Marks Electrical (LON:MRK) 26/11/2021 £1.17
This company sells electrical goods such as fridges, tvs, cookers etc online a bit like Ao World (LON:AO.)
The company was founded in 1987 by Mark Smithson.
IPO date was on 05/11/21 with an ipo price of £1.10.
Normally I would avoid ipo’s but this has caught my attention.
First off, there are a few negatives such as:
Low EMS and illiquid due to very few free shares on the market.
The CEO, Mark Smithson owns 71% of the company.
It is in a sector unloved and a sector that struggles to make good margins.
No one has heard of Marks Electrical.
You may be asking yourself now why this has caught my interest.
Well, Marks Electrical (LON:MRK) has a different business model compared to AO and is on course to produce an 8% margin of profits while investing heavily on advertising via search engine analytics and also through tv adverts.
It currently only has 1.5% of the market because only 6% of the population have actually heard of them.
Interim results showed a 78% growth in revenues to £37m and has continued its momentum to date.
Profit making and free cash flow of £5.9m.
Warehouse has been upgraded as well as a new fleet of delivery vans with about 100 drivers employed.
They would like to try and get to a 10% share of over £5b market here in the UK.
Marks Electrical (LON:MRK) are planning on starting dividends next year.
The company is very proud of their customer service and see this as a core to their business.
So basically a growth story but one where the company is already profit making and intend to continue to be with future investments not expected to be more than a few million pounds and funded via their cash and future profits.
So having decided I was interested I had a phone conversation with the CFO Josh Egan this week.
I asked:
How is it this sector struggles, in particular AO, yet MRK are having almost double the profit margins?
AO run with 19 distribution centres compared to MRK having one central centre…
