News & Thoughts
Randall & Quilter – Acquisition and H1 results
Share Price 181p
Mkt Cap £228m
Thinksmart – FY Results
Share Price 14p
Mkt Cap 14p
- Results to June 2018 Business volumes up 17% to £13.7m (FY17: £11.7m). Revenues down to £8.1m (FY17: £10.1m) as company moves away from Upgrade Anytime product as well as a lease accounting method that transitions to spreading revenue over term of lease rather than earning upfront commission. EBITDA down to -£0.59m (FY17: £0.54m). Cash and cash equivalents of £2.5m (FY17: £4.5m), increasing to £10.5m as at August 2018 given the sale of 750,000 Afterpay shares as part of the ClearPay deal.
- Estimates We aim to introduce estimates once we have clarity on how ThinkSmart will execute on their numerous upcoming opportunities. The company announced a strategic alliance with a global bank which will allow them to use the bank’s balance sheet and increase market penetration in the retail point of sale market; they have £60m available for growth; and they’re investing in technological IP for further expansion. Reduced cost base post-ClearPay deal likely to move the company closer to profitability.
- Valuation We retain our conservative price target of 33p and reiterate the huge opportunity contained in ThinkSmart’s residual holding of ClearPay under the management of Afterpay, a A$3.8bn global market leader. With cash now at £10.5m and a further 250,000 Afterpay shares available for sale, ThinkSmart is worth 25p today at the very least, assuming 1.5x price/sales. This price ignores the residual ClearPay holding.
- Conclusion The company do not sit on their hands. They have successfully launched and subsequently sold innovative point of sale product ClearPay while managing to hold a residual ownership that is likely to bring substantial returns by the end of the 5 year deal term. Concurrently, an alliance with a global bank and investment in technology suggests similar success are likely in future.