Team Internet Share Discussion Threads

[hsduk101] 19/3/2024 17:34

Shinez sold themself quite cheaply at only 4x their profit. I guess good deal for Team Internet Group here

Lets say on a basic level Profit will grow from $24m to $34m(+50%ish) and debt to $115m. that will be only 3.38x profits. Which isnt thayt much different from the current position of 3.0x

Not bad overall.

[deanowls] 19/3/2024 16:08

Same.disappointed they have done this a day after results and stops them being questioned. I’d rather they be buying back the shares and again getting a clear year under their belt. Debt is now higher.

[ggrantsu] 19/3/2024 13:12

this is the difficulty with TIG - what I alluded to yesterday. the numbers are look brilliant and their allocate capital well to shareholders...

however, online marketing is a very alien world and its also a very low multiple world. if you look at the websites of Shinzen or whatever its called, you quickly see why their is real skepticism...i just cannot see how there is any kind of moat whatsoever about those websites...i can barely see how they generate a lot of traffic as the content is literally just AI generated gobble.

probably chucks off cash somehow, but unfortunately those kind of assets are always going to be valued at 4-5x profits.

personally a little frustrated as thought all this years FCF cash would be available for buybacks as deferred comp now ended. this acq. is a large chunk of annual FCF.

[deanowls] 19/3/2024 12:33

I thought we were just starting to get a clear view of the company. Seems we are back to buy and build etc.

[rivaldo] 19/3/2024 11:51

New Edison research is out post-results (not yet incorporating the acquisition).

TIG beat forecasts on almost all metrics, with 22.4c EPS beating the 21.4c EPS forecast.

Curent year basic EPS has now been upgraded to 26.76c EPS (from 25c EPS). i.e 21.07p EPS and a P/E of 6.4.

Next year's forecast basic EPS is now 28.12c EPS:



"Valuation:

Shinez brings US$1bn+ revenue potential Across FY24e and FY25e, the group remains at a steep discount versus peers, despite delivering faster FY23 revenue growth and margin expansion. Pro-forma with Shinez, US$1bn+ mid-term revenue seems achievable. Combined with continued operationally geared organic growth, this could drive stock upside"

[cp42kx07] 19/3/2024 10:35

I have to assume (pray?) that TIG management have a far better understanding of how to value Shinez than I do because I agree, the 3 sites mentioned are really unimpressive. In any event I think that they should have waited a few weeks before announcing, thereby giving investors time to digest the excellent results and likely push the share price higher. After an impressive presentation yesterday this is disappointing.

[ggrantsu] 19/3/2024 10:16

Just being frank here...going onto the acquired companies' websites is not very impressive...

anyone else done a tour of them today? e.g. falafelandcavier...it's just random recipes?

[davebowler] 19/3/2024 09:14

Berenberg sees value in Team Internet Group
Internet services company Team Internet Group (TIG) is delivering ‘resilient growth’ and is expected to hit current market expectations, says Berenberg.

Analyst Ciaran Donnelly retained his ‘buy’ recommendation and increased the target price from 180p to 185p on the stock, which softened 1% to 135p after full-year 2023 results on Monday.

The results were ‘marginally ahead of the numbers in its trading update of 29 January’. Revenues were up 13% at $836m – the online marketing division grew gross revenues by 14.3% to $657.1m, while the online presence division grew gross revenues by 17.1% to $179.8m.

‘These results are 7% ahead of our forecasts for gross sales and 6% ahead for adjusted earnings,’ said Donnelly.

‘In terms of the full-year 2024 outlook, management is confident it will meet current market expectations. We update our full-year 2023 forecasts to reflect the results and make minimal changes to full-year 2024 and full-year 2025 forecasts.’

Donnelly increased the target price as he said the valuation was an ‘undemanding’ 8.2 times full-year 2024 price to earnings and the shares offer a free cashflow yield of 14%.

[diesel] 19/3/2024 08:45

I think the market will decide, well managed growing businesses, demonstrating confidence by acquisition growth attract more market attention than just buying back shares.

[adamb1978] 19/3/2024 08:39

The key in the announcement in my mind is this:

"this acquisition is expected to significantly enhance earnings per share (EPS), with a forecasted adjusted EPS growth in the high single-digit percentage range for the pro forma fiscal year 2023, not accounting for potential synergies."

Therefore whilst I'm not in favour of their previous M&A approach of paying high prices funded my issuing piles of shares, I am in favour of these tuck-in type deals

[davebowler] 19/3/2024 08:30

Zeus-
Online Marketing bolt-on
Following the record FY23 results announced yesterday, Team Internet announced an accretive bolt-on acquisition for an initial consideration of $42m. The Group is continuing its strategy of making accretive bolt-on acquisitions, aiming to diversify its revenue model and expand its traffic monetisation options and capabilities. The deal is expected to complete in late May 2024, at which point we will incorporate the impact into our forecasts. We continue to believe that Team Internet’s strong track record, cash generation and growth opportunities are not reflected in its 4.8x 2024 EV/EBITDA multiple.

¨ Bolt-on acquisition: Shinez creates and promotes engaging organic and paid content across diverse channels such as social media, search engines, and native networks. Shinez generates income by promoting its original content and driving traffic to its websites (by advertising its articles on Publisher’s platforms) at a cost lower than the price at which it monetises its ad inventory (as it has qualified traffic through the funnel). With the acquisition, Team Internet Group will be monetising traffic across three main models, pay per click (PPC), pay per action (PPA), and pay per mille (PPM), with the latter being a previously unaddressed channel.

¨ Diversification and revenue synergy benefits: The acquisition diversifies Team Internet’s vertical exposure into underserved sectors, such as Lifestyle, Food, and Travel, and adds content creation and campaign optimisation expertise. Shinez also reduces monetisation network partner concentration. On a FY23 pro forma basis, the acquisition more than doubles the Online Marketing segment’s revenue generated independently of its Tier 1 channel partner from 15% to 27%. Team Internet anticipates significant revenue synergies from cross-selling between Shinez’s and TONIC's publisher bases and through deeper vertical integration with major networks, in particular Meta. The deal is expected to provide more sources of traffic and more options for monetisation, targeting a broader array of advertising networks and expanding Team Internet’s Online Marketing engine.

¨ Transaction details: The $41.8m initial consideration, funded with existing cash reserves and debt from its RCF, is equivalent to 4.0x adjusted FY23 EBITDA of $10.4m and generates a FCF yield of over 20% based on FY23 figures. The deal is expected to create mid-single digit percentage EPS accretion on combined pro-forma numbers for FY23, before the impact of synergies. An additional $12.3m of contingent consideration is tied to ambitious financial targets over two years, which we would expect to enhance the accretion if met. With the Group currently trading on an FY24 EV/EBITDA multiple of 4.8x and generating a FCFF yield of 16.9%, we think this acquisition presents better returns to shareholders than further share buybacks at this time.

¨ Forecasts: Shinez reported $100m in gross revenue $17.2m in net revenue and $10.4m in Adjusted EBITDA for 2023. On a pro forma basis, Team Internet estimates the enlarged Group would have generated gross revenue, net revenue and Adjusted EBITDA of approximately $948m, $208m and $107m, respectively. The impact of the accretive acquisition will be incorporated into Zeus estimates upon the transaction’s completion, expected in late April/early May 2024. For FY24, we expect to add approximately half of Shinez’s $10.4m FY23 adjusted EBITDA to the Group forecasts for FY24. The deal is expected to create high-single digit percentage EPS accretion on combined pro-forma numbers for FY23, before accounting for potential synergies.

¨ Valuation: We continue to believe Team Internet shares are very attractively valued. The shares trade at only 4.8x EV/ EBITDA 2024 and 6.7x PE, with a 16.9% FCFF yield. In comparison, Online Presence peers trade at 9.2x EV/EBITDA 2024 and Online Marketing peers trade at 7.2x, 95% and 53% valuation premiums to Team Internet.

[rivaldo] 19/3/2024 08:25

Management have a terrific record over the years as regards extracting value and synergies from acquisitions.

High earnings enhancement, increased diversification and risk mitigation, entry into new sectors.....all of these combined wrapped up in one acquisition are more than enough for me.

[patsc100] 19/3/2024 08:06

@Rivaldo, why do you consider this acquisition a good one?

Imo, while price isn't high (4x EBITDA) this seems to be an average business though. My investment case was that they'll stop doing m&a and just return capital to shareholders. I prefer buybacks at 6x EBITDA vs m&a at 4x EBITDA just because of the risk they're taking.

Buybacks and improving operations would be my preferred priortity.

[rivaldo] 19/3/2024 07:18

Big acquisition news this morning - $41.8m paid for Shinez on a bargain multiple of only 4 times EBITDA.

Plus:

- "this acquisition is expected to significantly enhance earnings per share" by around 8%-9%, i.e high single-digits, this year
- substantially increases diversification away from Google, which is excellent news
- there should as always be loads of synergies in diverting traffic via TONIC etc

Hopefully this should excite the markets (though less so for those who believe the priority is debt reduction and not growth, which is surely what the markets are for imo).

[tole] 19/3/2024 07:13

https://citywire.com/funds-insider/news/expert-view-barclays-marshalls-crh-currys-team-internet-group/Berenberg sees value in Team Internet GroupInternet services company Team Internet Group (TIG) is delivering 'resilient growth' and is expected to hit current market expectations, says Berenberg.Analyst Ciaran Donnelly retained his 'buy' recommendation and increased the target price from 180p to 185p on the stock, which softened 1% to 135p after full-year 2023 results on Monday.The results were 'marginally ahead of the numbers in its trading update of 29 January'. Revenues were up 13% at $836m – the online marketing division grew gross revenues by 14.3% to $657.1m, while the online presence division grew gross revenues by 17.1% to $179.8m.'These results are 7% ahead of our forecasts for gross sales and 6% ahead for adjusted earnings,' said Donnelly.'In terms of the full-year 2024 outlook, management is confident it will meet current market expectations. We update our full-year 2023 forecasts to reflect the results and make minimal changes to full-year 2024 and full-year 2025 forecasts.'Donnelly increased the target price as he said the valuation was an 'undemanding' 8.2 times full-year 2024 price to earnings and the shares offer a free cashflow yield of 14%.

[ggrantsu] 18/3/2024 16:43

very very chuffed with a large re entry at 127p today.

presentation was very high quality and reminded me a lot about the respect I have for this company and the management team. it is a funny little niche they operate in...and one which I'll never really understand intricately...

but there comes a point where you can't argue with a company's consistency in the numbers and its growth. that wouldn't be enough for me, BUT the mgmt incentives here and inside ownership / continued commitment to hoovering up stock make this a logical investment in my view.

[davebowler] 18/3/2024 16:14

Good recovery!

[kalai1] 18/3/2024 14:12

Team Internet Group plc posted solid audited FY23 results this morning. Revenue increased by 15% to $836.9m adjusted EBITDA increased by 12% to $96.4m, operating profit increased by 26% to $42.3m while PBT increased by 98% to $29.3m. Adjusted EPS for the year rose 32% to 23.22c while a final dividend of 2.0p was proposed, up 100% as the group continues to pursue the progressive dividend policy launched in 2022. Net debt increased by 31% to $74.1m primarily due to $39.7m of cash share repurchases. Valuation remains compelling with forward PE ratio at just 7.5x in the top decile for Software & IT Services companies. The share price lacks some positive momentum and has been drifting sideways in range for a couple of years. There is no rush to buy at the moment, but the share is certainly worth monitoring and will be well worth owning once it does start moving...

...from WealthOracle

[ggrantsu] 18/3/2024 13:51

nice to see a UK company so friendly to shareholders - not many out there who are so conscious about buybacks.

liked it when he said, even though some people want them to pay down debt more than buybacks - 'we believe buybacks create more shareholder value vs. paying down debt at these valuation levels'

[ggrantsu] 18/3/2024 13:39

more buybacks on the way...basically said as much as he could confirming it.

[adamb1978] 18/3/2024 10:42

If you look at FCF yield before discretionary items like divis, buybacks and M&A, this is approaching mid-teens percentates, which is really crazy.

I dont think its impossible for this to get to 250p at all based on that. It really just needs to keep its nose clean and shed its previous reputation of a company which was loss-making and addicted to issuing piles of shares to fund M&A.

I think the new CEO gets that, and it just needs them to keep on churning out the goods

[ggrantsu] 18/3/2024 10:28

Don't know about a complete doubling...

But 180-200 would be an entirely fair price for a company doing all the right things and growing in a very depressed ad market.

could debate all day though...the online presence business (domain names) is clearly worth a high teen multiple - domain names, as we know from godaddy, are a dream business.

so yeah...not sure! but 6x PE for a company growing at double digits and returning cash - too cheap!

[boadicea] 18/3/2024 10:20

Urgent sellers presumably looking for something with liquidity that they can sell without admitting a loss! Although the response doesn't altogether surprise me based on previous experience, it's a very short term view. This would look fair value at twice the price.

[indiestu] 18/3/2024 09:59

Lovely. Buy back lots of shares at a cheaper price. All on track!

[barnesian] 18/3/2024 09:18

The dividend will be payable on 28 May 2024 for shareholders on the Company's register of members at close of business on 26 April 2024.