Small Cap Value Report (Tue 22 Dec 2020) - FRAS, BOO, APGN, DFS

22nd Dec '20 by Paul Scott

74 comments 9189 reads

Good morning, it's Paul here with the SCVR for Tuesday.

Timing - it's fairly quiet, and I started early, so we should be finished by 1pm. Update at 12:46 - that's it for today, newsflow seems to be quietening down now. Today's report is now finished.

Agenda -

Frasers (LON:FRAS) - Withdrawal of guidance. Tier 4 lockdowns a disaster for non-food retailers, at peak trading time. Read-across to others.

Boohoo (LON:BOO) (I hold) - beneficiary of another lockdown, and in the running to buy TopShop maybe?

Applegreen (LON:APGN) - Confirmation of agreed takeover bid. UK market cheap, more bids to come?

Dfs Furniture (LON:DFS) - I've had a detailed rummage through its half year trading update today.

Preamble

There are five number 2's in today's date: 22122020. That sounds slightly rude. To counter the winter blues, I always remind myself that we've seen the longest ~~day~~ night (yesterday) already. From now on, it will start getting light slightly earlier each day, and it won't be long before the sun is streaming through the windows when the 7am RNS starts pinging. There's a cheery thought, which we need to focus on, let's face it. I find the TV news so depressing these days, that I switch it off, and binge-watch DVDs of old comedies like Yes Minister, George & Mildred, or Gimme Gimme instead. It's good escapism, highly recommended. Or play ZZ Top nice and loud!

Mello Monday was a marathon last night, grinding on until 10pm. I had planned to go to ASDA to get my Xmas parsnips at 9pm, but unfortunately that wasn't possible. Let's hope nothing else crops up today, as I don't want to deprive my mother of her root vegetables on Christmas Day.

We saw some knee-jerk price plunges yesterday, some of which made sense, and some of which didn't. I find it's useful to keep some spare cash to hand in the last 2 weeks of the year, because the thin liquidity can lead to quite bizarre price movements, and hence buying opportunities, as we saw yesterday.

Frasers (LON:FRAS)

426p (down 10% yesterday) - mkt cap £2.0bn

I forgot to mention this yesterday - the tier 4 restrictions have really clobbered retail & hospitality again. This is their absolute peak trading period,…

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gtrdave

22nd Dec '20

The Guardian have just published a new expose re exploitation of Boohoo (LON:BOO) workers. Apparently, some have been paid as little as 29p per hour. I hold a few and hope Boohoo lives up to its promises regarding ending exploitation within its supply chain.

https://www.theguardian.com/bu...

MiserableJacktPotato

Re Boohoo (LON:BOO) taking Topshop - I would also like to see them pick up a higher margin menswear business, either Burton or Topman. Mostly because I'm sick of my junior colleagues turning up in the poor quality stuff from BoohooMan and I'd like to be able to point them at something that, whilst mildly more expensive, will last them longer and will allow them to look like they're not chronically underpaid!

BoohooMan - great for Friday night down the boozer, but not for the office :)

aknownmoose

there has to be a Boohoo (LON:BOO) shorting club at the Guardian surely? They cant possibly have nothing better to do than keep digging up the same story over and over. Like anyone is surprised that working conditions in Pakistan clothes factories are not well described by some employees. The Guardian sounds desperate now

Martin VT

Well is this good news that they can no longer find any dirt in Leicester?

The claims seem confused and disputed, but this seems to be part of the challenge in not only managing the standards at their independent suppliers, but also their subcontractors - sounds tough, even with the very endeavours.

By the time Boohoo (LON:BOO) finish their audit and controls work abroad (by end of 2021 I think they quoted) I suspect that they will have supply chains as ethical as any in the business. Meantime MSM is doing what it always does, string out a story for as long as possible. Overall this will be positive for Boo as it has been for others in the past.

Incidentally, I don’t think Guardianistas have travelled too much as they show a photo of a squat toilet, which their readers are clearly supposed to be horrified about. News flash for them, that’s what toilets in Pakistan often look like!

fwyburd

Re Boohoo (LON:BOO)

I'm pretty sure they mentioned this particular story in the parliamentary meeting last week and talked about how they responded (or have I imagined it)? I've certainly heard this story in the last few days so seems like old news to me.

cheers

Francis

Thornabian

I like how they put it in pence and not rupees.

The average pay for the textile industry in Pakistan is $128 or around £100 per month. That is about 29p per hour. Sounds low to the UK but if that is the average in the country, and the country has a far lower cost of living, then Boohoo (LON:BOO) are not doing anything any different from any other.

I have travelled in much of Asia and eaten street food in some countries which cost less than 30p (Vietnam for example which is actually more expensive than Bangladesh and Pakistan in many places) and it was very good. Seems odd to people in Europe but that's the cost of living difference.

Tanglands

share price up 2% today, is the guardian going bust?

They even have squatting toilets throughout Japan and on all of the bullet trains. Well more kneeling toilets actually. They do also have none-squatting/kneeling which are labelled "western toilets" which seemed quite amusing to me when I first went there.

garbetklb

Hi Gokart1

What a great 1st post! It's incredibly helpful to have informed commentary from people working in relevant areas - especially ones that are peripheral to, but vital to, many of the businesses being discussed here.

Thanks!

Morris1602

Everyone should know what this company does viz. provide a perfect solution to gobble up unrecyclable plastics, old tyres etc. without generating obnoxious emissions; the output is feedstock for the hydrogen economy i.e. fuel grade hydrogen and energy plus syngas. Velocys (LON:VLS) has a similar process and arrangements with Shell & BA to generate aircraft fuel from refuse. Every local authority should work with their refuse company to resolve this problem. I hold these companies and a number of others in the hydrogen economy like Itm Power (LON:ITM) & Ceres Power Holdings (LON:CWR) which could make a significant contribution to easing the climate crisis if their technology is rolled out globally - something which is already beginning to happen. A fascinating subject - look at https://www.pragma-industries.... for the ultimate transport.

Threepeat

I have read your post now twice because I had no idea of the mechanics involved. many thanks for sharing your knowledge and expeience for those unversed in such matters

Thanks again

shopping365

I think the lesson there is to look at hydrogen companies. I sold half my holding of Powerhouse Energy (LON:PHE) this afternoon as there could well be resistance at 8p, that share price was last reached in August 2013. I have a large holding in Itm Power (LON:ITM) which is benefiting from collaborations with Linde and Snam, and also have smaller positions in Ceres Power Holdings (LON:CWR) and AFC (couldn't get this one to work with the £ sign as it seemed to think it was Arsenal Football Club). The share prices have been helped by the release of a white paper on energy which mentioned hydrogen 133 times. Powerhouse Energy (LON:PHE) also appeals to environmentalists because it plans to use non-recyclable plastics and tyres to produce hydrogen (and other by products).

Simon Rowan

I wouldn't want to be without parsnips for Christmas dinner either. Its Brussel sprouts that are always the challenge possibly equally for retailers too. They seem particular appropriate this year what with the final curtain on Brexit approaching. One supermarket is offering a stalk of Brussels for a quid or a token bag for 14p! Its almost like we are obliged to buy them. Any one know of any better offers?

Nice to see IGP giving us a pre Christmas gift . If they can shift the sp that much on 200k contract should be interesting to see what happens on the next big one. And the Kent coastal skies had the largest amount of vapour trials I have seen this year which is good for Air Partner apparently. Merry Christmas everyone involved here and happy hunting for next year.

mikebianchi

Guardian running another story take a look at web site. As Paul says thankfully most buyers aren't Guardian readers.

smatthews1

What a fantastic nugget of knowledge, thanks for sharing!

Albertos

Wouldn't be surprised if the ESG box-tickers in the City are though - but they've probably had their day with Boohoo (LON:BOO) .

Snooker18

I hold £Boo, but hope you are not banned. Your comments have substance.....

Phuntt

couldn’t agree more snooker. Mojo has a lovely way of getting up people’s noses but the conversation between him and eg Thornbian has a great way of shining lights on pros and cons I hadn’t considered with various stocks.
It can be tiresome to listen to but some of the stuff that comes out is truly valuable if you get past the aggro. I’d be upset if mojo got banned. Contrary opinions should be valued rather than discarded.

Antehelion

agree with Sooker and Phuntt here - Mojo doesn't hold back for fear of people's feelings, but he/she does quite often make sense - and a few recent posts have been generally helpful and constructive.

I don't like to see people at loggerheads though (and don't like to be reading about it during busy days) so perhaps its time to take a breath and let some water slide under the bridge - you clearly don't agree with each other on some points - thats why we have any form of market at all and hence ultimately why we are all here and reading this. as investors looking for ideas and factual opinions on stocks.

every opinion adds value, can help tame the optimist that buys froth at the top of the cycle and can help locate value at the bottom - I personally can't tell if we are at the top of the last bull cycle or bottom of a short bear market and about to set off on another bull once we get past the various immediate/topical issues du jour. I hope that everyone on here can keep contributing constructive thoughts and share differing opinions where needed without arguing a point to death - all your constructive comments are helping me to (slowly but happily) grow a pot of cash and I thank you for helping me and each other on our respective roads. be nice to each other - we're all here to make money together!

mark1308

23rd Dec '20

OMG your preamble is spot on ! The proper term is the shortest day i believe but who cares as longest night means the same ! and i was very much looking forward to this passing as now EVERY day is a little longer ( light wise ) . Your TV choices and ZZ top are some of my favs as well ! Please may i wish you and the team a very merry Christmas and once again express how much you mean to us your humble readers for your very hard work on our behalf - it is very much appreciated. Here's hoping we can look forward to a better year in 2021 and perhaps by Easter the news about the number getting the jab will include a major portion of those at greatest risk. Cheers.

Small Cap Value Report (Tue 22 Dec 2020) - FRAS, BOO, APGN, DFS

Preamble

Frasers (LON:FRAS)

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Paul Scott

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