Member Info for iWantThatOne

And thereafter there are other strategies TIG can pursue to prevent this happening anyway, such as paying down debt rather than another BB scheme. Though that would not be optimum use of capital under their “waterfall” model. It is rather unsatisfactory in that regard. I’m sure both TIG and Royde are completely on top of this situation btw, it’s hardly as though it will have come as a surprise.

I’m pretty sure the big IIs here aren’t happy! The signs for me are that on the day of the prezzer last Monday Michael looked sick and made noises about how the share price can’t stay at this level (then above 100p). The fact that he was so open about possible structural changes (splitting OM / OP) and that there’d be no more acquisitions for some time suggest the Board had already discussed this, plus the strategy to get back to growth, in some depth. It also suggests to me that they are supportive rather than plotting.

On the algos, if some of this *is* trading (eg if the share price moving below the 50 day MA triggers a sell, for instance), presumably this would reverse after a while - though it might take >50 days? I haven’t looked at the charts, anyone know how this is looking?

Did anyone notice two 2m trades that went through within a minute of each other on Friday afternoon? Mid-price so unsure whether a buy or sell, but given the lack of impact on the share price I guess these might both be Liontrust sells that have been worked for some time. Let’s see if we get another TR-1 early next week. They had just under 4m shares left after the previous notification.

But algos trading on whose behalf? Between them Kestrel, Erin, Inter.Services etc hold >40% of the shares but all have beneficial owners on the Board, so any dealings would be notifiable. So they’re not holding the price down. Maybe the algos are simply automated trades for any number of funds that now streamline their operations this way? And given the SP drop, maybe their algorithms tell them to sell - no human intervention? I know nothing about this so welcome any thoughts on what this means, but do wonder if this trading doesn’t necessarily support the idea of a “plot”.

Interesting comment on the Takeover Code from Stas that says Kestrel would have to offer at least the highest price they’ve paid in the last 12m in the event of a takeover. Well they paid £1.46 at one point not too long ago, possibly higher as I just did a quick look. If this requirement is real, is that a major concern?

Also to those who think the company should be doing a lot more. What would you like to see exactly? Director buys and accelerated buybacks if allowed - fine. But what else? They can’t fix Shinez quickly; nor make click rates go up; nor accelerate the Comparison roll-out significantly. None of this is easy.

Also I just don’t see the manipulation. I might be wrong but I just see a small number of trades each day. Why is it obvious that this is manipulation? Buybacks make it look like sales and buys are suspiciously close. I think some are having difficulty imagining that anyone could possibly sell at these levels, whereas I can completely understand some investors completely having lost faith and just wanting out.

Btw, why would the Board recommend a low-ball takeover, when they have no need to sell and have already intimated that 100p is ridiculously low? They wouldn’t, and that would also be very uncomfortable for Kestrel, so I think we shouldn’t be concerned about that.

Well if the volume of buybacks is constrained to be less than the number of sells, what’s happening is that buybacks are “buying into the sells”, rather than sellers selling into the buybacks. In that situation it shouldn’t be a surprise that the sp isn’t going up. We just need more buyers, fewer sellers! The metrics look very attractive for those who believe in the company, but I guess not everyone does and/or they’re content to sit on the sidelines for now.

I think many investors just want to get out of their investments when they see the route to SP growth is hard and will take a bit of time - even if the upside is attractive. Or they have a rule that they’ll sell when the SP has dropped by x%. Many will just try their luck elsewhere. That’s not my thinking though - all that matters is “which investment today will make the biggest return within my timeframe”.

Agree on the reasons for being becalmed, plus that retail investors probably want to see how the FY results turn out (“in line with expectations”, we were told on 30/9). Cash generation has also been low but will recover in ‘25, so that may have concerned some. Even if they miss by a couple of $m (say $14m EBITDA instead of $16.8m) I don’t think it really matters because the trajectory is very clear.

The SP should already be higher but I think the real kicker comes when people realise what will be generated in the next few years. My own simple model suggests $25m EBITDA next year (Singer had $27m originally pencilled in for FY24 before the year-end 23 issues), and around $35m for ‘26. That’s based on the progression of ARR, the NRR, increased gross margins once the DOCOMO routes are fully migrated (referred to in FY23 Results) and a final bit of cost savings. Singer already has a price target of 220p, and given the kind of results above that’d translate to 400p or so. Starting to deliver these results would boost confidence and close that “Boku valuation gap” that’s been discussed.

I disagree with you when you say breaking up the business at current valuations would be poor strategic judgement. You’re missing the point - the current valuation (and that prior to the recent drop) is very low *precisely because* the current business is a mishmash of OP and OM (at least in part). No other business operates like this. Investors who like slow steady secure growth - pension funds, say - would snap up a focused, independent OP business but will be put off by OM. People interested in OM want something completely different from OP. The result is that nobody apart from Royde is buying TIG. Splitting the businesses will boost the valuation.

Ok, bear with me on this. If you split Zeus’ new FY24 EPS of 22.7c between OP and OM, splitting everything - Opex, Amortization, Tax etc - on the basis of their respective gross profits from 2023 (prob v similar for ‘24) then you get OP 7.1c per share and OM 15.6. Very simplistic but it’s a start.

Now sell OP for, perhaps, 10x EPS. That’s much higher than the current valuation but equal to peers on an EV/EBITDA basis and much less on PE. It could be justified on the basis of a clean split, a perfectly understood business etc etc. That’d be 71c per share or $182m in total. Again, that’s on the basis of OP carrying its share of net debt, amortization etc.

That leaves TIG as an OM company with net cash of about $115m, no interest charges (assuming debt is paid off) and therefore improved EPS close to 20c ps. Even on a low multiple of say 8 (again reflecting a clean proposition but going through some reshaping) that leads to an sp of about 160p when allowing for the cash. PE would be 8, EV/EBITDA 2.9, EV/Sales 0.4. All low compared to peers.

Alright, I know it’s just playing with figures but this is how I could see it playing out.

Does anyone have any thoughts on the H1 news that the GTL signed in 2022 went live with its first two telcos in H1 24, with two more due in H2? If this is indeed Apple, as many think, what is happening here - are these essentially Transaction Payments whereby telco customers pay for Apple Store purchases via DCB? Such arrangements have existed for quite a few years (I see DCB is accepted by Apple in about 30 countries, each having between one to four telcos where this has been set up). If they have started putting these through the Bango platform then a) great but b) it’ll take a long time to get through them all.

Well there’s not a lot going on here, is there? There seems to be the odd sizeable trade, maybe one per day on average, but it’s not clear if these are buys or sells. I suspect you’re right that Liontrust continues to offload.

I’m thinking of the DVM business like a big, heavy flywheel that has just started to turn. Early days, but every deal written remains in place and is growing at >50% pa. Add in new deals every year that should do the same and you’ve got a business with ever-increasing momentum.

Sorry, if the market *does* think that things will worsen!

I agree. At the current SP, P/E is 4.9 and EV/EBITDA 3.9. That only makes sense if the market doesn’t believe that things will worsen. I listened again today to Monday’s prezzer and thought there are some good short-term positive actions - trimming the cost base and also launching the Comparison product (essentially VGL) in one country each month, with that already underway. More than anything, though, it was Michael’s surprisingly candid words on how OP might be split off into its own listed company or even sold. With a GP of over $60m pa this year and an EBITDA of $30-35m (my estimate) then it could attract a good valuation in either of those scenarios.

I bought a few more yesterday. This drop has been overdone. I think the company splitting out EBITDA for OP and OM at year-end will aid comparisons with the peer group and start to reduce the “conglomerate discount”.

Dugbe will not be sold, it was never going to be. $75m was a joke offer. Now that Coris/CIG are in charge they can just put it on ice for several years until the other mess is sorted out.

You mean the stock is undervalued, rather than the PE being “wrong”. Yes, totally! There remain some risks (click rates worsen, notably), but even then the company is making good profits. And if it were to be becalmed like this for a significant period due to low click rates I reckon they’d look to trim the cost base and put up the dividend so it becomes a genuine income stock, which would attract a whole new set of investors. Plus there’s scope for a sale or unlocking value from separating out OP and OM. All IMO.

I reckon current sellers are those who were initially attracted by a high growth company but are now seeing it becalmed. It’s temporarily become a low growth low PE income stock (though the income isn’t particularly high). But there are also so many ways that growth can be restarted that, for new investors or new money, this seems a really attractive investment (IMO). A great stock to hold in a SIPP. I’m already overweight in TIG and hurting, but I’ll be putting more money in very soon when I think it’s stabilised.

The FY EBITDA figure of $97m will be pretty accurate. $23.5m was added to EBITDA in Q3 despite Shinez’s helpful contribution of -$0.5m and the current low click rates. Q4 is always the busiest, so adding a further $27m to EBITDA should be doable.