LBG Media – shares up as co-founder adds further to his stake

How many times have we seen or heard the expression – ‘According to the LADBible’ – well now investors can take advantage of the connection.

What was spun out of an idea for a social media publishing business dreamt up by students at Leeds University in 2012, has now become the world’s all-time most viewed and engaged publisher on Facebook and is also the biggest publisher on TikTok.

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What is a LAD?

To this group a LAD is an everyday hero who takes a positive and constructive role in their community.

It looks to champion a variety of people, from both celebrities and its audience, and bring them all onto the same stage.

Impressive 39% CAGR

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Over the last four years the revenue of LBG Media (LON:LBG) has grown at a compound annual growth rate of 39%.

The group describes itself at the largest youth publisher in the world –

“Over recent years, we have delivered significant multi-platform audience growth, establishing ourselves as the largest youth publisher in the world. 

Our reach spans 64% of the UK’s 18 to 34 year-olds, a valuable demographic for advertisers which has been historically hard to reach. 

Our data insight and position as a trusted voice for our highly engaged audience make us attractive for brands seeking to advertise to our audience.”

The group produces and distributes digital content across a range of mediums including video, editorial, image, audio, and experience (virtual and augmented reality) and now has a diverse collection of ten core specialist brands using social media platforms primarily on Facebook, Instagram, Snapchat, Twitter, YouTube and TikTok.

Analyst Estimates

The year to the end of this month is estimated, by analyst Rachel Birkett at Zeus Capital, to have seen revenues of £63.0m, upon which it could have made adjusted pre-tax profits of £13.5m, generating 5.3p of earnings per share.

The UK-based multi-brand, multi-channel digital youth publishing group in the year about to start is likely to push revenues to £69.4m, pumping profits up to £17.2m, worth 6.4p per share in earnings.

For the year to end December 2024 estimates are for £76.4m of revenues, £18.9m profits and 7.0p earnings.

This ‘asset light’ business is both scalable and very cash generative.

An example of just how cash generative this group can be is illustrated by the estimates for the current year end net cash balance to be around £31.0m, for end-2023 a figure of £52.8m is suggested, while the 2024 total could be £68.1m – which compares with the group’s current £251m market capitalisation.

Brokers Liberum Capital will be holding a Tech & Media Conference on 17 January at which LBG Media will be one of the seven companies on show.

Shareholders

Taking a quick look at the major shareholders, those already into the equity include abrdn (6.88%), Canaccord Genuity (4.22%), and Slater Investments (3.83%). Mahmud Kamani, controlling shareholder of Makkma Investments holds 20.21%.

Solly Solomou, the group’s co-founder and CEO, has been adding still further to his holding, with a purchase announced on 23 December of another 50,000 shares @ 100p each to take his holding up to 86.68m shares, representing 41.99% of the group’s equity.

In rapid market reaction to that news the group’s shares shot up nearly 14% to close at 121.5p, up 14.5p on the day. 

Conclusion – keep a watching brief

Without doubt there is the promise of a major uplift in this group’s share price, but after the recent sudden rise, it could be wise to just watch how it performs and be ready to jump in on any inevitable fallback on profit-taking.

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