Member Info for kularatnam

Today Chairman & a NED bought 3500 & 4848 shares respectively.

Today's price action and large volumes connected with NFP numbers. Things are settling down now . Hopefully we end up positive

I dont know whether Penfolds is a new or existing Client. The ad is for wider global audience.

https://www.bandt.com.au/penfolds-unveils-global-masterbrand-campaign-via-casa-colombo-monks/

https://www.linkedin.com/posts/monks_penfolds-just-uncorked-its-new-masterbrand-activity-7237484360914923520-UOPM/

Is an interesting subject with no end to discussions. In context to S4 if any one can find an answer for its price @ £8.00 then answering the price @ 60p is easy. IMO the former is due to extreme (lunatic) optimism and for the latter quite the opposite pessimism.

Now I turn to a slightly different thing, showing a bit of my ignorance as well. I know Monks as an ad agency just like WPP, IPG, Publicis etc .But I do not know the complexities of these businesses - what are they good at, how they differentiate with each other. Then I came across these two companies - The Trade Desk & Nexxen - also in the ad industry.

TTD has revenue of $2bn mkt cap $50 bn. Nexxen T/O around £260 mn & mkt cap £400mn - lofty valuations. About TTD it does "

Our self-serve, transparent software helps advertisers use the best available data to reach audiences on the open internet at every stage of the funnel - from awareness to engagement to conversion.".

I do not know whether Monks do or do not have similar platforms to work with its clients but a similarity is these two are also not holding companies like S4, but a unitary structure. A unitary structure has a number of advantages over the others. So, Will or Can S4/monks. com evolve and become a niche market player in the industry. I wish so. IMHO.

I posted sometime back after July profit warning, that prices at that time - 60s - wont stay for long as predators would be circling. Now I did some research into M&As in this industry during the last few years and some interesting findings surfaced. Listed are some of the deals -

Acquiree Aquirer Acquiree Revenue Deal Value Year

William Hill 888 ( Evoke) £1.3 bn £2.2 bn 2021/22

Playtech Aristocrat £1.2 bn £2.7 bn 2021 - Deal failed

Sisal Flutter £590 mn £1.62 bn 2021

SKS 365 Lottomatica Euro 300 mn Euro 639 mn 2023 Playtech also bid.

Snaitech (Playtech) Flutter £800 mn £2.0 bn 2024 pending

I only considered one metric - Revenue Vs Deal Value - and found the deal value to be more than twice of the revenue.

Based on this Evoke is sitting on a enterprise value of roughly @ £ 3.4bn ( £1.7 revenue *2). Deduct the Debt you again get £ 1.7bn as the share value or £ 4.00 per share. Not that a suitor will foke out this amount but they have a margin between the present mkt cap of £300 mn to £1.7 bn to play with.

Now why is this deal value twice that of Revenue. My reasoning is this. In this industry EBITDA is around 20+%. So if you are debt free Cash Flow/Return is 20%, when you pay twice the revenue your return is 10% which is very attractive. in this low interest environment.

Playtech is the center of attraction having failed before and on the verge cashing on its Italian business I believe coming months or year will be interesting for Evoke with much higher SP. All IMHO. GLA

Nige I agree with your views on Dividends. Also on the cards is Share buy back. SMS has said his aim is to improve the value of the share owners and as to how share buy back helps.

1Msn, a good find.

In that " Sorrell admits It didn’t play out that way because a lot of the founders continue to run their businesses as if they were still smaller companies. He said: “Good people tend to put their arms around things, but exceptional people are good sharers – they are the jewels but to be frank there aren’t as many as there should be." SMS is very frank about his top executives who came along with the acquired companies.

I think that explains all the trouble S4 had to go through during the last couple of years resulting in Accounting fiasco, missing on targets, profit warnings excessive hiring & then firing etc. Even H1 results are published very late. Most companies have finished it by now. The market lost confidence resulting in the debacle of the share price. Now it looks like things are being put in order. I think Rebranding & Organizational restructure which is underway will make things better and a re rating on the horizons. IMHO.

I also found an article , bit old. but useful to read.

https://www.hulkapps.com/blogs/ecommerce-hub/media-monks-navigating-internal-turmoil-towards-unity

Nige, good analysis and shows how undervalued we are now.

One of the line items caught my attention.

Earnings which was a loss of £159 mn in 2022 moves to a Profit of £10.8 in 2026. Actually it has reduced to a loss of £14 in 2023. If 2023 numbers are analyzed further, in the H1 it was a loss of £23 mn, which means H2 ,2023 it should have been a Profit of £9mn. Going by this I am of the view we will have a Profit in H1 ,2024. More so with the cost reductions, trimmings of number of monks.

Https://www.google.com/search?q=chilis+burger+time&oq=Chilis+bur&gs_lcrp=EgZjaHJvbWUqDAgCEAAYFBiHAhiABDIGCAAQRRg5MgkIARAAGAoYgAQyDAgCEAAYFBiHAhiABDIJCAMQABgKGIAEMg8IBBAuGA

https://www.google.com/search?q=chilis+burger+time&oq=Chilis+bur&gs_lcrp=EgZjaHJvbWUqDAgCEAAYFBiHAhiABDIGCAAQRRg5MgkIARAAGAoYgAQyDAgCEAAYFBiHAhiABDIJCAMQABgKGIAEMg8IBBAuGA

Will happen with the H1 results - what ! less than a month away. Why - will show a Profit for the first time, AI related contract wins and more importantly more info on GM contract which will be worth several whoppers, in Monks jargon. All my guesstimates. Hope they come true. GLA.

Extract from the RNS today

"On 16 August 2024, the Company was notified that Andrea Gisle Joosen, Independent Non-Executive Director of the Company, purchased 16,699 Ordinary Shares, at a price of 61.7p each (the "Transaction")."

Yes they have bought. CEO 900,000 shares, an NED 87,536.

What I liked most is the headline " Current trading consistent with 5-9% H2 revenue growth target ".

This is a business with a topline revenue in excess of £ 1.75bn per annum that is achieved consistently. Thanks for the well established brands 888, William Hill & Mr green. With a gross margin of 65+% & EBITDA of 20% 7 all what these CEOS have to do is to contain & manage costs. But normally as is the case with all New CEOs, this guy too has gone on experimentations and new things - name change, not known benefits as operating brands remain the same, write offs, new type of marketing, new and additional personnel, may be at higher costs & possibly making redundant of existing ones of similar positions, US exit. All this would have cost substantial amounts. Thankfully , assuming bulk of theses are one off costs and that brought out the bad H1 results. We will not have these costs from H2 2024 onwards. And that means, as they confidentially say , we will be in positive territory in all aspects, now onwards. IMHO. GLA

With a Divi yield of an attractive 6% , even more tempting with interest rates dropping. Will become a defensive and income stock for passive investors. Company's revenue ups and downs YOY are the norm for the industry , but long term steady

Director buys, that too very large, more than the transaction of own company shares. is an affirmation of this proposition. More director buys, NEDs, possible.

Add Powder Tech sale, The company will be at a different level. IMHO.

Half year results on the 15th.

Any idea when the transition period will be over? Will there be a RNS.

BTW, crazy market. Why such a big drop of 10% from yesterday’s highs. High volumes.

Wont last long. This company was subject to two or three attempts for a takeover in the last couple of years while still the SP was much higher. There is strong cash generation only to be used up interest payments. Unless some drastic measures are taken by the new management such as sale of assets or brands to reduce debts, in addition to focusing on operations , things are not going to be in their way.

My earlier post caption should read as "Topics of Interest".

2mee was engaged from June.

https://2mee.com/case-study/test-case-sudy-7/

https://igamingbusiness.com/company-news/department-of-trust-partners-with-evoke-to-enhance-player-safety/

A bit of a dull period last couple of days. This board is in silent mode - no new topics -, no trading update, low/thin volumes traded and not much price movement.

Of all these things the important one was the absence of trading update. Having looked at the Trading updates of 2022 & 2023 I find them to be actually " Profit Warnings" one way or the other. I think this time around they have updated us on the 6th June , that is almost end of the half year and since then didnt see any material changes and therefore would have not thought of another update. That looks good and positive. I reckon we will see the Half Year results being the next update and it could be much earlier than the usual schedule. GLA

NigeCo, thanks again for your views on my note and also for the WSJ link. A lot to learn from the article and also I have few comments to make, which I will do later. One thing struck me was the Stagwell connection. Incidentally I find them also being selected as an Ad agency along with other smaller ones and Media Monks in the General Motors media review. I dont know Stagwell & Media Monks combination is by design or default.

https://www.linkedin.com/posts/peter-m-delorenzo-b100aab_on-the-gm-marketing-mess-editors-note-activity-7210612048227876865-PH_p/

In case of a merger valuations can take different forms but the stated $700 mn offer looks very opportunistic to capitalize on the troubled situation S4 is in. It is basically 70% of S4 turnover. If you look at Stagwell mkt cap it is 75% of its revenue. So where is the Premium in a takeover for S4.

Interesting developments , and have to take a wait and see approach.GL