- The company is on an earnings upgrade cycle
- 75 per cent of revenue is recurring or repeat business
- Experienced management team has restructured cost base
One cash-rich technology company is forecast to deliver 45 per cent growth in pre-tax profits this year, yet it is only valued on a multiple of 10 times earnings. The contribution from acquisitions underpin part of the forecast profit surge, which mitigates risk, but there is a strong organic growth profile, too. With the smart management team leveraging an enhanced service offering across an expanded customer base, the risk to forecasts looks weighted to the upside. It’s reasonable to expect that the directors will utilise a cash-rich balance sheet to make further small bolt-on deals, another catalyst for potential profit upgrades.
Headquartered in London and with offices in Asia, the social and digital media business has undergone a dramatic transformation since a boardroom clear-out in the first half of 2020. It’s a story that investors have yet to fully cotton on to.
The new (but highly experienced within the industry) management team have gone about restructuring the group by cutting the cost base, mainly by reducing monthly staff costs by half in 2020, and have repositioned the business across four core pillars: performance media and search engine optimisation (SEO); social advertising; transactional websites and platforms; and a portfolio of owned and operated social channels.
Through these four pillars, the firm is unique in that it is both a digital media owner and a digital media agency. It effectively acts as a broadcaster for the digital age: publishing content on its own channels on platforms such as Instagram, TikTok and Snapchat and on behalf of channel partners and blue-chip clients.
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