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Not sure if anyone else has got access to the latest Jefferies note, but its a pretty good read. Looks like Steven Whitehead did a sales presentation, which I assume this was to other analysts too. Jefferies also met with Lucy Gorman too it seems.
Https://www.linkedin.com/feed/update/urn:li:activity:7062681230554591233/
I think that the Apollo approach most likely happened a while ago (probably end of the year or early this year) and discussion have been ongoing for a while. We would never have known if it wasn't for the MoS article the weekend before results that led to spike in SP on Monday morning and most likely the takeover panel told the company to put out a statement to maintain a fair market.
I would not be surprised if Apollo weren't already at a stage of virtual data room and DD etc by the time the news came out and this forced statement wasn't ideal for any of the parties.
All imo of course
https://www.bloomberg.com/news/articles/2023-04-17/thg-shares-soar-47-after-it-confirms-apollo-takeover-bid
Shares out on loan, an indication of short interest, represent about 10% of the company’s free float, according to data from S&P Global Market Intelligence as of April 13.
That's about 130m shares out on loan
https://www.ft.com/content/95a44c6b-a2a9-4b34-a404-ba92280f21d3
Sparta Capital, founded in 2021 by former Elliott Management portfolio manager Franck Tuil, also has a stake in THG.
A person close to Sparta argued that Apollo’s interest in THG wasn’t surprising since the company is significantly undervalued but any offer would have to come with an outsized premium to make sense.
Cult Beauty Advent Calendar released today. 30,000 to sell with 160,000 signed up to the waitlist. Last year sold out within hours...
https://www.cultbeauty.co.uk/cult-beauty-advent-calendar-2022-worth-over-1000/13948029.html
Decent and fairly balanced write up imo. Shows which direction this market is going in
https://www.just-drinks.com/analysis/sports-nutrition-growth-credentials-face-inflation-resistance/
Starting to fall. Looks like investors starting to reduce short bets on Yen. Could be a big tailwind if continues to turn
https://www.ft.com/content/80c16dc8-9965-4648-bc29-edf7187eec4b
Note contains a number of charts to support their thesis. Cant share the note but here is each chart headline if helpful to people?
Chart 1 - THG 2023 EV/EBITDA Is At Troughs Vs Key Peer Groups
Chart 2 - THG Sits In The Middle Of The Range Of Ecom Peers At Target For 2023 EV/
EBITDA
Chart 3 - Both Sweet Whey And Dutch Whey Have Seen Prices Fall From Peaks, With
More Recent Data For Dutch Whey
Chart 4 - Visits To The Largest Performance Nutrition Websites In The US Have Fallen
By -11% In H1 22 Vs H1 21
Chart 5 - Online Consumer Engagement Has Been More Resilient In The UK At +12% In
H1 21 Vs H2 22
Chart 6 - MyProtein Has Grown Market Share Of Traffic In Both The US And The UK In
H1 22
Chart 7 - MyProtein UK App Downloads Continue At Healthy Levels...
Chart 8 - ...And Daily Active Users Are Also Trending In A Positive Direction
Chart 9 - MyProtein's Momentum In The UK Is Strengthening Further
Chart 10 - Brand Awareness In The US Is Consistently Building From Relatively Low
Levels
Chart 11 - Although The Price Gap Between MyProtein UK And Its Competitors Has
Narrowed Slightly, MP Has Maintained A Significant Margin Of Relative Cheapness
Chart 12 - As The Protein Content Of Protein Powders Varies By Brand, We Also
Looked At The Price Per Kg Of Pure Protein, For Which MyProtein Also Comes Out As
The Best Value Product
Chart 13 - In The US, MyProtein Does Not Have The Same Lead On Price Vs Its
Competitors
Chart 14 - Which Results In A Higher $ Cost Per Lb Of Pure Protein
Chart 15 - Visits To Major US Beauty Websites Have Fallen By -9% In H1 22 Vs H1 21
Chart 16 - Similarly, Traffic To UK Beauty Sites Has Declined -10% In H1 22 Vs H1 21
Chart 17 - THG's Relative Performance Has Accelerated In The US
Chart 18 - Based On A Basket Of 14 Beauty Products, LookFantastic Has Significantly
Improved Its Price Positioning Relative To Peers Since 2020
Chart 19 - Although In Italy LookFantastic Does Not Lead On Price
Chart 20 - In The US, LookFanatastic Has Reduced Its Prices And Is Now -2% Cheaper
Than Ulta Based On Our Basket Of Skincare And Cosmetics
Chart 21 - Whilst Consumer Interest In Peer Brands Has Remained Flat Or Fallen In
Recent Years, LookFantastic Has Seen Sustained Growth In Search Interest In The UK
Chart 22 - Whilst The Decline In US Searches For Dermstore Could Highlight
Increasing Consumer Appetite For Make Up Over Skincare Categories
continued...
Look for reassuring news on gross cash. Investors will be keen to see how peak input
pressures and investments on building a global fulfilment backbone have impacted
THG. We expect resilience with a fall in gross cash of c.£130m in H1 vs end 2021, to
c.£400m. We still see £236m of (peak) cash burn this year, still leaving closing gross
cash of £300m and the untapped £170m RCF.
Just managed to get access to the Jefferies broker note from last week. I thought it was very positive (main page summary below):
Key Takeaway
We resume coverage of THG at Buy with a 120p PT (which excludes M&A optionality).
Our estimates are cut by c.10% vs pre-restrictions given lengthier input/fx dilution
and a more gradual build in Ingenuity revenues. In recent weeks COGS pressures
have softened materially. And our scrapes suggest that THG's two flagship platforms
continue to enjoy strong customer appeal. The Sep interims should confirm ample
liquidity to weather an uncertain macro outlook.
A perfect storm has hit THG and peers... given spiking input/operating costs and
consumer behaviour (partly) reverting to pre-COVID levels. The shuttering of debt
markets has prevented public-to-private deals to address extreme valuation lows. A
lapsing of restrictions allows us to review THG's case ahead of the 15 Sep interims.
We reinstate at Buy with a 120p PT or 2023 EV/EBITDA of 8.6x (our prior 250p
was SOTP based, with market conditions, especially pricing of M&A, impairing the
relevance of this approach).
...but challenges are subsiding... Soaring whey prices have hit MyProtein's gross
margin and THG's EBITDA estimates since late 2021. We have further reflected these
by lowering our group margin trough to 5.5% in FY 2022 (from 6.1%), and 4% in H1.
More helpfully, spot prices have fallen sharply since the April finals, and are
now down by >20% sequentially (see charts attached). Air freights have similarly
retrenched from their late 2021 peaks. The Yen remains unhelpfully weak.
Notwithstanding this, the second half of 2022 displays the promise of a much more
satisfying delivery. We model for H2 group margin to rebuild to 6.7%.
...and ecom platforms continue to deliver. Our scrapes suggest that THG's flagship
platforms enjoy healthy levels of tractionn with consumers globally. Google searches,
website traffic, and app data all point to ongoing leadership positions in the UK and
a further build in relevance in the US, especially in Nutrition (as well as far greater
resilience than ecommerce peers).
Pricing data confirms that THG has remained disciplined, and retains attractive value
positions across the two divisions in the key markets polled.
We reflect a slower build in Ingenuity Commerce. We expect THG's H1 to confirm
solid market share gains in the two ecom platforms, but we take a more cautious
end consumer outlook and trim our FY group sales growth estimate to 20% from
21% inc fx previously (JEFe H1 at +16%). This is below FY guide for growth of 22%
to 25% ex fx (which excludes a RUS/UKR hit of c.1%). We have also reflected the
impact of more elongated investment budgets at Ingenuity's Commerce clients, and
now model for FY revenues in this segment of £85m vs a guided range of £108m to
£112m. The margin mix impact of this slower build explains a more moderate rate
of margin recovery in 2023 (to 7.6%) and 20