning of THG Ingenuity to focus on larger, higher revenue and higher margin clients with high-quality recurring revenues."

Clearly the 60% Ebitda margin quoted by RBC was off the mark considering THG say they are focussing on "higher margin" clients, as it would seem unlikely when they say higher margin they mean more than previous quoted 60% EBITDA.

"We project that Ingenuity Commerce could increase tenfold to £0.5bn of revenue in five years, with at an EBITDA margin of around 60%, drives our discounted cashflow valuation for the segment of £4.4bn. Yet the market is attributing no value at all."

https://www.sharecast.com/news/broker-recommendations/rbc-capital-ups-rating-on-thg-to-outperform--9088704.html

It feels like just any official news would help THG. Especially some kind of decision on strategy etc. In a sense we've been waiting for that decision over a year. Probably because MM has found it hard to decide himself, not helped by some macro events such as Russia/Ukraine.

Yes Ocado do have more cash than THG after the last raise, though they also have more debt - £1.9 billion odd.

Oke you say they owe £200m now, are you sure? I believe all we know is the main euro loan matures in Dec 2026 which would be 47 odd months (3 years and 11 months). I was imagining they would re-finance at this point and that we'd be well back into a bull market by then.

Oke surely THG could fund it from their cash, once they sell their property they will have access to £680 million? Obviously might effect trying to be cash flow neutral but we could fund it.
I definitely take the capex conundrum on board that you talk about, but it gives the impression perhaps that its a life or death decision for THG whereas the truth is one would imagine we should be rising whichever choice they go for.

I prob go on about Ocado too much but last year they had falling revenue (to £2.2 billion) and break even EBITA. THG had some revenue growth to £2.25 billion and around £80 million EBITDA.
Ocado are predicting for 2023 to have negative EBITA the first 6 months and better in the second half and hoping for "marginally positive" EBITDA for the year. They're also hoping to be cash flow positive in around 5 years, THG no EBITDA prediction yet but hoping to be significantly cashflow positive next year. Moody's give Ocado a lower credit rating than THG.
Ocado market cap of £6 billion, THG market cap of £762 million. Therefore I can't see the current capex conundrums we are debating as being the key cause of the price being so low.

Lol Buckle, obviously I wasn't saying it's good to have made losses (though that was common for a lot of growth companies in recent years) just that it's a slightly overlooked aspect moving forward if THG are going to pivot slightly to cutting down and focussing on profit more as they can make profits without paying tax on those profits for a fair while. So arguably those potential future profits are slightly more valuable than your average companies taxed future profits.