Member Info for Boyobach

It's looking weak today guys, with the last credible support level, as far as I'm concerned, starting to give way: https://invst.ly/1ce4fx

I've not been in OCDO for a while now and haven't been tempted back in by recent events or the immediate outlook.

A major concern for me has been the lack of profitability at ORL , where the technology should be proving itself as a significant tool in the grocery retail world. If it isn't delivering results for ORL after all these years then why would other major retailers invest in it? I'm not going to pursue this further, so cheerio all. Best of luck to those continuing to hold.

Absolutely right Kieran.

Friday’s drop was always pointing towards 226 - the most recently established bottom - so 230 should not have been unexpected. Never catch the knife whilst it’s falling - you may be lucky but few people ever are. As of now, the risks are still high: 226 was the last bottom but there’s no certainty that sentiment will stop it falling further. For every argument that says this is the bottom there is another argument that says it could go low lower.

Think carefully and never bet cash you can’t afford to lose on something. Be prepared to take the loss or leap clear quickly if it continues down. Below 226 is literally uncharted territory for OCDO - the next level is debatable and hasn’t been tested. https://invst.ly/1ccgt6 .

OCDO is a speculative trading share - profits that will generate value (either dividend or growth) for investors are not established. Don’t be fooled by tech myths: it’s not a high volume, high margin, must-have consumer product: it ain’t ever going to be a tech juggernaut: at best it might become today’s equivalent of an analogue era non-mainstream tech company like Racal (remember them? NO - of course not!). If you are looking for the next Acorn - which developed into ARM using their RISC processing technology- then OCDO, based on their trajectory, are simply not likely to develop into the same league. Be real: assess the product, the market and don't be distracted by the polarising idiots and puerile sh_t posted on boards like this one.

Good luck to all here: Longs/Shorts/Traders/Qantas - this is a speculative one that's not for those who are seeking a solid, risk free, long-term investment.

Yesterday was a stark and dramatic reminder to 'mind the gap' : https://invst.ly/1cbuz-

It's very naive to assume that shorts like Valueplay do badly when a share recovers from a low point: it's a simple case of closing near a low and reloading near the top of the next cycle. Longs that took profits at the recent high near 400 have done very nicely and may well decide to reload again, shorts just operate in the opposite direction. The childish long v short name-calling is a distraction: the fundamental question for both sides is whether OCDO has a product that delivers for its clients and will ultimately prove to be a commercial success within the retail industry. The performance of ORL in the UK and Kroger in the US are the main indicators for this and are the reason why OCDO is priced more in relation to retail CFC performance than in terms of perceived tech innovation. After more than a decade of robot grocery picking, the jury seems to still be out.

The technology isn't going to be in demand unless/until supermarkets want to adopt it.

In the US, Kroger currently seem to be assessing whether they should be prioritising investment in traditional stores over automated CFCs.

ORL isn't yet profitable in the UK - so why would the technology side of the business be doing better? The technology simply hasn't proved itself to be a game changer for retailers.

I guess for Oracle the 30% drop from August's high in just over a month doesn't matter: 'Who gives sh…it’s the price in 2years that’s counts ….'

I can't say that's my view: I like to buy at optimum value, keep a core holding and trim as appropriate if it looks over priced.

The profitability of robotic CFC's remains fundamental to the development of automated grocery picking: Is automated order fulfilment more profitable than store-based manual fulfilment?

£68 did seem a very strange target but it occurred to me that it would fit with a highly inappropriate projection of the trend in OCDO's sp between 2018-2020 https://invst.ly/1c8lbq . The person who posted it is on my filter list but I hope they are not seriously reliant on that target being achieved.

Given that the Hatfield CFC began operations in 2002, a thirty year lease ending in 2032, the year given to OneClick for the 'capacity fees' payable by ORL, seems a logical fit. Perhaps the 'capacity fees' charged by Tech Solutions covers both the modules and the leasing costs of the warehouse they occupy.

It seems odd to me that the two items (the technical kit and the lease) would be combined but given the historical background I guess it might well be the case.

Thanks for the conversation guys. Absolutely right Waccy - strategically Hatfield wasn't ideally located for expanded services and they also wanted to introduce the new technology. However, if Hatfield was so past its technological 'use-by date' it is unfathomable why there were nearly ten years of fees still to pay on it (based on the 2032 date we've been given). Maybe those fees are only payable whilst the kit is still functional and installed in the empty warehouse? A bonkers situation in my view if this is a fair summary of the case. ATB

Yes OneClick - the picture could also be complicated by the fact that OCDO Group is based very nearby (adjacent ?) in Hatfield, although I guess that the redundant CFC property is physically separate, occupied under a separate lease agreement and no longer serves any active purpose as far as OCDO Group or ORL is concerned (this assumption would need to be verified). I'm sure there were good reasons for expanding CFC capacity in the region, using the latest technology in the process. However, incurring nearly ten years of legacy costs seems excessive and such transitions should be managed to maximise the value extracted from existing facilities and resources that are contractually binding for so many years. It does not make the technology look good when this 'fast growing' retailer is still unprofitable five years after the JV with M&S was launched, especially when this is partly because of redundant legacy systems that could not be scrapped at a one-off cost or usefully redeployed. Ultimately, ORL is the showcase for Technology Solutions and the prolonged and somewhat opaque Hatfield CFC saga cannot be helping to make the technology look like a must-have winner in the world of groceries. Indeed, the risks it seems to highlight may well be doing the opposite, as further roll-out of automated grid CFC's seems to be stalling. They do need to wrap this up soon - ideally within months not years IMV.

Pokerchips: Are they in a position where they can actively attempt to lease any of the building out and save lease costs ??

I only know what's in the HY/FY reports. I'm not aware of anything regarding the lease position .

Pokerchips: 'Revenue to one part of the business, cost to another ??' ORL is a separate business 50% owned by OCDO which should be profitable in its own right if the technology were performing well. However, it is not yet profitable - largely because of the Hatfield costs.

Pokerchips: I should more correctly have used the term 'capacity fees' and was referring to this section of the FY24 results (Page 20, I think):

'There are 30 legacy non-OSP modules within the 123 modules at the end of the period. These primarily relate to the Hatfield and Dordon CFCs which generate a lower fee per module than an OSP module. While the Hatfield CFC ceased trading during the prior period, the Technology Solutions business is entitled to continued capacity fees at Hatfield, which in FY24 were £33.2m, and continues to charge them in full to Ocado Retail.

These therefore appear to be module related (ie technical system ) costs which, to me, do not manifestly include any lease costs for the property in which the modules are located.

Toffeeman: The ongoing Hatfield costs payable by ORL to Tech Solutions for the redundant modules appear in both the figures for ORL (as reported now within MKS results) and also as an income to Tech Solutions in OCDO's FY and HY reports. They are established (although it was unclear to me how long they had to run) - so they should be 'baked-in' rather than having any unexpected impact on share price when results are announced.

Thanks for posting that, Linek929. Unfortunately it doesn't get to the root of the issue for me.

Whilst it covers accounting technicalities in relation to the ORL deconsolidation, it doesn’t seem to spell out the high level of ongoing liabilities in relation to the unused Hatfield CFC. These would have been due irrespective of the deconsolidation and strike me as a significant long term drag on ORL’s profitability. According to the available information, it appears that, by 2032, the redundant capacity at Hatfield CFC will have accumulated nearly ten years of lease and technical support costs. Would closure of a manually operated CFC have had such long term implications?

Automation is supposed to reduce costs and improve efficiency in the low margin grocery business, however the Hatfield story paints a picture of costly inflexibility and strategic incompetence. Why was Hatfield abandoned at such high cost if the technology still had ten years of useful life remaining? Why was the equipment not re-deployed or the technical support contract transferred to the replacement CFC?

Cheers OneClick - Thanks! That's a useful clarification regarding a heck of a lot of cash (£33.2m in 2024 according to the FY Report) being paid by ORL for idle legacy capacity over the next seven years for no productive purpose.

Having glanced at this thread, I do recommend filtering people that make derogatory personalised comments but offer little or no objective observations about OCDO's performance as an investment. I currently have five contributors here that don't appear in my feed - saves time and avoids all the irritation they can cause if you are overly sensitive to the moronic comments they make. Because it is over exploited, I find this site also benefits from the use of an effective ad blocker.

Thanks OneClick. However, a 'lease' on the property and the 'capacity fees' payable to Tech Solutions for the unused modules installed at the property, worth circa £30m pA, are presumably two separate accounting items which might well have different contract durations. Bearing in mind that the Hatfield modules were classed as 'legacy' equipment when the site closed, it would seem to be a significant Retail management blunder if £30m annual support fees to Tech Solutions continue to be due on them for nearly ten years after the site closed. I can't help feeling that they may have misunderstood your query.

Thanks for all the responses - one did get filtered but lots of good points from all the others.

The sp is currently heading down towards the next support, probably around 310/300. Interesting to see which one and whether it builds back from there as shorts/traders potentially drive a cycle back up. I do think 250 is a bit pessimistic but I don't rule it out - so I'm watching and waiting for now. GLA

So how are you guys reading the current OCDO trend and the market in general? The trend is not fully established and may yet prove to be either short lived or steeper than shown here: https://invst.ly/1c4kk7

Net reported shorts increased slightly by just over half a percentage point to 5.1% during August, but are still a percentage point below this time last year at a similar sp. Unlike last year, there is no scheduled September Retail trading statement - this appeared to cause a rather daft one-day spike to 400 last year, perhaps because some investors didn’t know their Retail from their Tech Solutions! Anyway - Retail should be part of MKS’ interim statement on Nov 5th - so is the downward drift likely to continue until firework night? It’s an interesting time for the markets as they get back to business - with a global ‘crash’ being due according to various pundits and Mr Buffet having allegedly moved into cash rather than stocks. In the most recently reported quarter, Berkshire’s cash position reportedly hit an all-time high of $344bn as they dumped Apple (dyor). I must say that I’m now preparing to do much the same with my own portfolio, as the US, under comic windmill slayer Don Quixote ver 2.0, moves prematurely closer to joining the faded empires of the past.