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CentralNic Group

LN: CNIC

£163.8m market cap

86.75p last close

CentralNic Group is a leading global domain name registry services provider, operating through three divisions: Reseller (number two globally); Corporate; and SME. Services include domain name reselling, hosting, website building, security certification and website monetisation.

Investment summary

CentralNic has announced the conditional US$36m asset-based acquisition (payable in cash on completion) of one of Team Internet’s closest competitors, Codewise, a domain monetisation business based in Poland. Based on the year to 30 June 2020, the deal values Codewise at 0.60x historical sales (US$60.3m) and 4.9x adjusted EBITDA (US$7.4m). The deal is being funded by way of a share placing, with CentralNic having placed 40m shares (21% of the equity) at 75p per share (a 6% discount to the 10 September closing price), raising gross proceeds of £30m. Assuming a year end completion date, we estimate that the deal will be materially (c 18%) EPS enhancing in FY21. The acquisition is highly complementary to the successful Team Internet acquisition, completed in December 2019, building CentralNic’s technology base and market share in domain monetisation, diversifying its client base and strengthening the group’s development capability and senior management team.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2018A 56.0 9.1 7.4 5.56 20.4 N/A
2019A 109.2 17.9 12.8 7.92 14.3 N/A
2020E 217.8 30.7 17.4 6.51 17.4 N/A
2021E 295.3 40.3 27.7 8.81 12.9 N/A
Industry outlook

CentralNic supplies the tools needed for businesses to develop their online presence, providing domain names, hosting, websites, email, website security, brand protection and online domain monetisation services. It delivers services to c 40m domains, with cross-selling and upselling important drivers of future growth. Organic growth (estimated by management to be c 6%) is supported by M&A.

Last updated on 22/09/2020
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Sector
TMT
Share price graph
Balance sheet
Forecast net debt (US$m) 76.1
Forecast gearing ratio (%) 52
Price performance
%
1m
3m
12m
Actual 0.3 0.3 70.1
Relative* 3.5 6.8 111.6
52-week high/low 95.0p/40.0p
*% relative to local index
Key management
Iain McDonald Chairman
Ben Crawford CEO
Michael Riedl FD
Don Baladasan Group managing director