CentralNic “generate reliable revenues based on subscriptions and serve diversified customer bases” says Zeus Capital

CentralNic Group plc (LON:CNIC) announced the acquisition of VGL Verlagsgesellschaft mbH (VGL), Germany’s largest provider of product comparison websites. The acquisition offers opportunities to cross-sell traffic, reduce traffic acquisition costs and leverage VGL’s content creation expertise. We expect the transaction to be 11% accretive before synergies in 2022 on a pro forma basis. CentralNic Group also announced 2021 results slightly ahead of expectations. We provide a review of CNIC’s businesses and summary investment case in this report.

VGL is a high growth company with a dominant market position. Revenue grew 30% CAGR 2018-21 to $55m and EBITDA margin reached 20% in 2021. The company adds customers (e.g. Amazon) and traffic from c. 270m annual visitors, about double estimated visitors to which.co.uk. Despite VGL’s strong growth and competitive position, CentralNic is paying only €60m ($67m) EV (6.2x 2021 EBITDA), funded through a £42m ($56m) equity raise, estimated £3m ($4m) from an Open Offer and €21m bond financing ($24m). We estimate net debt/ 2022 EBITDA rises from 1.5x to 1.3x pro forma, post transaction.

Results ahead: 2021 revenue was $410.5m, in line with the January trading update (c. $410m) and 35% ahead of our original forecast a year ago ($304.1m). Organic growth was 39% in 2021, accelerating from 29% in 9M 2021, 20% in H1 2021 and 9% in 2020. Adjusted EBITDA was $46.3m, slightly ahead of the January trading update (c. $45m) and 12% ahead of our forecast a year ago ($41.4m). Operating cash conversion was 116% (2020: 120%) and net cash was $75m, in line with the trading update (c. $76m).

Outlook upgrade: Based on continued strong trading, CentralNic upgraded 2022 outlook to at or above the top end of recently upgraded expectations. We conservatively make no changes to our top-of-consensus pre-acquisition estimates.

Investment case: CentralNic Group is a market leader in two high growth markets – digital advertising and domain name management. The Online Marketing division grew 65% and the Online Presence division grew 9% in 2021. In addition to delivering strong growth, both divisions have attractive business models. They generate reliable revenues based on subscriptions and serve diversified customer bases. We see the potential for earnings growth to accelerate. The company is currently in an investment stage but investments should plateau in H2 2022, leading to the potential for margin expansion. We believe CentralNic’s strong growth, high revenue visibility, operating leverage and high cash conversion are undervalued by its shares’ low multiples. Shares trade at only 8.9x 2022 EBITDA, 12.5x P/E and 9.5% FCFF yield. Our DCF valuation is 176p, well above the current share price.

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
Facebook
Twitter
LinkedIn
CentralNic

More articles like this

CentralNic Group plc

CentralNic’s unprecedented journey: 10 years post-IPO

In the fast-paced realm of the digital world, ten years can seem like an eternity-it’s a canvas of endless innovation, challenges, and reinvention. For CentralNic, the past decade has been nothing short of transformative, marking its

CentralNic Group plc

Titan Partners with Team Internet to offer business email

Titan, a leading business email service provider, announced a strategic partnership with the Team Internet Group (TIG) formerly CentralNic, a leading global internet solutions company. Team Internet’s dual focus includes domain name management (Online Presence) and high-growth digital

CentralNic Group plc

CentralNic rebrands as Team Internet

Another well-known domain industry firm has rebranded itself around a forgettable, search-resistant company name. CentralNic is now Team Internet, though it will continue to use “CentralNic” in its domains business. The company has changed its primary

CentralNic Group plc

CentralNic buys LA-based Adrenalads for $2.35m

Internet specialist CentralNic announced the acquisition of Los Angeles-based Adrenalads on Friday, for cash consideration of $2.35m. The AIM-traded company said the acquisition was aimed at bolstering its media-buying arm Zeropark, and improving its overall efficiencies and market

Centralnic Group Plc

CentralNic Group to change name to Team Internet Group Plc

CentralNic Group plc (trading as Team Internet (LON:CNIC)), the global internet company generating recurring revenue from privacy-safe, AI based customer journeys that help online consumers make informed choices, has announced that on 28 September 2023 it will

CentralNic Group plc

CentralNic CEO calls on industry to tackle climate change

CentralNic CEO Michael Riedl is calling on his counterparts at other large domain name registries and registrars to meet up to coordinate the industry’s response to climate change. During a broad keynote at the London Domain

CentralNic Group plc

CentralNic Group turns to AI to drive performance

CentralNic Group PLC has announced its intention to leverage artificial intelligence (AI) technology to further enhance its performance. The web services group achieved positive results across all business segments in the first half of the year,

CentralNic Group plc

CentralNic up 18% in H1

AIM-listed fast-growing acquisitive internet domain name and web services provider, CentralNic continues to expand at an impressive clip. The pace of top line growth appears, however, to be slowing as the year progresses. Turnover for the six months

CentralNic Group plc

CentralNic Group: Fine-tuning the growth engine

CentralNic’s H123 results showed continuing revenue growth and margin expansion, with growth now being driven more organically and across both operating segments. Partnerships could be key to unlocking growth from underutilised brands, with management winning several

CentralNic Group plc

CentralNic to utilise AI for accelerated performance

CentralNic Group announced its plans to leverage artificial intelligence (AI) in order to enhance its performance, following positive results in all of its business segments during the first half of the year. During this period, gross

CentralNic Group plc

CentralNic delivers another strong performance during H1 2023

CentralNic Group Plc (LON:CNIC), the global internet company which helps online consumers make informed choices, has announced its unaudited financial results for the six months ended 30 June 2023. Financial summary: ●       Gross revenue increased by 18% to USD 396.4m

CentralNic Group plc

Adapting to new technology

In the bustling year of 1995, Microsoft released Windows 95. The commercial featured a huge Rolling Stones hit, and the brand-new OS caused massive shock waves in the tech world. Let’s imagine an old-school redactor staring at

CentralNic Group plc

CentralNic announces strategic alliances

CentralNic Group PLC (LON:CNIC), the global internet company that derives recurring revenue from privacy-safe, AI-based customer journeys that help online consumers make informed choices, has announced a series of recent strategic partnerships, achievements, and the overall