Member Info for Okehurst1

Bail out time for the Shorts

Know it’s family silver stuff but £2B would be a gem of a deal for the share price

Pay off debt £300M
Drop a few quid into Beauty and spin off in USA - what would this be worth in USA?
ULTA is valued at $3B !

Ditto Ingenuity - via a SPAC

Special divi to boot

Dream on stuff but not impossible

Appreciate it was only rumours within the industry but wonder IF they are about to sign off HOT’s on a disposal like Nutrition?

They laboured how much Nutrition was worth / been approached multiple offers for same but it didn’t touch their price point ?

Many of us would prefer Beauty to be sold If they have deemed that’s what they have to do to raise capital but selling Nutrition at £100M to £120M EBITA - where it could be -
Could they bag 18X ?
Doable and gives them forward 3X sales

Feels that way ..THG has always been leaky

Will be interesting to see how the 70M shorts react ?
Insiders running a 3:1 long/short book may be closing the latter that puts pressure on the II’s who are short -who don’t have the info - and what do they do?

Almost 20% jump

Something going on over and above ….?

Market Makers moved the Bid down to test weaker hands

60p next few days ?

Hi Justise
Re Iceland
We have had no direction on volume /margin as yet, guess they don’t want to disclose for commercial reasons

If THG maintain/ guide the 44% gross margin average and 10% growth then it’s all the Mix so to speak

Ditto guidance on Gross EBITA - 6.5% 2023

Suggest this is the best way to measure THG performance

If they grow faster and margin moves you can slide the EBITA number up ( or down )

Moni,
The two ‘non ‘ bids were from his ‘ bestie ‘ Iain Mc and the Candyman
Both were leveraged debt
Don’t forget Iain Mc was shorting via other vehicles as well as bidding long

THG could never do either deal - impossible
The balance sheet is shot through today even without adding
£1.5B ( assume 60% bought out)

The lead banks would never allowed it, private equity would have needed £2.2B of cash to fund the takeover and provide the £700M of headroom the business has put in place

This business couldn’t afford even a 10% coupon on £2.2B

It was all smoke and mirrors, it eventually drove the share price down to 30P
Plus and Mouldy and his new pals took advantage

Smart bit of business and apparently legal

It’s a big IF …

But if they come in at top end £130M ex SaaS then their 2023 forecast could be £175M at the mean - I’ve worked on 4.5% to 4.75% gross for 2022 which looks in the bag

If we go with 10% growth and 6.5% gross EBITA then they forecast £170M

Arguably they could get back towards the 8% 2024

They then hit £235M EBITA on 10% growth

So just based on this years EBITA we are sitting on just
4 X EBITA …. Could well be the cheapest share in the top 350
companies on the market

As per original post below

Either one of the 3 major options and we should bag from here at the minimum

The Shorts have been waiting for a red dot and it didn’t arrive

Looks like THG have hit Guidance

£1 to £1.20 is the minimum this stock should be post trading statement

Think the lack of the red dot confirms they have hit target / guidance

If this years EBITA is £175M - if they guide to ?

THG will be on a forward rating of just 4X at current levels, even at £1.20 we would be sitting just above 8X

The market is 12X currently

Price is so cheap at the moment

Always has been

Something afoot

- Hit guidance, numbers looking good, capex, staff cuts
FCF positive

- Selling a division

- MBO

Anyone of the above sees us Bag from here

… freeze capex for Ingenuity

THG churns FCF 2023

2024 FCF goes through the roof

Logically they have to go down this route, they can’t pump another £1/4B into Capex
into a division generating £200M Rev
It would need a Pod of Whales to turn Ingenuity around medium term

Take on board Beauty/ Nutrition have benefited from the Ingenuity floor plate but just digging when in an a hole, generate £cash grow the businesses generating 90% of the revenue and pretty much all the profit

Agree, we should see a gradual improvement this week, with no red dot THG must have hit guidance

Motley know what you have searched - via their platform

They them generate the ticker code / codes and add to the script

Finally entice you in to subscribe as they have an article that is new information

Good summary Steve

Fully agree all points

Good post Investing101

When we overlay with Boots data ;

In November, Boots.com percent of sales reached almost 23 percent, including the biggest ever single day of digital sales for the business, on Black Friday’

Internationally, the company's U.K.-based drugstore chain Boots saw strong Christmas sales with revenue up 4.6% for the quarter - we know digital sales were almost taking £1 from £4

Boots also said sales growth in Fragrance / Beauty

Due to whey prices dropping considerably in H2 think we can all agree Nutrition looks like it will have had a decent Q4, Beauty had a red flag in terms of would it perform ?

With THG Beauty occupying 1st and 5th position on line and reading across to Boots we may well get surprised to the upside - material increase

Nb - What would Walmart pay for THG Beauty as they push on to grow on line sales ?

Tbf Moni think Steve has a point - fair balanced post and am Long as you know
We will all do ok here, we just need to have patience, share info and allow other views for debate, just in case we have missed something

Good luck with your investment

Hi 1 pencil

My thoughts and hindsight being a wonderful thing … the 2 divisions could now get by utilising smaller distribution centres, taking the view we have 85% spare capacity at the moment and management could just focus on the core business’s
Nb Golden raised this one

Against all that THG wouldn’t have nicked the £2B off the City and SoftBank to grow Nutrition

Not knocking Moulding, as an entrepreneur he’s class but moving forward in this climate he needs to find a way to fund Ingenuity

IF THG are in DD they will have presented forecasts to the prospective purchaser, it’s usual practice to cut costs as much as possible before DD and demonstrate during the DD process the business can run on the £costs disclosed - warranties and disclosures being everything ( legally )

Not saying they are in DD btw

The ‘ offers ‘ last year were non bids funded by debt
THG could not afford to service

Yes they can

Only need to inform on contract signing … it’s just DD till then, nothing binding