Boohoo is too cheap, says Liontrust’s Field9 Jun 2022 06:13
Boohoo (BOO) is too cheap considering its net cash and potential for growth, according to Liontrust’s Chris Field.
Field holds the online fast-fashion retailer in his £61m Liontrust UK Equity Income fund, and in his latest update backed the stock despite its recent derating on concerns around the squeeze on consumer incomes and supply chain issues.
‘The delays in product delivery to customers outside the UK and the investment in newly-acquired brands such as Debenhams.com have unnerved investors but we believe both issues are temporary,’ he said.
‘It retains a strong business model and product offering that has kept our original investment thesis intact.’
He said the 0.5x sales valuation was ‘too low’ given Boohoo has net cash on its balance sheet, has ‘nearly 40% of its market value in freehold property, is very profitable in its more mature, but still under-penetrated, UK market, and is expected to see growth re-accelerate from 10% to over 20% per annum’.
Field said the potential may ‘tempt the 25% founder family shareholders to take the company private’.
Boohoo shares closed up 1.8% at 78.4p on Wednesday – well under a quarter of their peak in June 2020, before a scandal over UK factory conditions