Member Info for TYLO

Oh apologies, I thought shore capital was an investment company but they are also a market maker. That makes alot more sense now. Thankyou.

On the RNS why does it say shore both bought and sold shares. It’s said this on multiple of them. Why are they both buying and selling shares. Seems very strange. Market manipulation?

Https://channelx.world/2024/02/ebays-mark-monte-colombo-on-the-refurbished-tech-opportunity/

Nice video of one of eBay management talking about the refurbished tech sector and even references musicmagpie during the discussion. This sector is very on trend and as peoples pockets get tighter they become more savvy and look for opportunities to save themselves money. Tech is only becoming a greater part of our lives, I’ll reference the iPad kids, you go to restaurants and kids are glued to the screens, but things like phones have becoming an extension of ourselves. People talking about crypto, AI, google, amazon, Uber etc but we need phones, iPad etc to actually use these platforms. Pick and shovels is how I like to think about it.

Stopped by Trafford Asda before and luckily the kiosks was being emptied by one of the employees. I was

Able go explain to the guy who I am, that I’m invested in the company etc etc and he was nice enough to show me how the internals of the kiosk work, how many devices it can hold and how the collection process work, the machine was full of phone I believe we counted 15, he was saying how this kiosk and the one in Trafford centre across the road have to get emptied every couple days because they are some of the most popular locations. He explained how he’s employed by a third party company who is then in contract with musicmagpie, he also explained that he himself drops the phones to musicmagpie head quarters but other workers in other areas essentially box up the devices and post them to musicmagpie for processing. Just thought I’d share this little anecdotal experience

Another thing to note here is Damian has bought £150,000 worth of musicmagpie shares with an average price of around 10p. He’s not exactly Elon musk so that amount of money is not peanuts to him, he also doesn’t strike me as the kind of individual to gamble on things. If he’s buying it’s because he believes in the value and prospects of the business. it wouldnt surprise me to see another RNS of him acquire more shares, someone has clearly been loading up recently. December has 1.4 million website visits, January had 1.5 million website visits so that’s stable and in line with previous years. we have had all the investment in kiosks, website and IT improvements, corporate and domestic rental assets. these investments are well above the current market cap and that’s without all the pre existing infrastructure. They have the musicmagpie brand, Asda partnership ( Asda has also been buying up local co-ops and petrol stations and converting them into mini Asda stores, could be great locations for another kiosk roll out) these have intangible value to them. 10m mcap is pricing the business for failure and severely underestimating the true value of the business . Refurbished tech is very on trend, consumer technology is only becoming a greater part of our lives, phones are essential an extension of ourselves. idk I don’t want to convince myself or you guys that this is all sunshine’s and rainbows because it isn’t, the business has a lot of work to do and the environment is tough and is only getting tougher. time will tell.

JD.com has also enter an offer for curry’s. Looks like many players see the fact that a lot of uk businesses are undervalued at the moment. This could improve sentiment around musicmagpie and encourage other payers to look around and make offers for other uk businesses like msuicmagpie.

15% EBITDA growth while the higher margin side of the business which is in decline therefore off setting some of that growth. Looks like the business is currently priced for failure and the disc media, kiosks and corporate side are completely discounted.

Why would I want a dividend when they have debt. I would much rather them use the cash to pay down the debt and not have to continue to pay interest, especially in this environment.

Looking into it abit more, looks like music magpie partnered with a company called utilize when they first launched there corporate rental program know as magpie circular. Looks like magpie circular, utilize and Damian hansons circle loop are all similar. Damian Hanson may have heard about musicmagpie through connections with untilize. Over the last couple years music magpie has spent over 10 million on website and IT development. Some of this will of course be maintenance cap ex but some of it will also be spent on the new corporate service side, including the new magpie circular website developed in partnership with utilize. This and the Disc media side seem to be completely discounted in musicmappie market cap. Disc media will probably make around 11 million in gross profit this year and I expected continued corporate rental contracts.

Never mind I see what you were trying to say now. You have been ignoring the RNS and one day in the future they’ll be an offer for 40p that you completely miss because your ignoring the current useless RNS

An offer “was” made. That’s not future tense dude.

Where does it say an offer was made for 40p

They never report in February. It’s always been in March. Also I’m hoping they give us more information on corporate rentals and on kiosks, so amount paid to customer through kiosks, number of devices through kiosk and any plans for further expansion. If they work why not pump em out ?? the corporate rental side has been here since October 2022 since then only one big client being stagecoach has joined. Maybe they are more focused on SMEs and don’t feel the need to report on each individual small business that joins.

Only 8 trades today so far? Why so little activity? when everyone expecting the full year report for. I’m thinking early March

I agree, america it a whole different kettle of fish, management already stated the us arm doesn't really contribute much to gross profit. just seems like a drag on managements focus. i would much prefer they sell it and use the proceeds to lower debt. lowering the debt would put the company in more sustainable financial situation and give Steve breathing room to think. right now it seems like their entire focus is on managing the debt, just a whole bunch of pressure on trying to survive, giving little room on how they can improve the business. when your all stressed out you cant think clearly and it can lead to poor decision making. i dont agree on share buy back right now, why would you want them to by back shares when they are paying big interest on the debt.

Another thing musicmagpie could do is sell the american side of the business. focus on the uk business and use the income to lower debt or fund the rental side.

We’re basically saying the same things. The rental income itself isn’t the profits, once the device is rented back out again, or returned and resold is when they make the profits. The initial rental income goes towards the cost of the unit, processing fees etc. essentially they are making someone else buy the units for them and then reselling or renting them later. Essentially the same thing you do with a property rental. You don’t expect to make much money from the rental cash flow because you know that’s gonna go towards things like boiler repairs, the property make become vacant for a couple months etc etc. the rental income basically goes toward the mortgage and up keep of the property. Profits are then made when either the house is paid off or if you sell it at a later date. Of course hand sets don’t usually appreciate after use the way houses do so it’s not apples to apples but a very similar concept.

Essentially what I was trying to say is they don’t make money by renting the device they make money by selling the device once it’s returned back from the rental. It’s essentially gives them units with much lower acquisitions costs. The rental incomes goes toward, debt and repairs. It’s like mortgaging a house getting someone to pay rent and then selling the house later down the line. you don’t make money from rental. Because you have to pay for repairs on the house. You factor in repairs, time vacant and use the rental cash flow to cover all cost. Or am I wrong here?

So we start 2024 with 37k rentals. These will mostly be single device rentals (1 unit per person) some may have a combination of devices I.E a watch and a phone or a phone and laptop etc etc. the hard part about modelling this is that new rentals are constantly being added while existing rentals are being renewed or expiring. They say they have around a 70+% retention rate. So that means 30% of the devices will be returned back to musicmagpie, these devices will have had two benefits 1 a year of rental cash flow,2 depreciation to reduce taxable income. Some of the devices will be impaired due to general wear and tear but the majority will be still fit for purpose and can be re sold or rented back out again. The fact that rentals come in over time and the fact the device will only be returned after 12 months minimum means earnings are massively understated. We have seen a small margin improvement already, the company attributed this to two things, better buying and selling pricing (which I don’t believe is the main factor because it’s a highly competitive market they have to buy things for the going rate and sell them for the going rate this is dictated by market forces not by musicmagpie) the second factor is devices return once the rental contract is finished. these devices have had half there value paid for and can then be resold for the going rate. This is why margin is improving. Basically getting other people to pay for the devices and then selling them afterwards. This is what is and will continue to drive margin improvements. With 37,100 devices out for rental at least 30% or 11,130 devices will be returned this year with a 50% discount to there fair value. Musicmahpie sells these devices and makes a huge profit. This is in my opinion the true power of the rental side. To return devices that have had half there face value paid for already, spruce em up abit and then sell them. I don’t expect much more additional subscribers this year but I do expect improvements in margins, cash generation, EBITDA and net debt. 7.7m in rental assets, 4m spent on website improvements last year at least 2.2m spent 2023 half year but probably closer to 4m for the full year. 3.6m contracted rental revenue on a 10m market cap seems crazy.

Interesting, Thankyou for that. I’ll look into him some more. Seems like institutional selling has provided us with yet another great opportunity to buy into this company at a cheap valuation.