Member Info for martyh

Completely agree.

The kpop.flex instagram account now has 34k followers.

The bands have a huge number of followers on Instagram. Here is a list I pulled together about a month ago:

Instagram followers/millions

Monsta X 6.3
(G)I-DLE 7
NCT Dream 9.1
ENHYPEN 9.5
Mamamoo 7.4
KAI - EXO 13.8
AB6IX 1.5
IVE 1.6
Oneus 1.7
Dreamcatcher 0.9

Great to see the stadium taking shape.

https://twitter.com/lvcgplc/status/1524095940080119812

This is a big event. 70k fans over the two days. €5m+ in total ticket sales.

Lots of hotels are booked out. Others charging 2 or 3 times normal prices.

I think my numbers for Bricklive might be too conservative.

The Zoo program only started in 2019 and the sets were still being built, so some only featured for part of the year.

In total 2019 revenue from the Zoo tours was only £1.3m, being made up of five tours (Safari, Big Cats, Brickosaurs, Animal Paradise, and Ocean). On average they were rented for about half the year.

New large tours have been added – Supersized, Brickosaurs Evolution, Animal Wonders, and a new Brickosaurs currently being completed.

With a higher utilisation on the original tours, plus the new tours, it could bring in over £2m extra revenue.

Added to the £1m cost saving that could mean Bricklive could cover costs and bring in £3m annual cashflow.

Sensible discussion helps everyone.

I’ll report back from Frankfurt!

I think the company was building solidly before Covid.

I look at everything from a cashflow perspective.

Before Covid the company only had the Bricklive business – Shows, Tours and Corporate Builds/Sets.

In 2019 the company was operating cash flow breakeven, before working capital and was forecasting profitability in 2020.

For 2019, turnover was £5.4m and gross profit was £3.1m. Admin expenses were £3.7m giving an operating loss of £0.6m. That included £647k of depreciation so the company was breakeven on operating cash flow pre working capital.

However, the company was building out its touring assets in 2019 and spent £1.2m on the builds. So there was cash outflow.

Now that we are properly coming out of Covid there is no reason that the company’s revenues from Bricklive can’t be back at the 2019 levels. We know the tours are booking out very well and the shows are now restarting.

They have also added a number of large tours and the Zoo program only started up in 2019. So revenue from Bricklive could be substantially higher.

The company has also removed over £1m from admin expenses. This can be seen in the accounts. In 2019 admin expenses were £3.7m. In the first half of 2021 they were £1.36m

So I think there is potential for the Bricklive business to cover all costs and make at £1m-£2m operating cashflow, perhaps more.

The company has largely built out its touring assets now and there shouldn’t be large build costs going forward. In H1 2021 only £151k was spent on builds.

The company also has a large Lego inventory. At 30 June 2021 they had £4.3m of bricks on the Balance Sheet, plus they also has £3.9m for completed builds. So £8m in total.

Formula E is the other part of the business that has the potential for material profits. The annual fee that the company receives is £350k and we’ve been told that the company’s share of the annual sponsorship should be €800k.

On top of this there is the E-fest.

So another £1m+ of profit being added next year.

You’re getting a lot for the £16m market cap even before kpop, and I think kpop profits could dwarf the other divisions.

Good post Bennster,

I just posted this on ADVFN:

I’m heading to Frankfurt for the festival on Saturday. I want to see it first hand.

I’ve built a decent position in the company. I’ve followed LVCG for a long time but bought most of my position after details of the kpop festivals started to come out. Mainly bought sub 5p and I think the company is worth a lot more than the current market cap.

It’s good to see that Gervais Williams at Miton thought the same, investing recently at a small premium.

We can all do our own maths on the likely profit from this festival. The final numbers will be known soon and the analyst will use these to help forecast the profit for 2023 based on 4-8 festival. I think that will be a large number compared to the current market cap and that the share price should rerate when the research note comes out, if it hasn’t done beforehand.

I also think the other divisions of the company provide an excellent base. The company was in good shape before Covid. I’ll post some details later.

Here’s the timeline:

• 20 Dec 2021 - announced the current dividend program, forecast COMBINED 2022 and 2023 NOIs of $184m, and 2022 year end unencumbered cash of $66m.
• 24 Feb 2022 – 2022 NOIs of $150m
• 4 April - 2022 NOIs of $192m
• Today - 2022 NOIs of $241m

I’m guessing perhaps $100m of the original $184m (for 2022 and 2023 combined) related to 2022.

Therefore, for 2022 we now have an extra c.$140m NOIs and $50m capex. c.$90m extra cashflow.

Add this to the $66m cash they were previously forecasting for year end 2022, gives cash of c.$150m at the end of 2022.

Potentially could pay a $100m special dividend (7p a share).

Good posts.

In my figures I haven’t included any extra for the VIP premiums. I’m using the EUR 3m total per day but agree that this probably doesn’t include the VIP premiums – which are significant as you show.

I think I’m being prudent in all my assumptions.

Another point is that KPE will get back their share of the up-front costs, on top of the profit numbers we are calculating. They paid $400k of the costs for day 1 and will have paid some for day two (although costs will have been much lower).

Therefore another $0.5m+ will hit the KPE bank accounts once Ticketmaster release the ticket monies directly after the event (on top of the profit share from the tickets).

We will need to wait until after the festival for final numbers but we can have a go at calculating the profit based on what we’ve already been told.

We know that day 1 is now sold out and that day two has sold 21k tickets and they hope to get this to about 26k tickets. We know the mechanism for allocating ticket profits to KPE. We also know KPE has a minimum profit guarantee on merchandise.

Based on this I calculate the profit as follows (this is profit not revenue).

*Day 1 profit to KPE: €0.9m
*Day 2 profit to KPE: €0.7m
*Merchandise minimum guaranteed profit to KPE: €0.4m
*Annual consultancy fee to KPE: €0.2m

In total €2.2m profit to KPE which is already known. LVCG’s share is therefore €1.1m

Additional profit:

*Sponsorship: We’ve been told that the sponsorship will bring in about $1m for a sold out show.
*Streaming: This is the big unknown, but the deal is structured so that LVCG can’t make a loss. Profit could be significant and all to LVCG (after the streaming company’s cut).
*Merchandise sales above minimum guarantee: This could also be significant - the 14 Feb RNS states the following:

‘Average ticket prices are in the region of Euro 70 per ticket and research indicates that average spend per person on merchandise could be the same amount again. This means that the potential total revenue for all partners assuming day two sells out could be in the region of Euro 6mio for ticket sales alone and close to twice that if merchandise is added.’

I’m hoping that LVCG will make at least €2m from the Frankfurt festival, with streaming providing the potential for more (big unknown).

I think the Bricklive business plus LCSE business will cover the company’s overheads in 2022. So the Kpop profit flows to profit for the company.

I think this one annual festival therefore justifies the current £18m market cap of the group.

There is at least one more festival planned for 2022 and 4-8 festivals are planned for 2023. As set out on the webinar yesterday, the potential for streaming revenue will be greater in future shows as packages by individual band will be available (with interview, backstage footage etc).

Merchandise sales should also be higher with the potential to sell band merchandise as well as kpop.flex merchandise.

It should also be easier to sell out the events with the whole weekend announced upfront.

If the additional festivals are announced there could be a fairly quick pathway to profits of 10m+ and therefore a market map of £100m+ (50p+ share price)

Previous Doors stream of Damon Albarn:

https://doors.live/en/e/damonalbarn-rewatch-eu

It's being streamed on 29th May/30th May to coincide with the SBS broadcast on TV in Korea.

Looks like you can choose for a number of times to stream the event on 29th/30th. Will help maximise the global audience with different time zones.

I think it's a good decision to go with a single, professional streaming company who take care of everything.

https://doors.live/

Website live and you can now buy tickets.

I think they've just taken the opportunity to refresh their headroom. Otherwise they would be left with zero flexibility for the next 2/3 months until the AGM.

I certainly don't think they will need any cash to keep the lights on. Far from it. But who knows what opportunities might arise on the kpop front - things seem to be moving quickly. They wouldn't want to be in a position where a great opportunity presents itself and they can't take advantage because they need to wait 2-3 weeks for a GM.

Bennster,

I’m familiar with AGM resolutions and the relevant sections of the Companies Act.

I didn’t overlook anything. I just referred only to the non pre-emptive amount since it’s the only amount that is relevant.

Placing shares are never issued under the ordinary resolution. It would require the company to go to all existing holders and offer them shares on the same terms in proportion to their holding. It’s doesn’t happen.

That’s why there is always a special resolution that allows companies to issue shares without the pre-emptive rights of existing shareholders.

For all practical purposes the company could issue shares in a placing of up to about 12.5% of the company’s existing shares.

They need a General Meeting because people are starting to exercise warrants.

As set out in the GM details, the company has used up its headroom following the investment by Miton.

In June 2020 there was a placing and the company issued 4m warrants exercisable for two years from the date of the AGM (23rd July 2020). These originally had a 15p strike price but this was subsequently reduced to 10p.

Therefore these warrants are in the money and the expiry date is approaching. Clearly they expect the warrants to be exercised and therefore need some more headroom to issue the associated shares.

This will bring £400k into the company over the next 2 months.

There are another 12m warrants with a 10p strike price exercisable up until 29 Jan 2023. This should bring another £1.2m into the company this year (or in Jan 2023).

So some good chunks of cash coming into the company from the warrants.

As part of the AGM the company is also taking the opportunity to refresh their general authorisation to issue share. Up to about 12.5% of the company’s shares on a non-pre-emptive basis.

They certainly won’t need cash to keep the lights on though. A huge payday is coming from the festival.

From the physical ticket sales alone (plus the associated payback of upfront costs) I calculate that EUR 2-2.5m should lands in the KPE bank account directly after the show.

Then there is streaming, merchandise and sponsorship monies to come on top.

I continue to think the company is hugely undervalued given the opportunity in Kpop.

Looking forward to the webinar tomorrow.

Gervais Williams is a very good fund manager. The performance of the Smaller Companies Fund speaks for itself.

It’s a huge vote of confidence that they have taken 10% of the company, buying in the market on top of taking the whole raise.

Something else to note is that Miton know LVCG and DC well. They held over 3% at the end of 2017. They’ve chosen to take a much larger stake now because it has never been better value.

The Kpop opportunity is too good to miss out on. The earnings from Kpop could dwarf the rest of the business and justify a share price an order of magnitude higher than the current share price.

The share price hasn’t responding yet because the wider market doesn’t understand the potential. Once we start seeing the figures from the first festival the share price should react accordingly.

I suggest everyone listens to today's Investormeetcompany presentation when the recording is available later.

Gave a really good idea of the scale of the kpop opportunity.

They said at least 2 Kpop festivals are going to be held this year, potentially 3. That alone is big news.

Next year there will be 3 or 4.

David also breaks down all the revenue streams. Streaming could well be the biggest, but even something like sponsorship, which people aren't talking about, will bring in a million dollars if the Frankfurt show sells out (which he thinks it will).

Good post Bennster,

Agreed we will certainly have churn around the 5p mark. Hard to tell how much and for how long.

But I think the company is trading at an extreme discount to how much I think it could be worth. So I've bought a lot of shares and I'm waiting for the story to unfold. It's not worth trying to be cute imo. The volume might not be there when I need to buy and the price could run away.

Hopefully we'll have large volume as news comes out over the coming weeks.

I don’t think the market has appreciated how large the streaming profits could be, or how popular the artists performing at Kpop.flex are.

The streaming potential is huge.

The two largest Kpop groups are BTS and BlackPink.

BTS earned $71m from a single 2-day streamed event last year. $71m!

https://www.bandwagon.asia/articles/bts-break-own-world-record-1-33-million-paid-viewers-online-concert-2021-earnings-sales-tickets-merch-muster-sowoozoo-virtual-livestream-venewlive-kiswe-8th-anniversary-watch-hybe-big-hit-music-june-2021

BlackPink made $10.5m from a single live stream

Individually the bands aren’t as large as BTS or BlackPink, but collectively they are.

BTS has 60m instagram followers and BlackPink has 45m. Collectively the Kpop.flex bands have 55m.

BTS has 38m monthly listeners on Spotify and BlackPink has 15m. Collectively the Kpop.flex bands have 30m.

The streaming profits from just the annual Frankfurt concert could be a company maker.

People need to understand the cashflows and the reason for the raise.

The Bricklive business is doing very well now. It could cover the group’s overheads and leave some profit.

The Kpop event is going to create very large cash inflows, but these will be received after the event. Live Nation will release the cash from ticket sales after the event, plus merch and streaming cash will come in around the event. At the moment the company is having to pay out setup costs for the event (especially with the extension to two days). They also need to take advantage of the wider kpop opportunity (the event has been far more successful than anticipated).

Therefore there’s a timing difference on cash flows that needed to be bridged. The fact that they managed an institutional fundraise at a small premium is great, especially in the current market.

Once the concert is over I calculate that over 2 million from just the ticket sales will hit the KPE bank account. Streaming and Merch could easily double that and more.

https://twitter.com/BurggrabenH/status/1500881099022606337?s=20&t=1mEpo5yjAgisY6JFphkxSQ