CentralNic Group Plc (LON:CNIC) has announced that it has entered into an agreement to sell a number of premium domain names for a total consideration of US$3.4m in cash. The proceeds will be used to accelerate growth within the Group, as the business continues to focus on growing the recurring revenue base.
Premium domain sales confirmed. As flagged at the H1 results, we were expecting the sale of premium domain names within the domain trading business of the Enterprise division to occur within H2 and today’s announcement confirms this. The contribution of the sales was in-line with our forecasts and therefore we expect no further premium domain sales this year. Encouragingly, the contribution from premium domain sales is reducing YoY and the company expects this trend to continue, with sales contributing a decreasing proportion of the overall revenue next year.
Valuation. CentralNic is trading on an EV/EBITDA of 10.6x to Dec 17 dropping to just 8.2x in Dec 18, and P/E of 12.7x. Given the strong operating cash flow characteristics, impressive track record being built by management via successful acquisitions and the continuing diversification of the business, we feel the shares offer investors a value opportunity given the industry backdrop, where CentralNic’s listed peers are typically capitalised in the billions of dollars