The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I want to buy some for 20p
Compare my filter list to Kachrafilter's worst offenders.
Can anyone see the worst offenders?
Kachrafilter
looks like you have upset the green boxes.
the thing i found when i use to listen in the past was their contributions are just so poor they dont actually substatiate any bear case at all. it just a waste of time reading anything they have to say. filter is peace , with no downside :)
Filter.
Makes everything better
Near term, unfortunately, I can see Boohoo continuing their spending spree using debt.
It would notr surprise me to see another £25M-£50M of acquisitions in distressed brands.
Boohoo clearly have confidence in their implied margins & business model and are acting decisively.
Unfortunely this would likely weigh on the share price as debt will not be popular.
Sales growth of course is just a symptom.
The driver is market disruption.
Looking ahead into FY23 we see:
- probability of recession: this tradfitionally works against mainstream brands and favour discounters.
- high energy costs: this will severely impact high street retailers & not online
- Boohoo US market growth
- more brands falling into financial distress to be snapped up for pennies on the pound out of administration
- a move from Boohoo from fashion lead sales to multicategory sales
- significant reduction in absorbed freight costs
What it does show is strong inventory control which is an expected best practice for any fashion retailer, and something done very poorly by some.
Most of the growth stats are still wrapped up in COVID lockdown practices & restrictions. Do very difficult to get a steer on organic growth. We would expect high street growth to be better versus LY restrictions, as compared to online's sales boom. Boohoo 2021 reporting had them top of growth tree specifically
As for cancelled orders it's pretty meaninglessness. Thats a standard forecasting due diligence for any business and doesn't imply anything. Or not atleast as it has been presented.
The marquee growth issue for the business is US sales, with big ticket investment in the market.
the shorters did it.
they know something
I think anyone with an average above 100p would be worth a peek.
The data suggests profit will recover but not to pre-covid levels for few years.
Therefore we would anticipate a rebound to around 75p to 150p on a coservative basis but not a full recovery.
This said a large number of stock are in exactly the same boat so there are a lot of rich picking for those with cash.
This suggest BOO is trading substantially under it's asset backed value with £100M forecast free cashflow realised over the next 24 months
therealelogo
I agree with you.
but I feel you have actually substantially undervalued Boohoo's assets as you have also considered non current assets.
current assets are on top of that.
so really its closer to:
£400M Equipment
£250M Inventory
£50M Trade Receibles
£20M Other
So Circa £750M asset value considering the business is not in financial distress
I wager that Citdel has a similar view:
https://www.retailgazette.co.uk/blog/2022/07/boohoo-receives-boost-as-us-hedge-fund-citadel-takes-5-stake-in-retailer/
I further wager near term short interest in primarity in light of macro market conditions:
https://www.shorttracker.co.uk/company/JE00BG6L7297/
to me this says 1 thing very clearly:
Now is the time to be buying Boohoo stock. The business is as the bottom of a profit change cycle with forecast prfot and revenue growth for years. Circa £100M free cashflow, which no doubt will be plough into more business acquisitions, or used to pay the CMA fine, or both.
Per Barclays Research:
Revenue
FY22 £1982M
FY23 £2013M
FY24 £2224M
Profit before tax:
FY22 £7.8M
FY23 £27M
FY24 £62M
https://research-centre.barclays.co.uk/shares/boohoo-group/broker-views/
Also for the reference of the deramp crew:
this would be am example of comment better articulating the bear case.
As compared 'it's crashing & gunna crash soon'
A summary of key concerns:
- freight costs not viewed as not normalising for years
- a potentially loss making US market
The scope of the US market evidenced through Sheins distribution centre expansion looks promising.
Boohoos margins are stronger than ASOS too so they may do better in the US.
Credit Suisse downgrades Boohoo
16 May, 2022 13:52
Sharecast News
Print
The bank, which has cut its rating to ‘neutral’ from ‘outperform’, said there were “too many questions” hanging over the online specialist.
In particular, it pointed to high air freight rates and capacity – which Credit Suisse said it did not expect to normalise in the next couple of years – concerns about the US, and growing competition.
It said: “Opening a distribution centre has not resolved Asos’ losses in the US, and we are concerned the same applies to Boohoo, as the addition of import tariffs, central costs and a high degree of friction in the supply chain will more than offset stronger sales from an improved delivery proposition.”
On competition, the lender noted: “[Chinese fast fashion brand] Shein remains a very significant threat to Boohoo outside the UK, given its scale, marketing presences and simpler supply chain.
“We believe there will be increasing amount of regulation around human rights and environmental issues but it is uncertain whether this hinders Boohoo or reduces competition.”
As well as cutting its rating, Credit Suisse also reduced current year earnings before interest, tax, depreciation and amortisation margin assumptions to 3.5%, compared to guidance of between 4% and 7%, and slashed the target price to 80p from 170p.
“We prefer Asos and Zalando, which have also been similarly de-rated but we have greater confidence in their business models, cashflow and execution,” it concluded.
just updated to include:
Jongle
Fira2011
Wibblewobble1
Daytradenovice
I am very interested in the bear base.
But if you look at these users comments that are consistently:
- very low quality
- spam the same message up to several times a day/week
- are reguarly involved in personal disputes
- are disrupting an readible/intelligable commentary
If you are looking for a cleaner & better experience on here it only takes a quick look at these users posting histories to confirm the above.
happy investing :)
UK customers are exactly the same.
Been there, got that badge and tshirt.
There is a real entitlement in the taregt market. they number of people willing to say that the appropriate action for a busienss to take after a bad customer experience is to close down is significant. I almost think they need to build in enhanced customer service levels into the pricing to hold a few hands.
There is also the significant possiblity of fake reviews which plague retailers but certainly not a good look