Member Info for varun25

Exactly my views on the share price drop... bought a little bit more today... now a totally full position so I better not take a bath on this one...

Significant drop in share price today ahead of results. I doubled down but I wonder if someone knows something ahead of the results that is resulting in sell downs? May regret doubling down but this is now one of my top 3 positions. God help my analysis that this is undervalued!

I have been of the view that this company is ideal platform for a PE to continue to do a buy and build in this sector. The valuation is 8.5x EBITDA which is fair but not demanding and therefore the right thing to do is to put themselves up for sale. I think this kind of business goes for north of 10x EBITDA. Also, will be a natural exit for Ashcroft who would not want to own this asset forever. so I would not be surprised if some bid comes in for MRL.

I think the short position in fact may be driven by someone having some views on the CMA investigation. The valuation is not that elevated for a business of this nature so someone taking a short position is implying they expect the earnings in the the P/E ratio to drop. The organic growth in the last report was a bit disappointing so are we also looking at a slowdown in the Vet market?

Agree that it seems like this is priced wronly with visible revenues, growing EBITDA and DCB in the back mirror. average price for me is 65p but I will add if it goes towards 55p.

I am a holder with average price of 115p so I am heavily down. I think the turnaround or some green shoots on the US side of the business are needed for me to double down. The last set of results showed continued strong performance in UK, Japan and Europe but US is dragging the entire group down. even if I can see some stability in US, I would double down and increase my position. until then I am on the sidelines.

Good to hear your thoughts and it hopes it works out for all of us.

The company has AUM are stable although bespoke being repalced with model portfolio services so there is downward pressure on yields. Even so, the overall AUM is stable. They have disposed off loss making international business and recent acquisition of Lift made sense to me although it does feel like they are paying a lot for that acquisition. The market cap is £250m. net cash is c. £70m (adding gilt portfolio and cash) compared to an EBITDA of £35m and FCF of about £20m. so EV/EBITDA is c. 5.5x and P/FCF is c. 8x. The numbers look way too cheap for a business of this nature which, although has headwinds with move from BPS to MPS, benefits from recurring revenues driven by AUM. there is a nice 5% divi yield at the current levels. what is the bear thesis at current pricing levels? I also own Tatton which is a much superior business (only focus on MPS and super lean) but trades at eye watering levels.

Fair enough. My point was that even with a modest decline in EBITDA (for whatever reason), it still does look cheap at less than 10x FCF!

The share price is a bit of a puzzle. The statutory earnings are a messy due to amort but this business genrates £40-50m FCF as per below $96m EBITDA

less $10m of capex

less tax of $6m

less interest of $12m

less: leases of $2m

less: recurring one offs etc of say $5m

This means that the price /FCF is c. 7-8x. with track record of growth, increasing dividends and continued buybacks , I am struggling to see why this valuation makes sense. The revenue per thousand sessions has been under pressure and declined strongly and Billy mentioned that this will remain under pressure but even if the RPM declines another 10-20% from here, I would think that EBITDA declines by say $10-15m (assuming clicks stay the same - they have been growng) and the valuation is still a P/FCF of 10x or so. Shinez acquisition made sense to me and I believe that there is scope to cross sell Tonic and Shinez traffic which is a question I asked last time to Michael. I am just worried that there is some obvious flaw in my thesis so holding back on doubling down . Average price at 132p. Do we have any bears on this name to bust our bull thesis?

The organic growth seems to be solid excluding DCB. They have been winning new contracts. The valuation at 5x EBITDA doesn't make sense. I have been looking to add small quantities at the current level.