7digital Share Discussion Threads

[cloudwars] 03/7/2017 08:04

FinnCap have raised their target to 14p from 12p

[bloomer2] 02/7/2017 23:02

A few observations:-

To get some idea of the impact of the MediaMarktSaturn acquisition, it's worth looking at the affect of the Snowite purchase on the company finances. 7Digital purchased Snowite in 1st half of 2016. In that half, admin costs rose from £5132K in 2nd half 2015 to £6398K. So an increase of approx. £1.3m in 6 months. In the 2nd half, admin costs fell to £6159K (as costs were taken out) and ignoring the MediaMarktSaturn acquisition, we should expect further falls in 1st half 2017. The loss for the year 2016 was 5169K rising from £3119K the previous year (ignoring the Audioboom right off). The MediaMarktSaturn acquisition is larger than Snowite so we might expect a greater increase in admin costs so I'm really struggling to see how losses for 2017 will be £1500K! Certainly, anyone thinking of purchasing shares need not hurry!

According to the CEO, the business was profitable in June and the final quarter of the year - in his own words, "quite siginificantly so". Given that the losses for the year were £5169K, is it really possible that 7Digital was profitable for a third of the year. The MediaMarktSaturn acquisition has come at the end of the 1st half 2017 so the interim results should give some indication of the profitability (or otherwise) of the business.

I thought the AGM slides looked like they had been knocked up in a tea break!

[tiger60] 30/6/2017 14:05

I read it. Seriously you thought that was good?

[pet lover] 30/6/2017 13:54

Yes a seller is dumping and a buyer is buying.

Been the same for weeks.

For those who did not get a look in at the placing, cheap stock is available.

2018 is just six months away,that should produce large profits.

2019 may be pried on a PE of around 3.( no broker or company forecast.)

[folderboy] 30/6/2017 13:42

I have seen the presentation . . also seen the daily fall in the share price. There seem to be two different and contradictory stories

[pet lover] 30/6/2017 13:30

Have you not seen the presentation.?

[tiger60] 30/6/2017 13:29

Good to hear they don't need more financing this year but the lack of new contracts is killing momentum.

[pet lover] 29/6/2017 13:26

You would do well to look at the contracted revenue growth.

We all know 7dig has in the past failed to deliver.

That's why one can buy at today's price.

As you know I bought at 6p and after reading the new information on the web page today I can see 60P all over it by March 2019 or just 20 months away.

Next year some very large profits will show through.

[pet lover] 29/6/2017 13:11

A respected report from the AGM yesterday.

Two shareholders attended.

Meeting lasted around half an hour.

Presentation, that was at the same time, going up on the company web page.

Upbeat about prospects money spent now would produce far more in 2018 onwards.

No funding required as part of the deal closed last week allowed for pre payments.

The company accepted it had been a long road but reassured shareholders that income was on the rise.

Plan to do the rounds in the city over next few weeks.

Peter Downtown speaking in NEW YORK so not in attendance.

Streaming platform very secure and scalable.

Talking to half a dozen parties about potential new agreements/ contracts but takes time, gearing up staff, as tight run ship.

[tiger60] 28/6/2017 14:19

Will they need more cash this year with a last reported balance of 0.8m?

[barnetpeter] 28/6/2017 14:10

there is also a strong possibility that someone will buy 7dig at about 15-20p. Just loose change to a company that thinks this will be its next move. Good that it has raised new cash now......as I said yesterday I wont be chasing this above 7p.

[michaelmouse] 28/6/2017 14:00

Slightly off topic but not totally unrelated, it can be frustrating to watch the share price of micro-caps seemingly bounce up and down. However, I've been here many times before and it's often worth the wait accumulating the dips at this stage (assuming you have confidence in a company's long term future).

The second highest riser today is Creightons which I posted a blog about in 2015 when the share price was 6p. I never did get around to buying any. I mentioned a lack of dividend was a factor. Of course they've just announced stellar results this morning and the share price is now in the low 30s. Guess what? They've also introduced a dividend. It was a micro-cap that appeared to be going nowhere then all of a sudden it's more than 5 bagged.



It is disappointing when you miss opportunities, but getting to the point, I believe that whilst 7digital is arguably a riskier investment than a company like Creightons, I do believe that if 7digital are successful, the rewards will be far greater in the medium to long term. Given the prospect of excellent cash generation I'd also expect dividends to flow in future.

[michaelmouse] 28/6/2017 13:32

Nice summary napoleon 14th.

Certainly not risk free as you rightly say, however the signs are very positive with the possibility of upside surprises in the medium to long term.

I've said many times that if the business model shows that it's working effectively in 2018 and beyond then 7digital now have a quasi-monopoly with high barriers to entry. Exciting times ahead if they've got it right.

[bloomer2] 28/6/2017 13:20

Well I think it anyone had looked at the accounts over the last 3 years, it was clear that 2017 was not going to be a profitable year. Problem is how do we make any assessment of the earnings of the business post MediaMarktSaturn acquisition. We can't rely on management statements and there is nothing else to go by. I'm yet to be convinced of the benefits of the Snowite acquisition!

[napoleon 14th] 28/6/2017 13:13

Being devoid of illusions myself, I'm tempted to agree with Rapier.
However, 7DIG have succeeded in building a dominant position in a high growth area & picking up a strong ally (previously a strong competitor) who could even end up being a suitor. Strategically this makes so much sense that ebitda can take a deep breath for a year IMO, & has been true to expectations on a continuous basis.
From the Powerpoint presentation:
"Changed mix of revenues
– Previous estimates based on assumptions of existing 24-7 revenues
– Revenues now mixed
• Existing 24-7 contracts
• New development contract with MediaMarktSaturn
• Changed assumptions about transition
– Previously assumed transition to full consolidation savings over 3 years
– New services can be run from existing 7digital platform with increased investment
this year
– Consolidation savings can be brought forward to mid 2018
– Creates increased LBITDA in 2017 but nearly doubles EBITDA in 2018
– 2019 will see first year of full consolidation savings"

7DIG are boldly expanding & building impressive market share, which is not risk free, but the rewards are well worth going for; "nearly doubles EBITDA in 2018".
The presence of a big shareholder also stabilises 7DIG's position as MMS could swallow 7DIG during breakfast. Great strategy!:

"In terms of revenue, sales area and headcount, the MediaMarktSaturn Retail Group is Europe’s leading consumer electronics retailer and provider of related services. Our integrated online and fixed-location offerings reach millions of customers every day."

[hausofmaus] 28/6/2017 11:59

Slides from the AGM are online now:

Puts some meat on the bones of why we now take a loss this year, with promise of larger "profit" next year...

[monte1] 28/6/2017 10:42

Finally, teh penny starts to drop.

[rapier686] 28/6/2017 10:38

17 Jan 17 : "returned an operating profit for the final quarter"

10 Mar 17 : "Full year results released today are in line with expectations and the Group's stated strategy, as it delivered on the Board's commitment to reach operating profit by the year end, recording a profitable Q4 and a record sales month in December"

When money needed to be raised words were used which gave the impression that profitability was improving and had passed the breakeven point in Q4 2016

And for clarity the 24-7 acquisition was expected to "be EBITDA neutral in 2017"

28 Jun 17 : "The Board now expects 2017 to result in a combined loss before interest, tax, depreciation and amortisation of approximately £1.5m"

I'm finding it increasingly hard to attach any credibility to 7DIG's statements.

[michaelmouse] 28/6/2017 08:34

You're quite right it's not the projected p/e, although clearly the valuation is on a very low multiple of the projected EBITDA.

Clearly, this could fall even lower with one or two major contract wins. It all looks very positive at the moment, particularly since the recurring revenue streams enable them to predict future earnings with a greater degree of confidence than most.