AlphaValue Corporate Services
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Bloomberg   MHM FP
Travel Services  /  France  Web Site   |   Investors Relation
Preparing to launch Matching App
Upside 1,363%
Price (€) 0.47
Market Cap (€M) 2.71
Benchmarks Current multiplesWeightValues (€)Upside 
NAV/SOTP per share   75%5.701,116%
DCF (Edit and simulate)  25%10.32,105%
Target Price  100%6.861,363% 
Valuation matters
Equity financing

Given the maturity of the concept at an early stage, financing by third-party resources (traditional bank debt) is not feasible. Recourse to hard capital or, failing that, high yield debt (convertible bonds) will therefore have to assume the entire financial need linked to the development. The valuation of MHM will therefore be closely linked to the way in which its development is financed.

Cost of capital and DCF

The cost of capital can be equated with the WACC if the company is financed exclusively with equity or similar funds (CB). On an early stage green field model of a start up with limited initial development resources (below €50m), we apply a discount rate (CoE) of 15%. This rate may be revised upwards or downwards depending on the evolution of the perceived risk during the ramp-up phase in 2022-24.

Reverse valuation

Based on our current valuation of €0.05 per share (€28m market capitalisation fully diluted at the price target), the discount rate used leads to a forward 5-year valuation of €56m. Taking into account future dilutions to finance the completion of the platform as well as the commercial roll-out would correspond to an ex-post valuation of around €80m over a 5-year period.

If the success of the MHM platform is confirmed around 2024 (visitor dynamics and volume, hotel referrals, revenues, cost control, etc.), we would have to gradually revise the associated risk. We may have to significantly reduce the discount rate in stages and thus increase the valuation.

Alternative valuation models
  • Comparables

As the platform’s activity is nil or low in 2022-23, the application of a valuation model based on revenue, profit or per matcher multiples is not relevant.

At maturity, and depending on the pace of growth, MHM could be valued using comparables in the same segment (Airbnb, Tripadvisor), similar segments (air ticket or travel booking, such as, or technological reservation models by extension (Amadeus), or even software or IT services players.

  • NAV

We define a NAV which is by nature close to our DCF result. It also results from the sum of the investments to be made, which are deemed to have at least the same value in the event of the sale of the company.

  • Dividends

We do not expect MHM to pay dividends in the foreseeable future. The investment and deployment phase should cover at least 2022-25.

  • Exit value in majority price

In the event of success or viral development, the maximum value of MHM would be reached in the event of the sale of the company to a major player in the sector wishing to broaden its offer or distribution model (a typical acquirer: Airbnb or Tripadvisor) or to acquire it on a defensive basis. In this case, the valuation would be disconnected from the company’s economic performance. It is common for start-ups to be valued at €50-100m once the proof of concept is done. Compared to the size and solvency of potential buyers, these amounts are insignificant.

The reference shareholder of MHM has informed us of its intention to operate MHM in the long term without considering a transaction. We therefore do not include this valuation in our model. It is in fact a free option for the shareholder whose value will only be detectable once the proof of concept has been achieved, accompanied by strong growth to ensure that the operational break-even point is reached.

  • International deployment

MHM will initially focus on the French market, which is sufficiently deep to allow the model to be tested. If successful, and in a second phase (beyond 2025), the duplication of the model internationally could prove to be a powerful driver of value by simply extending the platform. However, MHM will have to multiply the advertising costs (Google referencing, €6-10m per country per year) by as many locations. The referencing of hotels abroad, for French guests, allows for the most obvious target enlargement at the lowest cost. MHM will thus be able to prepare, from its French customer base, the expansion of its geographical coverage of matchers. In addition to the necessary local referencing, the adaptation of the platform will be necessary (multiplication of languages / translation in particular).

DCF Valuation Per Share Help View DCF history
WACC % 10.6
PV of cashflow FY1-FY11 €th 4,266
FY11CF €th 16,275
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.60
Terminal value €th 180,573
PV terminal value €th 65,856
PV terminal value in % of total... % 93.9
Total PV €th 70,123
Avg net debt (cash) at book v... €th 9,887
Provisions €th 0.00
Unrecognised actuarial losses... €th 0.00
Financial assets at market price €th 0.00
Minorities interests (fair value) €th 377
Equity value €th 59,859
Number of shares Th 5,789
Implied equity value per share 10.3
Sustainability impact on DCF % -4.86
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 25.0
Average debt maturity Year 5
Sector asset beta x 2.10
Debt beta x 1.40
Market capitalisation €th 2,715
Net debt (cash) at book value €th 9,196
Net debt (cash) at market value €th 7,821
Company debt spread bp 700
Marginal Company cost of debt % 10.5
Company beta (leveraged) x 3.00
Company gearing at market v... % 339
Company market gearing % 77.2
Required return on geared eq... % 18.5
Cost of debt % 7.88
Cost of ungeared equity % 14.0
WACC % 10.6
DCF Calculation Help
  12/22A 12/23E 12/24E 12/25E 12/26E
Sales €th   7,753 13,800 15,780 19,569 23,880   
EBITDA €th   -567 -2,048 -7,598 -4,860 -2,122   
EBITDA Margin %   -7.31 -14.8 -48.1 -24.8 -8.89   
Change in WCR €th   -1,250 -2,637 0.00 0.00 0.00   
Total operating cash flows (pre tax) €th   -1,229 -4,685 -7,598 -4,860 -2,122   
Corporate tax €th   -55.0 0.00 0.00 0.00 0.00   
Net tax shield €th   71.3 0.00 0.00 0.00 0.00   
Capital expenditure €th   -588 -300 -300 -300 -300   
Capex/Sales %   -7.58 -2.17 -1.90 -1.53 -1.26   
Pre financing costs FCF (for DCF purposes) €th   -1,801 -4,985 -7,898 -5,160 -2,422   
Various add backs (incl. R&D, etc.) for DCF... €th   9,392 650 650 650   
Free cash flow adjusted €th   -1,801 4,407 -7,248 -4,510 -1,772   
Discounted free cash flows €th   -1,801 4,407 -6,553 -3,686 -1,309   
Invested capital   1.74 4.68 4.98 5.28 5.58   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
In currency per share
% of gross assets
Goodwill MHM 100% AlphaValue valuation 40,000 40,000 6.91 88.9%
MyAgency 100% GAV 5,000 5,000 0.86 11.1%
Other 0.00 0.00 0.00%
Total gross assets 45,000 7.77 100%
Net cash/(debt) by year end -12,000 -2.07 -26.7%
Commitments to pay
Commitments received
NAV/SOTP 33,000 5.70 73.3%
Number of shares net of treasury shares - year end (Th) 5,789
NAV/SOTP per share (€) 5.70
Current discount to NAV/SOTP (%) 91.8 View history

Changes to Story : 09/08/2023, Changes to Forecasts : 09/08/2023.