The Mission Marketing Share Discussion Threads

[glasshalfull] 24/3/2016 19:30

Courtesy to update the thread to intimate that the management team have reassured on the concerns I spoke of in my post yesterday (post 943).

I can confirm they are comfortable with broker cashflow forecasts for the current year. These indicate operating cashflow of £9.9m which is more than double last years figure. Also satisfied on the measures they're taking to develop the business & ensure its stability for the medium/long term. In other words, careful expansion rather than an acquisition spree.

Pleasingly, I would anticipate that margins may improve further to c. 12% this year.

A number of other positive tit-bits, but encouragingly, bigdog now going great following some initial teething problems which they highlighted in the result statement. Believe we can expect a decent contribution this year.

Leaves the shares on a PER of 6.5 (excluding the debt mentioned previously), PEG of 0.5 & providing a div yield of 3%.

Stock - o - pedia currently ranks TMMG v highly, giving it a stock rank of 95.

Following the bullish noisies from management I've consequently doubled my position.

Kind regards,
GHF

EDIT .....now tripled my position.

[red_shed2000] 23/3/2016 12:31

GHF,

Thanks for your considered analysis. I too missed the deferred consideration aspect but even so, with revenues and profits growing in addition to improved cash flow I don't consider the balance sheet stretched and find their valuation very low when compared to peers.

They made the mistake of taking on too much debt in the past, I trust they won't make the same mistake again. I like the management, a little eccentric but do what they say and consistently deliver in recent times.

GLA

[glasshalfull] 23/3/2016 12:00

Well I dipped my toe in and picked up 50k on that 8% drop which I feel completely overdone given yesterday's bullish statement.

I do however agree with WJ that the balance sheet does look a "little" stretched but had opportunity yesterday to have a better look at the contingent consideration alongside finnCap's forecast.

My update yesterday (post 936) provided the net debt of the company per finnCap for 2016 & 2017 AND includes payment of £2.9m in acquisition obligations in 2016 and a further £2m in 2017 (see Note 13.1 from yesterday's preliminary results). To clarify, net debt is forecast to fall to £5.7m by 31.12.2017 and this figure INCLUDES the combined £4.9m consideration...which leaves remainder of £3m to be paid between 2018-2020. B/S therefore not "over"stretched IMHO, but I'd like to see stronger cash generation which is certainly forecast for the next 2-years.

So, all things considered, I believe they look decent value on a prospective PER of 6 for this year with 14% EPS growth factored in & with the positive outlook provided yesterday. Hopefully I'll be in a position to obtain further clarity from management on their acquisition strategy over coming days.

Kind regards,
GHF


EDIT - redshed - Just read your post. IMHO they need to strengthen the b/s & improve cash generation. Operation cashflow is forecast to rise from £4.3m in 2015 to £9.9m this year. That'll do for starters!

[red_shed2000] 23/3/2016 11:08

This really is quite ridiculous. Target after target met but it still goes nowhere. Not sure what they have to do?

[asagi] 22/3/2016 15:17

Hard to know how to treat contingent considerations WJ, they only become a liability once the terms are met BUT I agree that the earnings along the way are being counted. It's a fair point and I'm embarrassed to admit that I hadn't really considered it.

The absolute level of debt obviously becomes less of a concern if EBITDA increases. It's good to see that the Group managed to start an agency by itself.

I think that the company needs to stop making acquisitions. That would make its balance sheet clearer and better.

Asagi (long TMMG)

[dr biotech] 22/3/2016 14:51

A couple of years ago they were concentrating on reducing debt. I am not against more acquisitions but they would have to be equity rather than cash investments. I have always seen this as a decent long term play. Has been one of my better investments over the last few years.

[wjccghcc] 22/3/2016 14:22

Thanks GHF. I do like them but the balance sheet is beginning to look a little stretched, particularly if they continue with more acquisitions.

[glasshalfull] 22/3/2016 14:03

Valid point WJ ... I simply provided the figures released via finnCap's note as I'm sure you're familiar with. Thought all PIs should be in the loop on forecasts.

I looked at the contingent consideration when reviewing FRP last week, and came to a similar conclusion as you have with TMMG.

I'm not currently holding here but plan to review over coming days.

Regards,
GHF

[wjccghcc] 22/3/2016 13:56

I think you ought to include the contingent consideration in the net debt - after all they're including all the earnings from the acquisitions. So net debt is really 19.7mm giving a FCF/EV of nearly 11. Not quite as cheap as the PE would indicate.

[glasshalfull] 22/3/2016 09:32

Positive results from TMMG with commentary suggesting they are back on the acquisition path.

In addition to snippet from oregano (above) Broker finnCap indicate,

"The group has produced another strong set of results with operating income up 11% to £61.0m (forecast £60.0m), gross margin up from 43.8% to 46.2% and headline PBT at £6.46m (+17%), 1% ahead of the finnCap forecast of £6.40m.

Net debt was higher than expected at £10.9m, an increase of £1.5m over the previous year. This was driven by net cash acquisition expenditure of £2.4m and a £2.0m increase in the working capital requirement, partly as a result of changes in commercial terms with two customers. The group's leverage ratio remained unchanged at 1.3x

...analysis indicates that the group is delivering a growth profile higher than its peers but sits at an EV/EBITDA discount of c25% and a PE discount of 40%. We retain our 60p share price target which implies 36% potential upside and would return the group to the average for its peer group."

Forecasts

2016

Turnover £155.5m
PBT £7.2m (+10.7%)
EPS 6.7p (+13.7%)
Div 1.3p (+8.3%)
Yield 2.8%
Net Debt £8.3m
EV £46m

2017

Turnover £167.9m
PBT £7.8m (+8.3%)
EPS 7.3p (+8.3%)
Div 1.4p (+7.7%)
Yield 3%
Net Debt £5.7m
EV £43m


Regards,
GHF

[cheshire man] 22/3/2016 09:00

Thanks for that oregano, very encouraging :-)

[oregano] 22/3/2016 08:56

From Fincapp

The group has announced final results slightly ahead of forecast with growth in headline PBT of 17%, achieved through a mixture of acquisitive and organic growth. Our 2016 forecast implies further growth in PBT of 11% which our analysis suggests is ahead of its peer group, yet the stock sits at a 40% PE discount to the peer group average. We view the stock as good value given the growth profile and retain our 60p target price, which would return the stock to parity with its peers.

[dr biotech] 22/3/2016 07:46

EPS of 5.9 that gives a PE of about 7.5. surely that has to be a bargain?

[red_shed2000] 22/3/2016 07:44

Yet again they hit their numbers. Yet again very good results...grossly undervalued I'll hold for another 2 years!!

GLA

[janeann] 22/3/2016 07:27

interesting read and all pretty positive. nice to see the chairman notes that .... 'I feel that we are going in the right direction ...'

[qs99] 18/3/2016 11:35

nope, we are both in TMMG and are sharing same sector thoughts...! don't worry will stop now, but as CLL results were yesterday a response seemed appropriate.

[pj 1] 18/3/2016 11:28

Wrong thread Guys!

[qs99] 18/3/2016 11:24

Yes in TMMG, think management have done well and have more lofty ambitions than today's size and shape so happy to be on board. CLL I think has more to come IMO, if they settle the VAT issue then that takes IMO a big uncertainty off the shares and current broker targets are all 20-25% above recent price so still plenty of upside IMO....net debt in RNS down to c.£4m so that and yield will make it attractive to predators IMO/DYOR if they don't motor along, so hopefully a win win....I've added to over last week and looking forward to post results road show pushing them to new highs...

[red_shed2000] 17/3/2016 17:31

QS99...you're in this as well!! I missed CLL this time but have done alright there over the last couple of years. This one though.....I've purchased so many times I've lost count and never had the heart to sell as it's grossly undervalued (IMO). Hope it continues its move upwards....

GLA

[qs99] 17/3/2016 17:19

Hope a few took a look at cello? Cracking set of results today IMO, dyor, and 10% hike in divi.....still worth a look IMO...

[qs99] 16/3/2016 15:44

yup looking good ahead of next week IMO

[cheshire man] 16/3/2016 14:10

22 Jan 16

finnCap TP 60p Retains

[asagi] 16/3/2016 13:26

nice rise... a good rise here always puts this tune in my head.



Morricone at his best....

Asagi (long TMMG)

[oregano] 16/3/2016 10:30

cheap as chips this thing. On 7x earnings and we know numbers are going to be good.

[mfhmfh] 11/3/2016 21:28

Patience is definitely the key here. I agree I don't ever remember this company releasing a bad statement. Roll on the 22nd March...