Member Info for Okehurst1

Golden - agree you are being factual
Let’s see what happens with Ingenuity and the £1B

7% EBITA margin on Beauty on £1B plus they should be able to do a deal / even part equity, same let’s see if they have done

This is the last throw of the dice for Ingenuity, it needs these big whale contracts, feel for us PI’s it’s weirdly a Win Win

If they don’t land the whales then the capex grinds to a halt and they focus on the core business’s and it’s the end of Mouldings vision for THG - no need for £100M capex SaaS spend this year and we are FCF positive
Ingenuity never worked out, it’s the way it goes

Personally I think they will land the big contracts / commit to the SaaS capex and that’s ok as well.

Soon find out one way or other

Announce the £1B GMV contract and we see the start of the rerate

I think the interesting debates will come post event

Put aside an equity deal - for now

It will be interesting to see how the market values Ingenuity?
Reason being, put aside the robotics element is bought in , their model is getting closer to Ocado’s
Of course not 100% but Ingenuity may well be the sweet point on how to actually generate cash with a D2C generic platform based on GMV

One to debate in detail once the £1B banked but the market will be able to work out and place a value on Ingenuity

HH, you can’t put out an RNS without the company lawyers and broker clearing the wording
- you can guide on EBITA and miss but that’s reputation / trust at risk

The lawyers would have been given access to the HOT’s to allow them to say about the £1B GMV

My thesis is there is a chance there is DD being finalised on an equity deal - because of the delay
I may be totally wrong but usually on a straight supply contract the HOT’s are pretty standard but let’s wait and see as I say I could be wrong

Think the £1B is in the can but do we get a full year ?Fair comment Tuan
Soon find out

Tbf to Golden , the gist of the message is fair comment
but unfortunately for THG that model didn’t work, for whatever reason, pointless arguing over it , it’s done, we have to move on .

They pivoted Ingenuity, brought on board the new CEO and it looks like he’s about to deliver a massive GMV deal

This is the way they are going , GMV driven

# he

I don’t think that’s their target client
Put aide forever 21 went bust / restructured, no issue with the latter but the brand name was sold off to Regions like India etc
It’s too fragmented to do business with for the likes of THG

https://www.financierworldwide.com/forever-21-files-for-chapter-11-bankruptcy

Let’s see what names they announce with the deals, as mentioned before it’s a double edged sword

No big whales and we don’t spend the capex, our FCF is positive - although I think they will announce as much to the fact of the RNS HOT’s must be signed

The time delay indicates a possibility of an equity deal - not nailed on - the level of DD for equity transactions / shareholder agreements is complex over and above a supply contract , as I say I could be wrong but that’s my opinion for what it’s worth

The new guy at Ingenuity will get major kudos if he pulls this off ditto Matt IF she sella stake same time, I wouldn’t back against it .

Forever 21 got restructured they were huge, now they aren’t
Bits went off to India etc brand name etc

In 2020 the rump had a valuation of just $80M at restructuring level

That’s by the by and I said ‘ small client’ they not THG’s target market anymore

It’s big Whales who can move the dial but that comes with a cost and it’s spend on SaaS and that’s where the 2023 capex will go

Agree 2phevs

I look at this way, Moulding nicked a load of cash to buy web sites and invest in Ingenuity

He’s had to tweak the Ingenuity model and you can buy in today at a 95% discount to its high - but the infrastructure costs are sunk

It’s now investing in SaaS to improve the service the whales want, with £1.2B of GMV the market will put a value of something on Ingenuity - zero at moment

They sell equity in Beauty as an example and the market can place a value on the £2B D2C businesses they own and we get a big rerate on top of above

We are just sitting in the stalls waiting for race to begin, once the flag gets waved ( the £1B ) we are away

Golden, leave it with you and 2phevs on the micro below

Suggest Ingenuity have no interest in these ‘small ‘Clients, the model has changed - as we know

It’s all about high volume global whales, massive GMV, max the capacity

Land the £1B and invest heavy into SaaS to support the model and go for more Whales and give the what they want service wise, it’s the way forward

Fully loaded Ingenuity with its current capacity has maybe £150M EBITA - no idea how long it takes to get there but the £1B is a move in the right direction as will be the Capex spend to assist - they tweak £quantum to be FCF neutral group level this year

Steve
Know it’s kind of irrelevant in the scheme of things but the MM’s played the game and have now moved the Bid up - they took a soft £70k
don’t think it’s Shorts as such, too much ‘ noise ‘ out there

Once the RNS lands with/ without equity we can estimate the FCF for this year
landing £1B GMV will create serious amount of tech jobs which will be the main focus of the capex

No whales no capex of note required, double edged sword

I would prefer the £1B and invest in the Ingenuity tech
and they balance the capex to be FCF neutral
the market will like that.

Equity deal though and as we say … changes everything

Maybe wrong Steve but I suggest the Insiders know the HOT’s of the Ingenuity deal and their contacts now the same and it’s imminent, as such the buyers are picking up around the 55p level

MM’s drip the Bid a couple of pence first thing to snatch a few cheap shares off the uninformed and then sell on later in day - been a pattern the last few days

For what it’s worth I think the Ingenuity deals will happen, no way would THG lawyers give them protection within the RNS (£1B) without seeing the HOT’s
the big unknown is do they have an equity deal in the mix?
If they do that’s a big gamechanger

Poker

Nutrition /Beauty are making a decent blended margin now Whey has dropped 50%

They are now focusing on Ingenuity SaaS so we can assume they have orders - Heads of Terms for the £1B otherwise they wouldn’t have been allowed to place in RNS

Looks like an RNS is inbound imminently

It’s just is there an equity angle as well ? That’s the unknown ?

Either way good news for THG , selling an stake in an division is a bonus on top - if it happens

Moni,

Poker has a point, they are making a profit at EBITA level
basically it’s all going back in to fund Ingenuity vis capex

We either believe it or we don’t - ingenuity

We pull in the £1B and Ingenuity is on its way

Good post Canary

If I may add, it appears the capex for 2023 is around £85M to £95M
and focused on SaaS around Ingenuity
In effect they are going for it - Growing Ingenuity Software wise

So we may see blue collar staff reductions and Tech job increase

Makes sense to me if they have visibility on what Whales want in terms of D2C services

They could pull of an equity part sale of a division and it super charges their cash and of course the delivery time of Ingenuity SaaS wise

Put your EBITA margin on the £2B core divisions and everything else slots into place so to speak

ASOS has a larger free float

THG free float is relatively small

Index funds will soak up / require 5% of the stock

HH, agree

We covered this Blinky
Worth reading the placing document

The only consideration short term ….. when do they start the full listing application
Apparently it can take 26 weeks, ideally they start April / advise the market

Understand Index funds will require 5% of the stock

Think your right Canary

LTH II’s won’t take a low ball offer