Activist investor Kelso has given a ringing endorsement to THG’s business strategy in its latest update to the stock exchange.
Kelso made an initial £2.7m investment in THG in January, increasing its stake further in April. The latter investment also saw Kelso CEO John Goold join THG’s board.
In its latest report, the investor was particularly keen to highlight THG’s decision to “separate” its key divisions last July
Kelso said: “This approach encourages stock market analysts to value THG on a sum of the parts basis, given the distinct nature of the various divisions.
“It is pleasing to see this change gradually occurring in the analyst community and we believe this will ultimately lead to the stock market better appreciating the fundamental value of THG, shifting away from pure e-commerce benchmark valuations. Liberum, the independent broker, continues to re-emphasise its 225p target value, over two times the current share price.”
THG’s shares were trading at 100.58p this morning.
Kelso also, once again, identified My Protein as an undervalued asset of THG, arguing it should be valued as a global consumer brand, given near $1bn sales, double-digit EBITDA margins and its increased product innovation in the current year.
It said: “This division alone continues, in our view, to be worth more than the market capitalisation of THG.”
Kelso currently holds around 8m shares in THG, or around 0.6 per cent of the company.
