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Research: TMT
The Marketing Group (TMG) has made its first acquisition under the new management team. Although relatively small (FY16 revenues of €1.5m), wildcard fits well with Ranieri Communications, adding to its PR, social and influencer network. wildcard communications brings in a good range of blue-chip clients and opportunities for cross selling. Our FY18e and FY19e earnings estimates are nudged ahead, having being increased by 10% following the Q3 results. Industry interest in TMG’s start-up blockchain-enabled global media agency, Truth, has been very strong. Having spent time sorting out the inherited group, it is clear management is looking for profitable growth, which should lead to an improving rating.
The Marketing Group |
Acquisition of German wildcard |
Acquisition |
Media |
29 November 2017 |
Share price performance
Business description
Analysts
The Marketing Group is a research client of Edison Investment Research Limited |
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The Marketing Group (TMG) has made its first acquisition under the new management team. Although relatively small (FY16 revenues of €1.5m), wildcard fits well with Ranieri Communications, adding to its PR, social and influencer network. wildcard communications brings in a good range of blue-chip clients and opportunities for cross selling. Our FY18e and FY19e earnings estimates are nudged ahead, having being increased by 10% following the Q3 results. Industry interest in TMG’s start-up blockchain-enabled global media agency, Truth, has been very strong. Having spent time sorting out the inherited group, it is clear management is looking for profitable growth, which should lead to an improving rating.
Year end |
Turnover (€m) |
PBT* |
EPS* |
DPS |
P/E |
EV/EBITDA (x) |
12/16** |
15.8 |
2.2 |
11.3 |
0.0 |
3.5 |
5.4 |
12/17e |
26.9 |
1.7 |
4.2 |
0.0 |
9.6 |
6.5 |
12/18e |
31.2 |
2.2 |
5.0 |
0.0 |
8.1 |
5.1 |
12/19e |
34.3 |
2.7 |
5.8 |
0.0 |
6.9 |
4.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Not restated for disposals.
wildcard communications is being purchased for an initial consideration of €0.234m, in cash and as a working capital injection. There is a three-year earn-out at a maximum multiple of 7.0x PAT. The next payment is scheduled for Q119 and is based on a multiple of 3.0x FY18 PAT, less the €0.234m already paid and to be met half in cash, half in equity. It was founded in 2008 and its client roster includes BMW, Canon, EA Games and Bosch.
Based in the UK, Ranieri bought a small French agency earlier in the year and now adds Germany to the network, which has good positioning in the consumer tech and gaming space.
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Disclaimer
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Disclaimer
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The Magnolia development remains one of the most competitive LNG development projects (greenfield or brownfield) globally. Industry is starting to recognize that the current LNG oversupply will move towards undersupply within five years and there are few projects on track to fill the resulting gap. This should put Magnolia increasingly in the spotlight for buyers looking to fulfil demand in 2023 onwards. LNGL management has indicated it is in discussions with many companies across a diverse set of geographies and interests. We have adjusted our valuation to account for a delayed expectation of project FID, reducing it slightly to $A1.25/share (US$3.8/ADR).