Member Info for Commonsense5

Valuation … simple high level

DOCS - £2.4bn mkt cap and net debt I think around £150m. Sales of £900m forecast to March 2022 (to be proven ?) and eps according to Stockopedia 15.7p March 22 going to 19p (quite a challenge in current market!) to March 2023. 10.5p eps to March 2021 2 months after IPO so current year March 2022 50% growth year on year ! 35% at least of the company up for sale I have no doubt

The Hut group sales of £2.3bn run rate , net cash and market cap £1.12bn. Growing pretty quickly and time will tell on this one I accept.

Boohoo - revenue £2bn net cash a few hundred mill and market cap £1.1bn.

Both the above are 100% online obviously.

Biggest issue for Docs is where real numbers really are - Hut and boo are pretty up to speed reflecting current global issues. Not sure Docs is …

What an eerily quiet chat room for Doctor Martens ..!!

I have done some more reading on DOCS - none of it makes me feel any more confident … a few points that the company will need to highlight quite shortly …. March year end so expecting a statement soon with Q4 trading .. (the ‘quiet’ months as DOCS say themselves) actual results in June assuming Permeira dont jump in first with a big sell order to reduce their 35% holding first …I do hope this time AFTER the trading update and NOT before !!!… poor show

1. Russia ? I see 4 stores in Russia - I don’t know whether owned or part of wholesale sales ? Anyone know ? ASOS on Tuesday will talk more about their Russia exposure which so far affects profits to minus £20m. I wouldn’t mind betting Russian sales of Dr Martens are pretty decent. ? Is Dr Martens still supplying Russia ? The product suits the cold Russian climate and they like their brands …

2. D2C might be growing as a % of total to a decent number but that was partly due to wholesale falling -14% in Q3. I was surprised that wholesale sales were as high as they are !!… interims show of 6 months sales for wholesale of £221m of total £370m - quite high and importantly reducing - D2C growing as a % naturally well done … OR because the biggest channel sales are falling !? I guess we find out soon. I hope the company hasn’t been stuffing global wholesales with product to achieve forecasts to find last quarter ooops -14% - China lockdowns / supply from Vietnam .. Russian sales … these are serious headwinds and with 60% gross margins overall .. will big profits quite hard if sales reverse…

3. I see the company last predicted that Ebitda margins will rise from 23% to 30% medium term. Unless the coming knows something the world doesn’t - this will be literally an impossible task and needs updating ?

4. I don’t think forecasts for March 2023 have changed since the company floated ? I think in this kind of sector with its supply chain as it is with those soles having decent oil related products (UPVC chunky sole) etc; DOCS stands pretty unique in NOT having downgraded forecasts in the last few months or since ipo. I know in January they were confident of hitting expectations BUT a few global issues since ..??

5. 5th Jan 2022 - Permeria announce first sell down post ipo in Jan 2021 shares still almost 10x their original investment … 421p a share pre the sell down announcement … next trading statement 27th Jan weeks later Q3 results .. shares at 294p and have fallen ever since … good sell Permeira at 395p … new holding 35% . non exec on the board but Chinese walls strong no doubt … selling ahead of what you thought would be a positive statement - why not be decent and let the market decide on the statement and THEN sell .. oh no

6. New auditor 9 months post ipo ?

Not the same Permeira as AA and Saga ? Anyone from Permiera able to talk is through the good ones ? All 7 brokers remain positive - still 400p + PT - stock to pla

My little take is as follows re pending results - my concern is a cautionary outlook as ASOS may do Tuesday HOWEVER I think the city will see trough that because ..

1. It will look an obvious tick down pre going private - that would embarass new chair I would have thought
2. We will get a long awaited update on separation which has to be done now
3. The $100bn recent Shein deal will focus managements minds that if they want to go private whether 150p or 200p they need to get on with it as it will be 1000p plus in private arena in 18 months min

Fingers crossed

Thanks Eviking - why invest ?…

I guess some of us are deep value investors which this is

Yes my biggest worry is management but so far on paper things appear to be improving ?

Fundamentally £3bn of sales for £350m mkt cap and reducing debt in what should be a structural growth situation - I think 5% market growth they say?

Yes smalller margins but plenty to make this fundamentally cheap on every metric - apart from dividend yield !!

Momentum is a hugely important thing on the market and when it turns in this kind of stock it turns massively - as I said before feels like one big seller and I think I know who it is and it looks like they have at least a few days to go. Once they stop selling it will turn. Positive momentum will bring institutions ultimately and this stock can return to 50p plus; that is where it should be right now on fundamentals. The upside versus downside equation looks very nicely skewered one way.

I also think PE will buy this for a big return ultimately

Why do you say management are crap ? Would genuinely love some examples ? Lack of inspiration to the wider team or wrong decisions ? Thx in advance

Hi all, I became a holder in CPI today for the first time. Aware lucky that only buying in now but I think this is a fascinating situation. Really appreciate the shareholder analysis - feels like the long term slump is due to one or two big holders selling. It might be as simple as when they finish selling the stock can rally and not before.

When it turns I think it will turn very hard but the small cap / mid cap guys want to see real evidence. I suspect better blue chip funds need more evidence than I needed, not sure they have had enough yet.

Anyway, I enjoyed reading some of the recent posts which were very helpful thank you. I am hoping to see more contract win news, disposals as mooted recently, further debt reduction, maybe dividends. I have no idea who the retained brokers are but will find out.

Sorry no added value but keep the faith all

Done a bit of reading on Dr Martens … I think the 90 day lock up comes off this week since Permiras last sale in Jan. In at £300m 8 years ago and well in the money still despite the share price fall - suspect they will be going again soon. Done some basic reading on the numbers and it looks like from Stockopedia that forecasts ramp up to March 2023 by a decent % which is an ask in this market. Feels like a stock to avoid and expensive given uncertainties. Just seen the Shein boots at £25 versus dr Martens at £150. Maybe I have missed the positives

Sadly mr angersharkz I think you are right but if you and I are finally saying that … this is probably the bottom ! The market hates one thing the most and that is uncertainty. The union discussions are a big uncertainty and the sooner those discussion can be concluded the better. The company also needs to get a March end trading statement out. It is the most short in the company as I have seen in the last year, they will all buy back at some point alongside at some point a company expanded buy back. The cash flows need to speak for themselves.

Mr scamp - a quality value add comment thank you

To a previous poster, the buy back hasn’t been wasted, indeed reducing the number of shares is a long term forever win from an eps and dps perspective.

I really believe there will be a level where UPS or equivalent vie for a strategic stake - maybe UPS isn’t the right example but the value opportunity is too great. Final point, don’t forget the hedgies arent necessarily being specific to RMG - they could be just general market shorting.

Deep huge value - we just need to sit it out

Best wishes

Last year the big trading update was March 10th. I suspect they know roughly where the numbers to March year end are already. Don’t forget the LTM or last 12 month run rate of operating profit was … over £1bn (interims + H2 last year). Yes headwinds going forward (that customers will pay for) BUT I think they will let us know this years profitability sooner rather than later. As I have stated before I really hope the union gets a good deal for employees, it should AND the company can afford it whilst still looking after its shareholders. The valuation remains fundamentally totally wrong BUT the cash flows will speak for themselves ultimately !!!

LinkedIn RMG released just now a video re 100 days to go until the new centre opens !! 800,000 parcels a day. I have no idea of the economics of site from a cost reduction perspective but I am guessing significant ! 4.5 football pitches. Looking forward to the next video instalments

Re pricing … I would expect large companies with big market share to have more power on the pricing - a fact that is generally helping the larger players in industry across the piece at the minute

The union / wage discussion is not new - in my view it is one of the reasons the share price came back from 525p recently. Everyone should have known this. The oil : petrol price being the other one. The two are connected. As I said before, look medium term and enjoy the fact the company are buying back BIG numbers of shares at low levels for ultimately bigger enhancement of earnings - well done the company keeping their powder dry at 500p plus. They bought 1.5m a day last few days. That tells us everything is fine.

Don’t forget the great line in the December RNS … ‘over two years they will move the balance sheet to nil net cash’ - younger analysts don’t seem to get the huge cash flow consequences of this - that means more return of excess cash - I predict end of March they go again with at least flagging another special divi and more buy backs. New automation comes on stream …

An amazing buy at these levels.

£3.6bn mkt cap. I think still £400m net cash maybe more. Operating profits of £600m even Liberum say to March 2023 - that will be too low.

More importantly I predict Putin is bulleted within a week which as well as fixing an atrocious situation obviously but inflation reduces, petrol prices reduce … etc. Neither of these outweigh the positive of stopping this terrible terrible war.

Mr Trek, what a quality comment thank you !!!

I think Onc is massively overlooked. It is of a market size that very few public market funds care. Retail will buy it first then institutions at much higher prices.

I watched the Company meet investor video which is excellent.

Back to 150p++ soon I think

Holy1 - thanks

Isn’t the Panel minimum price rule for say Softbank 12 months post acquisition ? In which case May 22 (around the corner especially by the time any deal completes) they can pay a more sensible price that pleases everyone. I hope not that long and I have no doubt that they can all find a way around it within the letter of the panel but worst case, Softbank won’t miss out on this for 3 months. SoftBank don’t get them all right but look at ARM - they just bought the lot for about £35 Billion and now it is worth probably £70bn - well done them !!! (Being lazy not checking those arm figures but they are roughly right - and zero chance listing on U.K., to my great sadness).

Thanks Hosai

I have some sympathy with the writer although I think his conclusion will be wrong - 4 months and no strategic update on all the important points we have discussed (Chair/ index/ beauty / separation .. the list goes on) , the share price falls hugely 50% + and then we simply get a quick reaction to a negative press comment when they share price falls a mere 10% - the company has to be getting ready to explain all
soon … hopefully that will be a very big win - I think we have seen the low of late 80’s so 15p downside say from 100p and 200p ++ upside

I think all of those points are correct but we are in falling knife territory in a tough market and potential buyers have very little confidence in the stock due to very poor IR, very sadly. It is a very valuable business, time will tell

Thanks Hosai - given where THG came from re governance and indices etc these are really important issues to non holders who won’t get stuck in until clarified. If MM feels conflicted .. then step in the non execs to keep shareholders aware of these important matters, or not ! Unacceptable governance and non existent Investor Relations. Any efforts to go private on the cheap could backfire if the market has had the wool pulled over its eyes

I am all for a bit more freedom in the U.K. but the rules are there to stop such bad communication as this - if the share price was UNCH we might not care but it is not !!

Hosai do you accept no update in 4 months since October 2021 on five or six very important subjects is unacceptable ? These points are almost as important as operational matters !

One can blame uk and funds if you play by the rules - 4 months without a strategic update … you can no longer blame the market - not good enough by the board