Associated British Foods Share Discussion Threads

[kevph] 05/7/2022 16:10

Unbelievably down below the Covid lows. Wondering where this will land?

[essentialinvestor] 01/7/2022 18:18

Large director buy, any views here?.

[tlobs2] 01/7/2022 10:15

Wow, that's what you call a decent directors buy :-)

[m_kerr] 28/6/2022 18:18

doesnt mean prices will fall though, just means they will rise at a lower percentage.

[justiceforthemany] 24/6/2022 15:36

Wheat prices down 20% in 2 weeks.
In line with other commodities.
May mean inflation has peaked.

[m_kerr] 21/6/2022 19:57

good company doesnt necessarily mean good investment.

if you pay 10 x ebit you've got a better chance of making money than buying it at 25 x ebit.

there is huge risk buying shares priced for perfection, and great opportunity buying good companies cheaply.

the assumptions made to price this at £12.8bn, and enterprise value of approx £11bn are very pessimistic indeed. e.g. if instead of declining, primark does as ABF expect and grow by 30% in the next few years, we could be looking at ebit of more like £1.5-2.0bn in 5 years.

[essentialinvestor] 21/6/2022 19:10

diku, the multiple has effectively reverted to the pre Primark parabolic growth phase
at very approx 12-13 x earnings. You could make a case that is cheap, if Primark
can remain as profitable over the longer term.

[diku] 21/6/2022 18:56

Post 2884 & 2886...morale of story is shares are not for permanent keeps?...

[essentialinvestor] 21/6/2022 13:35

If you bought ABF in 1993 and held, as some will have, you are Up (today's price) just under 3,800%,

Include dividends and the return is greater.


Anyone buying 5 years ago was paying in excess of 30 X earnings and that
was just silly (being very polite). - as some of us pointed out at the time.

Mean reversion on the multiple was always going to kick in at some point.

[philanderer] 21/6/2022 09:47

JPMorgan cuts AB Foods to 'neutral' (overweight) - price target 1,900 (1,940) pence

[porsche1945] 21/6/2022 08:42

Almost the same price they were in 2012 and down from 3400 before covid to this, shocking, tiny dividend and real capital destruction, and this is a better ftse 100 company than most of the dross on there. Would figure it has to go up from here but I guess that’s how people felt all the way down.

[m_kerr] 20/6/2022 22:31

they should break well over £1bn in EBIT. the shares are very cheap given the roughly £2bn of net cash they will have by the year end. an EV/EBIT multiple of about 10 for a well run company with a proven business model is remarkable. the share price also totally ignores primark upside.

[darrin1471] 20/6/2022 18:46

Makes sense when you read all the trading update:

"We have chosen a much expanded range of children's products for this trial, which we believe has the potential to satisfy unfulfilled demand, driving footfall from both existing and new customers to deliver incremental sales in store. The trial will take place in up to 25 stores in the northwest, which will provide a representative sample of store sizes and formats in our UK estate.

The Click & Collect service will build to offer customers some 2,000 options across clothing, accessories and lifestyle products, which will cater for a broad range of family needs from furnishing a nursery to clothing children of all ages. Around 40% of these options will be exclusive to Click & Collect. The expansion of the offering will be particularly attractive for our customers who do not regularly shop in our larger stores. Our average size stores are only able to stock a limited range and for these customers the number of options available to them will broadly double, increasing even more for customers of our small stores. This trial will enable us to provide more fashion, licence and lifestyle products to more customers and more often. In store collection will be available from designated areas, designed to be welcoming and situated in the heart of the store.

Click & Collect orders will be processed and dispatched to store from a dedicated UK distribution centre. Our product suppliers will prepare the stock in cartons in a way which will enable simple and efficient picking at the distribution centre. This pick and pack operation will be manual during this trial with plans to automate in due course. Orders will be free to collect for our customers, and returns will be accepted free of charge in store."

[essentialinvestor] 20/6/2022 16:42

Wider UKX up 1.5% perhaps helping to be fair, but yes a decent reaction to the update.

[phillis] 20/6/2022 16:33

highest of the day

[queen gibbs] 20/6/2022 12:57

Primark don’t sell BTS clothes - that market has been left deliberately for the supermarkets to fight over

[darrin1471] 20/6/2022 12:47

Back to school is a fair call. Customers will want a specific size and not a wasted journey.
Once you start putting product on a website you don't want customers finding the product is not available instore.

[roguetraderuk] 20/6/2022 12:34

must be a reason for it limited to kids. maybe its back to school or summer holidays, something they think can sell enough to provide a real picture. and given the long time coming its prob something they have been forced into doing - c&c. ship has sailed on this one in terms of bang for buck, but for the business im sure they can make it work in the way that john lewis did.

[darrin1471] 20/6/2022 12:24

Kids clothes are cheaper as there is no VAT but the margin ex VAT is the same as far as I am aware. My main point is I do not understand why you would trial c&c on a low value items unless you wanted to prove c&c profits could be made on all items including low margin items.

[queen gibbs] 20/6/2022 12:03

Darrin - not sure if the reference to higher margin is for the sales? Not VAT on kids clothes as they are classed as an essential

[darrin1471] 20/6/2022 11:45

Rogue, I've never heard of kids being higher margin.
If doing a c&c trial then surely it should start with higher priced items. It costs the same to process a £30 coat for c&c as it does a £3 kids t-shirt. Returns are higher on higher value items though.

[essentialinvestor] 20/6/2022 09:27

The usual results/trading update price action on ABF is an opening pop
which is sold off during the day. Looks a solid enough statement but difficult market
atm.

[whalehq] 20/6/2022 08:06

Incredible that they can maintain FY run rate margins in Primark given input cost inflation and without price increases to date. Other operators are really struggling in this area. LFL 2% ahead of pre pandemic, European on slow path to recovery, US looking good, city centres recovering footfall, agri demonstrating pricing power and other divisions starting to filter through.

It will be interesting to see what happens when the primark price increases come in. I'd imagine more of the same. Even with clothes 5 or 10% higher Primark is still amazing value. Where else can you fill a bag for £50 and come out feeling good about it?
I'll tuck these away until 2026 at a minimum.