Marlowe Share Discussion Threads

[masurenguy] 30/12/2022 09:10

The word on the street about Marlowe’s gyrating share price

Almost exactly a year ago the shares hit £10, valuing the group at £1 billion..........By the time of its half-year results last month, the stock had fallen by 30% to 700p......By the middle of this month Marlowe had lost a further 45% prompting comment that with the shares at 400p, that may restrict its ability to raise money on the stock market......then the shares went pop, putting on 25% in a week to go back above 500p. Yesterday they lost 31p, falling 6.1%, to 473p. Word is that the volatility is being caused by marginal buying and selling by retail punters.

Complete article::

[dr biotech] 28/12/2022 16:24

Should Never have dropped that low in the first place. I think this will do well over the next couple of years assuming that rates peak quite soon. Business itself is mostly non discretionary spend ie fire safety so revenues should be quite stable even in a recession

[wad collector] 28/12/2022 13:01

Maybe , but the market is so volatile that it wouldn't take much bad news to erode the recent bounce.

[prokartace] 28/12/2022 11:26

Too late to join the party?

[gucci] 22/12/2022 12:57

bottom in?

[masurenguy] 15/12/2022 10:04

Now down by 60% this year, and has briefly breached £4, to hit a new 30 month low this morning. Still watching and waiting to pull the trigger to reinvest here.

[gripfit] 14/12/2022 21:30

£3 I’m in

[dr biotech] 08/12/2022 13:01

I’ve just watched the presentation- doesn’t seem to add a lot but I think the fall is overdone. They did show some humility too. I’ve added 2k at 455, hope this is the bottom.

[masurenguy] 06/12/2022 08:10

Some interesting points about the recent interims and the subsequent negative market reaction from Insider Ideas have brought Marlowe back onto my radar screen following some substantial share sales by Dacre and Skinner @690p in March last year. I subsequently sold out at just over 800p some 15 months ago. The current price of circa 475p is back to the fund raising levels of 475p in July 2018 and 478p in June 2020 and is also 13% below the last fund raising @547p in October 2020. At this level it is looking like an interesting proposition once again and therefore it's now back onto my watchlist. The main negative issues are debt and cashflow, which need to be addressed in this inflationary climate.

* Market cap £480m@ 490p, net debt @ Sep 22 £155m, EV £635m.

* Marlowe’s compliance service related revenue streams seem to be highly predictable and should remain secure throughout the economic cycle. Revenues are enjoying high single digit organic growth rates thanks to volume growth, pricing power, and cross-selling efforts between its various offerings.

* The management and BoD are heavily invested in the equity and seem to be of high quality/integrity.

* On 23 November 2022 the company reported interim results and the stock traded down heavily in the subsequent trading days. Broker reactions to results are mostly positive although some brokers have downgraded forecasts slightly to reflect rising cost of floating debt outstanding, and/or commented on the need for cash conversion to pick up in H2.

* The stock now sits on a current run rate multiple of 7.7x EV/adj EBITDA using Marlowe’s adjustments, or 6.4x using Marlowe’s £100m fwd adj EBITDA number that it said on 23 November will be reached “materially ahead of the original end of FY '24 goal”. Given the stability and economic robustness of the growing revenue streams, this valuation seems worthy of consideration.

* Management have just bought shares following the recent price drop. The management and board have a strong vested interest in the company’s equity, which aligns their incentives with the rest of the shareholders. Even after much dilution through share issuance for acquisitions, Alex Dacre still owns c5% of Marlowe today. Lord Ashcroft retains a 12.4% holding and seems to have sold little or no shares since Marlowe’s founding.

* Management also have quite a significant performance incentive scheme, the 2021 Executive Incentive Programme (EIP), which will pay out to certain directors 10% of the total shareholder return above a 10% hurdle rate over a five year period from Mar 2021, using the March 2021 placing price as reference. Alex Dacre has a 56.5% share of the incentive pool, the new CFO Adam Councell has a 18% share, and ‘other directors’ have 25.5%. This implies that Alex Dacre must get the share price above £11 (almost double current price) before he or fellow directors start receiving any value from the EIP. Furthermore, in order to agree the EIP with the board, Alex Dacre and other participating directors had to commit to below-market salaries and forfeit annual bonuses for the 5 year period. The management were willing to sacrifice annual security and short term gains in exchange for greater leverage to long term upside, in a manner that makes them more aligned with other shareholders.

* Cash flow and cash conversion was a disappointment in the H1 results. There is now significant pressure on H2 results to show an improvement in cash flow conversion of profits.

* The company is split into two main divisions - Governance Risk & Compliance (GRC) and Testing, Inspection and Certification (TIC). The company’s early years were mostly focused on growing scale within TIC, which is composed of fire safety and water & air safety compliance services. In more recent years the balance of growth has shifted towards GRC, which is composed of health/safety, employment law/HR compliance, occupational health, and compliance software.

* The nature of these businesses should mean that revenues are able to grow organically even through a recession, as customers need to continue paying for compliance services if they want to be open for business at all - the vast majority of Marlowe’s services are not a discretionary spend for its customers that can be turned down when business is weak.

[1nf3rn0] 02/12/2022 12:35

My take is that operating cash flow and the increasing level of capex and acquisition integration are causing concern, and I expect the Q&A in next weeks investor meeting will focus in on this

[prokartace] 30/11/2022 08:50

Did I miss something?

[gripfit] 30/11/2022 08:47

I nearly bought these at £2.50 3 years ago .. I might actually get them at that price , if they carry on falling ..

[simon gordon] 24/11/2022 16:23

On the quarterly chart the support zone looks to be around 400p area:


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