- Positive annual meeting trading update
- Integration of Social Chain well advanced
- Trading in line with market forecasts
- Several new client business wins
London-based social and digital media group Brave Bison (BBSN: 2.38p) has released a positive trading update that suggests the 13 per cent share price reversal since April’s full-year results is overdone. Billionaire British-Belizean businessman Baron Michael Ashcroft certainly believes so, having raised his stake from 16.1 to 18 per cent. He has good reason to.
Firstly, the integration of Social Chain, a market-leading social media and influencer marketing agency, is going well. It is not only generating cost savings, but the newly acquired business is delivering new engagements with blue-chip clients including Asda, Warner Bros and Pinterest. A successful integration of Social Chain is important as its contribution underpins expectations that 2023 revenue will increase a third to £42.9mn to drive pre-tax profit up by a fifth to £3.1mn. Brave Bison is trading in line with these forecasts.
Secondly, the group’s digital advertising and digital commerce businesses continue to win new clients or expand existing relationships including a US insurance company with $12bn of revenue and a Finnish retailer with revenue of $1.5bn. Importantly, exposure to the fastest-growing sections of the industry means that the group is well-positioned to deliver growth in more challenging trading conditions
Thirdly, Brave Bison publishes content to attract views and serve advertising on more than 650 social and digital media channels hosted on platforms such as YouTube, Snapchat, Facebook, TikTok and Instagram. In golf, it manages the DP World Tour and PGA Tour, both of which have renewed their valuable contracts for 24 months.
Fourthly, the group’s £6.2mn cash pile and undrawn £3mn credit facility provide the firepower for more earnings-accretive bolt-on acquisitions.
The shares are attractively priced on a cash-adjusted price/earnings (PE) ratio of 7.6, having risen by 34 per cent in value since I initiated coverage (‘Alpha Research: A social marketing profit play for the digital age’, 10 May 2022). Buy.
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