the relentless reduction in debt over 8 years is very positve,
but the most positive for me was for them to predict a strong year ahead,
and that is despite the economic headwinds.
i think that they dont say this unless they know they have the results in the bag
(even at this early stage of the year!)
they also confidently predict a significant growth in margins,
so they must be confident of some significant back office savings.
i think the contract to promote the UK after BREXIT is also very significant,
not only will it be huge business but i think it must make it easier for them to persuade other clients to move to them. Maybe it is this that gives them confidence for the future.
I don't fully understand their IP but others mention it as being a valuable item for them.
I see that Paul Scott has sold his holding which was published this afternoon so i think that has encouraged others that follow him to offload later in the day. His points are very valid of course but i think he is now taking a conservative stance for his portfolio and 'pruning' several holdings. Regardless I am happy with my own analysis and knowledge of the company. And backed by a strong chart that has shown good outperformance in recent months.
but most unusually they state plain and simply that there are confident of a strong 2018!
so that implies EPS of 8p+ and a 2p dividend.
debt , including deferred payments is < 1t ebitda
and they now have the supports of London base, new acquisition, DofE 'brexit promotion' contract, and developed IP.
as before a price rise > 48p would be a MAJOR chart break
but the price action for the previous 6 monhts do indicate a bubbling of interest to me.
quite likely to be tipped by Simon T in the ic which will highlight value etc...
at 46p WOW I think this is a great trading update.
Results are in line this is a relief given the normal nervousness re H2 weighting.
CASH flow has been great, again, with debt now down to < 7.5m and historically they have very good CASH collection in the first few months of the year so when the announce their full year results I would expect Cdebt to be lower again. That is the lowest debt position for 7 years despite growing turnover by c.50%!
AND, they remain committed to achieving 14% margins that is a 20% jump in profitability from current levels and yet they are still achieving 4% LFl growth!! The reduced debt has lower the interest charge by over 20% so with good sales growth, and profitability improvements ahead it looks like TMMG could achieve 25% EPS growth for the next 2 years.
They have now achieved 7 years of growth but feel confident of another 2 years ahead and yet EPS to Dec 18 = 8p with a 2p divi. I also make that EBITA of 11m which is equal to c.14p a share!! With minimal debt and a great CASH flow record.
As before >48p is a HUGE chart buy signal
All IMHO, DYOR + BoL
TMMG is in my portfolio (has been in and out for 7 years!)
The mission continues to trade in a range of 39.5-50.5p, representing a substantial discount to other quoted small- to mid-cap marketing/communications businesses. The current price puts it on an FY18e EV/EBITDA of 4.4x, compared to the small/ mid-cap media sector at 8.0x, a 45% discount; on a P/E basis its multiple of 5.8x compares to peers at 11.4x. The sizes of these discounts are difficult to justify given the earnings and dividend growth and the improved state of the balance sheet.
TMMG at 48p the contract win for DTI is , I think, hugely significant.
TMMG share price has been lowly rated for years not for the lack of profit growth, cash generating, debt reduction, or dividend increases!
But because of worries re being a people business, the general quality for a small cap plc, the quality of earnings when CASH is regularly used to buy in growth.
I think this contract puts these all to bed , and some .
As a multi year contract, across multiple countries, which is of the highest profile (BREXIT for worlds 7th biggest economy!), it means that people will stay with the agency for the experience, it is organic growth rather than an acquisition, it is highly visible and its gives the company huge credibility. So I think it bats away investors previous concerns.
What are the financials... well no update from the company yet but it is easy to play around with averages for conferences and get £1m to £2m per year probably at the lower end of this range. Remember the agency Bray Leino, which has a 20 year growth record, which is c. 40% of TMMG t/o has said it is the most significant thing in their history! So it seems reasonable to assume it is significant.
Much more so, I think it wil enable TMMG to pitch and convert to sales much more easily so their will be a significant halo affect.
Other aspects in the last 3 RNSs TMMG has enthused about all the other agencies and their progress and opportunities there is little mention of Bray Leino so this is on top of current expectations.
When TMMG announced their growth scheme in March the CEO of Bray Leino got the highest level of incentive shares. I thought that was interesting because the salary of all the board members is pretty much the same some take it as salary, others as benefits but , aside from founder David Morgan, they are pretty much banded. which is intentional to ensure equality amongst these different entrepeneurs. My view is that TMMG felt this contract was a possibility way back at the start of the year and created a growth scheme which gave them reward if it was pulled off. At the time the share price hurdle of 75p seems ludicrous compared to the market price of 40p but I think now it gives an indication as to what potential they see in future contracts.
And of course we dont know what else they have yet to announce.. the latest RNS was stuffed full of optimism for future pitches.
And the chart .
There is a classic flag break, with volume, out of a growth trend going back to 2010 which predicts a price move to c.80p which was previous resistance. From this break out there is no resistance until that point though I think 50p will be a sticking point for some technical analysis.
The catalyst for a major move would be an RNS from the company. Paul Scott owns the shares so I think any positive RNS will be highlighted through him and also ST is likely to update positively.
so another set of solid results from TMMG,
and strong words of confidence not just about H2 but about grwth next year as well.
CASH flow remians strong and debt is below 1.5t ebitda.
EPS will be close to c.8p next year (based on 10% growth)
and with further 10% divi increases it is almost becoming an income stock - LOL
it does feel like there is a head of steam building in the share price,
i thought these results might release the price from being range bound but not yet.
that said if there was good press coverage this week or next could easily see the price nip up a couple of pennies, and ironically if that happened I think it would give more investors the confidence to buy based on the chart break out.
share price action over the last couple of months feels like a head of steam building...
results are good, volume is high over the last 12 months,
and recently its been easy to sell volume into a strong price...
some-on eis very happy to buy up sahres at the moment.
what has tipped me over the egde is the solid price movement from SIV, CMS + CAU,
it just seems that there is a lot of positive price activity in the small marketing sector at the mo.
my guess is some sort of corporate transactions that shows there is hidden value in these businesses.
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indeed its has been stagnantover the last 3 years - but, for me, that's the attraction!!
the super long term chart is still in an uptrend going back to the managment buy in in 2010,
and the positive about the chart for the alst 3 years is that the support level of c.40p has held.
So, as i see it, the bsuiness is still growing and developing,
but not the chart is lagging slightly behind,
it would now seem surprising that it would fall through that support at 40p (given the positive trading update), thus the most likely is a decent rise from the current position (say to 50p).
it is always possible that rise becomes sustained if the market starts to take a liking to TMMG but i'd ride that wave if we get there.
so a strong trading update this morning with 10% + growth in H1, debt down
and mgt happy for similar growth in H2.
was surprised the shares only rose 1p but then againthe amrket is down 1% today.
the low PE rating and low debt , with good growth record are all supported by a good chart pattern.
it wont set the world alight but steady at this price.
All IMHO, DYOR + BoL
TMMG is in my portfolio (has been in and out for 7 years!)
I bought a few of these the other day after a friend suggested them to me. They look cheap to me and are generating good cash and the divi yield is reasonable.
I would prefer it however if they stopped making acquisitions for a few years and sorted out the balance sheet, it is a bit light on tangible assets which I know is normal for this type of business but look at how Creston sorted out their balance sheet and they eventually got taken out.
The results from TMMG seems to be 'more of the same',
increased sales, profit and eps.
now they are putting some effort behind the divi with a 25% increased
and a progressive divi in future - 5% + progressive is not too bad.
TMMG have always been a little unloved with a low rating
but this will gradually disipate with more years of good performance.
I do think the market seems to have missed their 3 year targets released in the results...
it does help explain why they wanted more shares at 75p!!
TMMG fcst t/o growth of at least 5% p.a. for the next 3 years,
and a big uplift in the margin from 11.5% to 14%
we know the max debt is capped from their covenants
so you can work this out to give EPS approaching 9p in 3 years time
which is 40% + growth from today, I.e. 12% p.a. + 5% p.a. divi
if that is achieved they will have increased EPS by 150% over 10 years,
surely at that point mgt will get a better rating.
I like their confidence for 2-17 and the fact that they have high visibility for growth in 2017.
analyst expectations are for eps of 7p in 2017and a divi of 1.8p
Can't disagree with what they're saying. Personally I think fair value for Mission would be in the range 55 to 65p, but I thought that when I bought in last year and the sp hasn't budged much. Plainly the market doesn't care diddly squat about what I think !
The mission continues to trade in a range of 38-47p, representing a substantial discount to other quoted marketing/comms businesses. The current price puts it on an FY17e EV/EBITDA of 4.4x, compared to the sector at 7.8x, a 44% discount. The size of this discount is difficult to justify given the earnings and dividend growth and the substantial improvement in the state of the balance sheet. Dated 23Mar17
I thought the GSS was a very interesting RNS this morning.
After my analysis Ive concluded that it is good news
1 there was no obligation to announce today but they have chosen to announce today 4 weeks before the FINALS which means that there are no bad news in the FINALS, and no lost, or wobbling clients in the pipeline. It also gives comfort that there are no surprises in the accounts. Basically it puts a floor under the price at 40p (otehrwise mgt would have waited until the bad news was out and issue the GSS at a lower price)
2 I think it also means that the directors view todays price as relatively low i.e. they expect it to be higher after the FINALS
3 regardless of any moral opinion it is an incentive for the directors to get the share price higher
4 it is a reasonably fair scheme. As a shareholder I am giving away c.3p of my gain if I gain 34p from today. So at first glance, compared to yesterday I am 3p worse off, except that I think it means there is now a much better chance that the price will get to 75p because of the heavily geared incentive to management. And the is a HUGELY increased chance that the price will get much closer to that 75p (lets say half way at 58p) compared to yesterday. So realistically if I bought today I have a decent chance of getting to 58p within 2 or 3 years that is compound growth of 17% p.a. for 3 years (incl dividends). I think that is attractive upside when there is little downside.
5 the total top mgt team own c.40% of the shares in TMMG so the argument that they are taking money away from us private investors is much diluted given that they are also 40% shareholders themselves. You might argue that then they didnt need an extra incentive and indeed that is a very reasonable argument. But taking out the emotion it means that the total mgt team will be very incentivised to stay with the business and to retain their best clients, and that the board will now go on a route to improve investor perception of the company.
Before today I thought a fair price for TMMG was 55p over a 2 year period with a nice 4% dividend. However I also recognised that there were downside risks of client loses and some surprise. So today I see that a floor has been put under the price (there is little chance of major client losses in the near term) and now it is reasonably more certain that the FINALS, and in particular the outlook statement, will contain good news.
In conclusion, TMMG still have a great recovery story since new mgt took charge in 2010, it is growing steadily (8% a year for 8 years), it is very lowly rated, it generates large amounts of CASH, there is a decent divi and the GSS gives a lot of comfort that 40p is now a floor to the share price and also gives optimism that the price could re-rate significantly as the businesses continues to grow over the next 2 years which is backed up by a positive price trend chart..
The value of agencies IMO is closely related to the quality and commercial effectiveness of their people. Traditionally the smart people often have left established businesses to set up on their own - and some have succeeded spectacularly.
So keeping these key people on board and motivated is a good move.
The RNS explains that the cost of the scheme is low compared to the overall uplift in shareholder value if and when the vesting level is reached (75p).
There is still a figure north of £80m for "intangibles" shown on the consolidated balance sheet - which is higher than the total (book) equity value of £73m. From one point of view the business is still under-capitalised.
If the award protects our "intangibles" then it seems a reasonable price to pay.
As ever just opinion and interested to know what others think. DYOR.
We're growing at high single digit rates, have a low PEG,a nice divi and the directors have all got decent stakes in the company.
Eventually the market may sit up and take notice, but our market cap probably keeps us under the radar of the bigger institutional guys and we're not sexy enough for PI's to try and trade us so we'll probably stay moderately unloved until, or unless, there's some merger activity which perks up peoples interest.
In the meantime I'll take the divi and, if the sp ever starts to look a bit frothy ( admittedly that doesn't look overly likely ) take some profits now and then.
Unspectacular growth lets say but still headline profit up to £7m with some exceptionals (yawn). Good dividend, reasonable growth, strong management team, falling debt BUT rubbish PE. Any insights gratefully welcomed
"The mission continues to flesh out its offer, scaling up and adding to its capabilities through small acquisitions and start-ups. H116 figures show double-digit growth in operating income, with adjusted EPS ahead 15% y-o-y, solid cash flow and a good step-up in the dividend. A number of high-quality names are added to the client roster, including O2 and Halfords. Greater emphasis is being placed on collaboration between the networked agencies, which should maintain the new business momentum and enable the group to win a greater share of spend from existing clients. The deep valuation discount to sector looks increasingly incongruous."
finnCap view this morning:
"Once again, the group has produced a good set of interim results in line with our growth expectations. The results confirm that recent acquisitions are continuing to trade well and that global capabilities have been further strengthened. Profit and earnings forecasts remain unchanged, although the 67% increase in the interim DPS results in DPS upgrades. The stock is now yielding 4.1% and sits at an EV/EBITDA of 4.3x, reflecting a significant market discount. Our 60p target price implies 64% upside."
Good trading update.
Business remains seasonal but strong H2 trading confirmed.
year end debt balances higher than last year , but this is due to seasonal nature so expect will reduce by H1 as usual.
Think share is nicely placed now for 50p in 2016.
catalyst will be confirmation of results, outlook and debt reduction on March 22,
and further cash flow confirmation with interim.
I expect ST will review positively as well.
so its possible 20% upside plus 3% dividend,
that's good enough for me in well managed, UK focused business with food cash flow record.
Market has reacted badly to acquisition,
Which is understandable.....
No details, no financial and might seem like money spend on chairman's whim....
I see it as a classic TMMG sort of deal....
it makes sense, it is people based, it is risky and quite possibly expensive.
my guess is a c.500k to 1m investment with little current return,
and like most of ad agencies CASH spend is money just to stand still....
Its good news if TMMG now have links with an industry respected video provider,
but it also highlights that they had no exposure to this area before the acquisition,
and without it would have been left behind....
For me, TMMG is a long term investment,
they have demonstrated a consistent long term return on CASH investments,
and are obviously compotent at what they do....
so I expect the share price to continue to trend upward,
with greater volatility depending if it is in favour with pi's....
market currently risk adverse,
and recent 2 deals whilst they might (time will tell) be good business,
give nothing to encourage a new pi the incentive to start buying TMMG.
I think at 42p, TMMG is at bottom of range and supported by chart levels,
but expect it will take positive outlook in the January update to get the price up above the 50p level that I'm expecting in 2016.
TMMG share price seems to have cleared a few sellers
and is now showing a little underlying strength...
I've a feeling we will see 50p+ before too long......
Interesting article in ic this week re sports marketing.
TMMG have a new agency which I think has gone unnoticed by the market.
For an 'investment of a few hundred thousand probably already absorbed into company forecasts for the year, the new business has been launched into a strongly growing market with some predicted clients wins and a possibility to get some of the churn comes with the acquisition of Chime by WPP. As well as the fact that this sports marketing could easily add 500k to profits within 3 years, I think it shows the entrepreneurial nature of management.
Which is time will continue to erode the discount it currently has to its peers.
TMMG results today ...
All figures were up in double digits - sale, profit, eps and dividend.
they say all good. Quote: "profit up, debt down - just the way we like it!"
the new mgt team came on board in 2010,
they had an emergency rights issue to get debt under control,
and since then have grown steadily.. 8% p.a. in EPS over 7 years (F)
eps to dec 16 will be 6.1p,
but normally looking 2 years out can see eps of 6.5p and reasonable debt
(quote:"we don't want to make mistakes of previous mgt")
so its hard to see why the rating languishes at 7 times!
whats the catch.....?
1 - results are H2 weighted which people don't like H1 = 2.4m; H2 = 4.6m
(it has been this way for 3 years and reflects underlying client buying patterns)
2 - l.term growth is modest 8% a year - financed by 4% a year increase in shares.
(typical of an agency business they use CASH flow to buy growth)
3 - maybe people don't like the company and its unusual style - see c'man verbosity in reports!
interestingly the share price has risen 40% p.a. for the last 5 years even though eps have only increased by 8% p.a., so this means a re-rating has being going on - with investors giving a higher rating to profits, the funny thing is that the rating is still low!!
there seem to be various support trends in place....
- 4 point support line from 10p in 2010 to 40p in 2015,
- 4 time break-out and pull back above 40p since 2009
- rising 200d at 42p
- golden cross of rising 20d and 50d through the rising 200d at 43p in July 15.
interestingly over the last 12 months it has under performed the market,
but that is due to a share price fall last September,
if the price remains unchanged for the next few weeks it will show up as outperforming the market over 1 year, 3 year and 5 years,
which will look good for momentum and trend investors doing stock screens.
At the moment if some-one looked at all companies with PE < 10 they would see TMMG,
then they would see that in the last year it has under peformed,
and would conclude that earnings are due to drop..... and not follow up on the company
in a few weeks time - they will see rising momentum and look rating and look into TMMG further.....
so I see this has the potential to double over the next couple of years,
though as a small cap with l.term holders (incl mgt with c.20%) expect some volatility.
- its a simple business that the company has stuck too for a long time,
- fundamentally undervalued,
- supported by chart pattern,
- risk reward is acceptable,
i've done the same. Invested previously at the refinancing and now back in.
I think the market despite the highs is risk adverse
but is not starting to interest in small companies that have a good track record.
since the refinancing TMMG has generated more than £18m of free cash flow after adj for any rights and placings. TMMG has also shown steady growth of c.8% a year.
My valuation based on a trend average CASH generation of £3.8m for 2014 growing at 8% a year.
This values the company for me at prob close to £50m (55p) a share
and prob higher a future growth is likely to be higher given lower debt and better UK ecomonic growth.
This analysis supported by excellent chart trend and reversal patterns indicating also c.55p
Very quiet board, and interesting to see Lambrini Girl got this one quite wrong. She/He is normally pretty good on this and I've know LG to get shares in downtrends bang on. Anyway, having been in and out of this share in previous years I bought back in at 42, and am pleased to see th rise today with the director buy, which should indicate a decent set of results, and a rise into the 50's and hopefulyl without any reversal this time.
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