Moneysupermarket.com Group PLC

Moneysupermarket.com Group PLC (LON: MONY) is an FTSE 250 listed Company, which provides price comparison services through three brands - TravelSupermarket, MoneySuperMarket, and MoneySavingExpert.

MONY had paid an interim dividend of 3.10 pence per share on 03 September 2021, while the ex-dividend date was 29 July 2021.

Investment Highlights – BUY at GBX 243.60

• On the profitability front, the net margin and the operating margin remained above the respective industry median during H1 FY21.
• In terms of technical indicators, a 14-day RSI of ~33.84 supports the upside potential.
• Despite reporting a decline in top-line revenue and operating cash flow during H1 FY21, MONY had maintained the same amount of interim dividend.
• The Company had strengthened its net cash position from £7.50 million during H1 FY20 to £8.80 million during H1 FY21.

Key Risks

• The disruptive technological changes and cyber threats impose a risk to the business model.
• MONY may experience operational glitches, which may result in the transfer of incomplete or incorrect data to or from partners, which could negatively impact brands reputation.
• The UK trade deficit came out to be larger than expected at £12.71 billion during July 2021.
  

Recent Developments

On 12 August 2021, MONY had confirmed that the merger of TravelSupermarket and Icelolly.com to create the Ice Travel Group would get completed by early September 2021. 

H1 FY21 Financial Highlights for the six months ended 30 June 2021 (as on 22 July 2021)

 (Source: LSE Website)

• The company improved Gross Margin from 67% in H1 FY20 to 70% in H1 FY21 due to lower online spending.
• The cash conversion remained strong with £35.1 million of operating cash flow with net cash of £8.80 million at the end of H1 FY21.
• The top-line revenue declined by around 11% during H1 FY21.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative) 

Conclusion

MONY maintained a strong cash conversion rate & healthy balance sheet with a decent dividend payout ratio, reflecting confidence in the prospects of the Group. The Company remained optimistic about the strong recovery in H2 FY21, benefitted by positive momentum in borrowings, revenge tourism and car insurance. The stock made a 52-week high and low of GBX 311.00 and GBX 233.79, respectively.

Based on the improved net cash position, and support from the valuation as done using the above method, we have given a “BUY” recommendation on Moneysupermarket.com Group PLC at the closing price of GBX 243.60 (as on 09 September 2021), with a lower double-digit upside potential based 22.70x Price/NTM Earnings (approx.) on FY21E earnings per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peers/ Industry information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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