LONDON, UK: Kelso Group, the main market listed investment company, has updated its shareholders on its investment in THG Plc (“THG”), the online retailer and technology group. Kelso confirmed that it owns 8.0 million shares in THG, through ordinary shares and CFDs.
Kelso is pleased with the significant progress made by THG during 2023, including its recent positive trading statement, with management expecting H1 EBITDA to be approximately 41% up year on year. Kelso also welcomes THG’s improved communication, governance and commitment to joining the premium index.
Kelso notes that the one-year anniversary of the announcement of the THG ‘Separation’ is later this month. The Separation allows each business division of THG to be independently managed and reported on, and also gives THG strategic optionality to attract third-party investment or sell any of the divisions partially or in full.
Kelso believes that this approach encourages the stock market to value THG on a sum of the parts basis, given the distinct nature of the various divisions. Kelso believes that this will ultimately lead to the stock market better appreciating the fundamental value of THG, shifting away from pure e-commerce benchmark valuations.
In particular, Kelso believes that THG’s Nutrition division with its main brand of MyProtein 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. Kelso believes that this division alone is worth more than the market capitalisation of THG. Kelso points to the recent industry developments that highlight the value and demand for nutrition products, such as Mars’ acquisition of Kevin’s Natural Foods for $800m and Tesco’s target of boosting sales of healthy products to 65% by 2025.
Kelso remains confident in its investment in THG and believes that there is significant upside potential for shareholders.