Will Moon Be a Pig?

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There are lots of new issues coming out, some good some bad. I try and evaluate each one on a sensible valuation basis.

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So … to Moonpig.

My guess is loads will buy this. Why?

Cos it’s Moonpig! With the great ads!

This is no reason to buy. People mailed me they had bought the AA. Why I asked. “Cos it’s the AA”! I shorted the AA and made a packet. It was a rubbish new issue – debts of more than £2 BILLION! It went from 400p to 35p.

Here are the red flags surrounding Moonpig:

It started by plugging its “EBITA” rather than real profit. Always a red flag.

If a company starts plugging EBITA first be cautious!!

EBITA figure is always a lot higher than the real profit.

EBITA £44m. Real profit according to the FT £18.4m. Now what about debt?

Hmm. Not mentioned apart from they hope it will be 2x EBITA. Ok then £88m.

Upside? They will have done very well during the lockdowns. And profits will be higher.

The question is how much would you value it at? Well, I was thinking ok £18.4m profit but then there is the debt and possible good growth for lockdown. But that may not be repeated once the shops open again.

I was thinking, ok let’s say they did so well profits will be £30m. How’s about ten times that then, about £300 million then.

But ok, let’s take the EBITA figure, let’s all it 10x that and add some say £500 million then. Given the debt that must be top whack?

The actual valuation? They are saying £1.2 billion.

Yes folks. One point two billion.

Now would you pay more than a billion for a company with that profit and that debt?

Of course not. I suspect shareholders can see the next statement will show improved profit but they want to get out because after lockdown not so much. I also suspect the share price will boom upwards in the days following the float.

And that is when I am going to short it! If the valuation gets to £1.bln I am going for a giant short.

All the above is based on figures I got from the FT and the Times so if I check them and they aren’t right or the real profits look to be way higher or the debt a lot lower, I reserve the right to change my mind! Also I could be talking crap and I am not the market, DYOR!

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Comments

  1. dave says:

    moonpig well 360p float price seeing a 450p high. NT got fevertree wrong when he said expensive when listed but moonpog so expensive what physically inventory does it have to sell?

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