7digital is proposing to raise £8.5m (before expenses) through the issue of up to 212.5m new shares at a price of 4p, a 22% discount to close on 30 November. £8m of this has already been placed or subscribed, with £0.5m available via an open offer. The shares will be admitted to AIM on 19 December, subject to shareholder approval.
Written by
7digital Group |
Proposed £8.5m fund-raise |
New equity issue |
Media |
7 December 2017 |
Share price performance
Business description
Analysts
7digital is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||
7digital is proposing to raise £8.5m (before expenses) through the issue of up to 212.5m new shares at a price of 4p, a 22% discount to close on 30 November. £8m of this has already been placed or subscribed, with £0.5m available via an open offer. The shares will be admitted to AIM on 19 December, subject to shareholder approval.
Year |
Revenue (£m) |
EBITDA |
PBT* |
EPS* |
DPS |
EV/EBITDA |
P/E |
12/15 |
10.4 |
(2.1) |
(7.6) |
(7.1) |
0.0 |
N/A |
N/A |
12/16 |
11.9 |
(3.5) |
(4.7) |
(4.1) |
0.0 |
N/A |
N/A |
12/17e |
19.1 |
(1.7) |
(2.9) |
(1.8) |
0.0 |
N/A |
N/A |
12/18e |
24.9 |
3.0 |
2.1 |
1.2 |
0.0 |
3.6 |
4.6 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Our forecasts are under review – awaiting finalised capital structure.
7digital has announced a £8.5m fund-raise at 4p per share, a 22% discount to the closing price on 30 November. 163.4m new shares have been successfully placed, raising £6.5m before expenses. In addition, its largest shareholder MediaMarktSaturn (MMS) and a new investor have proposed to subscribe to a further £1.5m (36.6m new shares), and it has commenced an open offer for up to £0.5m (12.5m shares). The new shares will be admitted for trading on 19 December, subject to shareholder approval. Management plans to use the additional funds to strengthen the sales, customer on-boarding and technical teams (£1m), as well as ongoing restructuring of the cost base following the 24-7 Entertainment ApS acquisition (at a cost of £1m, which is expected to generate £1.8m savings). The remainder will be used to strengthen the balance sheet and provide additional working capital flexibility as the group expands.
Management has reiterated its confidence in meeting its full year expectations and continues to expect to see the full benefits of its acquisition of 24-7 in 2018, during which time we expect the group to move into a cash-generative position. We had previously assumed that the above investments, which are already factored into forecasts, were funded with a £2m bridging facility and consequently forecast changes are likely to be limited to the changed capital structure of the group. We place our forecasts under review and will update them once the capital structure has been finalised. However, with a potential 116% increase in the number of shares in issue, it is likely to result in material earnings per share dilution.
|
Disclaimer
|
|
Disclaimer
|
TransContainer announced its third quarter IFRS results on 28 November, revealing continued growth in net income and EBITDA, driven by increased container traffic (y-o-y and q-o-q) and falling empty run ratios. Net income grew by 33% from second quarter levels and was more than double that seen in the same period last year. EBITDA margins increased to record levels of 50.3%. We expect margins to return to more normal levels, but remain strong (c 40%) in the long term aided by continued market growth. The company continues to trade well below global peers on EV metrics and our valuation of RUB5,100/share (derived from a mix of EV/EBITDA and DCF methodologies) indicates around 15% upside in the shares.