Centralnic Share Discussion Threads

[battlebus2] 13/9/2016 16:50

Kestrel adding again, now over 13%...

[saucepan] 13/9/2016 13:33

It is worth taking a look at the clarity, plain English, and detail set out in today's results for Keywords Studios (KWS) - including for its various business strands - and then comparing them with the opacity and woolliness of what CNIC produced. Chalk and cheese come to mind.

[lanzarote666] 12/9/2016 20:04

Thanks for the link and the write up.

The key part for me is that they can generate the cash and the profit by selling the Premium Domain Names at any time they want to (to an extent). This is why they appear so confident that they will meet H2 and 2017 targets.

Effectively there is a war chest of value in these Premium domains.

What I am unsure of is what values are being achieved for such names in the current market. Does anyone have knowledge of recent examples of domain names sold and prices achieved?

[battlebus2] 12/9/2016 19:40

Seems wise CM , open the drawer in 2/3 years.

[cheshire man] 12/9/2016 18:58

I've held too bb,,,,,,,,just tucking them away :-)

[battlebus2] 12/9/2016 18:12

Yes a very informative write up by the Private Punter, hasn't changed my mind that these are still a great long term buy.

[speedsgh] 12/9/2016 17:54

Is domain name business in good Nic? Private Punter reports...

Read more at

[speedsgh] 12/9/2016 13:11

Perhaps it's going to pop... that would turn it into a right corker...

[battlebus2] 12/9/2016 12:50

Indeed PJ usually a sign of something bubbling under the surface.....

[pj 1] 12/9/2016 12:48

Agree but its always worth keeping a bit more of a closer eye on anything Blue on a day like today imo

[battlebus2] 12/9/2016 12:48

No keep that on hold until we hit the 70p brokers target ;)) and don't tell me it'll be vintage by then ....

[speedsgh] 12/9/2016 12:42

Hmm. Perhaps more of a hick up, than a tick up. Don't think I'll bother getting the champagne out of the fridge quite yet! ;o)

[battlebus2] 12/9/2016 11:57

Low and behold a tick up :))

[battlebus2] 07/9/2016 21:24

Not always the case buffy... Held ALT for three years now a 4 bagger, held SOM for two years then the turnaround and a 10 bagger, held CRAW for three years then it multibagged 20 times, only a few instances of which there are many more so from my investment perspective loyalty pays. This will prove to be another imv but as ever each to their own. We'll agree to differ on this one. Lots of twists to come. Good luck to all who sold.

[buffythebuffoon] 07/9/2016 21:02

I've read the text. I also read the half year results in detail. Did you?

What is this billing nonsense....

Billings represents the value of products and/or services invoiced to customers stated prior to discounts or rebates and prior to allocation of revenue share between registry operator and registry service provider. Billings do not equate to statutory revenue.

What is the point of even quoting billings? As for the revenue increase, you must know the saying 'Turnover is vanity, profit is sanity'

Too much obfuscation for my liking. I had second thoughts and sold out completely today. I'll keep them in my watchlist, but I've too many other better homes for my money. This is going nowhere for quite some time.

You don't get marks for loyalty, and you don't make money by falling in love with a company bb2.

Buffy

[battlebus2] 07/9/2016 15:12

It was a conservative view buffy read the text.....

[buffythebuffoon] 07/9/2016 14:59

5 years time?!

CNIC made a loss and we know why. The thing is, CNIC could go on the acquisition trail every year for a few years and it will be a jam tomorrow story for much longer. Even an optimistic view expects 90% of the domain buyers not to renew. One in ten retention is well below my expectation.

It sounds to me like there is a lot of cannibalisation going on if that's the case. I wonder what percentage of the non retained business Zeus Capital think will go elsewhere. That is, do the 90% buy another domain?

Buffy

[modform] 07/9/2016 12:59

Bb2, never said it was a sell, that depends on each investor's risk and reward and their own judgement. You maybe right that the share price will be much higher in a few years time but I need to see some evidence of how profits are generated before I consider it as an investment. GL

[battlebus2] 07/9/2016 12:17

Modform Adams analysis does not mean that CNIC is a sell, what ever happened to long term. I think everyone is missing the point here. Come back in a couple of years, if hope to see a much higher share price.

[modform] 07/9/2016 12:05

I never understood why woody, one of best TA I have come across, bought this in the first place. Let the chart be your friend Completely agree with your analysis Adam, well done, a comprehensive analysis

[battlebus2] 07/9/2016 12:02

Adam i fully understand that and the reasons behind it..Just look at what could happen say 5 years from now with renewals...Although the scale of renewals is unknown (we conservatively assume c.10% renewal rates), of the 6.5m .xyz domains, for every 1% that renew, CentralNic receives over £0.1m in EBITDA based on current renewal prices.

[battlebus2] 07/9/2016 11:47

Zeus capitals view... Centralnic Group Plc (LON:CNIC), the internet platform business that derives revenue from the worldwide sales of internet domain names, today announced its half year results for the six months ended 30 June 2016. During the first six months of FY16, CentralNic Group Plc has demonstrated how the acquisition of Instra has driven the company’s growth strategy by both increasing recurring revenues (now 60% of sales versus 51% in H115) and improving the quality of earnings. In terms of headline numbers, sales have increased by 101% to £8.9m (£4.4m), adj. EBITDA by 29% to £1.3m (£1.0m) and adj. PBT by 12% to £0.9m (£0.8m). The Retail division was significantly enhanced by the contribution from Instra, while there were minimal premium domain name sales in H116 compared to £0.7m H115, which diluted the overall gross margin to 26% from 43%. Management are in advanced discussions with trade buyers for premium domains and anticipate securing significant high value and high margin sales in H2, and as a result, remain confident of achieving FY numbers.
Transformative acquisition of Instra has improved quality of earnings of the Retail division. Sales from Retail increased to £6.8m from £1.8m last year, thanks to a £4.9m contribution from Instra, with integration progressing in line with management expectations. The division delivered £1.1m in adj. EBITDA, with £1.0m from Instra, versus a small loss in the prior period. In addition to creating exposure to emerging markets growth, the Instra business has similar economics to CentralNic in terms of strong cash generation and utility style earnings, with clients paying upfront for 1-10 year usage of a domain name and an annual renewal fee for continued usage. The division also saw underlying organic growth of 13%, primarily from Internet BS, which provides portfolio tools for domain name investors.
Firmly established as the number one Wholesaler of new TLDs globally with 34% market share or c.8.2m domain names. Wholesale division generated revenue of £1.6m (H115 £1.6m) and EBITDA contribution of £0.7m (£0.6m). xyz continues to rank in the number one spot, with c.6.5m of domain sales, boosted by a large-scale 2 year anniversary marketing campaign in June, which resulted in 1.9m domains registered within a single day and over 3.6m new registrations in the month. Whilst the benefit has not translated into material earnings yet, due to heavy discounts, there are now significant volumes of domain names that will be up for renewal within the next 12 months. Although the scale of renewals is unknown (we conservatively assume c.10% renewal rates), of the 6.5m .xyz domains, for every 1% that renew, CentralNic receives over £0.1m in EBITDA based on current renewal prices. Additional domain extensions won in the period include .store, .fm, .am and .art.
Significant opportunities for growth in Enterprise division. Enterprise division generated revenue of £0.5m (H115 £1.1m) and EBITDA loss of £0.1m (£0.8m). This reflects a change in the mix, notably the exclusion of any significant premium domain names that occurred in the prior period, however we expect premium sales to occur in H2. Increasing recurring revenues is a key strategy of the division, and discussions are progressing well with a leading software and managed service provider to the telco industry to introduce software to allow sales of domain names. The division is considering the introduction of new services in the areas of online security potentially via acquisition.
Valuation. CentralNic is trading on an EV/EBITDA of 6.2x to Dec 16 falling to just 3.8x to Dec 17, and P/E of 13.1x to Dec 16 falling to 9.7x, a significant discount to its peers. Given the growth prospects of the business, coupled with the strong operating cash flow characteristics, the impressive track record being built by management via successful acquisitions and the diversification of the business, we feel the shares offer investors a value opportunity given the industry backdrop, where Centralnic Group Plc listed peers are typically capitalised in the billions of dollars.

[adamb1978] 07/9/2016 11:44

Thanks Saucepan.

Battlebus - the problem with that revenue growth figure is if you strip out the Instra revenues then there is minimal organic growth