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Not sure I have any 'words of wisdom' but I'll comment.
If you think a share is going to go, a downswing in price is good, you can buy cheap. I jumped in a little too soon, but I think in the long run I'm going to be happy anyway.
So, what's holding it down? Well, first, it was overpriced for what it IS. There's premium built into the price based on what people think it will, or might, be. If Primark goes big in America, it will be extremely valuable. So maybe some sentiment is now less positive about that. Even at today's SP, the price to earnings ratio is still at 17, and divi around 2%, hardly attention grabbing, especially with UK shares perhaps undervalued generally. I wouldn't touch it if I didn't see significant potential for growth here. I didn't buy for what it is but for what I anticipate it to be.
So, it's a growth stock. I suspect general market sentiment over Brexit and recession fears is hurting growth stocks more than others. I think that's a factor.
I also am sure like-for-like sales at Primark being down is not helping. You can only open so many stores, and once you hit that limit if like-for-like sales stay down, then revenue will drop. I'm not persuaded they will stay down.
I think another factor is concern about whether Primark will be as successful in America as here. Walmart has some cheap clothes. The American clothing market already has some inexpensive options. Is it really going to work phenomenally, or will it be good but not great, or will it flop? I don't think it will flop but no one really knows.
The pound's weakness may not be helping that much either. I suspect ABF imports more than it exports, so a low pound hurts. If that's the case, part of the price may be due to no-deal Brexit pessimism and the anticipated hit on the pound. It's anyone's guess what happens with Brexit, of course. I'm expecting no-deal, and expecting it to affect the pound but not disastrously, but within a year or two to see a recovery.
My opinion only, which may not be worth anything -- I'd say if you aren't prepared to ignore the share price for 1-3 years it may not be the investment for you. Likewise, if your risk tolerance is low. I think there's significant upside but I'm not in very heavily here, because I do see some risk that the upside never materialises. I don't think the downside is as high as a lot of 'growth' companies, either. They'll keep producing food and it's one thing people have to keep buying. So I doubt you'd lose a lot of your money, but if the upside doesn't come, you might lose a little bit of it, and you might have lost the opportunity to buy something better.
For me, the risk is worth it. In fact, I think I'm likely to wish I'd bought more. But that will be hindsight.
The word around ABF seems good, with Primark forging ahead on profits and sales, and a positive Trading statement 4/7/19 confirming US business and activities remain positive. Any loss from Sugar is supposedly factored into the 1H19 results and better performance is forecast 2H19 / FY. Hargreaves Lansdowne shows as Very Strong Broker Buy and many have revised their target to a range of 2900-3400p. So, with all this positivity, why the poor share price and why is it enduring continuous slides. It could dip below 2300p in next few days (appreciate that it has recently gone ExD). Does the 2.1 Divi Yield put investors off, or is their some worry that Primark, the Jewel in the Crown, may be broken out of the ABF share price and be a stand alone share? As someone keen to add ABF to my small portfolio, the price slide against the positives confuses me. Any words of wisdom?
I've seen this for some time as a nice hedge against Brexit. If we do get a no-deal Brexit, and if it does turn out to be damaging (I'm not persuaded it will happen or be that damaging if it does), I think ABF is likely to do relatively well anyway.
Better than expected. I'm in this for the long term but nice to see it do reasonably well short term, too.
Odd. I was responding to a question about how much profit the cannabis operations was generating. That question has disappeared....
I don't have any hard facts on that. This article (https://www.verdict.co.uk/british-sugar-cannabis-uk-medical-marijuana/) says the CBD industry in the UK is worth £200 million. I'm not sure that is helpful.
The Telegraph had an article on this when they began this business that gives a reasonable description of what they are doing. https://www.telegraph.co.uk/business/2016/10/25/british-sugar-to-cultivate-cannabis-plants-in-norfolk-for-gw-pha/
The tatest interim results, for 24 weeks, showed the sugar division with £769 million in revenue and £1 million in profit. Cannabis is part of the sugar division, I believe. I don't think it is yet a significant factor, though it has the potential to become so.
Seems like a good move in principle but I don't know enough about the Wilmar situation to know whether the price agreed is good for ABF or not. I don't see any particular risks on the China/US trade war situation that would be negative for this.
A big factor in the price is the expansion of Primark to America. There's a premium on the price because of the expectation that is going to be profitable. If it works, this one will take off. If it doesn't, the price is likely to drop even if the results are pretty good. I'm in because I think they'll make it work pretty well.
The results were not too bad and price started going in right way, but sadly didn't last long enough :(
sadly dragged down by Sugar division again but Primark performing well and divi increased. Interesting to see what BoD will do to improve the sugar biz. SP nicely up. Let's hope it continues.
Given the winter has just ended and people eat more/buy warmer clothes and with the financial uncertainty of brexit, I think this is going to give good numbers tomorrow, notwithstanding the slight downside in relation to the beet production which may dent slightly, as the last release stated increased profit from better cost control. We shall see....
I ask the question is it possible that ABF could be looking at Premier Foods as a likely takeover target , perhaps their sugar and other ingredient takeoff requirements would enhance ABF share price and turnover , or perhaps ADM might go into a joint venture with them to offload some of their flour and other interests .PFD share price is certainly very low at present after disastrous management decisions and strategy ,I believe the sum of the parts is greater than the sum of the whole. Watch this space , something has got to happen in near future .PFD shareholders are very unhappy after McCormack rebuff which would have put money in their pockets..
TOP NEWS: AB Foods Says Primark Christmas Sales "Exceed Expectations"
LONDON (Alliance News) - Associated British Foods PLC on Thursday reported a strong performance during the key Christmas trading period, with sales at retailing arm Primark coming
[17 Jan '19 07:22]
Can't comment on the wider business as had limited exposure to it but do have a working knowledge of the Primark side at a strategic level.
There are lots of things for the business to be proud of, ethical sourcing for a start.
There are also areas where the strategy has not yet caught up with the scale. Decisions that were correct at 50 - 100 stores are not always correct for 300 - 500 stores.
They are aware and have started to take steps to resolve some of the issues already.
They have made good progress in new markets in Europe and the US, they have not yet exploited the counter seasonal effect the southern hemisphere offers to reduce markdowns and obsolete stock holding.
Personal viewpoint is that they would be a great success in Asia, S.Korea in particular would be worth consideration.
I see Primark as a continuing success. That said, it is not a business without risks and challenges, labour rates are going up, labour availability is going down, sustainable cotton production will come under pressure, keeping supply channels open and onboarding new suppliers will therefore become a challenge and may require alternative and more diverse sourcing policies.
The negative press regards fast fashion and the throw away society add to the mix.
Above all things the fickle nature of the target market is probably the single biggest risk factor.
If Primark falls from favour and the tide turns to one of the other fast fashion retailers the decline will be swift and brutal.
Why are we seeing such a constant drop in SP at the moment?
Maybe Primark foresees more of this kind of thing https://www.v3.co.uk/v3-uk/news/3065360/uk-government-goes-it-alone-with-digital-services-tax-tailored-for-amazon-ebay-facebook-and-google
"Our full year outlook for the group is unchanged with progress expected in adjusted operating profit and adjusted earnings per share. Strong profit performances this year from Primark, Grocery, Agriculture and Ingredients are expected to more than offset the adverse effect of lower EU sugar prices."
A buy for me and just hope it isn't tipped in any newspaper as folk are beginning to get suspicious of that kind of thing.
Insurance will pay out.
Huge fire after recent undergone a £30m refurb, its a write off or impairment
Sorry I will finish that. Retail sales were up overall because online sales increased but high street footfall dropped.
Probably the drop overall is too much as this averages a pe of 17, but it’s hard to see where the growth is coming from unless Primark really ramps up. And if investors aren’t investing fir growth they certainly aren’t investing fur tyevdividend it’s too small.
Sugar as always has been a drag even though it only accounts for a small part of the business.
Primark only works in busy footfall areas. Last month highlighted the dilemma in the news. Retails sales online was up
What's everyone's view on the dramatic fall = 30% drop since November?
Primark can no longer 'paper over the cracks' in the rest of the business?
High Street demise?
No online platform?
Interested to hear
Had a look - thought it was because Primark was expanding and prospering yet the High Street is doomed. Young relative of mine a retail manager here following a degree in Risk Management and securities, derivatives and investment or some such - which tells me something anyway. Maybe David Davies (Tate and Lyle man in his prime) has stopped taking 8 sugars in his tea. Whatever twont always be this low.
I just come in to this at 3,029. Seems like a good deal so far. I got a feeling this one is going up soon.
was showing over a £5 drop earlier must be a LSE problem