Member Info for Yesimabeliever

@prox I don’t believe share split prohibits a hostile.

Question whether it is feasible though with MM controlled Ingenuity so pivotal commercially and operationally.

My hope is that they split Nutriton/Beauty with Selkirk type deal and MM moves to founder/NED roles across Ingenuity/Beauty/Nutrition.

Personally I think the market probably did ascribe zero value to Ingenuity (or indeed worse).

Unfortunately the demerger has been timed alongside a dreadful Q3 trading update from Nutrition, and throw in dreadful current Gilt sentiment and we are where we are with the SP.

Only strong numbers (and/or some financial engineering) will lift the SP now. Nutrition needs a sharp recovery post rebrand and Beauty continue 2024 progress for us to see respite. No more excuses Moulding.

Surely support for him continuing in Remainco must with Sofina/QIA/Balderton all turning their back on Ingenuity? I struggle to see how he clings on in plc having overseen so much value destruction, and city credibility in the toilet.

Am I missing something, isn’t it a closed period 30 days prior to trading update and therefore is a closed period?

Thanks for your insights Oke.

Agree Okehurst, the challenge though in forecasting the the 2025 numbers of the basis of 2023 are:

1) so many “exceptionals” in the 2023 numbers

2) volatility/quality of Nutriton earnings in 2024 post rebrand and elevated whey pricing environment in 2025 like to linger and reduce margins

I agree though, debt needs sorting, and Selkirk type deal would refinance and separate in one hit.

Cheap at it is, I’m not sure there is a single buyer for the two.

Personally I think the route forward is to seperate (Selkirk type deal).

Myprotein could susbquently be picked off by US FMCG (stake or whole) with a desire for exposure to international healthy “nutrition” market, and they bring US/Global offline distribution.

Beauty I think needs a partner/investor to support :

1) selected retail stores in major cities to support online market place (like Sephora model)

2) Buy and build of brands to increase % of own brands on marketplaces (and improve margins further)

Good luck all, I’m checking out until trading update

I agree moniman, APN & myprotein do need to be compared, just not APN & THG.

Even with MM at the helm I agree THG can get to £1 with better and consistent Nutrition numbers (prob not in March). But to go beyond it I am increasingly of the view that Beauty and Nutrition need to be seperated, and strategic investors/partners brought in

@moniman, agree APN vs Myprotein valuation looks an anomaly, but we have to compare apples with apples.

Strip out Beauty, as it is a fundamentally different and lower margin business (selling lots of 3rd party product) and let’s just focus on Myprotein.

>6x revenue, but historically lower profitability 12.5 % target EBITDA vs 25% APN

Whilst lower margin, I’d argue THG’s heavily invested D2C client relationship and business model is far superior and more resilient with subscription/repeat order and direct customer relationships. Unfortunately market can’t look past dire numbers of 2024 (-10%+ topline and -50% bottomline due to rebrand apparently!), more challenging D2C customer acquisition post Covid, and margin volatility due to whey prices (albeit that effects APN also).

Granted Myprotein is a much more developed international business & brand, and emerging product innovation/partnerships.

But what matters are the numbers. So with a return to Myprotein growth in 2025 and stable margins, and meaningful progress in the offline strategy to support growth, I can see a path to £1billion valuation for Myprotein in the short to medium term. To get past that I think a “ strategic premium from a global FMCG operator is required.

I wouldn’t touch their research with a bargepole either

Clearly APN vs Myprotein valuations look way out of kilter when comparing the 2 market caps and the scale of the operations. But Matt hasn’t helped us there in the short term by driving myprotein numbers into a brick wall in 2024. Hopefully Q4 numbers will be the start of the bounce back and we will see some long term benefit from the rebrand.

Markets seem to be valuing myprotein as ex growth or low growth, hence the pitiful THG plc valuation. Whilst I Iike myproteins emerging partnerships in the UK, I don’t see anything that will meaningful move the dial on growth in international markets where organic D2C growth looks harder to come by since THG switched off unprofitable customer acquisition.

Looks to me like Myprotein needs a strategic investment from a big global FMCG with offline distribution to really get growth motoring again (ideally US). Suspect MM has tried and failed on this to date.

Personally I am all for a Selkirk type minority deal if it separates nutrition from Beauty, establishes a “fair” market value for Nutriton from investors interested specifically in Nutriton (and recapitalise Nutrition and Beauty in one swoop) and provides a route to a deal with a strategic trade investor targeting “healthy” products down the line. If a Selkirk type deal bolstered the Nutrition Exec team and moved MM to non exec (he seems to be toxic with institutional investors), that would be a win all around in my opinion.

“New ceo

Capital markets day to fully explain new remaining business

Dividends

Clarity on debt deleverage

Forecasts hit day in day out

No jam tomorrow”

If find myself agreeing with Steve on this.

“It does feel a bit like they left enough breadcrumbs to make us believe it’s going to be Myprotein but doubt is an offer coming , more likely an alterior motive to get the share price up in Q1 or to identify any other interested parties”

Point well made moneymad, I have pondered this myself.

Have also pondered why anyone would invest in Selkirk to pay a premium for a minority interest in a division. If it is THG they are targeting, surely now Ingenuity is gone better for investors to buy THG’s shares and own 2 divisions for the price of one? 🤷‍♂️

Agreed OSG, when I watched the Selkirk video I thought the deal structure Iain Mc was proposing was designed to meet MM #no thanks Apollo criteria. Thing is, now it’s far from clear that MM has a #nothanks controlling majority in Remainco to insist on only minority deals.

The question is how attractive are Nutrition and/or Beauty assets to trade or PE when tied into long term Ingenuity contracts (and therefore MM as counterparty). My concern is this will put off 3 party bidders or mean the assets are held back from realising their full value.

I believe they said 3 years of tax losses for Remainco in an early demerger call

Thanks all for contributions this morning, in particular @oohaah and @1pencil.

If thoughts are right re Sofina, optics not great for levels of II support for Ingenuity. Starting to regret taking up my pro rata!

If Remainco is to remain listed, struggling to reconcile how MM continues as CEO with diminished holding, visibly eroded II & PI support for his Ingenuity project, and dire 2024 numbers in nutrition. Time to move him to founder/ned and get some new management in IMO, hopefully as part of Selkirk type deal to split Remainco divisions. Don’t see how city disliked/mistrusted MM is part of any solution for remainco shareholders, a busted flush IMO.

Here’s hoping it’s in play OSG, I’m certainly not voting to maintain the status quo come May.

We’ll have to agree to disagree there poker. The contracts provide the legal/commercial framework for the relationship, but Remainco CEO will be able decide to dial up/down spend within that framework…Dialling up looks like a potential conflict to me

Poker understand your point, but assuming Ocado plc owns 100% of tech and retail?

There was no conflict on this at THG until Ingenuity was demerged and MM upped his stake to over 50%.

I’m no conspiracy theorist, I own Remainco and Ingenuity shares. Appreciate there are contracts in place but with my Remainco hat on, I struggle

to see how MM can possibly manage the remainco/ingenuity contracts in an executive role without there being a conflict.

Saying Remainco will never make a profit is drivel, but Remainco spending £400m+ on services at a private co where the CEO is the majority shareholder is a governance issue, even with contracts, checks and controls in place.

Given the Ingenuity contracts have to remain due to the symbiotic relationships, I hope the next stage post this demerger is separation of nutrition and beauty and MM into NED roles for both.

The point you raise rizzel does highlight the ongoing conflict of interest of MM staying on as CEO of Remainco, and majority shareholder in Ingenuity. Along with RyanF’s long list of MM misdemeanours, struggle to see how it is anyone’s interest for MM to continue as remainco CEO.