 Big plus to see Max Royde buying even more. The complete pause in buying recently must have meant he felt these were more fully priced?
I am continuing to add in spite of what I felt was a bad results day i.e. I still don't feel like I have had a decent explanation as to why Shinez, in particular, saw such a weak H1...and how we are going to realise expectations for the year.
On the other hand, there are few other businesses in the UK I have followed closely for so long...and I think it is overlooked given the blackbox nature of the online marketing piece. Having got more comfortable with that piece, while believing the domain name business is extremely valuable, alongside what is very strong cash generation, I feel sub 150p is probably a very good place to take a view on this name.
IMO - mgmt. needs to re-do an investor day, setting out the message in even clearer terms vs. the capital markets day 23. they also need to do a dedicated session on Shinez.
I think mgmt are very good, but are guys who live in the world of TIG's tech niche. That is fundamentally a very good thing, as you are invested alongside people who are passionate and very well incentivized in terms of insider ownership levels. at the same time, we want to be able to have the broader market really get what TIG does...
just my two cents. |
Bring back share buyback. |
Not sure we’ll go much lower, 140 may be the support level, so much for their talk of shareholder value, a 1p divvy hardly compensates for a 60p fall. They should concentrate on growing the business and intergrating all the acquisitions to provide synergies and cost savings. |
Horrible share price crash here...surprised we are about to cross into the 130s. |
How does he like it cooked? I like mine rare! |
Let's hope it's a gravy train! |
Please don't forget, the CEO has an enormous stake in the business. |
Good to read the previous posts, all adds to the understanding or confusion, but then you’d have to go some to beat the TIG management when it comes to enlightenment!
I’m holding for now, major shareholders haven’t moved, brokers are positive, they’ve got one more chance of showing that their acquisitions a make sense and that they are creating a coherent sum of the parts. |
cheers Adam! Funny how investing can work...I personally think 150 and below is on balance an excellent time to be increasing exposure here as the valuation is back to a much lower point...but also think the issues of Shinez seasonality + explaining in the most simple way the nuts and bolts of TONIC etc need to be managed better.
Convinced more than anything else that there is a sum-of-the-parts argument given the inherent value in the domain name business - that is a truly excellent business. |
no problem ggrantsu. As above, their comms doesnt bother me personally, but evidently it continues to bother many others that it will hamper the price. I thought they were improving in that respect, but the IMC presentation materials were very weak. I wouldnt say that that was the main reason for bailing through, but one of the few above and probably a couple others not listed. Not ruling out getting back in in future, but price needs to be lower for that such that risk/reward is better balanced and would also need to see where H2 is coming out first given the increased risk of missing targets in my view |
very interested to hear your view on this adam - as we have had war of words over this historically with you being ardent in saying that their communication in terms of what they do is completely fine. more interesting as you have long been invested. |
I've been quiet since the results but given my bullish comments on here over the last couple years, I should say that I'm now out. I'd sold 1/3 of my position at 192p previously but now sold the rest.
The main reasons are:
- the Shinez performance in H1 was shocking, and if there is/was some strong seasonality they should have mentioned it as it appears as though they had the wool pulled over their eyes and paid a huge price
- if I take their H1 performance and adjust to include a full period contribution from Shinez then I can just about see them making the bottom end of the revenue guidance range (depending on growth in H2), but equally can see them missing it. In terms of hitting EBITDA guidance, last year they made around 7m more in H2 than in H1 and repeating that delta gets you to around 100m and then you need to add a full 6m Shinez. Their cost control is generally good so I can see them just about hitting the low end of the range again (105m), but there's not huge margin for error and if gross margins weaken further, they might well miss. If H2 EBITDA = H1 and you only get 2*1.2=2.4 from Shinez, you're at 95.6, so c.10% below the range
- whilst it doesnt bother me too much, the company's ability to explain their business is a real problem for lots of investors which reduces appetite for the stock...which in turn bothers me greatly! I wasnt able to make the IMC call however the first section of the deck is really weak in explain what they do. I don't think there is anything underhand in what they do, and the cash generation shows that, plus and I think the CEO is straight and honest...but enough investors want to know the nuts and bolts of businesses which they're in and TIG's comms doesnt do that
- lastly, I've become increasingly uneasy with using EPS pre-amort of internally generated intangibles. Amortisation of that type is akin to depreciating fixed assets. I'm happy with adjusting for amortisation of acquired intangibles, but ones which the company is investing in regularly do need to be included in EPS. That increases the PE by 2x-3x.
I think the cash generation of the business is still decent however with the murkiness of the above I could see the price being more likely to drift down further to say 120p-130p rather than bouncing to 170p-180p. I'd look at it again in that range as the risk/reward balance would be better and FCF yield attractive.
Best wishes for those staying in.
Adam |
This is a brutal brutal sell off now.
Thought 150 might hold…
Only good news is at least it’s back in good value territory! |
For me they need to stop the share buy back and also stop the dividend payout.
The money saved can be reinvested in improving the business and solid future investments/acquisitions. Putting the money into the business |
never nice to say this...but i am convinced the real falling off a cliff here is due to the mgmt. presentation yesterday. it was not good...the messaging was badly communicated, there was a lot of long pauses and loss of train of thought, and ultimately there seemed to be very little confidence. if you were tuning in for the first time yesterday, there is absolutely no way you would have a clue about what the business does.
the decline in RPM, which was significant, was probably the most concerning bit aside from Shinez performance.
at the end of the day, if you have leverage and are doing buybacks, any acquisitions need to significantly outperform from the word go.
i guess there is seasonality with Shinez but I have to say I was pretty taken back by the figure of what it would have generated through the H1 period vs. its level of earnings last year. doesn't make sense to me and really hope this isn't the start of something more significant going wrong.
TIG needs a very strong H2. |
Interesting that yesterday Berenberg INCREASED its target price to 220p (from 205p): |
What hope of a bid? |
Indie.., absolutely! There are two stories here and little concrete evidence to support either. I did manage to reduce my holding a tad at the 200 level but didn’t expect this.
Holding the rest for now, probably a mistake. |
I'm trying to make a case to buy back in if things settle but I can't. Slowing growth, squeezed margins, a share buyback with no cancellations, murky financial reports, not to mention the purchase of a potentially underperforming Israeli company. This last point could be the biggest roadblock to finding new investors considering the track record of shady Israeli companies delisting from AIM and the current troubles in the Middle East (whatever your viewpoint may be). Fundamentally its a trust issue now, do you or do you not trust management. Its been a fun ride. GLA. |
So where to from here? A drift back to 140, a possible support level, or was the sell off over done and we’ll see a gradual recovery? |
https://domainnamewire.com/2024/08/12/team-internet-group-posts-single-digit-growth/ |
Seems the fall was due to growth concerns. |
.........Coverage of the conversion funnel: Scope for vertical integration With the acquisition of Shinez, Team Internet now has a presence at each stage of the e-commerce conversion funnel, from the initial raising of awareness and brand building, then building and qualifying interest, right through to setting up the transaction: ◼ Awareness: Shinez provides solutions for helping advertisers raise awareness and build their brand, and is paid on a pay per (1,000) view (PPM) basis. ◼ Interest: Tonic determines a consumer’s interests through its double qualification process, then directs well-qualified leads to advertisers, being monetised on a pay per click basis (PPC). ◼ Sale: at the sharp end of the funnel, Vergleich provides comparison sites to enable consumers already considering a purchase to compare and evaluate products or services, being paid on a per transaction (PPA) basis, often a percentage of the purchase price or in Vergleich’s case a percentage of the total basket size. Exhibit 4: Coverage of the e-commerce conversion funnel Discover Awareness Inspire Brand build Interest Inform Evaluate Sale PPM (Pay per 1000 views) Est Range c$0.5-$2.0 PPC (Pay Per click) Est Range PPC $50-120 (per 1000) Team internet ave $88 in LTM to H124E Reward/ Incentivise PPA (Pay per action) Large range – typically as a % of purchase price or total basket size Source: Edison Investment Research, Team Internet . This coverage of the funnel opens up a number of opportunities for vertical integration, essentially capturing a greater proportion of the value chain in connecting buyers to advertisers. These include delivering ad inventory to the Shinez sites using Tonic, or even selective placement of VGL transaction sites where it is seen not to conflict with the platforms’ advertiser customers. Given Shinez’s high volume, but low transaction value, the successful addition of higher-value PPC or PPA revenues on only a small proportion of volume should generate meaningful revenue synergies. |
Edison -
Team Internet’s H1 earnings showed resilience despite continued headwinds in online marketing. Going into the typically seasonally stronger H2, we expect the company’s initiatives in product innovation, vertical integration and international to increasingly influence growth and margin expansion. At 8.8x FY24 earnings, Team Internet continues to trade at a significant discount to peers on our unchanged earnings estimates. We believe this rating remains attractive given the company’s track record, prospects and cash generation. Year end Revenue (US$m) EBITDA (US$m) PBT* (US$m) EPS* (c) DPS (p) EV/EBITDA (x) P/E (x) Yield (%) 12/22 728.2 86.0 64.3 14.7 0.0 5.6 14.6 N/A 12/23 836.9 96.4 77.6 22.5 2.0 5.6 9.5 1.2 12/24e 939.2 110.2 91.0 26.3 2.3 5.6 8.2 1.3 12/25e 1037.7 119.5 101.8 28.3 2.5 5.6 7.6 1.5 Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Earnings resilience despite headwinds H1 gross revenues of $409.7m (+3% y-o-y) were essentially flat excluding $10.7m from Shinez, acquired 29 April. A weak adverting market continues to suppress Online Marketing, particularly Search, but as this is the lowest gross profit business, net revenues (gross profit) grew 7% y-o-y at $97.7m, with gross margin expanding by 80bp y-o-y. EBITDA expanded by 4% to $46.6m. Net debt was $109.9m, reflecting the Shinez acquisition and operating cash conversion at 87%. However, with cash conversion expected to normalise close to 100% in H2 and no share buybacks scheduled, we expect net debt to reduce to $66m by year end. This includes the payment of an inaugural interim dividend of 1p. On track, strategic initiatives coming into play Our P&L estimates are essentially unchanged from the net revenue/gross profit level and below, with gross revenue pared back by c 4.5%, more in line with consensus. While we do not expect a near-term recovery in click rates, events such as the Olympics and particularly the US elections should support the online advertising market into the seasonally stronger H2. Key strategic initiatives should start to have an impact in FY25. These include vertical integration initiatives, such as including Tonic or Vergleich ads on Shinez content, the expansion of Vergleich beyond Germany and new product launches as well as competitive and efficiency initiatives in Online Presence. Valuation: Discount looks unjustified Team Internet trades at an EV/EBITDA multiple of 6.0x and a P/E of 8.2x with a 14% free cash flow yield. On a fundamental basis, we believe that this remains too low for a business with Team Internet’s track record, prospects and cash generation. The group’s rating is a c 45% P/E ratio discount to ad-tech peers of the online marketing business and a 47% discount to the online presence peers (albeit a small subset). A recovery in online advertising, accretive M&A and/or a resumption of buybacks could drive EPS upside. |
Fair enough. Let's see how they address it
I've long thought that the way to get a multiple rerating here is to maximise on transparency. Hardly any investor will look at their accounts or the way they describe their business and say its very clear. The problem is, if anything I find it to be getting more complicated, rather than less!
Hopefully the management or advisors can add more clarity and precision
Eric |
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