Inspired Share Discussion Threads

[rivaldo] 25/4/2024 12:08

Certainly looking strong again - bouncing nicely on any dips.

With 13.7p EPS forecast this year, INSE still looks exceptionally good value against Liberum's 200p target price.

[rimau1] 25/4/2024 09:42

I suspect the Yu crowd have moved across to here since this was flagged in SCSW recently

[slogsweep] 25/4/2024 08:57

can't even place a limit order

[slogsweep] 25/4/2024 08:55

Just can't get stock

[1224saj] 24/4/2024 16:24

Something bubbling

[aishah] 24/4/2024 15:24

That's a very sharp bounce. M&A activity?

[1gw] 24/4/2024 15:13

Nice. About time this had a decent bounce.

[lawson27] 24/4/2024 12:44

Joined you for the recovery here, GLA

[rivaldo] 24/4/2024 08:55

Excellent start - almost moving up on every buy, perhaps suggesting not much stock around.

[aishah] 23/4/2024 15:02

Agree rivaldo. Added here today. Great write-up in SCSW latest issue.

[rivaldo] 23/4/2024 14:49

Crikey, even INSE's joining in today's small cap rally....about time. Loads of upside here for a fair valuation imo.

[rivaldo] 10/4/2024 14:59

Absolutely right 1gw.

[1gw] 10/4/2024 14:29

No, as I read it this is just the dilutive impact of the 8th April issue of equity on their holding as a % of total voting rights. They hold the same number of shares as on the Inspired site, as of February, and a bit more (allowing for consolidation) than in their June 2023 holdings notice.

[earwacks] 10/4/2024 12:25

Gresham seem to be the cause of the latest drop. Reducing 1 percent. Is it just the beginning

[rivaldo] 08/4/2024 10:47

Liberum have issued a new 36 page Buy note this morning, with a 200p price target....

Here's their summary:

"Inspired Plc

The transition to a more diversified business is on track

The FY 23 results were slightly ahead of our estimates. We make four key points on the business: 1) Inspired has evolved from a Third-Party Intermediary (TPI) in the energy market to a technology-enabled services provider; 2) synergies between divisions help cross-selling and make Inspired uniquely qualified to help with both sides of the energy equation (cost + consumption); 3) underlying EBITDA is expected to double in five years (FY 22-27), indicating 24% upside to our FY 26 estimate; 4) the business is becoming less reliant on Energy Assurance profits, which helps increase earnings quality. In terms of valuation, a CY 24 P/E of 4.6x is attractive given the growth.

Key points

FY 23 results were slightly ahead.
Optimisation was the star performer.
Net debt (exc. leases) was flat at the H1 23 level of £49m.
Contingent consideration being paid.

Value drivers

Scope to grow in areas like Optimisation, Software and ESG.
These should accelerate growth and increase the valuation multiple.
A huge addressable market.

What market misses

Assurance <50% of FY 23 EBITDA.
Only Ignite consideration after FY 24.
Target to double EBITDA by FY 27 is achievable and suggests that there is prudence built into our estimates.

Is there value?

A CY 24 P/E of 4.6x is GARP.
SoTP suggests TP of 200p.
345p from DCF, with 9.2% WACC.
Currently a low carbon beta, but ESG credentials add to appeal"

[1gw] 08/4/2024 09:01

A bit of buying interest this morning. Someone making an early start on their ISA?

[1224saj] 08/4/2024 08:35

Well my family collectively hold equal to Richard Logan at around 1.10. We won't add until we see more confidence from the board

[1gw] 26/3/2024 11:54

I thought today's presentation was much more engaging than recent ones have been. Perhaps I just had a higher caffeine level, but it struck me that they are telling a credible story around what they have done over the past few years and that with covid uncertainty hopefully behind us they have a reasonable chance of reaping (more) visible benefits over the next few.

No advice intended.

[rivaldo] 26/3/2024 11:42

Liberum say Buy and have a 200p target price. They summarise:

"A revised CY 24 P/E of 4.6x is attractive given the growth A CY 24 P/E of 4.6x is attractive given the growth. Inspired has a low carbon beta, but that should change as its ESG credentials become more apparent. Growth in newer areas like Optimisation, Software and ESG, should accelerate growth and drive a re-rating. Our SoTP suggests a TP of 200p."

And:

"FY 23 underlying EBITDA increased 20% to £25.2m and FD EPS was 3% ahead of estimates. Net debt was flat at the H1 level of £49m and cash conversion was below target as expected, but LTM conversion to February was > 100%.

We maintain our FY 24 FD EPS estimate of 13.7p, indicating 3% FD EPS growth. We make 4 key points: 1) Deferred consideration will fall sharply after FY 24; 2) A wealth of new KPIs shows cross-sell is working and increasing the life-time value; 3) Assurance has good visibility and is stable; and 4) At Energy Optimisation, EBITDA has increased £5m p.a. over the last three years. A CY 24 P/E of 4.6x is
attractive given the growth."

[rivaldo] 26/3/2024 09:47

Agreed, a quiet year highlighting the organic growth being achieved without further acquisitions would be ideal.

The deferred consideration is essentially due to complete this year, so much of the adjustment differential will disappear, along with that fully amortised goodwill.

My position is that the core business is trading well, is distinctly positive going forward and should produce better and better cash flows.

It's worth highlighting that, from a standing start only 2-3 years ago, ESG Services and Software Services produced a combined £3.3m EBITDA between them last year. I wonder what these two divisions between them would be worth on their own against the £64m m/cap.

IMO the obvious (and temporary) negatives are more than allowed for in the very cheap rating for the ongoing business, and there should be substantial upside at some point.

[1gw] 26/3/2024 09:00

Acquisition-led growth doesn't make it easy to understand the financials does it?

Adjusted PBT of £16m vs Statutory loss before tax of £6m in [correction] 2023.
Cumulative adj PBT of £50m over the last 4 years vs statutory LBT of £14m.
Statutory loss in 3 of the last 4 years.
Retained losses of £28m.
Goodwill of £77m.

But they've grown adj EBITDA to £25m in 2023 from £13m in 2020 and adj PBT to £16m from £7m.
And they have now amortised a large majority (£24m out of £29m) of the acquired intangibles in the "customer contracts" & "customer relationships" categories.

The hit to profit this year due to revaluation of contingent consideration looks ugly, but is a consequence of acquired business(es) performing better than expected at the time of acquisition. Had they valued the business "correctly" (with the benefit of hindsight) at the time of acquisition(s) then it would have perhaps made the acquisition(s) harder to finance and would probably have led to the difference in valuation largely being attributed to goodwill.

It would increase transparency no end if they could now have a year or two without major acquisitions and with acquired businesses performing in line with current expectations so that there are no further major changes to contingent consideration valuation and no major exceptional charges. As remaining acquired intangibles (excluding goodwill) are progressively amortised away that should allow much clearer financial statements. Acting against that desire for simplicity and transparency of financial reporting there will always be the temptation to take advantage of perceived opportunities to grow the business through further acquisition.