Member Info for Okehurst1

Hi Ste
Was mindful of looking rampy on the £EBITA

If the heavy lifting is done on the capex and THG have so much free capacity I just can’t see how they spend £120M as a figure on Capex 2024 ? -I don’t understand how this can be logical

2024 and Capex slashed to £25M as a figure - why would they roll out more capacity ? Sell the £16B of space first

All over sudden THG FCF is £120M - plus the 2 items below that I’ve not included, in theory Ingenuity capacity at 50% and we are looking at maybe £160M FCF

Head reduction on top
Gross margin increase not included

Open for debate

If we look at 2024 EBITA at bottom of range, say £210M

Net operating cash flow should be around £150M

Then we have Capex for Ingenuity

THG tell us the heavy lifting is almost complete regarding Capex, we are told THG have £16B + of sales space so to speak and the ingenuity margin is 6% gross

THG cut the Capex to the bone 2024 and drive ‘ whale ‘ clients sales using existing infrastructure, net effect FCF could be materially positive.

Applying logic you wouldn’t roll out yet more sq/ft with £16B pro rata of space available

I’ve left the £133B of capex for 2023 -as is - to complete the roll out as already planned

Discounted below to zero but identifies opportunities

25% Head Count reduction - £90M ? Maybe
Ingenuity at 50% capacity 2024 £50M gross ?

Does illustrate how cheap THG is at £1B today on a risk / reward ratio

Mute point
Reducing from £235 to £199.99 for Black Friday is part of sales and marketing, we all know that.

Key factor they have stock and we know they can sell product, we don’t know how many they have sold already and did they restock ? No idea either way as yet

Let’s see how the overall numbers look at next update

Nb Mouldy played a blinder on the August call, he dropped the share price for him / Qatar and Lord Lucan Allen to chip in £39M of shares in open market at 39p

Thanks for sharing Golden - interesting

Good debate Ste
Agree with your £numbers / reasoning

On my side I think the THG investment opportunity is riding the EBITA (tail ) with one eye on FCF of course, know your same hat

IF they come in with £165M to £200M EBITA 2023 this is just a steal at £1B m/cap - I think we will gap up to the £1.70 over the next 12 months, the business has £670M cash at hand so no funding issues, we may get a bid of Mouldy who knows but think we all know he has to add a £2 to the offer, then we have Ingenuity where the heavy lifting Capex is all but complete bar £130M, a few whale orders and this division starts to look interesting

Cutting head count by 25% due to automation is the bonus ball

Ste, can’t disagree on £250M EBITA but they are on their way

Re growth, let’s see Q4, nice problem to have that we are still growing and the 2 core historically do well in a recession

‘ Sales at L’Oréal rose 9.1% in the third quarter compared with a year earlier despite slower sales in China due to Covid-related lockdowns. Coty COTY 0.00%increase; green up pointing triangle, maker of CoverGirl makeup, said organic sales grew 9% over the same period.

Beauty sales have also been a rare bright spot for retailers: Target said beauty category sales grew roughly 15% in its quarter ended Oct. 29 compared with a year earlier, with Ulta Beauty ULTA -0.59%decrease; red down pointing triangle shops in Target tripling their total sales volume over that period.’

1pencil

Nice bit of research Licker

Licker, would Mouldy secure a Bid unless he goes Big with a £2 in front of it ? Would he do that ?

Reckon we will see the 9% Shorts reduce as the II fund managers lock in YTD profits before year end

The fun bit for Longs, we don’t even need ‘ new ‘ money to come in here, the Shorts do all the heavy lifting as they take a bit of profit off the table for their Xmas stocking

I was more worried about the Crowman who was intimating 40p on Monday , hope the poster wasn’t caught short with a nasty margin call

Nb Licker

Thinking what a trade today at 6X EBITA 2023
A total steal although the Shorts say m/cap is heading to
£560M ( 3X 2023 EBITA ) or 40p :-)

Hi Licker
It maybe higher
- I was working on 10X a while back but upped to 14 which feels comfortable considering Mouldy doesn’t engage the City ?


Build in 10% growth 2023
Maybe on a good day £185M EBITA 2023
- overlap with 100pts price increases 2023 same 2024
and throw out X 14

2024 FCF £20M

It’s well doable we see £1.85 sometime 2023

Only raising this that it makes it tougher for Mouldy to nick this one back at a low ball

Who knows ? Maybe mixture ?

£100M to £115M EBITA is driving this one
Add on £670M cash at hand - no raise required

2023 EBITA £165M to £200M - if they guide
What a trade at potentially 6X EBITA

£115M EBITA X 14

£1 to 1.15p a share

That’s as technical as you need to be, that’s where we are heading before 2023 forecast is confirmed

Heading to 80p rather than 40p

Feel for any PI traders who missed this near 10% jump
Especially if they had a margin call

Hi licker
Good posts on CAGR btw

I quite like the 70% reoccurring consumer spend via their Apps and the 30% and growing automated sales handling
and top it all USA growing 25%

Nice data points to support the investment case at these levels

Doubt we will see the traders telling us 40p inbound whilst we go on this next leg up - no issues with traders on a short, good luck to them we are all here to make money but it will have been a horrible margin call this morning if PI’s were dabbling

Think it was SP who posted the executive of THG Ingenuity advising a few weeks how many orders they would handle this Q4 - via linked in

We did the analysis- it was rule of thumb and very rough guide - however by overlapping average sale value per order we could ‘ guess ‘ the revenue per 2 main divisions then multiply out on spread sheet via the gross margin

£115M EBITA was the number - that was with showing no revenue growth in the (£97M ) rest of the business including Ingenuity and no margin increase

THG advised 3 weeks ago we would be at £100M to £130M for 2022, IF we did hit £130M the £200M plus top end forecast for 2023 starts to look doable, at that point the rerate jumps a rung

THG insiders will know how that 2022 number is looking today and we know THG is leaky