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A final straight to a 10p bid?
Would not surprise me to see another RNS in the coming days - today's 100k+ trade likely to be from one of thise stake building
It is starting to feel like we are on the final straight here - this business deserves a conclusion to the ownership piece so it can be freed from the distraction and constraints.
I think 10p would be a great offer, why don't they just get on with it and bid. Otherwise you have to ask why on earth have these two high net worth individuals been buying big chunks of MMAG shares is the question 🤔
Hedge. Please support your assertions with some maths. It’s a small step for man but a huge step for MMAG 🚀🚩🚩🚩
TYLO apologies thank you for that, oversight on my behalf it should be £9m + £3.3m so £12.3m net assets once notional debt reduced to £5.3m. I have just checked the rented asset is included in the property plant and equipment value. still double the NAV right now. The £3.3m would be accrued before the sale of the rental devices i presume.
Biggest risk here is a delist now imho. There's been many AIM co's do it after listing in the last 2-3 years at significant valuations.
A company up for sale which has a MCAP at this level is a recipe for disaster - it's desparate. Almost 9 months, it's remained publically listed, no suspension and the SP has done nothing but fall to all time lows.
Think the BOD owe shareholders a swift decision on the talks to enable any move forward.
A lot of things are incorrect here. Notional debt after accounting for rental water fall would be 5.3 million which is correct. However that would only be the case if they collect the full years revenue and sell all the rental devices. So that recurring revenue would longer be coming in. furthermore if they sell the rental assets and pay down the debt, net assets would not improve at best they would stay static because as they sell the rental phones, intangible assets would also decline. They over reached here, took on a bunch of variable debt, interest rates spiked higher clearly caught management off guard, now they are stuck with higher interest payments in a weak consumer environment. The fact rentals declined while debt stayed the same is a huge red flag.
The notional debt is the debt that will be left after rentals returned and sold and confirmed cashflows,so it give s an accurate figure of what the net debt is. You mentioned a valuation of 28-42m and then you took off the debt of £13m from the 28m (being circa 15p). Actual notional debt hoever is £5,3 so the 28m would fall to 23m (circa 23p). hope that clarifies.
I've got to be honest, I'm missing the notional debt element. I assume the c.8m relates to rental assets in field less depreciation? Anyway we are still talking in multiples of where the SP is.
As for robswire ... in these businesses (at this stage) you follow the cash not the book. At the moment they are treading water with no intention of over-stretching again. Would say he's likely trying to swing trade this ticker ... good luck with that.
Robwire - I think we all know that your glass if half empty (bordering on empty). Not sure why you are still here? I cant beleive you are a shareholder with your peristent negative tone.
Increasing sales is not the only way of increaseing profit. Increasing gross margin %, reducing costs would also deliver the same result.
As I have said before, a private buyer will be more focussed on cashflow, EBITDA and growth opportunities.
The fact is that the company lost £115k a week in H1 . To break even it needs to increase sales by £577k a week or £30m a year which needs working capital. Can’t see those sales happening even if the banks are prepared to further assist, which is highly unlikely
Josey agree with you but remember notional debt is £5.3m, so add £8m (circa 23p) on to the valuation if you are basing on EBITDA. Net assets after notional debt is £18m. Recurring revenue of circa £6m pa with a gross profit of 90%, with some multiple like this of 3x-5x. i have seen businesses with recurring revenue of £1m go for £4m-£5m with a profit nowhere near as close. So many ways to value the business.
Yep we'd all like one of those businesses with less revenue and more profit!!
My simple take on (it if you were potential buyer for the business):
EBITDA seems to be stabilising so 7m seems a reasonable for the year and we know from a statutory perspective it gets decimated by impairments/depreciation. A 4-6 multiple would be 28-42 and right now in the climate we are in, 4 at best. Strip out the net debt and 15p per share would be the higher end you would consider, since you have to consider the weeds.
From a point of view of the seller, clearly you will be presenting a forward looking forecast and in particular one that delivers cash conversion on profitability. The issue is credibility in coming close to achieving this in a substantive manner. There is a flatline to the achievable margin since your core cost (tech devices) is wholly commoditised with very little scope for value add. The cost to capture is where savings which drop to the bottom line sit and I'd say on a consumer tech takeback programme alone, there is not much scope for improvement.
However, just like a consumer focussed reseller would look as average packsize as a key metric in their business ... MMAG needs to do the same and this is where diversification into other asset classes becomes important. They can then start looking at average 'household' recoveries per annum and 'participant' numbers. Create a dashboard equity houses get/understands.
The other more 'grey' area is the monetization of their opted in participants down the line. Not an area I'm overly familiar with. but getting to hear a lot about this and some wild values per opted in consumer.
Anyway there's a rambling ... but bottom line if you were a buyer I think range is 12-15 currently unless there's someone buying into the future. Management won't sell for that ... but reckon they'd buy at it.
Apologies moniman misquoted you there, was looking at one of your older negative posts and got confused. Back to my point can you elaborate? or will you continue to avoid?
Mike, you mis quoted me where do I say more money than sense?
Moniman you may be right but you state no facts, mostly, in my opinion, negtaive comments. Please can you oppose me with hard facts as to why this is a 10p buy out and why that damian hanson has more money than sense.
He obviously got more money than he knows what to do with. He might as well buy it out for 10p and put everyone out of their misery. I can't see this getting much above 10p but maybe 15p with a hostile take out approach. JMO Adyor
Nice, averaging down and show of continued confidence.
Damian Hanson back in for the third time.
I have been in and out here and whilst I think it should come good in the end, I have seen such AIM robbery taking place as of late, which is practically impossible for PI's to factor into their analysis.
What reassures me here, is some big hitters have bought stock who won't roll over if the BOD were to recommend a delist or undertake a hugely discounted placing to dillute smaller shareholders (unless of course those parties can participate)
IMO GLA DYOR
Hi Josey,
Yes i agree it will be a leaner more profitable business. Any one would rather have a company generating say £50m of revenue and profit of £12-15m rather than a business of £120m making a loss of £3m and certainly that business would be valued at more than MMAG given it is profitable i.e. you could "buy mmag" now for circa £7m and get a profit f £15m in one year. I think they have over reached and have realised which is why they are becoming leaner and looking for funding (through a sale) to push this further. Yes the clothing opportunity is certainly something that could move the business further forward, hopefully some meaningful updates on that soon.
What you say all makes sense Mike. Personally I think their revenue will continue to decline but what you will end up with is a business with stable margins and cash generation. Over-reaching has cost the company dearly.
You cannot completely dismiss the clothing opportunity since it is a model which works elsewhere and fits easily into the buy from consumer, flog it on ebay model. You can easily see a future where this stuff is sold into a network of designer 'thrift' shops.
Just to further comment, with notional debt reducing, interest rates likely to reduce, cost cutting measures increasing, profit margins increase, this is really only heading one way in my opinion. I imagine in the next report (if not bought) will show increase net assets, lower debt, higher EBITDA and lower capex due to fewer rentals. I imagine YE end revenue perhaps could be lower at circa at £120m. This is a presumption of course.
Just updating this based on a previous post before:
- Net assets: £9.5m ( 9.63p per share), adding back projected revenue and rental assets of £8.4m increases this to 18.15p NAV. see page 7 of most recent report.
- MCAP: £6.74m
- Damian Hanson invested £100k in Jan/Feb, he is a business phone CEO startup. Invested further £20k in April.
- Peter Hagreaves Invested circa £280,000 in June.
- delist requires 75% shareholder approval, management combined own 27% and according to website only 48% is in private hands (according to MMAG website). It is not in the incentive for private firms e.g. Schroders, to want to de list, as well as any other new investors.
- the most recent report in June stated cash is sustainable to June 2025, based on significant adverse unlikely scenarios.
- HSBC and NatWest Banks backing until 2026, with interest rates likely to fall at this point, financing expenses will definitely fall. Furthermore, given that now we will be completing less rentals, debt is likely to reduce and therefore financing expense.
- debt has increased due to more handsets for rentals, however, they are also considered assets as they have an outright sale value. This is why they have been added on as a notional value as above, increasing NAV per share.
- delisting would negatively impact the employee benefit trust scheme, as employees would have difficulty selling, so imagine they would not be happy.
- gross margin has improved on tech and cost cutting measures are being implemented. The company are trying to become leaner definitely. Perhaps based on the most recent report it is still being fed through the business.
- Information in the most recent report was already apparent in the most recent trading update, therefore the share was certainly oversold, which is why it recovered so much. Revenue was disappointing but is due to US exit.
- This business has potential and needs the right buyer. over £100m of sales is hard to do, this just needs to be a bit leaner and have more investment to make it more efficient, clearly why the business is looking to sell. I think fair value is still in the range of £25m-£35m in my opinion. Its assets alone are circa £18m.
- i am interest to know others thoughts
Ignore them Saab - they dont listen. They just want to talk this down.
There are two covenants and both MMAG comfortable compliant with both.