Equity Analysis /
United Kingdom

GB : THG Holdings - New independent Chairman; shares offer growth at deep value

    Adam Tomlinson
    Adam Tomlinson

    Analyst - Consumer Discretionary

    Contributors
    Anubhav Malhotra
    Wayne Brown
    CGS-CIMB
    25 March 2022
    Published by

    THG has appointed Charles Allen, Lord Allen of Kensington CBE, as its independent Non-Executive Chairman. Charles has a clear mandate to refresh THG's Board and further strengthen governance and diversity. In addition to reviewing the independent Board, Charles will be working with the CEO in developing the management team, as well as refining the Group's strategy. Following a raft of other improvements to the group’s corporate governance structures last year, this appointment addresses nearly all the concerns previously raised. What we find anomalous with the valuation, is that the fundamentals of the group are better than at the time of the IPO. So the 90% share price decline from its peak is excessive. Trading at 0.4x forward EV/sales and 4.9x forward EV/EBITDA is a distressed valuation which is wholly inappropriate for THG. Surely if this persists then some form of corporate activity is on the horizon.