Boohoo Share Discussion Threads

[cycle2] 13/1/2018 19:11

@meijiman Can I point out that nobody actually knows that it's margin loss that has caused the share price to behave as poorly as it has in the last 6 months. Yes, that's what analysts will say but then they have to have a reason to explain everything otherwise they look stupid (easy when looking backwards, not so easy looking forwards ;-)).

I prefer a simpler explanation: we've had two things occurring:
1. A large seller or sellers who have been dumping stock. We're aware of Carol Kane's sale and now Jalaludin Kamani having passed a reportable threshold but we don't know of who else might be offloading stock. It takes large players a very long time to do so.

2. It seems that buying pressure from institutions has dried up or reduced considerably. We've not had a threshold RNS from Old Mutual in a while, who were the ones loading up 12 months ago. We kid ourselves if we think that PI purchases make much difference with a market cap this high.

Does moving from 10% to 9.5% margin really matter when you have 100% annual growth? I think not, particularly when BOO's management can simply choose what margin they want by adjusting marketing spending (they've actually said that in the past). At the moment they judge it more prudent to go for market share growth and let the margin slip a tiny bit to 9.5% - good for them! Remember, they are very experienced in this field.

Is that the reason for the share price dropping 40% from highs? I don't think so. For whatever reason the big players are buying less aggressively or have reached a quota or something like that. As the company continues to grow at an astounding rate, the forward P/E and figures will look increasingly attractive and at some point institutional buying will ramp up again. Or perhaps Jalaludin Kamani will have sold enough for a nice yacht. Once that happens there will be no stopping the share price.

[meijiman] 13/1/2018 17:52

Does anyone have views on the margin position of the respective companies. Reading the copious comments a main concern has been BOO margins which has led to the stock being derated. On the other hand ASOS margins have declined yet the share price has gone the other way. I'm fairly relaxed on BOO margins particularly in light of the Burnley investment.

[kuss1] 13/1/2018 16:03

Some good points. NG's growth has been outstanding reaching 20 million in 10 months. I envisage all 3 brands reaching similar revenue levels. With less than 1 percent of the UK market still lots to grow. Europe and the US harder to crack but they are making progress and the rewards are huge.

The technicals were looking great 2 days ago. What happened there?

Interesting Asc margins gone from 7 to 4.5 since 2015. Take a look at the share price..

[cycle2] 13/1/2018 14:27

@AdamB1978 Very good points.

From what I have understood so far of management's strategy, I don't think they're planning to build warehouses in the US - for now everything is being kept in Burnley even for all the international expansion that's going on.

Regarding cash use for the PLT option, by the time we reach that, it would seem more sensible to do a placing. By that stage the Market Cap should be so high that the placing should be relatively small to pay, although that might not be the case if PLT turns out to be the brand that dominates. If it continues growth at the current rate, that's a possibility. It certainly seems to resonate with the US celebrity culture.

NastyGal intrigues me. I really didn't expect it to grow as much as it has over the past 12 months, which makes it look like there's another very strong brand being nurtured. They're taking their time to get it right but what is significant about NG is that the product ranges are higher priced. Yes, they've been on 50% discount to gain customer share (you can do that with higher priced products which are being produced in the same excellent sourcing infrastructure as BooHoo) but then once it flies, you can raise prices and it can contribute a significant amount to the bottom line.

Pity the technicals looks so rubbish at the moment. The trouble is that we're really just minnows playing in an ocean full of very big fish. All us long term holders are waiting for some big institutional buyers to start accumulating again and then there'll be no stopping this. As the forward figures roll over to the next financial year this has got to start looking cheap to some big players, the question is how long until that happens?

[joeall] 13/1/2018 13:58

Don't forget boo was one company but now three.

[adamb1978] 13/1/2018 13:28

The most interesting thing about the BOO valuation is that effectively the US is included for free. They've got a starting position, though probably not making money from it at the moment, but its a the level where BOO was back in 2011. If they grow that business similar to how BOO grew, ignoring the fact that the US market is several times bigger, then the current valuation is also very cheap.

Regarding the cash balance which one or two have mentioned, worth remembering that BOO have the PLT option over the 34% minority which they have another 4 years to exercise. At market prices, I reckon that that will cost around £300m so can understand them building up the cash pile, and they'd also have capex to spend in the US if they grow there in addition to the planned warehouse automation/expansion. By my reckoning, the current cash pile plus the likely cash generation from the business will be sufficient for both but I dont see dividends for a few years yet. That said, most investors wont be looking for dividends so not a problem.

[pediment] 13/1/2018 12:42

Not much solace for the longs here imo.

It's hammered through all the moving averages and finished on a minor resistance.

What you don't want to see is a return to the downtrend channel which outwith update periods is now well established.


The MACD cross looks a bit ominous for a drop to 168.00 where the channel continues. If it gets that low expect a battle there and further downside if broken.

[kuss1] 13/1/2018 11:48

Over-reaction to a relatively small sell by a non-director.

The large institutions ultimately govern price not the traders. They will buy if they believe the story.

Great update on 11th I thought. Exceeded all my expectations, particularly NG and PLT. Sell when the story changes not when it's getting better.

Melody999, I take your point. There are always low cost producers and exceptions. But the industry (oil/gas/commodities) have their cycles, are dependent on the price of the resource, and require lots of CAPEX. I don't like that mix. Especially when there is over-capacity with most resources and the price of oil always goes back to around $40-ish dollars a barrel, it's long term price point....

Anyway, back to Boo, see what next week brings..

[fuji99] 13/1/2018 11:38

Asos dropped from almost £80 to £20 before going back to £70+. BOO will build it share price growth with its year on sales numbers. For the long term holders it does not make a difference if one can be patient till say 2020.

[melton john] 13/1/2018 11:22

From the announcement (para 11) Jalal ceased to have executive responsibilities with the Group as of October 2015.

[jamesto2] 13/1/2018 11:10

Looks like it's heading down fast and will buy back in at 1.60p ... NXT is a more stable stock for now

[melody9999] 13/1/2018 08:28

This will at some point be seen as a good buying opportunity. Why? Because future growth will ensure that the valuation becomes increasingly appealing. And at that point the share price will rise. Thats why long term holders will win out in the end.

Kuss re oil/gas - I disagree. Looking back over the last 3 or 4 years you are right of course... before that oil/gas was a happy hunting ground. I suspect that oil/gas will do very well this year. I just look for low cost producers. See SQZ, TRIN, CNE for example. Same for miners I hold BCN and CAML for example. Sorry for O/T.

[thorpyuk] 12/1/2018 23:10

I'm going to hold this long-term. Not all that many growing earnings by 40% every year... flat between now & end of Feb followed by a big jump until June update at least...

[kuss1] 12/1/2018 22:43

To be fair to ASC they have 15 million active customers.... So that explains the valuation to some extent. Boo around 9 million.

[kuss1] 12/1/2018 22:32

First thing you learn in the markets is don't do oil and gas. Don't do commodities full stop. You are buying costs not revenue. The market is all about cash generation and the rate of that cash generation. Small cap explorers will ask you for cash. That's a no no.....

Boo growing its cash generation at 100%. That's why it's a good buy. I think you will see revenue of 600 million end of Feb given revenue of around 55 million a month. Margins of 9.5 million should see a net profit of some 57 million. Market cap 2.2 billion so rough p/e 38. Cheap as bloody chips....

Asc market cap near 6 billion on 80 million pre-tax, growth 25%. Boo incredibly cheap in comparison.

Anyway,been an interesting week. Slightly disappointed but that's the market.

On these market theories etc... remember it's all quite simple. Who can sell the most stuff to the most people for the most money.... You don't read that in the books but it sums up the stock market. Boo doing a good job at it ... that's why I like revenue growth and customer numbers. Margins of 9.5 are fine.

[mauricemonkey] 12/1/2018 22:06

Lol NTOG. Every night you must to bed wondering if there's going to be an RNS in the morning doubling/tripling the shares in issue.
Good luck with that.

[cinoib] 12/1/2018 21:43

mauricemonkey,
well as this sinks, again ntog is flying high am a grand up in days, can't say that about boo of late.

[mauricemonkey] 12/1/2018 18:48

Bought in at 26.9p
Last top up before results at 1.81.

You can do the hokey cokey all you want, trying to scalp 5% here and there. I bet there was a lot of nervous scalpers when the price refused to budge - it only fell because a director dumped 8 million shares into strong buying pressure so you got lucky.

As for "this can only go up"...

Revenue is likely to be around £550m.
So @ 9.5% margin profit is around 52.5m
Current Market cap £2.2Bn

P/E of 40

Another 100% increase next year P/E of 20.
Even if they only manage 50% that a P/E of 30

There's companies growing at 10% with PEs over 30.

[davr0s] 12/1/2018 18:43

You can lol all you want but when a share goes down on volume you are trying to trade into a headwind. On average you will lose so good luck if you think you can beat probabilities!

[mauricemonkey] 12/1/2018 18:34

Lol, the followers of people like Minervini have started creating self fulfilling prophecies all following each other in and out like sheep.

[tcarter66208] 12/1/2018 18:30

Can't wait to get out of this when I get the price i want it. Traders playground.

[davr0s] 12/1/2018 18:27

Posted months ago that this share is under distribution - completely ignored. You guys thinking this can only go up need to read O'Neil, Minervini... and still people buying the dip. Lol

[mauricemonkey] 12/1/2018 18:09

Oh well, it's only money - I was right though, someone was offloading significant numbers of shares yesterday.

[jamesto2] 12/1/2018 17:39

Wished I sold this week when it was 2.15p? Now looks to be heading down to 1.65p/1.70p level