Member Info for Kando

Uber cautious indeed. I think they're so wrong. To accord any genuine risk to Taiwan is monsters under the bed stuff. They're essentially guaranteed by the US. And how can Russia/Ukraine escalate in any meaningful way that would hit supply again? Europe has already resigned itself to a future without Russian energy supply. There's not much short of Nuclear escalation that would make things any worse - and similarly, that's a vanishingly unlikely scenario. That war is far more likely to stagnate than escalate.

"They don't hedge on whey, but at these prices, I think they should lock in a load, even if it goes down a bit further. At these levels they can make serious margin. If it goes back up to the peak, it would be really bad news!"

https://www.clal.it/en/index.php?section=whey

Look at the graph at the bottom of the page. See that peak to trough in 2007-08? Doesn't 2022-23 look like it's tracking more or less the same? Would you lock in this otherwise historically average to slightly elevated price of 950 or wait to see if there's two years of whey at 400 instead?

Okehurst, where is this inflation going to come from?

Deflation, if anything, is the bigger threat.

Well, I think a special dividend is fantasy, in any scenario. Any money generated would be sunk back into the business/pay off debt.

I think a full sale of either Nutrition or Beauty is also more or less fantasy, since both are inextricably linked to, and rely on, Ingenuity. There's no real way to p**** them out to the satisfaction of a buyer.

I also don't think they need to, or should sell. All divisions have a part to play in the future of THG. A strategic partnership with a division I would be fine with, so long as it benefits THG long term.

£8. With some patience and another bull market it'll be back there, so why accept less when there's that potential return? Look at sports direct in 2008. Should Ashley have sold then for 250p?

As long as it starts generating FCF soon I don't mind the capacity runway they've built. A large part of it is the regional coverage. It'll be underutilized now, in naissant markets like the middle East and Asia, but if you have confidence in the prospective demand from those markers, it's significantly more efficient to build one bigger fulfilment centre at the outset than a small one and have to expand or build more incrementally. I'm choosing to remain hopeful that in 3 or 4 years time shareholders will be glad of the historic investment that'll obviate investment demands going forward.

Because posting negative news and opinions is as much the purpose of this message board as posting positive news and opinions. It's not a ramping echo chamber.

We're here to debate the merits and demerits of the company to interpret its potential performance on the stock market. In that vein, I'm not entirely sure why you're here. This isn't the place to shout people down like it's a team sport, or post unrelated conspiracy theories. It's about THG, and it's not personal. Your spamming hasn't added all that much, but often sours and obfuscates the discourse on this board. Hence asking you to give it a rest.

Give it a rest eh moniman.

Well, I'm hoping that's our direction set if this is the inflection point I think it is. Still seems to have buying enthusiasm to carry on upwards. Back above 48.

And Morgan Stanley, as all the investment firms, have a narrative to sell, else they wouldn't be saying it. They say bull runs will last forever while they're busy dumping at frothy highs, and they say bear markets have further to fall while they're loading up at depressed lows. They sell each narrative long enough for them to build or unwind their positions, and then feign surprise or fall silent when the markets flip sooner than they foretold.

I'm not really much of a chartist, but it seems like a fairly meaningful inflection point here. If it can hold this week's momentum and make last week's 40p a higher low than the 32p in November, then it's fairly bullish that we're into the recovery. If it surrenders it all back and we see 32p again then the bearishness would have further to run, obviously. It seems to be grappling with which direction to go today.

I like Michael Burry. I think he gets some things right. But he predicts 88 crashes out of every 10.

CPI probably will go negative. There probably will be a recession, almost everywhere. It doesn't necessarily mean the ingredients are there for a deep recession and it's not guaranteed that governments will stimulate much (or have the fiscal scope to). I think his forecast for another inflation spike is speculative.

That time might come soon, but I don't think it's there yet. Renewables generated 40% of the UK's electricity in 2022, gas generated 42%. It's still an equal contributor to production so should be priced equally, else you'll struggle to manage and incentivize production, both in the short and long term. Once gas has been more or less phased out of average daily production, and relegated to their end use case - as backup generation to renewable variability, then I'd say decoupling them would have no negative consequences. But as of today, it would be too destabilizing for the energy market and dampen the investment we need to get out of the energy squeeze in the long run.

Moniman, yes, I think it's at least been mooted and they're considering the logistics of decoupling gas from renewable generation in the electricity market, but then you run the risk of disincentivizing the currently heightened investment in renewables, which, long term, are the road to energy independence and cheap energy again. The high price per MWH that's currently extended to wind and solar, care of high gas prices, mean that capacity is coming online, and being proposed, at a phenomenal rate across the UK and Europe, which really is what we want. The days of cheap gas might be over for good, but that's sort of what we wanted/needed to push to cheaper, more sustainable alternatives. In a sense, it's capitalism working as it should. If you interfere it will have consequences you probably won't like either.

"Kando which business do you think is doing £300m - £500m online sales and doesn’t yet have an ingenuity or partner platform helping?

I’d love if you could give three names given you think signing up 7 or so is possible"

Off the cuff:

Games Workshop - They have a relatively poor DTC offering. Terrible 17 day+ delivery times to non UK/US customers - and not great despatch times to UK/US customers either. They rely almost exclusively on brick and mortar stores and resellers. They have limited payment options at checkout. Their website - even though nominally offering said 17 day delivery times to other countries, isn't even translated into those respective languages.
Otherwise a very successful (414m revenue this year) growing british business with global appeal and traction - they just don't have global DTC reach, nor are they optimizing their online presence to build one. Ingenuity would appear to be a great match for them. Could easily reach 500-750m in online sales with the right distribution partner.

Moonpig - 368m in online revenue. Better online presence and checkout offering than games workshop but only serves some of the English speaking world, with the rest of the planet entirely unserved. Good potential match for Ingenuity to expand into more territories.

I believe it has been mentioned before, but vape companies like Elfbar also seem like a decent fit. Growing market, limited DTC offering globally for a lot of these brands, mostly relying again, on brick and mortar vape shops/cornershops. Must be demand for good DTC bulk buying/customization/flavour options.

Those are just 3 examples that you asked for, and only UK-based, but having global DTC reach means THG can appeal to companies of that size in any market. There's thousands retailers of that size across the US, Europe, China, the rest of Asia. The pool of potential clients that would be a good fit with Ingenuity is quite substantial. I would like to give them time to see what Vivek Ganatro can do.

Personally, I think picking up 7 or 8 middling 300-500m GMV clients is achievable and not altogether improbable within the next 12-24 months, then Ingenuity is pulling its weight.

I think it's those medium sized enterprizes, for whom their own global distribution networks are too costly outright to develop on their own, are the ones that Ingenuity will gain most traction with, and subsequent revenue from. The larger whales, those with revenues in the billions, will probably want tighter control of their own margins and favour investing in their own network (though may initially use something like Ingenuity to trial new territories) and are more likely to be capable of raising the funds to finance it. But there's far more medium sized businesses than large ones. I think there's a significant market for Ingenuity to tap, I'm willing to give them more time to see if they can tap it.

In the last webcast, Moulding made the same comparison I think I might have made in a post earlier this year, that he views what he and THG have experienced (re: the city and the press) in the last year as similar to Mike Ashley's experience with Sports Direct in 2008. He said if it takes 15 years for the market to consider THG a "good'un" and to be subsequently valued correctly, like Sports Direct finally was, then so be it.

He seems happy to ride this out. He certainly doesn't sound like he's in any rush to sell divisions or run back into private ownership. He talks a lot about optionality post divisional separation, so I still consider his focus more on finding strategic partners for Beauty and Nutrition than finding any potential buyers.

And value-wise, I think it would take something closer to IPO price and beyond for him to even consider selling, aside from the speculative fabrications in the press that a "city insider thinks Moulding would accept 250p". He just doesn't seem the sort to walk away from 18 years of work at the first bear market, when he still clearly thinks the company has a promising future. Especially now that many of the headwinds are swinging back into tailwinds again.

Or, sell nothing, allow the business to scale into cash generation - which they proved they were capable of pre-IPO. There's no rush with the reported cash on hand and heading towards cash flow neutral this year. Allow time for the plan to bear fruit. This doesn't seem like the time for panic selling or asset stripping. They have the cash. What debts they have don't start maturing until 25/26.

They built a 2bn+ revenue business over 18 years with a global fulfilment network that can service 195 countries. They have a vision and a plan that is global in scale and seemingly not far off being realized, and you would want them to ditch it all in the first bear market just because the share price looks transiently weak? The share price is where it is, but the books are what they are. Just because distressed funds like Softbank and Jupiter were forced to blindly liquidate their holdings and other funds have taken advantage by shorting it doesn't mean that a year out from now, THG won't still be growing revenue and market share and turning towards cash generation. And then what will the valuation be? I just don't share the sentiment that it's panic stations. I still think they're doing well in a tough macro, and that macro will improve sooner than people think.

Keep all the divisions, they all have a part to play. Keep the hotels. Keep it all. I think the money is there to see the plan through.

And the one doesn't lead the other? Has he ensured good and proper corporate governance then? Not very much has changed since his arrival, so the same governance issues that were held against THG before his arrival are still hanging over them, and that contributes, in part, to the depressed share price. He promised to come to the market with a strategic review that never materialized. Is it good governance to promise the market communications that never come?

"I’m going to keep calling out Charles Allen and his complete failure here..SP when he came in was circa 90p..over 50% drop..pointless appointment for a £400k salary."

If he doesn't bring anything to the table at the coming update then I would agitate for him to be removed/replaced. He's a passenger and THG needs a confident cheerleader. He was bought in to restore credibility with the city and the press, and has seemingly made no inroads with either. The only press he's generating is about how silent he's been. I was sceptical that his appointment would be the new start THG needed, as I personally didn't have a problem with Moulding holding both positions - and we know it's still his show anyway and Allen is just window dressing, but Allen seems to be doing his level best to validate that scepticism. He needs to pull his weight or THG needs to find someone new who can.