Sthe hares from THG, or The Hut Group, finally bounced back on Thursday, but, given how far they fell, even a 10% move doesn’t fix the damage. At 306p, the price is still only slightly above its level on Tuesday after City’s disastrous presentation where founder Matthew Molding tried to flaunt the wonders within subsidiary Ingenuity but sparked a collective hiccup of: ” Is that it? “
In a stunning research note, Numis analyst Simon Bowler assigned an exactly zero value, or “option value”, to Ingenuity, the track that provides “end-to-end technology services” – web hosting, marketing and logistics – for brands, includes its own from THG. “Ingenuity is essential in many ways, but it seems increasingly nascent, opaque and lacking sufficient evidence to warrant meaningful assessment,” he wrote. He values the entire company at 230 pence, less than half of the float price of last year.
There could be demonstrable value within Ingenuity if THG’s other divisions – Beauty and Nutrition – are seen to be paying nose, or even just at commercial rates, to use Ingenuity’s services. But Bowler’s point is obviously correct: mixing the profits from one THG pot to another creates no overall value.
Instead, the enthusiasm around Ingenuity was supposed to come from recruiting brands from large companies to connect to the system. The most eye-catching client – excited about the hills during last year’s IPO – is Nestlé, but it appears there was no update on this relationship on Tuesday, which was a big deal. serious omission when your “land and expand” strategy is to get your foot in the door and then gain more business from the partner. If Molding did not see the Nestlé question coming, it was naive in the extreme. Bleating about short sellers only adds to the impression.
He is founder, president and CEO, so he has only himself to blame. But he’s not alone in the meeting room. In the absence of an outside president, the critical figure is the Senior Independent Director (SID). This is Zillah Byng-Thorne, managing director of magazine publisher Future, whose personal stock could hardly be greater. Under his watch, Future has gone from being a stock market laggard to a highly rated outperformer of £ 4.25 billion. It’s been a story of flawless execution of an acquisition strategy, the kind of thing Molding would like to emulate.
It is assumed that Future shareholders would ban Byng-Thorne from spending many more hours at THG. But, when you agree to be the SID of a public company, you can’t wash your hands if something goes wrong. She could do two things at THG.
First, give assurance to outside shareholders that the colossal sums of capital raised (£ 920million free float and an additional £ 770million through a May placement) is being spent wisely and that THG can live happily without a new one. injection from SoftBank of Japan, which will not exercise its 20% option to buy Ingenuity for $ 1.6 billion under the current circumstances. Second, she could try to persuade Molding that it is in her own best interests to have a suitable president and tighter control of governance.
Like it or not, Byng-Thorne is now a key player in this intriguing drama. She is the figure of the board of directors that carries weight in the city, and these are the times when a SID is supposed to earn her fees.
Qinetiq finds even defense not immune to supply chain disruption
Is there nowhere safe from supply chain disruptions? A defense company specializing in cybersecurity gadgets, you might have assumed, would be a prime candidate for immunity, as mission-critical military elements tend to slip through. But, no, Qinetiq, which was privatized in 2003, said it “has technical and supply chain issues on a large, complex program.”
The FTSE 250 company is hoping to limit financial depreciation to less than £ 15million, which would be around 10% of expected operating profits this year, but the share price still fell 13%. It doesn’t help that as a defense vendor Qinetiq is forced to offer few details and only talk about “our customer” – the best guess is that the issue is with the components of the intelligent robots for the US Army.
If so, the clouds should eventually clear: Orders are up 25% for the half year and the only other slight swing was a profit margin in the “low end” of the range. previously announced from 11% to 12%. .
But these days, a low stock price is a time for any listed UK defense company on alert. The sector does not need an opportunistic new American acquirer to emerge; we’ve had more than enough of these this year.