Member Info for danl90

But my genuine view is that cost pressures will pass

Commercial flights starting to US will make a big difference

Ladies and gentlemen let me introduce ragtrade. I’d love to say his points are useful but do they help you understand the share price or why you can wait this out? No

Should the shares be 50p, 80p, £5 or £20. He doesn’t know but he can tell you they are cheap (this is against logic as to be able to say something is cheap you must also be able to say what fair value is)

If someone would like to let him know this it would be appreciated

https://www.boohooplc.com/sites/boohoo-corp/files/all-documents/result-centre/2021/boohoo-plc-interim-results-presention-300921.pdf

Pg 32 - if you believe freight costs will pass. Debenhams will start to pay its own way and automation has a cash return. Then the EBITDA for H2 was £135m!

This business is weighted to Christmas but let’s be conservative and say it 50:50 so double it’s £270m EBITDA on an underlying basis

On a poor forward multiple that puts this at like x8-x9 which is beyond a joke

Add to this the expected £24m annual cash saving from Burnley automation and the cash generation value alone makes this cheap

Then look to the future. Sheffield automation (when done 2-3 years) saves £20m annually

You can then start to model in Debenhams, Arcadia brands and then wholesale (wholesale isn’t a positive it’s just a fix for Europe where management are out of ideas for how to fix the decline)

You can easily see EBITDA at +£300m, £320m £350m or higher

All priced in at £2.3billion today

What even crazier on the above? I haven’t even modelled in growth of PLT and boohoo! If they do go back to 20% annual growth the numbers get stupid very fast

My point being that on a standstill basis this business is double value just by delivery from investment in the platform. This has been managements mistake they went for scale before quality (asos is the inverse) but hey ho it will be sorted next 3 years. US warehouse will handle £1bln of sales

So on a standstill this is cheap. Growth? Wow

@south no I didn’t say sell up. You can use equity so as shareholders you just own more

PLT and Boo are seperate companies already. Asos could issue equity to us so asos owns both but then we get shares in asos which owns the lot (same deal which national express is doing for stagecoach)

The point is it puts things in the right basket. Atm boohoo is awful in delivery to US. It’s 8 - 10 days to get to the customer. So the customer is shopping elsewhere

Asos is next day! Boohoo about to spend £200m to build a US warehouse. Asos already has one

So asos has all the levers to spin PLT’s gears. Atm as a boohoo shareholder you won’t get a US warehouse to 2023! How much market share do you want to lose between now and then?

The next acquisitions are good but what’s the advantage? Debenhams beauty isn’t a cross sell with PLT at all

So I’m not saying sell out I’m saying synergy. 2+2= 5

I think breakup would be a great way to see value. Sell boohoo and PLT to asos. Then list Debenhams and then Debenhams can buy N brown (good customer overlay and N brown can teach Debenhams about credit - which is very profitable)

@oke but I’m hoping the shares go up so I think ingenuity is worth more than £800m

If it keeps growing like it is then it can clearly push on hence why SoftBank say it’s worth a big chunk of change

200 brands and want to guess how much all that stock cost you?

Added today

This thing is a screaming on social media

Not long till it gets taken out

There’s a comment in the annual report that the Saas commerce element is only 2% of group revenue

Maybe you have this confused? I don’t think the terms of these contracts will be disclosed?

At end of the day as I say ingenuity is like a steroid for businesses. Look at hotel choc they are bragging about US expansion but it’s all via hut

Thanks. This is as I thought this is the full subscription revenue vs one-off projects

Its typically on 10 year contracts! Wow

@oke some very good points. I agree the vertical supply warrants a premium for both beauty and nutrition

I agree re ingenuity. It’s just a waiting point. It is investing. It has some amazing clients and I believe SoftBank will accelerate this

I bought as I do see upside. I do think ingenuity is something special. If SoftBank deliver we will be very happy

I also want beauty to carry on with M&A and the split is the quickest way to do this as atm there is no cash for big M&A

Cult beauty is also a great asset

How do you get there?

Worth picking some up. Kamanis bought in on the ipo so if you back them here you can back them there

I posted some pricing differences ages ago. Was told it’s all rubbish and I don’t know anything. So why bother doing any research as an investor?

Also noticing that Shein was flying on social media was also just absolute rubbish

Very important to keep your boohoo blinkers on!

Just curious but how old is your niece? Thinking is she low end of gen z or older?

My view is go the other way

Start at market cap £5.3bln take out cash so you’re at £5bln

Beauty next year should do £1.5 - £1.6bln revenue. There are some comps shares yesterday but picking 2.5x revenue multiple you’re looking at £3.5bln or above for beauty. Is this right? Well hard to say as we don’t know profits but we have been guided that gross margin is inline with industry. Also THG beauty has the benefit of being vertically integrated ie manufacture, own the brands and then own the website (shopfront) were these goods are sold (along with other third party brands)

This level of vertical integration should warrant a premium. Revolution for example does not own its manufacturing although it has an option to buy it

So £5bln less £3.5bln gives £1.5bln left. For me myprotein is the worlds leading protein brand. If you look at 2x revenue then you’re saying £1.2bln for that so you only need Ingenuity to be worth £300m (yesterday I had beauty at £3bln so the extra £500m to ingenuity)

If ingenuity is a unicorn then the upside here is huge. If SoftBank value is fair then you’re on a winner here

A lot will depend though on how easy freight costs normalise. My view is that they will when commercial flights start again

@harchris another way to think of it is that this business has since floated raised $1billion in cash. So having

- grown beauty massively
- grown nutrition
- got a world leading partner in SoftBank
- done some great M&A
- raised $1billion

its worth less than it started?

Admittedly most of the $1billion has been spent on Bentley and Cult but they are in the beauty division now for next years growth

Even if you take a negative view here. What is the beauty division worth as a stand-alone?

Nutrition also. I use myprotein products. I don’t even think of shopping around

Ingenuity is like a steroid for the businesses that use it. They grow whilst on it but the gains are not their own (it’s huts infrastructure) so they can never come off the steroids. Unless they go down the wholesale route but that’s not how the world wants to work now. It’s D2C as you want the customer data and insight (don’t tell this to rag)

You’re a lot more civil on this board btw

@notry tbh I sort of thought what you had suggested below. I just wasn’t brave enough to type it

I think if they show ingenuity to be a loss leader U.K. markets will panic. But I agree it then very much like Amazon you have to keep investing and growing and this will be a star. SoftBank are a good partner for this with deep pockets. Some articles say they might not use their option I think there’s 0 chance of that as it would be a PR nightmare for them. Also they are in for a chunk already

Because I’m happy to see where this goes long term. You never catch the bottom. We all know that

There’s a capital markets day this month. My thought is that this should put a bit more colour on what ingenuity will look like

Ultimately this business is better than it was at ipo. I’ve always wanted to own it (I just won’t justify paying an ipo premium which then flew 30%). I’ve waited and waited and waited and now feels like the time to be greedy when others are fearful

As I say I don’t think this is a slam dunk but if the split is right there is clear value here. London perhaps hasn’t appreciated what the states might?

Decided I’ll have a bite

My view is that freight cost issue will pass. When you adjust for that EBITDA will be c.£200m on current revenues and then you can add a bit for Cult and Bentley

This puts a fairly punchy valuation still but one that seems reasonable if the sum parts idea works

Ultimately Ingenuity is an unknown the quality of contract here gives me reason to believe outside of the SoftBank idea

Also the worry I have that beauty and nutrition might be on a bad deal is probably untrue as as long as they are on usual terms then this should be ok. Also why would coke and others all go with ingenuity if it wasn’t worth it?

If beauty lists in the states there is a big instant uplift here. I just wonder if as investors we will have to put cash in on any admission to fund the war chest?

But if commercial travel does free up a tonne of space on air freight then some of the big drivers of inflation fall away

Also (no freight expert here) but every business is saying “freight is hard to get so we have shipped early for Christmas” every retailer has posted high stock balances ready for peak. Now how was that possible if it was so hard to get? And was it expensive and so hard to get as everyone shipped early for Christmas as well as the goods they need now. In a few weeks what will there be to ship?

It feels a bit like the U.K. running out of petrol it was a small issue which human emotion has driven to a panic