Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Okay, the results are not brilliant, but in this economic environment, neither are they a disaster. I am disappointed by the 7% drop in SP this morning. Is this a bit of an over reaction or warranted? I must admit my patience is wearing thin about a turnaround in fortunes. Even my reinvested divs are not keeping up with the SP drops. The same old dilemma as to when one decides to call it a day, or to persevere.
SCB: A reasonable point about those online companies who have seen huge growth in revenue over that time, although I find your explanation somewhat of an over simplification. To me, both Asos and Boohoo showed signs of overtrading, but that aside, they did grow exponentially fast, but were slow to change systems, models, processes, and didn’t alter their strategies, thinking it was all going to be plain sailing with everyone's forecast of the demise of the high street. The fact remains that the leadership have hugely let down the shareholders and, setting aside some of the alleged questionable occurrences and decisions seen over the last few years, both companies have been complacent at best. They've been complicit in seeing the SPs dive by approximately 90% in three years. That's some considerable adjustment as you call it. Compare that to Next, who indeed have had challenges in their time, where we see their SP has moved roughly between about £40 and £73 over a significant period, due to quality management. There will always be excuses, but in my opinion, Asos with their bad management have only themselves to blame. I mean from over £65 to a figure of £4 is inexcusable. I fail to see how anyone can defend it.
What continues to irritate me (when comparing Asos, Boohoo etc) is the performance of other fashion companies who clearly know what they're doing. ABF today presented a very impressive set of results, largely based on the performance of their star subsidiary Primark. If Primark, operating on the expensive high street, can bring in figures like this, why can't some of the numpties operating online also produce reasonable figures? Answer: Online retailers are often one trick ponies with outdated models and questionable management. On top of this, I now see Frasers have today announced an £80m buy back of their own shares, prior to the announcement of their interim results on the 8th December. They made £634m profit before tax in April. They have also been investing in various distressed companies in the meantime. They seem to be so flush with cash that they are now adding extra value for their shareholders too. What's the betting that Frasers' interim results in December will be good? Meanwhile we will soon hear if an offer will be made for TS. My gut feeling is that an offer will be made but that it will be below expectations resulting in the offer being declined. Yes, this is certainly a possible long term recovery play, although I would prefer Asos to be carved up or wholly taken over now, rather than experiencing another couple of years of pain and the usual excuses followed by a 50/50 chance of surviving as an independent. No, I want my money back soon. It's not good enough that the SP has fallen from £53 when I bought a couple of years back, to £4 now. Actually, it's an utter disgrace.
If trade has continued along the lines of the last quarter to the year end 31 August, which Asos have basically suggested, given the sales declines, then they either have to sell TS or, in due course, raise more capital. Topshop is one of the areas where growth and profitability lies. Where does that leave Asos afterwards? Lower growth and thinner overall margins. It would only be a temporary fix to reduce debt, which in my opinion would subsequently start to rise again. Competitors see what a predicament Asos are in and the offers for TS will not be overly generous. I would prefer Asos to hold on to TS and for someone to come in and shake this company up either independently or by merging it into their own operations. If someone doesn't come in with such a proposition, I can see further struggles ahead. If I can see that, then the shorters certainly can. What upside in the SP on the sale of TS?....a temporary nice rise, but not substantial in my view. I don't think the shorts are going away any time soon; only perhaps a very slow and gradual exit. I hope I'm wrong but I'm long past trusting this executive to do much for the interests of the ordinary shareholder.
Netzeroready: hardly old news; it only arrived in the newsagents on Thursday. IC's assessment is of concern. Whether you like it or not the figures they cite are factual. For example: The new debt facility is at an extremely high rate (in my view down to the CEO's stupidity). Borrowing surged - debt more than doubled year on year. There are already signs of spiralling finance costs, doubling to £46m. IC says that this sets off 'serious alarm bells' as evidenced by last years net cash outflow of £213m. In conclusion they say it looks bad but could get worse. Hardly inspiring is it? One can criticise IC all you like but one cannot dispute the figures. It is worrying. And the market last week agreed. £6 by Xmas? I wish.
Knowbodyyouknow: You may have misread the selling puts explanation. The 'buyer' of the puts is indeed the one who is hoping that the share price falls below the strike price written into the contract by Frasers, the writer. Up until the expiry date of the contract, they would effectively have the right to get Frasers to buy the physical shares above the market price. The value of the put they've bought increases, and so they've won the bet by exercising their right. However, if the SP increases, the buyer of the puts will let the option lapse at expiry, as they obviously wouldn't want to exercise their right to sell their physical shares to Frasers at a discount. On a SP rise, Frasers has won the bet, as they've already received a premium for selling the put at the outset, and know that the put buyer isn't going exercise their right to force Frasers to buy the physical shares.
Yes I know, my explanation is probably as clear as mud!
S8raff: thanks, that's basically what I said in my last comments.
When Frasers sells puts, they immediately have a percentage holding in Asos, including voting rights. This is the case even though it is the buyer of the puts who calls the shots not Frasers. Frasers, as I see it, will only potentially own the shares (and if the price rises, will be unlikely to be called upon to buy them), so it's interesting that they acquire the rights straightaway. Explain that one!
Hi Turtlehead: You may well be right, although I think it may depend on what type of option is written into the contract at the outset. I dealt in options along time ago, and there was a time when you could, depending on what is agreed, either exercise anytime between two dates, OR alternatively decide on a fixed date. You're probably right that the latter is the case with MA's put option sales.
Knowbodyyouknow: I'm no in depth expert on derivatives either to be honest, but if you think about it logically, if you're selling a put to someone, you're generally getting something for it... an upfront premium. Conversely, the buyer of the put option has the right, but not the obligation, to sell the stock to the put seller at the strike price at any time before the expiry date that the seller wrote into the contract. Basically if the SP rises, the buyer will simply let the option expire, as obviously he won't want to tell the seller to acquire them at the (cheaper) strike price. If the SP drops, the put buyer will usually exercise his right to tell MA to buy the shares, not at the lower market price, but at the higher strike price. This implies that MA is fairly bullish about Asos. Having said that, he may have hedged his position in some way, possibly by placing a short bet as well. Sorry to waffle on!
Knowbodyyouknow: Regarding MA's (Frasers) derivative dealings, these have been 'selling' puts. It is the buyer of those puts who is therefore in the driver's seat. If the SP drops the buyer will probably be quids in and will call upon MA to acquire the physical shares at a price higher than the market price of the day. As I understand it , MA has been gambling on the SP rising. He's even been doing it on his own shares Frasers in recent months. He seems fairly confident that Frasers will continue to do well.
''We would prefer to remain independent'' but we're up for sale. This company has been doing well and was up for a re-rating. My guess now is that if no-one comes in with an offer, the SP , as someone has already said, will drift downwards.
At the risk of repeating myself, this company never fails to disappoint.
An extra week to try and dress up the results hasn't worked. The shares are the most shorted for a reason.
We basically already knew the last twelve months results, but now we hear of the expectations for the future. Reading between the bs, it doesn't look particularly reassuring to me......and the market agrees.
They will have to sell TS or raise further capital in another way at some point. I wouldn't touch a rights issue involving ordinary shareholders with a bargepole. I've heard enough bs over the last few years and what we have here is close to more of the same. There's a lot of long term debt ahead as well......don't forget the £500m bond down the line.
Berenbergs opinion is pure conjecture and not worth taking any notice of.
Calamonte mentioned the stock built up by 'previous management' lol. He was actually part of the previous management as the CFO before being promoted to CEO. What we actually need is NEW 'quality' management at the very top.
On the same day Asos gave these disappointing results, Next raised their own guidance by another 6.5% . The SP is up +40% in two years, and remember £3 billion of the £5.4billion revenue is online sales. Quality management. Then we have Asos SP down -84% over the same period. Nowhere good enough I'm afraid. The excuses are fast running out.
This is a grossly overcrowded market. Shein isn't going away; although the USA will inevitably bring in actions to protect it's market. In Europe Shein will continue to chip away at market share along with many others. Given the choice of buying dirt cheap clothes (through dubious companies) or 'saving the planet', most young people will, despite their general disapproval, still opt for dirt cheap clothes!!! Shein, who has moved HQ to Singapore, is here to stay ftb.
Don't be too excited about black Friday. We had the same hyped up boll**ks last year. They might generate some nice short term cash at zero margin and that's it.
MA has sold put options for this Nov, then Dec, Jan and Jun 2024. He may have to acquire the physical shares at the (higher) strike price in those months unless the SP rises from here.
Not sure how the market would read a TS sale. Selling a brand that has started to show growth and contribute to profits could be seen as a desperate move....cuts short term expensive debt, but in a climate of continuing declining sales. It's hardly a brilliant growth plan.
This could take yet another few years during which time anything could happen. It's a recovery play. Rather than wait that long, I'm praying for a takeover of some sort, but I'm not raising my hopes. MA and others are in it for themselves, not me.
I was aware things were going well, but unaware of any speculation.
Naturally happy about the SP today. The p/e now is really toppy. I think any initial offer would be lower than those speculated on here today. No-one is going to overpay in this environmemt.
Personally I was slightly disappointed by the announcement. The team there seem to have the formula right and are going from strength to strength. Why sell out now? Are they sensible to invite offers? To me it gives the wrong impression.
Selling TS, if true, is merely a short term fix to sort out the debt mess that they brought on themselves. Now we are, at last, starting to see growth in the TS brand, shareholders would be very annoyed to see a fire sale below that purchase price. However, what we are seeing here is that the break-up value of Asos added together is, as we always knew, worth far more than the current capitalisation figure.
The slight delay in the results is either to test the accuracy of financial information provided, or to do with the TS sale talks which, to them, would be seen as giving the company short term breathing space. MA would not like TS snatched away at this point. Given the opportunity, he wants the whole of the business for a bargain, so that he can skilfully dissect it himself and absorb the best bits into Frasers. If the sale rumour is false, don't expect much change tomorrow.
Agazzis....I like your common sense and logical ideas about opening strategic stores around the big cities. Certain brand names, such as Top Shop are synonymous to the high street. For example, look at'NEXT or FRASERS who, along with a few others, have the right formula for now and they evolve where necessary.
The problem is, the likes of Asos' executive are convinced that 'online' is largely the only place to be (all eggs in one basket).... online is 'the future, and the high street is doomed' is their philosophy and their whole operation is based on this false premise. Sometimes what goes round comes round and the high street is fighting back with stores who have the right management and the right model. Meanwhile Asos fights in an incredibly crowded market. Sooner or later there will be lots of consolidation in order to survive.
As for the contiued rumours about Asos, this newest one about Topshop should be interesting. The results this coming week would probably have seen the shares fall given the gloomy outlook, but if you add into the equation the 'rumour' of the sale of the Topshop brand, the SP will be supported once more. In my view Asos is in such a state with it's high (expensive) debt, that the temptation to sell TS to rid itself of a large chunk of this liability must be very tempting.
BrokeNsmoke....apologies for the delayed reply. This type of litigation can take some time as the lawyers involved endeavour to get as many claimants on board as possible. You're correct in your assumption that this could take a couple of years of tooing and throwing. I think at this stage it is 50/50 that it gets to court, as quite often a negotiated settlement before then is reached to contain legal costs. Nevertheless, I think this is just one more thing that will be putting some investors off for perhaps the next year or so until we know how things pan out. However I'm sure it won't put off MA, who is all too familiar with the courts. I won't go into the specific legal technicalities re the differentiation between class actions and group litigation when comparing US law with UK law (WolfofWarks is being pedantic). The fact is, is that everyone understands the underlying meaning of what is happening here; numerous individuals and instututions are threatening court action based on pretty much cast iron evidence that Boohoo's corporate governance was, to say the least, lacking, resulting in financial loss to the shareholders.
An encoraging directors buy, but I'm still hesitant at the very high p/e ratio of about 43%. This 'growth' stock which is down 65% and 59% over 5 and 2 years respectively, is not showing much sign of progressive profits. UK revenue growth is disappointing. US revenue is definitely encouraging. The share is under £10. Six years ago it was over £30. Some growth stock! Risky, despite Questor's recommendation today. Questor in my opinion has been abysmal in its recommendations over the last couple of years. Just look at TBLD and you'll see what I mean!!!
Presently yielding a 7.46% dividend. Tempting, but given there is more news today about the obscene pay off of the CEO, I can't help thinking the SP has further to fall. The results aren't that bad but its amazing how the market reads results these days. Anything other than phenomenal results, end up with a nasty price fall.