Thg Share Discussion Threads

[soleman1] 08/1/2022 16:31

Oh I see you have already posted it on BOO and ASC haha what a lad

[billionarebob] 08/1/2022 16:30

Don't this will affect THG as just like underwear make up does not tend to get returned.

[soleman1] 08/1/2022 16:29

Wrong forum try BOO

[merrick1965] 08/1/2022 16:24

Nobody questions the increase in online sales (and returns is just part of the model) it’s whether or not THG can achieve the targets ( ingenuity target bar is high because of IPO and SoftBank see hxxps://dl8hes3yo0qpy.cloudfront.net/wp-content/uploads/2021/10/26070543/Q3-2021-Ingenuity-Commerce-Update-vF.pdf ) but the valuation of SoftBank option is super high when one looks at recurring revenue forecast

The SoftBank option is

SoftBank option illustration: assuming 60% recurring sales mix from 600 sites live by the end of 2023 (£170,000 revenue/site) and a 4% revenue-share on £2.5bn GMV from Beauty & Nutrition, then Ingenuity Commerce revenues annualise at £270m in FY23 vs £4.5bn option price.


the barometer for market being happy is


FY21

ALL FIGURES
£M UNLESS
STATED Revenue Revenue
Growth %
CONSENSUS 2,201 36.4%
MINIMUM 2,179 35.0%
MAXIMUM 2,227 38.0%
Adjusted
EBITDA Adjusted
EBITDA Margin %
CONSENSUS 176.2 8.0%
MINIMUM 174.6 7.9%
MAXIMUM 179.2 8.2%

See

hxxps://www.thg.com/analyst-consensus/

[lodgeview] 08/1/2022 16:12

https://www.theguardian.com/money/2022/jan/08/uk-surge-in-post-christmas-returns-reveals-dark-side-of-online-shopping-boom

[merrick1965] 08/1/2022 09:46

When you launch IPO it is hyped (sell the investment dream) not uncommon for a company to spend vast amounts on expansion to build up sales and lose money pre ipo CaZoo a very good example. Not uncommon for earlier investors to realise investment and sell (KKR) Goldman increasing investment now selling before strong sales quarter does concern me (why have they reversed in investment decision on THG)could simply be a bad decision to unwind

Now THG has to focus on underlying profitably (I like acquisition of beauty manufacturing) for can sell higher margin products into their sales channels). Developing beauty brands could be lucrative. Ingenuity is in infancy and captital intensive being subsidised so market expect to see growth in sales to reassure strategy working

THG has great prospects but has to manage transition in philosophy from turnover is vanity to profit is sanity for whist sales have grown rapidly so has their headcount and their operational overheads are high. (Over expansion is also a threat)

The investment decision I am making is for investing in THG I think a question of let the muddy waters clear then invest when the market has finished the games that are clearly in play.

PSquare now below 0.5 not completely closed position, daily average share volume needs to be a lot higher for shorts to close. This is money article does not help, what I have learnt is when big boys (hedge funds) are in play they play dirty and have deep pockets - so if their game is still in play then once short completed then they reverse and that is when share rises

The point I was making if market speculation to be believed that MM wants to take private then why would he offer more than 50% premium to closing share price. Writing down assets and goodwill is lawful and permitted and impairs balance sheet. (And can be used to reduce taxes when a company profitable) But the valuations of online businesses have fallen dramatically in the last year so write downs are not unreasonable and an accountant know this.

The problem we have as PI is we do not have access to the information that clearly others do and we have to second guess when making our investment desisions.

This is why forums like this can be an excellent exchange to help each other. And sad to see this forum trashed by some. If a person is shorting I understand that is an investment plan but share knowledge that might help prevent others losing money. Visa V if long tracking reduction in shorts is vital for shorts closing can see reversal in trend - and this is the real question when will the trend line reverse for THG - in many respects most including I thought q4 trading update would be the catalyst and recent share surge felt like trend change - but shorters didn’t blink (pi did they were caught by peak trough reversal swings) and Goldman sold more shares. So does not appear trend shift yet

[billionarebob] 08/1/2022 07:55

True but not all exponentialy growing businesses make a profit. It took Amazon 9 years before filing an annual profit and look were they are now

[leoneobull] 08/1/2022 06:36

https://shorttracker.co.uk/company/GB00BMTV7393/Hardly heavily shorted. PQ Squared of Switzerland closed completely. I wonder why.... ?

[leoneobull] 08/1/2022 06:30

From LSE Linked in postFri 18:39Doesn't necc mean that much but liked this post on linked in:"THG Ingenuity is by far the most exciting business I've ever been involved with, let alone worked for.It's challenging, rewarding and humbling, and it's been an incredible year.We have the best minds in the industry, and also some of the youngest.I think experience is earned through time, your environment and you, and this place gives you more by the day than any other. Age doesn't matter.We're growing heavily in 2022, so look out for the opportunities. They will be plentiful.Happy new year everyone!"https://www.linkedin.com/posts/nealjon_thg-ingenuity-is-by-far-the-most-exciting-activity-6882753050650411008-IO8f/

[leoneobull] 08/1/2022 06:28

Sales are vanity, EBITDA margins higher would be sanity

[leoneobull] 08/1/2022 06:26

Merrick. Interesting posts and always useful to hear other side. As for potential writedowns, most sites they took over are doing well since they were bought. Yes, a writedown in intangibles may be possible but only in relation to the strongly performing beauty business. Ingenuity priced for free....so Softbank not exercising already baked in. As for shorts, they have reduced above 0.5% anyway. The Analyst has said nutrition and beauty are sound businesses and withdrawn their shorr rec.

[billionarebob] 08/1/2022 06:12

I think you have forgotten that THG is a plc, those in charge have to best represent the shareholders or risk going to jail. THG is also one of the most scrutinised stocks on LSE. MM is an account and no fool. He has more money than any of us could ever dream of why risk it all? Is he so stupid to publicly tell the world the business is doing fantastic and then cook the books for his own personal gain? Personally I don't think he would.

[merrick1965] 08/1/2022 02:15

Billionare Bob - this is not about valuation this is about strategic self serving agendas. Write down assets devalues company, invest heavily in inginuity and reduces cash reserves, already inflationary pressures so share value under pressure with a few tweaks,

SoftBank want to buy MM wants private current share value circa £2 - 50% premium to closing share price is £3 - voted by majority of shareholders (over 50% control by a consortium) . Why would moulding want to pay for more than he has to if wants to take private. Remember yes very successful driven man, but he did extract out property portfolio out of the group and achieved £800 million bonus that not only diluted shareholders but in my opinion was not merited based on performance

I think Thg is a risky call before results, holders deserve to be rewarded but why on earth are Goldman still selling and others shorting in run up to results when share has crashed so much already. All factors point to record sales and shares should be higher in anticipation of these results.

We all know update due - so time will tell

[billionarebob] 08/1/2022 00:49

Apologies I got your valuation wrong you value thg at 4bn not 3bn even so are you saying that thg is worth the same now as September 2018?

[merrick1965] 07/1/2022 23:26

BLDM I agree. The world is moving online with regards THG can they provide a full service solution for third parties who want to build online brand (including social media globally) and a direct channel as opposed to being a stock item on eBay or amazon . Oral and coke are probably loss leaders to build associated credibility, with the IPO Thg sung from the roof tops about the nestle deal but what revenues have materialised

Has ingenuity done a enough to justify valuation (no too much jam tomorrow) ingenuity growth infrastructure requires vast investment and losing money and THG need to stop buying market share and go through a consolidation strategy and focus on generating profits at a time when costs are increasing. Their cash burn must reduce then shares rocket. They can justify continued subsidy of inginuity if they can satisfy the market there is a volume recurring revenue model - so investment amortised over a longer customer life cycle - (easier to finance debt to expand from recurring revenue) they do have a lot of skills and infrastructure behind inginuity - but as a cost centre it is losing millions and being subsidised by online businesses that shall see reduction in gross profit margins due to inflationary pressures.

The major reasons I remain on the sidelines

Big boy shorters not PI are not closing

Goldman hell bent on getting out

non exec director cashes in £1.4 million shares in Aug before crash and spends a £60k token purchase after share falls 70% so she’s confident with her token gesture

I would have more respect if moulding said he would defer his £800 million share award until such a time as share value returned so that share bonus was merited on sustained share holder value

If SoftBank do the obvious and confirm not exercising their option (SoftBank will lose all credibility if they take up option at defunct valuation)

There is a potential to incur write downs on the balance sheet for recent acquisitions were at a hefty premium

On a plus - their sales are up above forecast, and SoftBank, moulding have a good opportunity to take private but realistically I think no more than £3


THG has great potential to revolutionise the world but so did the ZX64 in its day but was out smarted by the competition

THG trading update will have to be excellent just to ensure it does not fail to meet market consensus

[bldm] 07/1/2022 21:12

merrick, I get this but I thought the point of DTC was to sell to consumer. Why pay for THG Ingenuity if your revenue comes from amazon? sensei, I get that oral-b is a bad example. But out of all Ingenuity clients, oral-b and coca-cola are prominent ones. As I've shown, you would not buy oral-b via THG ingenuity because (a) it's more expensive and (b) amazon service is amazing. Coca-cola - most coke is sold in restaurants, bars, clubs, supermarket. I am yet to buy coca-cola online! And if I did, it would be through amazon fresh or ocado.

[senseibull] 07/1/2022 20:40

The black friday deals on their oral b ingenuity website matched amazon on price exactly for same models with free delivery. The only benefit was if you are a prime customer they will get it next day but for anyone else it was the same. Dont see why Ingenuity cant offer a prime type delivery pass that works for any ingenuity website either.However I would have expected oral b to drive more revenue through advertising to gain more customer insight but their twitter ads were pushing to amazon

[leoneobull] 07/1/2022 19:54

You want a toothbrush, ingenuity can getcha one. 5 pounds end 2022, ya heard it here first or my name's Colgate

[merrick1965] 07/1/2022 18:40

Not uncommon for manufacturers to sell at full RRP on their websites so they don’t undercut their retail channel partners (otherwise retailers will not stock product) Oral B (website more branding than direct sell proposition or clear old lines) a bad example of commercial volume viability of ingenuity. Hotel Chocolate high perceived value higher margin direct sell no conflict achieves direct to consumer revenue that’s where ingenuity works (expands hotel chocolate worldwide distribution and sales in territories it does not exist)

[bldm] 07/1/2022 18:13

Would someone share opinion as to why I can get cheaper oral-b brushes from Amazon than the THG Ingenuity powered official oral-b shop? Not talking pennies cheaper either - £142 on amazon vs £160 on oral-b website for the same product. I'd have expected the opposite considering you are looking to sway customers away from amazon.

[bldm] 07/1/2022 18:13

Would someone share opinion as to why I can get cheaper oral-b brushes from Amazon than the THG Ingenuity powered official oral-b shop? Not talking pennies cheaper either - £142 on amazon vs £160 on oral-b website for the same product. I'd have expected the opposite considering you are looking to sway customers away from amazon.

[senseibull] 07/1/2022 18:13

Make that 3

[propinv] 07/1/2022 17:40

I'm long here pre, but a dividend will crater share price as it tells world that management don't think they can achieve a better return investing it in the business ie growth and so it's better to give it back to s holders

[bldm] 07/1/2022 17:31

THG is a growth play, paying a dividend would be a terrible situation to be in for the company and investors. The argument from MM for the IPO was to generate cash to speed up growth. His words were something of the sort: "we can get there as a private company but it will take longer".