Member Info for Hosai

Still wondering why MM didn't tell the market the rejected bid approaches...one was said to have made "multiple proposals".
Obv the sp doesn't really impact the company short term though it can in some ways in terms of for example paying employee incentives via equity. The rejected bids would seem like a quick way to get this back up.

Nowhere near my average of around £2.16 yet...went in too heavy at that point to average down later, still feeling a lot more optimistic recently though.
I had considered spreading the holding out into other growth stocks such as boohoo and asos to diversify it a little when it was in the 80s obv glad I didn't now.

#$1.05 billion

That was what was slightly odd about the equity raise. Softbank invested $730 million of the $1.05 million raise clearly with ingenuity in mind, yet the bulk of that raise went towards THG beauty with the acquisitions of cult beauty and Bentley Labs.

Would softbank be able to buy THG shares currently? If they can, as much as I'd like them to exercise the option it would seem you'd think they would buy THG shares now, if anything so they could benefit from that uplift on those shares if they were indeed going to exercise the ingenuity option...but again not sure if that is allowed.

The aspect that makes me think about PE or MBO is the lack of director buys...I find it hard to believe they wouldn't be seeing value at this level when they rejected close to £4 billion in 2018. If it doesn't though am obviously happy to hold long term.

I was thinking the same Holy, pretty sure Blackrocks annual report was posted by DanL a few months where they explained they had fully sold due to thinking ingenuity would need a lot of capital to grow.

Simmons but you don't complain about the IFRS 16 making the interest expense higher than it would have shown as being before meaning in terms of making an overall profit or loss it's a neutral change.
Also obviously the rule effects all companies so EBITDA is just as comparable to other companies EBITDA as it ever was.

The 60% wasn't pulled out of thin air.

"RBC said: "We sympathise with the challenge in valuing Ingenuity. Indeed, it is what previously kept us on the sidelines.

"However, its momentum in the 2021 full year – we believe its site order book more than doubled - and improved disclosure have been overlooked.

"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

Simmons, there has been huge price increases this year for example in Whey protein, hence the big margin deterioration, in the medium term they predict to be back to 9-10%. They are not passing on the costs hence are predicting to grow 22-25% (prob around 19% organic) this year as opposed to other online retailers such as boohoo/asos who are predicting similar margins but to grow "in the low single digits".
I'm not sure Ingenuity is at 60% margin yet I believe that was where it was claimed it could get to in future years.

Today was highest close since 17th Feb

Not used to this looking good at this time of day...usually has its highest spike in the morning then falls off middle of day.

Forgot this one - "You've got the separation costs. Obviously, the separation gives us huge strategic optionality, and that will be a big win for us in the year ahead as a group."

Technically speaking they said at results the separation was still due to be completed q2 so this would be the last possible day.
As others have said it's hard to see the price not responding to a seperation as the market would be forced to "realize" that at this price some of the divisions are being priced for free.

I typed in separation in the earnings call transcript and here are some of quotes:

https://seekingalpha.com/article/4502838-thg-plc-thghy-ceo-matthew-moulding-on-q4-2021-results-earnings-call-transcript

John Gallemore

"We announced the separation of our businesses. And consequently, there will be changes in the way we present the business moving forward."

"The group has also incurred professional fees associated with the acquisitions completed in the year and restructuring costs out of the separation of our key trading divisions. Ahead of our planned separation, we have considered how the change in shape of the group is reflected in our cash-generating units."

Steven Whitehead -
"And Andrew, briefly pick up on SoftBank. The SoftBank option kicks in once separation is completed. It completes in Q2, but there's nothing to update on that at this point. It would be something for later in the year and no other updates outside of AutoStore"

Zara and Next now charging customers for online returns...so glad for THG doesn't sell clothing (other than a small amount) beauty and nutrition have low return rates, being charged could put people off buying clothes online.
https://www.bbc.co.uk/news/business-61423753

I can't help but think something is happening behind the scenes due to the lack of director buys? Obviously the bears would argue no buys because the directors do not believe in THG but at these levels this seems hard to believe?
As has been said they rejected £3.9 billion from PE in Sept 2018 in the year to which they finished 2018 with £916 million revenue, similar debt to now and £235 million in cash as opposed to £530 million in cash now.
If they didn't deep down believe in THG surely they would have sold at that point for nearly £4 billion?
I don't think enough has changed in terms of the outlook since then for them to not want to buy now at £1.3 billion?

That's assuming the acquistions brought in the revenue they predicted when they bought them.

They are predicting 22-25% growth for this year. 2% for organic seems unlikely would mean 8% for full year and therefore 14 - 17% coming from acquistions which would be too high.
From my calculations organic was about 18% in 2021 and would be about 17.5% this year in terms of the predicted revenue add from each acquistion.

She actually sold the business in June 2020, that £258 million revenue figure was for the year ended 2020 so in a sense the revenue multiple was actually higher than 5x

Charlotte Tilbury sold her beauty brand for £1.3 billion which had £258.5 million revenues that had grown 11% in the year and made a £10 million loss. So valued at 5x revenues. Obviously this was sold when the market was good and it was a beauty brand so not quite the same but is funny to think it was valued the same as THG currently.

https://www.theguardian.com/business/2021/dec/23/charlotte-tilbury-repays-furlough-cash-as-sales-soar