London, UK, 1 November 2022

The Pebble Group (PEBB): Initiation — Differentiated positions in promotional products

The Pebble Group operates within the large, global promotional products market, estimated by management at $50bn, under a highly experienced team. The group combines two operations: a fast-growing, high-margin SaaS business supplying independent distributors of promotional goods; and a dependable and expanding international business supporting brand engagement programmes for major global brands. The group has a strong balance sheet, with end FY21 net cash (excluding leases) of £12.1m, set to be exceeded in the current year. The share price does not, in our opinion, reflect the group’s positioning or opportunities.

We have looked at an earnings-based sum-of-the-parts and used a DCF methodology. The former is based on the peer group EV/EBITDA multiples of US SaaS companies capitalised below $1.5bn for Facilisgroup and of marketing services companies for Brand Addition. These methods both give an implied share price of 133p, with Facilisgroup roughly half the value inherent in the group.

 
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