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Does the £130M Capex support the consumer? Or is it completing the fit out of the super sheds , 80% of which is not being gamely utilised today ?

No idea because the numbers are so opaque ?

If we pegged Capex to the sale of the Property
Slash Ingenuity Opex costs to match net income - then we
have establishment cash burn on empty space funded out of the gross cash from Nutrition / Beauty

If they would have spent time explaining the running’s costs and how they where going to deal with cash burn the market would have appreciated rather than waste time about calendars

Does make you wonder why would they spend another £130M capex next year if they could pause? That’s £400M over 2 years
Most businesses would suspend IF they could, just wonder if they might trim that £130M down ?

Ha! If they said £44M capex … the magic number

Decent stab Golden - gets the debate going

Are we in agreement we have as much as 85% of the distribution units available for Ingenuity ?
£2B Rev over £19B capacity ?
Not an exact science of course but an indicator.

At £5 sq/ft rent say a £quid rates we have real estate fixed costs of £100M plus energy / security ex Capex for Ingenuity space ? Ball park

Less whatever Ingenuity brings in net net

THG had £100M Rev for Ingenuity but that looks its out the window now after last week ?

So that gap to establishment costs / plus capex less Ingenuity net revenue income

Gives us an idea of the cash burn, plus or minus Nutrition on Whey

Beauty doing well

Plus we have 200 point increase to 8% EBITA maybe - interesting they wouldnt confirm the 6% only 200 points up

Appreciate it’s a bit rough (above )but it’s a flavour of where we are to add your analysis

Of course it would be helpful if THG actually told us the numbers rather than guessing

Thinking on , would we say 7% yield ?
£12M tops in value

Good debate since last Thursday

Think we can pretty much agree, you wouldn’t short - could be very scary - and you need to be in this to win it

Agree a deal has to be done or he’s toast when the GS expires

Doesn’t work that way with PE though
They like to load with debt, he loses control

The business would have operational debt of maybe £400M next year plus equity debt to service, not even sure they could secure in this market

However a trade sale of nutrition works for all parties

Think it’s fair to say they were pretty clear on the Conf that they wouldn’t load equity debt into the PLC

Licker can’t see it

He doesn’t want the PE debt, they said it on the conf call, pretty clearly

Then they spent time explaining the value of Nutrition
- .2X sales to U.K. average 4X

The value gap is nuts.

They just sell Nutrition… retain the rump
Anyone on the conf could see that’s on their radar

They spent time going through the valuation

Sell nutrition
Pay back debt
Retain quote for Beauty and £capital to expand
Maybe a bit over for a special dividend
Makes so much sense

Separate post on a couple of obvious companies who could aquire nutrition ….

MM needs to do a deal, the market knows that, clock ticking for him

Now is the time for someone to strike

DG/ A,steel1

Maybe there is a way to sell Nutrition and make it work all parties ?

Reckon the City is aware of the risk for shorting THG, going to be interesting to see how far the share price rises, personal opinion it could head back next few weeks / months to 85p - the price our Chairman bought in, of course a sale of Nutrition
and all bets are off

Point being … there will be others out there who would benefit from THG/ Ingenuity, instead of paying 4X Rev for Nutrition they pay 3X but THG Ingenuity get the gig to continue to distribute Nutrition via a non exclusive agreement for X amount of years, doesn’t stop Haleon or others distributing over and above via their OTC channels

We get the £cash , no debt, remove risk to commodity markets, expand /,focus the high growth Beauty range and to boot generate a partnership to push out the use of THG Ingenuity - imagine storing / distributing all of Haleon’s D2C products where we could?

I don’t think any of us would doubt Moulding could pull off a deal like this, it’s what he does?

£10B a year of sales
Looking to expand their E- Commerce revenue
We are growing mid teens they are just 5% growth on 50% of their products

Off their web site

Medium term guidance
Performance

Organic annual sales growth of 4-6% ahead of market. Growth drivers are;
Oral Health & VMS: mid-high single digit growth and c.50% of group sales by 2025
Emerging markets: high single digit growth and in high 30s % of group sales by 2025
E-commerce; double digit growth and in mid-teens % of group sales by 2025
Rx-OTC switch to deliver +1% in year growth each, from 2025 if successful (excluded from mid-term organic sales growth guidance)
Sustainable moderate adjusted operating margin expansion per annum1
High and stable cash conversion
Delivering net debt/EBITDA <3x by end of 2024.
Initial dividend expected to be at the lower end of the 30-50% pay-out range2
1Adjusted operating margin at constant exchange rates

Suggest Haleon could well be the perfect partner for THG

Sell them Nutrition and act as their 3rd party distribution partner for their other consumer products utilising the THG
Ingenuity service.

Possibly one way to get around the problem of shared logistic assets?

Both parties get something out of this deal

https://www.haleon.com/our-brands/

£2B of net assets invested last 24 months … maybe £3B plus last few years
£2B of revenue
30% rest of world income
20% USA
80% repeat customers

Take your chances but for £500M it’s very cheap m/cap and Moulding can do a deal - we know that

Moulding needs a bid

He’s done the sniff test a few months, I wouldn’t be surprised, they were very coy on the Conf call

He’s has to do a deal or lose control, wouldn’t bet against Moulding pulling a rabbit out the hat

You have to be in it to get the multi bagger with this one

- beauty higher margin industry

2phevs, fair assessment

We may have more upside IF nutrition is lower GP - ELF and others with manufacturing capacity are higher margin
Guessing mins but could be in the 30’s% gross which if correct we generate even better cash as the price of whey drops

Hi Hosai,
Thought process THG is a proxy for the spot price of Whey - at the moment - rather than all or nothing as such

If it goes down relative wise we churn decent cash - or the other way if it goes up

To budge the share price to say as high as even our good Lord paid won’t happen until Whey starts to drop, however a Bid for the group or even a sale of nutrition and we see this rocket and 43P will be gone in a blink of an eye

As such suggest it’s a decent Risk/ Reward punt at these levels