Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I wish Matt would realise that he can have his cake and eat it.
In my view Kelso is not suggesting Matt leave the business, only that the business is radically reorganised.
The three divisions could be separately listed, Matt could be executive chairman of each and a major shareholder in each. All three new companies would have an experienced CEO with relevant industry background.
And all shareholders, including Matt, would be able realise greater value with their shareholdings, perhaps more than three times the current value.
What’s not to like?
I’ve done a bit of research which is always dangerous. 😊 It does seem to be the case that the sugarcane derived squalane patented by Amyris is the key ingredient in all Biossance products. It’s also sold to many other cosmetic brands globally by Amyris who have stated that they are disposing of their consumer brands e.g., Biossance to concentrate on R&D. So THG is very unlikely to have acquired the IP of the ingredient, only the right to purchase it as an ingredient when presumably manufacturing is transferred to a THG facility. Just my thoughts.
I would have thought this transaction would have warranted an RNS tomorrow but THG doesn’t seem to like them. Could be a great deal though, as was CityAM in my view. I think THG might well be turning a corner. We live in hope!
I simply can’t believe that THG will be listed on the LSE long term. How can Matt, with any credibility, keep THG listed on a market he has criticised so much and so often.
I would be delighted if he took THG private or listed it elsewhere. The sooner the better and in time for Christmas!
I’ve just been looking at the numbers too. Mars is paying 2.6x revenue and 22x adjusted EBITDA.
This despite revenue and EBITDA both falling compared with the previous year.
No wonder Kelso has been arguing for some form of value release, whatever form it takes.
We can only hope our day will come soon.
Now that inflation is falling and interest rates seem to have peaked, I wonder if the more favourable market conditions mean that a US listing for one of the divisions is now more likely to happen sooner rather than later.
Maybe they have been waiting for more stable market conditions. I certainly hope so.
Afternoon all
I have a simple question.
Does anyone think there is still the chance of a capital event over the next few months or do we need to trade our way to a higher price?
So much has been written here over recent months and as we all know nothing by way of a capital event has happened yet.
Like others on this board, fatigue is beginning to set in! I think there’s value here if the company is managed well, which it isn’t at the moment, but also like many others I’m hoping for a hostile bid. And the sooner the better! Please!!
I can’t see an MBO happening, but a hostile bid, that’s another thing altogether. I think that may happen at any time.
When all is said and done, I could just kick myself for investing in a dog !
Plain and simple.
Ok, so if it is an MBO, what price range do you anticipate? Interested to know everyone’s down to earth view, not wishful thinking! :-)
This share has disappointed on so many occasions.
I just don’t get Ingenuity. Honestly, I just don’t get it.
What the hell is the business case? Who on earth would sit on masses of unused capacity and pay for the privilege of doing so.
During the presentation MM spoke about ROI.
When I was young and foolish, someone advised me that if the planned ROI is greater than five years, it almost certainly would never return any investment.
I wish I’d got wiser and less foolish over the years.
Anyhow, a good glass of Chateau something and I’ll feel better after that.
Good luck everyone. We’re here for the very long term!
@Manifesto
I completely agree.
Investors choose companies because they exhibit a certain profile; risk/reward, long term/short term, whatever!
With THG we have two distinct profiles; nutrition/ beauty on the one hand which are both FMCG and primarily D2C and then we have Ingenuity which is long term and capital intensive.
The single best thing THG could do is to hive off Ingenuity in whichever way is selected.
I am massively disappointed with today’s results and I hope Kelso emphasise the same point.
And the sooner the better!
Having listened to the investor presentation and the Q&A my take on it is that the only possible capital event is a separate listing for one or more of the divisions with THG remaining the single largest shareholder.
My preference would be Ingenuity because of its cash burn and maybe in a U.S. market it might be looked at more favourably.
What does everyone think?
I’m a long term holder but I have to say, following these results which show no significant progress, I’d be delighted with an MBO at £1.50, never mind £2.50.
I’m trying to see the positives but it’s difficult!
I’ve taken this statement from the Q1 trading update.
“a significantly improving exit rate supports our expectations of core divisional growth each quarter for the remainder of the year.”
I’m not sure if this means their expectation is that each of the three divisions will grow each quarter or the aggregate of the three divisions will grow.
Coupled with the expected various cost reductions we should all quite reasonably be expecting some good results on Thursday.
If not, then something is really amiss.
I’ve reread the Q1 statement.
The two most important metrics on Thursday will be margin improvement, both at the gross margin and EBITDA levels, and overall Q2 growth which should be positive after being negative overall in Q1.
If they deliver on these two metrics then it should bode well for both FCF neutrality for the full year and net debt.
Almost everything else is fluff because if these two metrics are missed we’ll be punished.
Fingers crossed we’ll be ok.
Let’s hope this time we stay above £1
I think what this does is give additional credibility to the idea that THG Ingenuity could be run as a separate standalone business, rather than being ‘hidden away’ within a D2C/FMCG company.
I’m not saying this separation should happen but I think inclusion in this Gartner magic quadrant further suggests it is capable of being run separately.
My own view is that the leadership team seems to have taken on board the old adage that ‘turnover is vanity, profit is sanity’. At long last!!
My own expectation is lower sales but of a higher quality meaning an improved gross margin and EBITDA.
If we can show we are edging closer to the target of 9%, that would be £180m EBITDA on turnover of £2bn, this could warrant a PE multiple of 15 say, giving a market cap. of £2.7bn or £2ish per share.
We probably won’t get to this point in 2023 but if we can at least demonstrate progress this should start us moving in the right direction.
All just my opinion of course.