The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Jamess no need to feel offended, i am a LTH at 4,5 pounds and simply see with a lot of amazing retail investors here jumping from daily hope to daily hope with so much bs. Short term this is gambling with most of the guys here losing, long term this is a weighting machine. If the turnaround works and macro improves this will double from here IMHO....
Based on what do you think it will be 7 or 8? FCF? Book Value? Technicals? My take is that once FCF comes back to 50 M a year and rates cutes are there in combination with improved sentiment 9-10 is realistic. But with a big IF. Big mike is big mike for a reason.
I run the risk of being attacked here on this UK board but let me give me my outsider view after doing 20 years business with some UK companies. If you walk in London I see a city in decline, bad infrastructure and making most of the money via the pumped up bonus driven financial sector giving away the soul to the highest bidder from whatever place they come from. It feels like walking in a museum from the great empire long long time ago. Manufacturing what once was your pride is close to a dead man walking. Visited several factories in SME segment and you will be surprised they mainly use german prodution tools (i am not german...) because they do work. The unbelievable politics in your country, including the Brexit soap driven by what exactly? The poverty in some cities and cost of living crisis for the middleclass is painfull to see. I am also still amazed by the way of business communications I encountered so often, very indirect and foggy resulting in win-lose thinking one time deals, giving great power points but lacking customer centric thinking. If the UK wants to improve the economy it has a long way to go but I would say that many other western countries are not so much better. Perhaps we even need a serious depression again to wake up people and improve work ethics and mentality again, in the end fat dogs do not hunt. Regarding Asos this is one of the reasons why I am long now, the BOD need to hunt if they want to survive in this fashion jungle. If the CEO makes a mess from this he is out of the CEO game forever. Despite what I wrote I love to come to the UK and would only be happy to see the UK becoming the manufacturing powerhouse being innovative again what it once was.
Frasers Group Discloses 26.1% Stake In ASOS As At Jan 22 Vs Prior Stake Of 25.9% - Filing
I expext a further decline of sales based on less demand and more discounts, as they communicated. We will have to see how ASOS performs on the other turnaround topics , that will be what I am looking for. What could be helpfull is that the whole setting in the EU and UK markets are very very pessimistic now, also based on inflation expectations fueled by red sea etc. I see a clear return of the traditional discount month january in retail, we did not have that in 23/22. So central bankers in UK and EU are IMHO going to be surprised and way off with their CPI in Q1. It will be lower is my thesis and fuel more positive market sentiment coming months. If red sea is solved that would be a bonus. If CB will start lowering % in march remains to be seen, but CPI US and EU are diverting now. So we need macro improving, great weather, turnaround focus by BOD and no surprises from the big 3 shareholders in a negative setting. Patience you need....(say this like yoda!)
Read the book of the ceo last weekend, great business. Currently not in discount so on the watchlist for the next cyclical downturn. When, no idea but clearly a business with the right DNA. UK offers a lot mediocre businesses at the FTSE but this is not one. I wish more busineness would have had the thinking of the CEO in the last 20 year in UK and EU. GLA
There are many reasons to sell a business, only one to buy. Frasers went up from 22,27 % 4-1/24 to 25 % yesterday. That is serious conviction, buy when others are fearfull. This news underpins my own thesis so was happy to read it. GLA
Thanks west. Indeed Shein and Temu are amazing developments. I visited China early 2000 for business, last time there 2023 I was shocked to see the changes in China. Less expats in HK, Less western HQ exposure in Shanghai, less people on airports and traffic to the west, capital leaving China. Xi is doing what Trump did in US, China first all the way. This trend might wake up EU and UK politics and finannaly start protecting with fair rules western retail (high streets retail are dying) and this migh benefit Asos and EU peers. It is trully ridiculous also from an ESG perspective that youngsters buy jeans for 8 euro and use them a few times. I would not be surprised if US will lead this trend and start protecting their home business against these china websites. IMHO temu and shein mainly sell cheap ****.If ASOS does the turnaround and we get a fair playing field Asos can thrive again some day. EU and UK need to realise we have the buying power of 500 M people that CCP desparately needs to keep the factories running. In my own business I see pricing levels impossible based on bill of materials, 100 % sure subsidized by CCP. We only need some headlines in the news that Shein and Temu will be investigated etc and ASOS will benefit.
Any views here on impact freight costs due to attacks in red sea, most fashion and sportswear are from Asia?
agree, in this case imho we get paid to wait and odds at 4 pounds are good but with some serious risks and i am prepared for these risks, but you need to deal with the volatility. hence why i not often looking at the sp. that is what turnaround investing is all about. it happens under the radar. the case is so obvious for me, will never understand people who think they can move the sp by watching at their screen so much and they get emotional. the whole uk stock market offers a lot of "cheap" businesses with m&a options all around. but most are cheap for a reason and also due to poor uk macro , same for asos. this business is still fighting to earn the right to exist in an extremely competitive market in a macro and geopolitical setting we have not seen for many years. the future developments are uncertain in the short run but the long term thesis for me is asos recovers step by step in 24/25 and will/must (or else it is game over and will be split and sold off) revert to average margins pre covid. if the first signs are there we are on a proven track up a rerate will happen by analyst who rerate in waves up and down, the speed of the rerate depends on fomo, pehaps a unexpected bid, macro sentiment improving faster then expected, bod insider buying etc etc. nobody knows, disregards the prophets and develop your own angle. mine is i will make a ****load of money at 10 pounds on this if i am lucky and the thesis works or lose my fiches and move on.
There is no money to be made in speculating/trading for the average retail joe like me and most of you here at this board if you deduct trading costs and your time behind the screen. Daily Timing the market is a waste of time on this planet IMHO. For Asos the case is pretty clear, the turnaround works and we revert back to 10-15 pounds somewhere in the near future. Turnaround does not work and ASOS is in deep debt/cash trouble and SP will stay at current prices or even lower . Value in Asos will only unlock if data proves they are on track back to 4 B with FCF positive and income from operation back to 3-4 % nett nett, since fast fashion is brutal and covid days are over the new PE will not revert like what is was. ASOS needs to show evidence in Q1/Q2 that they are going to deliver, fact that CEO is not buying himself is a weak sign. The best scenario for long holders is FED/ECB realising they tighthend to much and start signaling interest rates % down as CPI is lowering and unemployment is rising. Then some money will find its way back to the stock market and we migh see a FOMO for ASOS in 2024 when Q1/Q2 delievrs proof of improved business. I need 1 pound from todays price to break even and consider ASOS still a good but risky bet.
Not worried at all, long term thesis 2030 holds for me. Just add stores every year, grow buying volume to claim best pricing from suppliers and execute retail best in class (lot of peer group players can not at the level they do ). We will never know the real reason why they sold, could be they need the money to reinvest in other opportunities, pay taxes whatever. When you keep a business like this for the long term you will see drops even worse then this. Currently fairly valued so will not add and collect my dividends.
The problem with this data is like with your accountant, it is all about the past looking in your back mirror so to speak. Retail is a forward looking business, extremely difficult. I am working with some of the biggest supermarkets and despite all the software and AI they have a hard time projecting demand. For example, Tesco decided to stop selling electronics like TV for many reasons including not being able to manage inventories and demand. This happened early 23, now they are changing their view on it again as they miss turnover Q4 and traffic that can also be converted to food etc. Liniair extrapolation of past retail data is dangerous. Where is retail and ASOS in 2 years time? That will be priced in for the next serious up or downtick, stocks are moved by information meanwhile the short sell are playing their games . The info that will move this SP to new levels are the following:
1) a bid from X to buy 100 % and take it private. Must be at least 10 pounds IMHO
2) Proof of turnaround working in combintaion with improved sentiment stockmarket (back to 15-25 in 3 years)
3) Proof of it not working, business model and CEO in trouble and need to raise cash, sentiment down economic bust, ASOS continuity in question and SP drops below 2,5 or worse.
The longer this sleeps the bigger the explosion once the cards are on the table. GLA
Perhaps the UK should also ban short selling like South Korea did this week, tech index 12 % up......
Read the results, very pleased with it. Thesis holds for me, let it compound. Would even prefer to see dividend being invested in the business so that part I will convert in some extra shares in dec23. I got in after the big drop of covid19 visiting many stores, talking to some suppliers and understanding that middleclass will keep on looking for bargains as the real debt crisis is still to unfold and TAM of BME is substantial in UK and France. Will not sell one of my shares. The best investments seem to take the least amount of time to check, i will skip the presentation by the CEO. Amazing however to see the unbelievable short term trading noise being played at the market these days and being down 5 % on this RNS. Adyen, I am from Holland, went up 33 % today after CMD last night. My guess is that volatilty is going to go up more and more in the future, that is good for long term investors like me who see a share as a piece of ownership. Will be in the UK soon again and check some stores again. All the best, stay focused and patient.
Fast fashion giant Shein is targeting up to $90 billion in its upcoming US IPO, according to a Tuesday report by Bloomberg, despite the China-founded company’s recent valuation dropping to $50 billion in secondary market trading due to market concerns. The timing of Shein’s long-awaited IPO remains uncertain due to a dim economic outlook as well as copyright and forced labor disputes concerning the company. The report also noted that although it faces intensified competition with its Chinese counterpart Temu, Shein shows continuing profitability, expecting to reach $2.5 billion in net income this year, a figure 2.5 times that of 2019. SOURCE Bloomberg
My take on this as a long ASOS investor is simple, watch the two stores and see the difference. Do you want a cheap frozen pizza or a better prepared one with good taste? Asos can be a profitable niche fast fashion player again. If Asos leadership will deliver on the strategy of speed and unique style fast fashion in combination with macro improving and efficiency of opex/capex they will overcome this situation and turn it around. But as gatusso said, sometimes maybe good, sometimes may s..t.
Anything can happen now. My take , just sit back and enjoy the flight. This is what high risk high reward/loss investing is all about. Jose claiming 50 % gross margin after FY24 is a sales pitch based on hope. A bid coming? Selling your silver spoons to survive? A drop of 30 % in revenue is a liquidity event they stated in their release, can happen or can not happen. Shein and temu (backed by PDD and led by their superstar manager now) will not be stopped. Being an investor now in ASOS at 4,6 pounds means I can lose big or win big. It is out of my hands. But all the capitulation talks here are a good sign. See you in march 24.
Enlighten me with an underpinning please?
So predictable the sell off today! What did people expect? Asos predicting 20 % growth again next year and 3 % net profits? This business is in a mega turnaround in a macro headwind situation with extreme competition. I hope they keep Top Shop and get the time to overperform the now -5/-15 % revenue outlook. CEO ASOS should buy some shares himself to prove a point that ASOS is undervalued now and that he believes in his mission. It worries me that he does not, but remember he was a consultant once.......Shein playbook is what chinese companies do all along, i have seen this many times before in different industries and is hard to beat. They take marketshare export financed by home markets and depress western players sucking all air out of it, have all the time to do that backed by CCP and weak governments in EU fair play regulations. In China PDD is killing it, they are know coming with temu to the west .Just see pricing for fashion on this site. Asos can only prosper if they add value from another angle, on price they have no optionality. On creativity they have. Long Asos for the turnaround or potential bid. If I was a top 3 shareholder I would act now, this is the lowpoint MCAP vs net value.