The Mission Marketing Group
BUY/HOLDDespite worsening wider market conditions, acquisitive marketing communications counter TMMG continues to deliver strong margin and earnings growth.
Floated on AIM in 2006, TMMG's mission is ‘the development of more services for more clients across more locations’ to drive organic, as well as acquisitive, growth and achieve sector-beating margins through a concentration of operations outside of high-cost central London.
Interim results to June revealed a 45% top-line advance to £57.6m, boosted by acquisitions including April-Six and thinkBDW as well as organic growth and a flurry from its digital operations. TMMG – whose businesses include Bray Leino, Big Communications and Fuse Digital – grew profits by 62% pre-tax to £4.9m, with operating margins maintained at a sector-beating 26%.
CEO Iain Ferguson was keen to flag up good levels of organic growth, as well as new business wins with the likes of Ricoh, Remington, Lil-lets and Orange, as well as bowed banking group RBS. And with TMMG having grown earnings by more than 30% to 10.15p, the half-time payout was held at 0.36p, reflecting cash conservation as well as longer-term confidence.
While the potentially negative effects of downturn on client spend looms over sentiment in the marketing services sector, the cash-generative TMMG is still growing much faster than peers and sees resilience in its model, which delivers a better bang for the investment buck of clients.
Valued at sub £20m and trading on a forward p/e of 3.1, despite its earnings progression and having grown annualised sales to £100m plus, TMMG is our preferred sector pick. If already on board, either sit tight or buy on weakness.
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Market cap: £18.03m
PE Forecast: 3.1
Share price: 54.5p
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