musicMagpie

LN: MMAG

Market Cap£49m

Last Close 45p

musicMagpie is a leader of re-commerce in the UK and US in consumer technology, books and disc media through its proprietary technology platform. It is expanding its offer into rentals of smartphones and other consumer technology, and widening its sourcing infrastructure.

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Investment summary

musicMagpie (MMAG) provides a cost-effective and sustainable alternative to buying and selling consumer technology and physical media. Future growth is supported by the positive tailwinds of increasing awareness of sustainability issues and the growing importance of the circular economy. It has a significant growth opportunity from the rental of technology, which is expected to generate greater revenue and profit over the life of a device than an outright sale. The addition of the new recurring subscription revenue has the potential to accelerate annual revenue growth from mid- to high-single digits and significantly increase profitability (low-teens EBITDA margin from FY26). H122 results were well flagged in the June 2022 trading update. We made no changes to our operational estimates beyond a minor change to depreciation.

Y/E Nov
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2020A 153.4 13.9 9.2 10.52 4.3 3.2
2021A 145.5 12.2 7.9 6.11 7.4 4.0
2022E 154.7 9.3 1.9 1.41 31.9 5.2
2023E 166.1 11.3 1.4 1.02 44.1 4.3
Industry outlook

The markets for pre-owned products in its core categories in the UK and US were worth £9bn in FY20, of which the UK was £1.6bn and the US was £7.1bn (source: musicMagpie’s Admission Document). According to independent third-party research commissioned by management, medium-term annual market growth rates for the product categories were forecast to be Technology 15%, Books stable/low growth and Media negative 5–10%.

Last updated on 28/07/2022
Content on musicMagpie
musicMagpie – Management optimistic about growth initiatives
Consumer | research Update | 28 July 2022
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musicMagpie – Buy more, sell more, rent more
Consumer | research Initiation | 11 July 2022
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musicMagpie – Diverging trends in H221
Consumer | research QuickView | 16 December 2021
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Share price graph
Balance sheet
Forecast net debt (£m) 3.6
Forecast gearing ratio (%) 14
Price performance
%
1m
3m
12m
Actual 2.3 (18.2) (75.7)
Relative* 1.0 (16.8) (76.0)
52-week high/low 189.0p/41.0p
*% relative to local index
Key management
Steve Oliver CEO
Matthew Fowler CFO
Ian Storey COO