MMX V CNIC16 Jun 2020 13:47
Reading through the points made recently – and specifically those around dividends and management approach - I had a quick look to see how our fellow London, AIM domain business is faring – Centralnic. Since our results in March 2020, mmx (Profitable, no debt, likely $8m in the bank, 900m shares in circulation, £54M current valuation, near all-time low) has seen some institutional purchases as SJL exited and confirmation on continuation of the buyback which included a reference to healthy trading. Since CNIC’s (Loss making, $76m in debt, significant growth, 189m shares in circulation, £160m current valuation, near all-time high) results in late April 2020, they have hosted a Stockopedia Webinar, been highlighted in Investors Chronicle as buy of the week, been recommended by Zeus capital and have now scheduled a capital markets day next week. They also deferred their maiden dividend – but made it clear this was to ‘preserve capital and make tactical acquisitions’.
Two very contrasting approaches – and very frustrating that mmx is where it is. If H1 trading is ok as now looks to be the case, have been hiring senior positions, have continued the buyback, and have more cash than when we started the year and were already committed to a dividend, it is very difficult to see a situation where management cannot commence payments. I do concur that our institutional investors are not motivated by relatively small dividend streams – and based on Toby’s comments around options it is looking increasingly likely this is all about an exit at the right price – but I expect a dividend to be paid later this year. It would be realistic to expect the business to boost its cash reserves further as we move into H2 ($10m+ by year end?) – as it stands our core business is valued at less than £50m given we have cash on our balance sheet – making the disconnect even worse. SB
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