CentralNic Group Analyst Q&A: H1 revenues 11% ahead of forecasts (LON:CNIC)

CentralNic Group plc (LON:CNIC) is the topic of conversation when Zeus Capital’s Technology Analyst Bob Liao caught up with DirectorsTalk for an exclusive interview.

Q1: CentralNic Group just released its H1 trading update. Organic growth has been a focus for some investors, how has revenue growth been in H1?

A1: Revenue growth was very strong, H1 revenues expected to be over $110 million which his 11% above forecasts and also, if you compare that H1 revenue against full year estimates, it indicates that some upgrades maybe on the way.

H1 revenue now represents about 55% of our full year forecasts and H2, in all respects, should be stronger than H1 due to the seasonality of the business because the business is underpinned by ecommerce which is definitely second half weighted.

So, it’s looking like a very very strong organic growth trend that the company is on.

Q2: I see that EBITDA was $15 million, in line with market expectations, how do you interpret this?

A2: Yes, so you see here that the performance of the profit level was in line while you’ve got the strong outperformance on the top line and that’s indicates, at least to us, that revenue mix is probably more bias towards some of the lower margin revenue lines.

In particular, the recently acquired Team Internet business appears to have materially outperformed in the first half and this continues a trend that we’ve seen over the last couple of quarters. More important to us is that this really reinforces the strong shareholder value has created through this acquisition.

Q3: Gross cash has moved ahead while net cash was relatively stable, what do you see underlying these movements?

A3: The gross cash grew about $3.5 million in Q2 but net cash grew only about $0.5 million, we’re assuming that the $3 million difference may have been due to the recent strong appreciation of the Euro because the company debt is denominated all in Euros. So, I think it’s a currency issue and a one-time issue.

What it does say is the underlying cash conversion is strong but I think in this quarter, at least, it’s been offset by the strong Euro.

Q4: Finally, can you give us a quick view on CentralNic Group’s valuation?

A4: If you look at the company shares, they’re only trading 8x 2020 EBITDA which is significantly below its peers, the PE is about 10x and a 9% free cash flow yield.

We believe those metrics are highly attractive given the company’s got some very very strong organic growth which has been demonstrated in this H1 trading update. It’s got high recurring revenues, it’s demonstrated its resilience during the pandemic and it’s got high cash conversion as well.

So, overall, those metrics are quite attractive given those characteristics.

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
CentralNic

More articles like this

boohoo Plc

Boohoo Group acquires a new office in Soho

Boohoo Group plc (LON:BOO), a leading online fashion retailer, has announced that it has acquired, for £72 million, a new office in Soho, the heart of London’s West End, for the Group’s London-based brands. Since acquiring the Karen

JTC Plc

JTC revenue up 15.9% to £115.1m

JTC PLC (LON:JTC), together with its subsidiaries, has announced its full year results for the year ended 31 December 2020.   As reported2020 As reported2019 As reportedChange Underlying*2020 Underlying*2019 Underlying*Change Revenue (£m) 115.1 99.3 +15.9% 115.1 99.3 +15.9%

CentralNic

India on the Horizon of a New Internet of Trust

If your organisation has a role to play in the overall trust of the Internet ecosystem in India, then you should attend the first introductory session organised in your country on the Domain Trust initiative. Domain Trust is an intelligence-sharing

Lookers Plc

Lookers Q1 trading performance better than expected

Lookers plc (LON:LOOK), one of the leading UK motor retail and aftersales service groups, has provided the following trading update for the three-month period ended 31 March 2021. Summary In line with Covid-19 restrictions, the Group’s dealerships remained

JTC Plc

JTC completes acquisition of RBC cees Limited

JTC plc (LON:JTC), the global provider of fund, corporate and private client services, has confirmed the completion of its acquisition of RBC cees Limited from RBC Holdings (Channel Islands) Limited, part of RBC Wealth Management. The acquisition was