Small Cap Value Report (28 Sep 2016) - MYSL, MOSB

Wednesday, Sep 28 2016 by

Good afternoon!

It's a fairly brief report today, as I don't have much time unfortunately.

There was a Radio 4 programme about fraud on AIM last night at 8pm. I've not had a chance to listen to it yet, but the link is here.

Of course, we all know there's plenty of fraud on AIM (especially with foreign companies listing on AIM, and in the natural resources sector), and it's a total disgrace. Sadly, it seems that white collar crime DOES pay. So whilst it continues to go unpunished, we need to be ever more vigilant for conmen and fraudsters who are attracted to AIM like moths around an electric lightbulb.

It's such a pity, because there are several hundred excellent companies on AIM, and they are sullied by association with all the junk. Mind you, having said that, it's pretty easy to spot the frauds, so people who get caught out largely have themselves to blame, some might argue.


Share price: 94.75p (up 3.0% today)
No. shares: 151.3m
Market cap: £143.4m

(at the time of writing, I hold a long position in this share)

Results y/e 30 Jun 2016 - the market is going crazy for online retailers that are demonstrating strong growth. MySale is slightly different, in that it floated in Jun 2014, on high hopes, but growth subsequently slowed, and the share price crashed.

My view has always been that the experienced management and backers (including Philip Green and Mike Ashley) would in all likelihood get it back on track. Meanwhile the strong balance sheet protected the downside. It's played out very well so far, with the shares having more than doubled now, since my original purchases in the 40p's.

Some of the upside has come from the general re-rating of growth stocks, but today's results clearly show that the company is indeed making progress - although not at the stellar level which Boohoo.Com (LON:BOO) demonstrated earlier this week.

MYSL is slightly different, in that it operates "flash sale" websites, where special offers are made for stock which is usually owned by another company. MYSL helps other fashion companies shift slow-moving stock, at a discount, and it accepts a lower gross profit margin because generally it doesn't own the stock being sold.

Personally I'm not madly keen on that business model, as you only have…

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MySale Group plc is engaged in operating online shopping outlets for consumer goods, such as women, men and children's fashion clothing, accessories, beauty and homeware items. The Company's segments include Australia and New Zealand, South-East Asia and Rest of the world. It operates with flash sales Websites in Australia and New Zealand (ANZ), South-East Asia (SEA) and the United Kingdom. Its Websites host time limited flash sales in each of its territories. These flash sales are focused on fashion, apparel, health, beauty and homeware categories and are undertaken on a consignment inventory basis. Its retail Websites also focuses on these product categories using drop-shipped inventory. Its flash sales brands include OzSale and BuyInvite in Australia, NzSale in New Zealand, SingSale in Singapore, and MySale in Australia, New Zealand, Malaysia, Thailand, the Philippines, the United Kingdom and Hong Kong. more »

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Moss Bros Group PLC is engaged in retailing and hiring formal wear for men. The Company operates through Moss Bros branded mainstream stores. The Company's segments include Retail and Hire. The Company offers various types of suits, skirts, jackets, trousers, coats, casualwear, ties, shoes and accessories. The Company offers clothing and accessories for various occasions, including weddings, prom, race day suit, tuxedo and black tie, interview attire and graduation. The Company also trades through Savoy Taylors Guild fascia. It has approximately 100 Moss Bros and Savoy Taylors Guild branded stores and over 20 Moss Bros outlet stores, which trade Moss Bros own brands and selected third-party brands, including Hugo Boss, Canali, Ted Baker, DKNY and French Connection. The Company has approximately 120 Moss Bros Hire outlets, which are contained within Moss Bros Retail and Savoy Taylors Guild Stores. The Company's sub brands consist of Moss London, Moss 1851 and Moss Esq. more »

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  Is LON:MYSL fundamentally strong or weak? Find out More »

19 Comments on this Article show/hide all

drvodkaquickstep 28th Sep '16 1 of 19

Great set of HY numbers from Touchstar (LON:TST) this morning Paul - welcome your comments

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JohnEustace 28th Sep '16 2 of 19

Re MySale (LON:MYSL), I've taken a look at their website and wasn't impressed. It seems to me that the TK Maxx online and instore offering is better if you're after discount designer brands.
I think that Australia is a much easier market for them in terms of the limited competition than the UK.

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paraic84 28th Sep '16 3 of 19

I spotted the other day which has a very similar business model to MySale so not sure why MySale say there is a lack of competition in the UK. The products on BrandAlley are much more impressive with some seriously good labels like Reiss who wouldn't ever go through TKMaxx. In fact I actually ended up buying something whereas I've yet to buy anything from Cocosa or mysale despite being a shareholder! BrandAlley UK also has a lot more Facebook followers than Cocosa. It might be targeting a slightly different audience but that's worried me slightly in terms of better competition. I can't see information about whether BrandAlley is listed or owned by a parent company, but would be interested to see what it's balance sheet is like and whether it's increasing revenue rapidly.

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Paul Scott 28th Sep '16 4 of 19

In reply to post #151952

Hi paraic84,

MYSL didn't say that there was no competition in the UK. They said that there's no dominant competitor, unlike some other markets. So it sounds like a good opportunity for them.

Regards, Paul.

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JohnEustace 28th Sep '16 5 of 19

In reply to post #151952

TKMaxx has these Reiss items available online

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JohnEustace 28th Sep '16 6 of 19

In reply to post #151952

BrandAlley UK was bought by it's management in an MBO so it's privately held.

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Johns 28th Sep '16 7 of 19

Re MySale (LON:MYSL), I've also taken a look at their website. I was in hysterics laughing at the designer men's shoes marked down from £2k to £200. I can't believe people actually buy that stuff !

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rhomboid1 28th Sep '16 8 of 19

I think the main upmarket competitor to Mysale is Vente Privee my wife keeps them very busy and in fairness much of it is to "refresh" my wardrobe. I was blissfully unaware of this "refresh" requirement but very happy to receive the goods!

It was started in Paris but is growing rapidly in the UK

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dgold 28th Sep '16 9 of 19

Paul and everyone else, did you notice the RNS released at 10.48AM by £PVCS? The company has now closed out their onerous contract to buy polysilicon at above the present market price.This was in return for a "significant" part of the prepayment to their supplier. As at 6.2016 "Prepaid expenses and other assets" was E4.95m, so I am guessing they forfeited about E3m. The NAV per share then becomes about 22p I would guess. In my opinion that brings closure to the one overhanging issue this company faced. Then of course there is a lot of potential upside as the company last reported in August "The judgment of the arbitral tribunal is now expected in early 2017 and while the outcome is uncertain, the value of any award if our claim is upheld could be a multiple of the Group's market capitalisation." (Note the share price then was about 12p). Now the price is 19p. Would you agree that it now looks like the company will probably just close down operations as they have implied (given the present low prices of their product) and hopefully get a good payout from its legal case? Even if not the shares are below NAV. Or do you think there are any potential risks? (I am long.) Thanks in advance.

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andrea34l 28th Sep '16 10 of 19

KWS down 7%??

I see someone has thumbs-downed my above comment . I'd really like to know what is the problem, I am not saying unpleasant to someone or about anything (of which there is quite a bit of as of late from some people), I am simply flagging a company that others have previously written about where there is a sharp fall in the price.

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Laughton 28th Sep '16 11 of 19

In reply to post #151952

Had a quick look at brandalley - but have to register with email address before being able to browse. So I logged off.
No such requirement at Boohoo.Com (LON:BOO)

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Samsgrandad 28th Sep '16 12 of 19

I feel Moss Bros are trading on a past reputation for hiring which they aren't living up to. How difficult is it to supply clothes which fit on the big day. Coincidentally my local store has closed.

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VickiG 28th Sep '16 13 of 19

Have used Cocosa approx a dozen time over the last 6 months. Extremely efficient delivery system and well packaged goods. Bought shares on the back of the levels of service plus the quality and variety of discounted labels keeps on improving month on month.

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Damien84 28th Sep '16 14 of 19

G4M Very interesting imo.

I think market forcasts for Year end 02/17 are for about 48.7M revenue and 1.6M PTP.
Going by there last trading statement its looking very likely that this will be beat, Interim results due 18th of next month will give the market alot more to go on. If they state that they are trading ahead of of these figures then that could take the shares above £3

All imo.

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Paul Scott 28th Sep '16 15 of 19

In reply to post #152021

Hi Damien84,

Yes I agree re G4M. It appears that the company is trading way ahead of Panmure's forecasts. Indeed, they could achieve next year's forecast turnover, this year (based on the most recent update reporting H1 top line growth of +73%).

I filled my boots with this one a few weeks ago, as the market seems to go crazy for big top line organic growth, and is less bothered about margins during the strong growth phase.

Regards, Paul.

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Paul Scott 28th Sep '16 16 of 19

In reply to post #151946

Hi drvodkaquickstep,

Touchstar (LON:TST) used to be called Belgravium. I followed it for years, and it never really went anywhere - profits oscillating up & down. It's reported interim profit today of just £219k. It's a tiny company, market cap only about £5m. I can't see why it's listed. I've held this share before, and you can't get out when you want to, if the market is going wobbly. Not worth the risk in my view.

Regards, Paul.

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AnonymousUser252054 28th Sep '16 17 of 19

The programme on AIM was worth a listen, thanks. Marcus Stuttard, AIM boss was extremely disappointing - a red flag in investing terms if lookng at a CEO or chairman. His response to a question about the issue of unpunished fraud that it was a 'risk capital' market was outrageous. Interview pulled him up on that, which was something - investors can live with a company going bust but not if that company got away with fraud, a distinction Stuttard failed to grasp or preferred to side-step.

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shipoffrogs 28th Sep '16 18 of 19

Agreed Shine66 - the sooner he goes the better. His complacency about fraud under his watch was truly shocking.

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cig 29th Sep '16 19 of 19

In reply to post #152033

Touchstar (LON:TST) has new management and strategy, who seem more competent than the previous lot. Maybe it's worth a new look?

Liquidity is an issue but one can see a glass half full as well: if the current venture works out, it will both re-rate and become more liquid.

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 Are LON:MYSL's fundamentals sound as an investment? Find out More »

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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