The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Canaccord Genuity downgrades Boohoo Group to 'sell' with a price target of GBP0.19.
https://www.investing.com/news/pro/boohoo-receives-investment-bank-analyst-rating-update-3189998
"You really would think moulding would have saved a F U to the stock market for Tomorrow to celebrate 3 years of misery but think we all know that would be expecting too much from him"
Hush now Sheila, you'll start boring yourself again.
strong opinions, weakly held.
it's matthew moulding you all ought to be upset with. it's not ****posters on forums that run the company or determine the share price.
few of you engage on the issues raised, all defensive and eager to make it personal. that reflects an emotional style of investing, not a pragmantic one. it's not a popularity contest. explain why the share price will go up from here without saying the words "capital event".
revenues in reverse, active customers plummeting, market share decreasing, still can't manage to make cash, already in net debt, deluded panglossian ceo who can't or won't be replaced, one division wholly written off, another (ingenuity) essentially dead in the water, stagnant and a capex blackhole. what part of inverted yield curves, sharply rising unemployment and consumer sentiment weakening makes you think thg is going to be priced more generously than it already is?
Lol. If you say so. Between colleagues, friends, family, and ostensibly unquestioning or indifferent allies, he's not under any threat. See: his re-election at the AGM with 95.65% of the votes. That after delivering the shambles of a double digit yearly topline growth miss at just 60 days notice and half a dozen consecutive profit warnings.
"if someone wanted it they’d take it."
So what you're saying here is that no-one wants it. Which sums it up.
That's fine Dave. Don't care what any of you invest in, no offence. I've never told anyone to sell. Merely discussing a company's fortunes on the company's lse thread, if you don't mind.
Just for future reference, if you use the "reply" button beneath a post, it allows you to contribute to an existing thread. You've, perhaps inadvertently, created 6 "Opinion" threads today.
Eh? The company is doing poorly. It's about to do even worse if there's a recession. Changing the CEO at this point is too little, too late. Any successor wouldn't have much time to right the ship to ride out any coming storm. It's academic anyway, he won't leave and he has enough control to block his removal. Whether you like it or not, you're stuck with him.
"based purely on interest rate trajectory and this is where there is a good chance you'll get caught out. Historical recessions from the start of a Fed hiking cycle is a mixed bag at best."
It's based on more than that Go. How many examples can you find of yield curve inversions not accurately heralding a recession, especially an inversion of this depth and duration? Recessions are only formalized in hindsight, some measures are already signalling that recession is already here. US Real GDI already turned negative and that almost always foreshadows a fall in GDP. Germany in recession already, the UK probably in or about to fall into one. Soft landing would be nice, but the indicators aren't favouring it.
But yeah, you're right, this is as much a THG specific issue. It's a growth stock that stopped growing under a CEO who can't help but mislead the markets and fail to deliver. It's a credibility issue over whatever ambitious narrative THG once had.
Not sure we hang around with the same sort of people then Dave.
Don't need to dress anything up. Buy when it looks investible. It doesn't right now.
Just for a point of reference, this is still valued at 2.5x Boohoo's mcap. Boohoo's balance sheet and income statement look healthier than THG's. Boohoo have shown they know how to make money in the past. The same can't be said of THG. That doesn't make Boohoo necessarily investible either, but suggests THG is not the bargain some of you think it is.
In less than a month, Fitch will issue their latest credit rating for THG. Last year, they isssued a B+ (Highly Speculative) rating with a negative outlook, 4 tiers below investment grate.
This rating was based on some forward looking assumptions about THG:
"KEY ASSUMPTIONS
Fitch's Key Assumptions Within Our Rating Case for the Issuer
- Organic growth from the company's existing product portfolio supplemented by acquisitions completed in 2021 (full effect to be seen in 2022) of around 12% annually for FY22-23 and a slow down to high single digit from FY24 onwards;
- Fitch-adjusted EBITDA margin around 2.5% for FY22-23 and improving towards 4.5% by 2024 and 5.5% in 2025 (2021: 3.3%);
- Operating exceptional costs around GBP50 million in 2022, gradually declining towards GBP20 million by 2024; these are partly reflected in EBITDA or within FFO;
- Working capital outflows in small amounts for FY22-23, reflecting investment in inventory to meet growth, before turning into neutral and slightly positive from FY24 onwards as a result of improved global logistics network and normalising demand;
- Capex declining from GBP180 million in FY22 to GBP130 million in FY23 and then further down to GBP120 million in FY24 onwards;
- No M&A from 2022 onwards;
- No dividend payments over the rating horizon."
How many of these assumptions did THG fulfill?
The debt is apparently of no concern to you, but it's likely facing quite a downgrade from the rating agencies, from mid-upper tier junk, to don't touch with a bargepole junk bond territory, considering it's failed to meet most of the assumptions that supported its existing rating, and by some margin. It's not even growing at all, let alone by 12%. It's shrinking.
They ought to, wages (and now fuel prices) are still heading in the wrong direction, and the base rate is still below inflation, which isn't really sufficiently restrictive, unlike in the US, where the fed rate is now above inflation. The BoE risks assuming the situation in the US will eventually carry over to the UK, but the UK has different dynamics and inflation may be much stickier here, as it already has proven to be.
Oh Ste, do you only stalk this board to police my posts?
I only post what is in THG's own presentations. Don't let reality get in the way of a good retaliatory ramp though, pal. Keep on going with your "alternative facts," arrogantly asserted. Didn't work yesterday, probably not going to work today. Your anger won't change the share price, but apparently that won't stop you trying.