Member Info for danl90

Just wondering can anyone explain what our equity story is? I just see lots of posts that say "on its way to £4" or "I know the fundamentals"

Ok well those fundamentals should be our equity story and drive our valuation. Does anyone here understand valuation or is £4 your number as you've seen £4 before and would like to see it again? I'm not meaning this in an offensive way but I joined this board thinking people understood these things and I'm not sure how many actually do

An example is ragtrade saying getting Topshop as the wholesale is great can anyone explain why this is negative to our equity story. It's literally the central thesis behind this share and why if we did yes we might make more profit but the value would fall away. Can anyone explain that?

Otherwise I feel like this board is literally for people who are just guessing a share will go up "why's that?" "I just feel like it's undervalued as it was £4 the other month"

If someone doesn't understand this and wants me to explain I'm happy to but I just don't want to waste my time trying to explain if I'm talking a language which others don't speak

But fundamentals are what drives the multiple! Without the multiple what do your fundamentals mean?

More profit doesn't always equal more value! I'm quite aware of the target customer base i'm only 30 and have lots of young cousins and a few influencer friends. My point is that you say the shares are undervalued. Ok, by how much? You do know that if you buy 1 share of boohoo today you're buying c.23 years of future profit? So how does that factor in to your fundamentals? It has to btw for you to be able to say the shares are undervalued

Also the wholesale business is value destructive as it doesn't go with our equity story. That is a fundamental! I can explain this to you if you like?

I'm not referring to results of balance sheets in the above btw i'm asking you to demonstrate how your deep understanding of fundamentals convert into equity value (also known as the share price). Let's see how you do

Ragtrade for every business you can create a target price. Literally brokers do this everyday! It's a multi million pound industry. If you see growth you extend the multiple

I'll ask you again, you do know how multiples work?

I actually like the idea of keeping 1 or 2 flagships stores. 1 in London and 1 in Manchester as a jewel to show how we have won the UK high street. Also I think it's a nice touch for the Kamani's having started in Manchester

Wholesale business I would put in the bin. I don't like the idea of passing margin away. This will dilute our equity story and drag the multiple (it's not just about sales rag - do learn about multiples and how financial metrics impact this)

I'd rather Boo control it end to end and drive synergies though our existing distribution network. That is the equity story management are telling investors. that we can simply lift brands into the boo framework. If we don't do this we risk the equity story and this would be value destructive

So what's the target price?

Unfortunately boo can't be bought atm due to the ESG overhang. You'd struggle to get investors to stump up capital and then something come out of the woodwork. A lot of funds which supply capital have strict rules on ESG

It's unlucky as I'd of loved to see one of those US SPACs buy Boo and Fashionova. Put together they would dominate the west and could push east. This would put both businesses c.10 years a head of current plans

The only slight issue now is if we DON'T get topshop. We have built a lot of momentum in the last week.

If we don't get Topshop and it goes to the sands of time this is fine as still a free chunk of £900m sales to try and attack

Worse case is it is saved y someone else and the free chunk has to be hard won. I think this would push boo back down again

I can’t see PE being credible buyers for this yes there are a few turnaround funds that will have a look (sun cap? Endless I saw have a new fund but possibly too small). The cash flows at present are poor with a retail estate which anyone with out a platform would have to keep and then they would have to burn cash on social media. I think PE would struggle to see the return/ risk profile. Particularly as working capital will be a mess atm with Black Friday stock not shifted. Also who would you exit a high street retailer to?

I think boo are a top contender but as I’ve said previously Mike’s promise to keep shops open will have a huge boot to political tailwind behind it as it’s good PR to keep jobs and promise of profits to pay back the pension (I don’t believe this will be achieved but he has track record and people will happily kick a can down the road to save embarrassment)

Boo’s offer will have to be a pretty penny I think so that the pension looks to have had value which is the only way I can see people leaning towards 13,000 losing their jobs.

I do think boo can pull this off. Perhaps we could pay using equity and say the pension fund will be full when we hit £6! Ha just kidding. It’s cheaper to pay with cash given the upside

@keepcalm. No you're in the right place we are awaiting ragtrade's valuation

I can feel something comprehensive on the way!

What's collective drivel about discussing fundamentals and valuation? That's literally the name of the game here

@Bablake - any links you can share on that? I agree it could be a game changer although graphene was meant to be and turns out it's not as easy to work with as people thought but 100% agree I should be aware on your point below

Thanks

@Kilminster we need a sell value. If he provides that and some analysis that could generate some new thinking and discussion. In all reality the discussion hasn't been immature we some have learnt some new topics and how valuations work

@Kallumama, agree Glen being at the mercy of metal prices is the only thing I also hate hence why i'll only hold it when prices look to be supported otherwise you're just racing to the bottom and hoping to be the lowest cost operator and that's a poor game to play

What about Pru? I purely like the sum of parts valuation that as it takes itself apart the pieces are worth more in separate

"I know" - clearly you didn't! there was no humor in your response you genuinely thought you had me

Come on give us a number. Don't take the cowards cheap way out and say it's my fault. Like maggie used to say "if they attack one personally, it means they have not a single political argument left" so don't let yourself down now

It's undervalued tell us by how much on you calcs and value drivers

@K - for what its worth I like Glencore. Would rather they still had 100% of agri trade as I think that business will be a jewel when the world has 3 billion more mouths to feed

Copper is heading to the moon. Coal is a drag and putting off ESG investors but glen is one of the lowest cost operators and china and india are building coal power like no tomorrow

Possible headwinds are fines but cash generation should be insane as metal prices expand. Its trading division should perform well as shale and other higher cost oil operators come in and out of teh market create regional price differences

It's my hot tip outside of boo but not for everyone

ragtrade "da shiz" was me using satire. Sorry if you missed that

Don't be silly. We all are here to share thoughts. Let's hear yours. Why is boo undervalued and by how much?

I wasn't meaning it derogatory it was just a question as this is a metric of a different industry. I had to google CMT anagram which I have no shame to admit as it's outside of my core knowledge base

So whats the value and why?

@K - agree in the long term but I hope to be sold before then :) so my comparison is more on the short to medium horizon

Agree that there is no defense against the three you list other than owning a brand people crave but will boo and PLT still be "da shiz" in 20 years time who knows

I think the only way to stop amazon is legislation which I am against as I believe (mostly) in free markets but I can't see how anyone will ever compete. I just saw a consensus forecast saying top end estimates of c.$80bln free cash flow in 2024. Don't mind having the fire power to compete with Asos it could literally buy whole countries! ha

If this is me then sorry! :)

But do you understand valuation multiples and how a business can extend or detract this? Because you can't seem to show any reason why you think boo is undervalued other than saying it's undervalued. To say it's undervalued you should be able to draw the value you think it is worth

Do you think you can do this? Or are you hoping the price goes up?

Ragtrade you make valid points but they are all in isolation you're not comparing them to boo which is what I am doing. Without you doing this your not generating any factual points for comparison its just one sided opinion. Try to make your point and then think "so how does boo compare?" and "does this drive value". Heres a few examples

" buying in a Brand is some sort of flawed disaster" - no i'm not saying that i'm just saying this makes you a different business to Boo. It is a disaster at present for Asos as it currently is only growing in this area which is lower GM% vs it's own brand which isn't growing. Boo wins here as it's GM% is far higher

"Amzon couldn't get its hands on NorthFace SS21 even if it wanted to" - ok fine maybe amazon couldn't but my point here is that Asos can't defend this revenue should Northface choose to open up to more suppliers. The ball sits with Northface or whoever. Another idea is NF could hook up into Huts e-retail platform and cut asos out. Yeah they'd probably be mad to in a short term but my point is asos couldn't do much to stop them. I'm not saying they will but it's the defensibility point. Boo hold all the cards in relation to their product this to an investor is good quality and drives the multiple

"Carhartt Sweatshirt then as a Independent retailer(re seller LoL) cost price would be around £23.00 mark up is roughly 2.2 plus vat, retail £60.00" this is fine, ok. Not disagreeing i'm saying here what drives multiple valuation extension is stronger margin vs peers. And Asos 30% gross margin vs boo's 54% is inferior. It's not saying Asos is bad I'm just pointing out the reason why boo warrants a premium in relation to it's multiple on this metric

"men's alone they sell thousands of lines each day" once again this is fine and no one disagrees but here what would drive your multiple would be demonstrating growth to investors. When you're at a 40 something multiple you're a growth stock not mature so it's great if you can show growth. Here Asos own brand did 0% and boo did 40% so it's boo that should warrant the multiple premium here

No disagreement with your points on Asos standalone and i'm not saying asos is for the bin all I am trying to say (for the 10th time) is why boo should warrant a stronger multiple than present as it can demonstrate key value drivers which outperform sector peers. Which is exactly what mickymix understood and summarised

Just wondering you do understand multiples and how they impact share price? I understand this isn't common and as a logistics guy it's not in your field

but just FYI re amazon it generates c.$30bln in free cash flow last year. Asos generates $450m (roughly converted). Amazon could throw $3bln (75% of Asos market cap) and not even notice. It would take Asos 66 years to generate 1 year of Amazon's cashflow. I'm just saying I wouldn't want to be fighting Amazon

to quote gandalf "the battle for the high street is over. The battle for online supremacy is about to begin"

But Asos doesn't own the third party brands they are third party! It makes bugger all money selling a North Face T shirt hence the poor GM% and PBT! The fact that third party brand sales grew 20% for Asos yet Asos own brand didn't grow at all shows that offering third party brands isn't a benefit as why do you want to sell a £20 T shirt you only make £2 on when you can sell a (or two) £12 t shirt you can make £6 on? The answer is you don't and it shows that offering third party brands is cannibalizing Asos own brand (I say again they didn't grow! So you just add more "noise" revenue)

Asos's own brand should be beating the growth rates that boo is getting particularly on a % basis as it's on a smaller £ base (only £1bln of rev and 0% growth when boo at £1.2bln and did 40% growth) and also Asos is in more countries. Asos has p/e multiple at 40 something so you HAVE to be growing for that. Mature none growth businesses trade at 8 - 16 depending on the sector.

Once again I don't care if Asos does or doesn't compete with Amazon my point is that if amazon decided to up it's game and throw £1bln at the reseller market how can Asos defend? Amazon could given it's $30bln in clothing sales literally burn cash to watch Asos fail. It could buy out the third party brands, buy entire collections on ridiculous rates so that would leave Asos without product. If Amazon chose to watch £1bln or £3bln go into that then even if it wasn't profitable there is no crown jewel defence for 66% of Asos business