Member Info for Okehurst1

Full listing to be announced April - beginning of the end for the II Shorts

Market knows Golden Share up in 26 weeks

£160M FCF + from Core operations on £2B Rev

Valuation With or without (u) stuff regarding £1B whales Steve
The tide has turned

Thanks Plutus

I liked the nugget of info we got off MM this week that we are pretty much providing the IP to Iceland and they do the rest.

You can grow that model expediently on the back of the Brand with minimum capital employed

The market has not fully woken up how scalable this actually is?

Thoughts on Ocado

It’s effectively a Consumer Surplus Business

The only winners are us ….the consumer, we get more ‘time’ but the investors who have funded make nothing and get caught up in a ‘ sunk cost fallacy ‘

THG makes ‘ stuff’ , we know what in and we know the margins ( ish ) we generate cash and we have top brands, the market is waking up to the opportunity at the current share price

Hi guys

Long THG … in quite heavy / agree ,Ocado not for me

Don’t wish to antagonise, think from my side I’ve finally got my head around the numbers - accessed broker reports and been sharing info for the BB were I can

Getting caught on the January update was a lesson, trying to make sure not to miss anything (again )

I like the look of the new CFO, I think management have a plan.

Nb it’s good to get challenged on what you post / data
Ditto encourage others to share their data, we all benefit
The Linked posts from management have been helpful

Think we will all make decent money from this position GLA

Think it’s down to pure cash available

Ocado last year and next 5 years will spend almost 200% THG market cap today
just on intangible capex - £340M weaning to £200M a year

We don’t have £80M a year FCF in the can to commit and we couldn’t compete with someone dropping £1.5B over 6 years

It’s arguable is there a viable business in 3rd party GMV ?
Ocado today - negative EBITA
Spotify - less than 1% operating margin

Is there any company out there can make $$ from a GMV model ? I can’t see one?
The intangible capex doesn’t appear to stop?

* Ocado are going to drop £1B cash over 5 years on tech capex let’s assume SaaS / Robots ,they did £344M last year alone

Lessons here for THG BoD

https://www.proactiveinvestors.co.uk/companies/news/1007563/ocado-at-crossroads-once-again-over-its-retail-and-solutions-arms-1007563.html

Helicopter view

THG could well generate £160M to £180M from its manufacturing/ D2C distribution platforms from £2B plus revenue

Ocado had £2.2B retail sales with M&S
Produces nothing tangible -produce wise- is an end to end provider
GMV style model

Solutions business, offers what Auto Store THG do give or take
THG will compete without the heavy capex - Ocado hinting they will enter the wider market but they have their hands full dealing with what they have

Ocado negative EBITA and will require £200M a year to invest in its SaaS / business

No idea how this is worth £4.5B and THG £800M ?Other than the Golden Share/ Robots that you can buy in off others - no brand pull , robot is a robot

Market waking up to THG and level of cash it’s churning and it’s taking a view THG won’t commit to the level of intangible SaaS previously indicated not without an equity deal or a seriously long term contract ,personal view our balance sheet won’t give comfort on the latter so we need an equity play to fund

It’s win win for THG shareholders at the moment

Not fully digested Ocado numbers but they are not pretty at first glance

‘Total Technology cash spend, £344m in FY22, is being amortised over a growing base of OSP partners. In addition, we believe around 70% of technology already developed can be applied to activities outside of the grocery sector. We expect total Technology cash spend to gradually reduce to around £200m per annum over the next 3 to 5 years’

However, as detailed in the recent 4Q22 Trading Update here, full year headline revenue (-3.8%, to £2.2bn) and EBITDA (-£4m, compared with £150m in FY21) performance reflects a combination of near-term pressures offsetting this progress.
· The most significant of these has been a volume (and so revenue) drag resulting from the unwind of the large basket shopping behaviours of the pandemic, and accelerated by the current cost-of-living crisis in the UK, followed by increased marketing spend to drive growth and relative to pandemic era lows, and inflationary cost pressures (primarily utilities‘

Golden, what was the share price then?
£3 ish

55p today it’s a decent punt

S/B

As you know I’ve critical of Ingenuity pinching all the FCF for a punt on intangible SaaS
but bullish on the Core £2B Rev that is throwing off cash
Brokers like the sound bite / basic guidance from the new CFO, margins are decent on the £2B
The new CFO thinks there is a sustainable model inside
Ingenuity

Spin out Ingenuity plc to USA/ Nasdaq and THG London share rockets

The investment community are starting to see the potential and of course full listing / golden share expiry is just weeks away now

Your on your A game crafty , like it :-)

Thanks for sharing your research Crafty

Good points OSG

I also think the market has looked past the Whale £1B, observed the Brokers have not upgraded the top line Revenue and took the view the pivot to the Autostore JV API model is smart / way forward

THG retains FCF / spend wisely

Meantime look at innovative fund raising specifically and independently for Ingenuity GMV

Splitting out the core businesses and Ingenuity charging them the going the rate - which we will all soon see next month - will be the catalyst for Ingenuity to raise its own cash as an independent entity so to speak

Morning O/P

Fair comments off you yesterday

I can only look at the sector /margins of larger peers, personally I don’t like
the GMV model, looks to me the provider spends a serious amount of money on Intangible SaaS / distribution centres / Infrastructure and gets a pittance in return
Ocado results this morning just reconfirm

I do like the THG Autostore J/V, think that’s smart business

Tbh Moody no idea on that one

IP/ Brand / API’s with User Interfaces, it’s smart business we don’t need serious capex

As Plutos says its brand value on the former

Providing the IP/Brand and being paid a licensing fee
Its a smart move, high margin

Autostore / API UI link up - minimum Capex
Again smart move, high margin

Take the view there is no VAT on cold prepared food , Iceland knocking out for around £5 quid?

We could be generating £1 aas a figure -,for each meal sold
Does wonders for our margins

No risk, just IP / Brand driven ,Worldwide market, appreciate Moulding telling us this stuff

Looks like THG are providing the IP and Iceland doing the heavy lifting of manufacturing ? Interesting to learn these facts

‘The Myprotein team sign off on range, nutritional content, taste, design and packaging, while Iceland takes care of the rest. The initial range focuses on frozen meals, with Pizza and Ice Cream ranges launching in April. Through the partnership we reach some overseas markets, and where there are gaps, we will look to establish similar partnerships’

Steve
They are only going to stop 3rd party if capacity max’d out which would mean higher margin for themselves

Decent business Beauty