London, UK, 10 March 2023

CentralNic (CNIC): Clarifying the narrative

CentralNic is a UK software company, operating globally through its two businesses, Online Presence and Online Marketing. Through a series of acquisitions, Online Marketing has become the group’s primary driver, delivering high double-digit revenue and profit growth year-on-year since the group’s first foray in 2019. Now at critical mass, the business is positioned for sustained organic growth, allowing management to prioritise capital allocation and shareholder returns, while maintaining high margins and strong cash conversion.

Both our peer valuation and discounted cash flow analysis provide an implied share price (average: 279p) that is more than double CentralNic’s current share price. We believe its focus on M&A-driven growth and lack of investor understanding of the Online Marketing business have been key to its current discount to peers. We believe that CentralNic's valuation has the potential to rise and the discount to peers could reduce if management delivers on its updated strategy, particularly by improving shareholder returns.  

 
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