Member Info for davey2

SP only going one way with revenues increased by £1.5m per day in the six months to September 30, up 58% to £717m. It also turned a £5.9m pre-tax loss for the same period last year into an £18.3m profit AO World has continued to see strong sales growth, with October sales increasing faster than in the first half as the retailer benefitted from increased capacity, stock availability and the impact of investments made earlier in the year. It believes it is “positioned strongly” for the period which traditionally is its busiest.

https://www.google.com/amp/s/www.proactiveinvestors.co.uk/companies/amp/news/934402

Shore predicts Arrow Global re-rating

There is ‘significant’ re-rating potential at credit management services provider Arrow Global (ARW), according to Shore Capital.

Analyst Gary Greenwood retained his ‘buy’ recommendation on the shares, which rose 4.3% to 156.6p yesterday.

He said over the medium term, profit would be driven by the ‘capital-light businesses which we think should help to drive a significant improvement in the quality of earnings’.

‘This transformation should drive earnings multiple expansion, in our view, with the current 2022 price/earnings multiple of 6x still far too low,’ said Greenwood.

‘We see fair value at 190p – 26% upside – but view this as being conservatively struck and with material upside potential

Interesting background to the fund. Clearly a lot of interest from institutional investors https://www.globenewswire.com/news-release/2020/11/13/2126238/0/en/Eaton-Partners-Acts-as-Exclusive-Placement-Agent-for-Arrow-Global.html

They have an employee share scheme which is very ambitious which, if you took at face value, supports a long term play - a share price of £12.55 by 2025 results results in a bonus to each employee of 18 months pay; at £9.41 each employee gets the equivalent of one year's salary. That said, I would take the share scheme with a massive pinch of salt - results due out at the end of the month. I have a target of 445p - if they reach it, I am out and will look to buy back in at a later date. I never give any advice on any shares as I am right as frequently as a I am wrong......good luck whichever way you play it:)

Revenue is only part of the story - the SP will only move upwards if there is any profit behind it!!

Q3 strong cash collections and a return to profitability - ambitious target of €10 billion funds under management target by end 2025 (currently 4.2).

Will have a spike today - Q3 discrete PAT up 15.8% to £9.1 million (Q3 2019: £7.9 million)

Gut feel is that the market has oversold these shares - Arrow are potentially well placed in the current environment as European banks will be under significant pressure to provision for non-performing loans as they should be able to benefit from their €1.2 billion of committed capital within their Arrow Credit Opportunities fund (which is predominantly undeployed) as well as from their combined subsidiary funds at Norfin and Sagitta where they have €2.6billion total funds under management). Going to be interesting to see where they end up after their results - could have a nice little spike (then again, may disappoint and continue their bumpy journey!!). Time will tell:))

Took a while for the market to understand that AO are one of the few cow's who will benefit from the second national lockdown as their bricks and mortar competitors are forced to shut up their retail high street operations. Guidance this month on revenues and profit are key.

Banks are involved with discussions with potential outsourcers are at an early stage, but banks are aiming to confirm the structure of the vehicle before the end of the year which could prove to be a windfall for Arrow. UK Finance is leading discussions to create a centralised “utility” that will deal with defaults on government-backed bounce back loans. It has contacted several potential outsourcers including London-listed Arrow Global to see if they would have enough capacity to support such a scheme, according to people involved in the discussions.https://www.google.com/amp/s/amp.ft.com/content/52f6ad43-abee-4a5b-929e-921dc4278122

Bold targets - share price of £12.55 by 2025 results in a bonus to each employee of 18 months pay; at £9.41 each employee gets the equivalent of one year's salary. Great to see the company give their staff the opportunity to benefit from the company's success. Share is definitely getting noticed - key is whether the profit growth matches the explosion in revenues.....next month figures and guidance are key.

https://www.retail-week.com/electricals/ao-ties-up-with-tesco-to-launch-first-store-spaces/7035982.article?authent=1

Sold at £1.71 this morning - if it drops below £1.50 will jumpt back in. No more news likely to come out of AO until Nov.

Strong results - key is the statement around future guidance re 20/21. "we are very encouraged by our current trajectory of revenue growth and profitability improvements and will update further at our half year results in November". AO management have a history of downplaying future revenue forecasts so this bodes well for November results. The NPS scores bode well for repeat customers as bricks and mortar retail has been permanently affected by the new norm of online shoppers. Looking for a 'pop this morning...

It will be an interesting day tomorrow for Mr Roberts and his team tomorrow - he has been very quiet since COVID. Tomorrow will let us know if that has been a good or a bad thing..........future guidance is key. Need to be evidencing some cash to pay down their dets and show momentun re their German operation. Market is looking to invest in good news stories - if they have a story to tell this will pop tomorrow to £1.85+/ If they don't it could get messy very quickly.......you pay your money, your take your chance!!

We already know the figures are going to be in-line with market expectations so the key with be any guidance they can share around trading from 1st April and set expectations for the next financial year. Their story around their 4 commitments will be key: UK MDA growth of at least 10+%; demonstrate they are making money in Germany and demonstrate that they are now cash generative. They have suffered from negative market sentiment when they got over ambitious with expanison in Holland - if they reset and show they are cash positive with a solid eco system this share will be back on the radar. If they can't if will fester at the £1.5 and lower.

Logistics division of AO appears to be growing. https://www.insidermedia.com/news/midlands/ao-world-company-takes-major-n
Will be interesting to see the forward guidance on the 14th

Covid-19 is expected to see one-quarter of the UK’s whole population make a permanent switch to online shopping as the pandemic accelerates the move from bricks to clicks, new research has shown. https://www.retailgazette.co.uk/blog/2020/07/17-2m-brits-plan-to-switch-to-online-shopping-permanently/

According to the latest IMRG Capgemini Online Retail Index, which tracks the online sales performance of over 200 retailers “The months most outstanding performance came from the Garden market, reporting a 163% YoY increase, even beating its last period of extraordinary growth during the 2018 summer heatwave. The Electricals market also recorded its highest ever YoY growth since the IMRG Capgemini Sales Index began tracking the sector in 2003.”