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    9984   JP3436100006

SOFTBANK GROUP CORP.

(9984)
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THG sees no reason for share slump as volatility continues

10/13/2021 | 05:45am EST

(Reuters) - British online retailer THG's shares seesawed on Wednesday after a badly received investor presentation drove the stock 35% lower the previous day, even as the company said it did not know of a reason for the slump.

THG said no material new information was disclosed during the presentation and it knew of "no notifiable reason" for the share price drop. It added its liquidity was strong ahead of its peak trading season, with 700 million pounds ($953 million) of cash available as of Sept. 30.

Shares in SoftBank-backed THG, which went public in a bumper initial public offering last September, plunged late Tuesday, registering their worst one-day performance.

The stock rose as much as 8.8% early Wednesday, before falling nearly 13%. It was last down 2.4% at 277.2 pence.

Graphic: THG shares https://fingfx.thomsonreuters.com/gfx/mkt/gdpzywwdjvw/THG.PNG

Tuesday's presentation focused on THG's e-commerce services business Ingenuity, a direct-to-consumer sales and logistics platform which it sells to companies such as Nestle.

Investors were disappointed by the lack of financial detail provided about Ingenuity, analysts said.

"We believe the company missed the opportunity to present satisfying additional stats and the detailed disclosure the investor community was hoping for," J.P. Morgan Cazenove analysts said in a note.

THG said in May it planned to spin off Ingenuity into a separate company, with Softbank having an option to inject a further $1.6 billion into Ingenuity at a valuation for the business of $6.3 billion.

But with the recent slump in its shares - down 65% so far this year - THG itself is valued at only about $4.8 billion, meaning Ingenuity's market-implied value is now close to zero.

"The market now seems to be taking the view that THG was grossly overvalued and that breaking the business up creates more questions than answers," said Russ Mould, investment director at AJ Bell.

"Until it starts providing some answers, the shares could well remain under pressure as it's very hard to properly value this business without all the right information."

Shares in THG, which also plans to separate and list its beauty business next year, had already fallen by a third in the four weeks prior to Tuesday amid reports that short-sellers were targeting the company.

Swiss hedge fund PSquared Asset Management AG had a short position of 12.3 million shares, or 1.01% of THG shares, as of Aug. 24. Tuesday's share fall made PSquared a potential profit of 18.7 million pounds, according to data from financial analytics firm Ortex.

($1 = 0.7334 pounds)

(Reporting by Sachin Ravikumar in Bengaluru and Sujata Rao-Coverley in London; Editing by Amy Caren Daniel and Mark Potter)

By Sachin Ravikumar


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
NESTLÉ S.A. 0.87% 118.82 Delayed Quote.12.99%
ROYAL MAIL PLC 0.56% 485.7 Delayed Quote.43.83%
SOFTBANK GROUP CORP. -0.71% 5559 End-of-day quote.-31.01%
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Analyst Recommendations on SOFTBANK GROUP CORP.
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Financials
Sales 2022 6 111 B 54 184 M 54 184 M
Net income 2022 1 476 B 13 083 M 13 083 M
Net Debt 2022 15 202 B 135 B 135 B
P/E ratio 2022 7,59x
Yield 2022 0,79%
Capitalization 9 526 B 84 250 M 84 471 M
EV / Sales 2022 4,05x
EV / Sales 2023 4,02x
Nbr of Employees 58 786
Free-Float 69,3%
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TrendsBearishBearishBearish
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Mean consensus BUY
Number of Analysts 15
Last Close Price 5 559,00 JPY
Average target price 9 862,00 JPY
Spread / Average Target 77,4%
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Managers and Directors
Masayoshi Son Chairman & Executive President
Yoshimitsu Goto CFO, Director & Senior Managing Executive Officer
Raul Marcelo Claure Chief Operating Officer & Executive Vice President
Tim Mackey Chief Legal Officer & Group Compliance Officer
Masami Iijima Independent Outside Director
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