Small Cap Value Report (Fri 9 Sept 2022) - ASC, XPF

9th Sep by Paul Scott

59 comments 5591 reads

Good morning, from Paul.

I don't know what to say this morning, as our head of state has died.

Let's take a moment to collect ourselves.

Moving on, I'll take a look at Asos ASOS (LON:ASC) a bit later.

Also, an opaque update from XP Factory (LON:XPF) (I hold)

ASOS (LON:ASC)

688p - mkt cap £785m

Trading Update

FY 8/2022.

If you can make any sense of this waffle, then good luck to you -

ASOS today issues an update on trading for the 12 months ended 31 August 2022.

Full-year sales, adjusted PBT and net debt are anticipated to be in the range of market expectations1. However, after having seen good growth in June and July, sales in August were weaker than anticipated. This reflected the impact of accelerating inflationary pressures on consumers and a slow start to Autumn/Winter shopping.

Profit is anticipated to be around the bottom end of company guidance, with constant currency sales growth of c.2% and net debt c. £150m2.

While ASOS remains cautious about the outlook for consumer spending, it continues to make strategic progress and manage the business for the current environment.

ASOS will report full-year results on 12 October 2022.

1 Company-compiled consensus as of 15 July 2022 for 12 months ended 31 August 2022
· Total Sales Growth in the range of 0.3% to 6.3% [Consensus: 3.2%]
· Adjusted PBT in the range of £9m to £43m [Consensus: £28m]
· Net Cash / (Net Debt) in the range of (£235m) to £101m [Consensus: (£77m)]

2 Company Guidance issued as at 16 June 2022:
· Constant Currency sales growth in the range 4% to 7%
· Adjusted PBT in the range £20m to £60m
· Net Debt in the range £75m to £125m

My opinion - the Sunday Times seems to get better guidance than the market. We’re told that c.£4bn revenues, and something around breakeven might happen.

It looks a bit of a shambles to me, and I’ve heard bad things about ASOS internally - for many years - that internal cliques are disorganised. That’s probably why it’s never made any free cashflow or paid out divis.

Mind you, £4bn revenues means a lot of leverage if markets turn positive.

Associated British Foods (LON:ABF) looks tons better, on a PER of 10. Why waste…

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TamzinPiworld

9th Sep

First post above is Accrol group (LON:ACRL) for some reason it didn't hyperlink and I'm too late to edit now

Bronstein

Dear oh dear. LOL They're not all that bad but I agree putting the prices up at least a bit would seems a no brainer.

Boon

That's my worry. They force a delisting by virtue of having 60% of votes backing it, causing the SP to crash, and then "offer a way out" for minority shareholders to sell at say c.6p a share.

nettle

And our Queen has met and charmed more than a quarter of all American Presidents that have ever been elected.

Leebod

Blowing your own trumpet?

topturkey

I am long Restaurant (LON:RTN) from 40p conversely. It is a well run business (now - terribly run in the past and shorted a lot around the time of the wagamma acquisition which was ludicrously priced) and they had already told the market they are well hedged and have now fully hedged utilities up to end of 2024 giving certainty on a big outgoing. i'd expect to see this back to 60p sooner than later barring any more major negative consumer news.

JASVFS

My wife has always been our admin department Paul, she logs into Barclays Smart-investor for me too! You know the part in the vows taking one's partner For Richer For Poorer? It's being tested to the downside right now but we'll be celebrating our 60th wedding anniversary this December, my wife has staying power. :-)

Re ABF, I like the two totally different strengths, there have been plenty of analysts pushing for them to spilt Primark off but I doubt that will happen while Primark keeps growing. I noted ABF might consider returning surplus cash to shareholders, I think that's more likely.

Zipmanpeter

Gear4music Holdings down from almost 1000p just 12 months ago to 117p today (102p first thing!). Both sets of numbers mad.

Long term the music market is very solid and moving online. £G4M is a UK sector leader and early online mover in Europe, has good links with big brands and a big suite of its own label sorted out. Its inventory wont age much so I expect some sales weakness before recovery. It will come back but will never make high margins since it is mostly a distributor.

I hold and am considering buying more, with a long term price target somewhere inbetween 102p and 1000p!

MiserableJacktPotato

Accepting anecdote isn’t data. This past week I’ve bought a cornet and a flugelhorn. I wasn’t at all impressed by the g4m website or offer. And that’s why, as the Dragons say, I’m out.

To see the effect she had on Foreign Leaders, you can watch this one-minute video

Trudeau mourns ‘one of my favorite people’ Queen Elizabeth - YouTube

Bristolian

Interesting! I'm a trumpet player myself so would be interested to hear your feedback as I'm on the market for a new horn

At the price point I wanted to pay (around £1-1.5k for each) the fluge options were very limited. And at the top end they're out of stock, not that you would buy a £2k+ horn online without blowing it anyway. To be fair, fluges are a bit niche though. I ended up getting a Ray Farr flugel, made around the corner from the first house I bought. The kicker for me on that was they would let me have it on trial for two weeks, so I can practise at home, take it to lessons and band and really give it a workout. I've got an ex display one but the reviews and feedback about them are great. I'm meeting the actual guy who made it when they hand it to me.

For cornets, a much more popular instrument, they have a lot of options at the bottom end but not much beyond the Yamaha 4000 series. I have a 4000 trumpet, looking for something better for my cornet. Currently have a Weril which I was sold rather than I wanted, if you get what I mean. It's fine, I wouldn't get another one, I just don't have the confidence with it that I do with my Yamaha though the person who sold it stated it was a far better quality instrument. I should've listened to my gut, it reallly isn't. Though again I guess one wouldn't want to pick up a couple of grand piece of kit without blowing it. Haven't made my mind up what to do about the cornet. I might stick with the one I've got but, probably unreasonably, I just don't feel good about it.

Also G4M don't state where the instruments are made. And, probably not woke, I'm a bit worried about getting something Chinese, I prefer something that I know isn't ripped off someone else's design. I'm a bit anti that sort of thing. I would rather pay a bit extra and give the people who did the original the money (only get legit copies of CDs and things, don't bit torrent etc).

Trent Hamilton gives a good impression of a few horns, I guess I need to see which ones are in my price point and not knock offs.

Steves cups

Quite simply THE Queen

Deliberate capitals

Patrickmylnetrade

Bloody love this. Keep up your fantastic work Paul. It’s hugely appreciated

Caper4

10th Sep

Well I suggest you pop over to Poole Quay and have a pint:). No tramps and beautiful fresh sea air !!

Yesterday , we were back in Richmond drinking at the Barmy Arms . We certainly thought it was well described when we were presented with a bill of £11.50 for two pints !!

Thanks so much MJP - great insight on instrument choice and Gear4music Holdings (LON:G4M) from a consumer perspective

I might not be their core market though, which is why I said this is anecdote not data :)

By the way, got the Fluge handed to me earlier; it's unbelievably impressive, beautiful to look at, sounds amazing and really easy to blow. I hate my cornet even more now :D I've put a bid on a Yamaha 6000 series cornet on an auction site. Fingers crossed I win that.

Epsilon

11th Sep

"her first Prime Minster, Winston Churchill, was born in 1874 and he knew people who born in the 18th century."

This would appear unlikely given that the life expectancy on being born in the UK in 1800 was just 39 years!

john2

Life expectancy is an average for all lives. Life expectancy in the 19th century was far lower than it is today because of the high rate of infant mortality. Of course it is likely that Churchill as a child met a few 80 year olds.

Rusty2

12th Sep

Queen Victoria was 81, so it is possible that he knew people of that age,

Small Cap Value Report (Fri 9 Sept 2022) - ASC, XPF

ASOS (LON:ASC)

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Paul Scott

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