LON:ASC | ASOS - General Discussion

16th Sep '21 by cwatson

10 comments 1097 reads

Hi All,

Just creating a separate thread for Asos (LON:ASC) as i know its a widely held share.

Asos (LON:ASC) have announced their ESG 2030 goals today. Could this be a catalyst to getting more institutional money onboard? personally not a great ESG fan (window dressing), however this is the direction of travel within the wider market and should allay some fears around the environmental impact of fast fashion.

The share price has been very weak lately, dropping from the summer high of £59. Does anyone have any thoughts on why? main reason i can see is the rise of Shein who are dominating the online rag trade a the moment with cheap Chinese clobber. I think Asos (LON:ASC) is still well placed given their mix of brands and strong customer service. Is now a time to buy why the share price is subdued? thoughts welcome

Paul's take from his portfolio update back in May below:

Bull -

Strong results, yet sector has de-rated recently, hence attractive entry price now, in my view
Stockopedia is showing forward PER 30.7 - traditionally Asos has traded on much higher PER, as do overseas comparative companies - hence upside potential
Strong, and continuing organic growth, plus acquired brands (e.g. Topshop)
Large, established, dominant online fashion website for 20-somethings

Bear -

Profit margin has been weak historically, but now improving
Increased competition
Online sales tax threat

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BnB

16th Sep '21

All the reasons to buy ASOS apply also to Boohoo (LON:BOO), which, if forecasts are reliable, is much better value. But £BOO shares have been hit just as hard.

Clawde

It is sometimes difficult to know how much to believe analyst's views, that could be biased, especially if you do not know when they reviewed their own thoughts. Have to say that, on another site, when the thoughts of 24 analysts suggested a low point of 4,000p on Sept 7th and a "median estimate representing a 89.17% increase from the last price of 3,066p", it seemed to be worth supporting for the long term. ASOS said nothing yesterday to suggest otherwise with their green chat.

cwatson

agreed Boohoo (LON:BOO) is also undervalued, however i see Shein as a much bigger rival to Boo and able to beat them at their own game - cheap throw away clothes. I was previously invested in Boo and made good money, but see the recent ESG issues and rise of Shein as detrimental to their model

Rusty2

Analysts are rarely right. Also they may have motives for their predictions.

paulgbrown

10th Nov '21

There was a capital markets day today open to investors. It went on for many hours and covered their medium term plans. I must say the presenting management team were very impressive and a lot of ground was covered. Their target sales of £7 billion sounded quite achievable with the plans they showed. Their margin increases also sounded plausible.

They have made a big investment in technology which is paying off as their distribution centres in the UK and Europe are fully automated. Now they are going to do the same automation at their Atlanta distribution centre.

As a shareholder I was concerned by the share price drop. I am now optimistic that the share price will rise over time as their medium term plans convert to cash. Although I already have a large shareholding I might increase it to average down.

Paul

I was unable to attend the capital markets day so thanks for the insight Paul. Good to hear you were reassured and management came across well. The share price has certainly reacted well, still a bargain at these prices in my eyes, i'll be adding more. £7bn revenue is very achievable, ASOS had its problems in the past but is now a well oiled machine. I have no doubts that in 2 years time the share price will be significantly higher.

abtan

16th Nov '21

£ASOS (I hold)

Hi Paul

Thanks for your thoughts on the Capital Markets Day (CMD.)

I've finally caught up on it myself and I share your bullish sentiment.

This one was already top of my buy/top-up list, and the CMD gave me further impetus to press the buy button. I will probably buy more soon as well.

The real standout was the next day delivery proposition. I had no idea how profitable this was versus all other cohorts.

£ASOS already have next day delivery in 85% of their markets, but it's the recently started Premier next day delivery service in the USA, made possible by many years of infrastructure investment as you pointed out, that has me excited.

I could only find Amazon from the online fashion retailers (and I looked at many of the biggest - Macys, Nordstrom, Gap.com, etc...) that were able to offer a similar service.

If Asos can get the marketing right, and the Premier service is anything as successful as it has been in the UK, then the profits will fly.

---

And if I'm wrong on the above, all I'm looking for is +10% growth for each of the next 3 years, which I think would make the the current price look too cheap.

Here's hoping anyway.

Cheers

3rd Mar '22

Well today has been another shocker, each time i think this can't go any lower it does! anyone else feeling the pain? i keep reminding myself that fundamentally the business is sound and they have the power to increase prices in line with inflation. i still feel like there will be a big demand for clothing by young people this summer, they didn't get a full schedule of festivals and summer holidays last year, they'll be plenty of pent up demand. The expansion into the US is looking strong. I think in 3 years time this will show as a great buying opportunity, however hard to pull the trigger at the moment with sentiment so bad

Asos (LON:ASC) (no position)

Yes, another big fall today.

I sold off last week when everything kicked off. Indeed I sold anything with material Russia/Ukraine/Belarus exposure.

As you say though the real reason to hold, at least for me, is the potential for growth in the USA. I imagine that I will buy back in soon on this basis, but I'm not sure when. It's certainly horrible making these decisions based on something even more terrible happening to others right now.

Disco Dan

I've just given up on this one. Could have sent my daughter to a flash school for a year with my losses but there's more important stuff going on at the moment.

A PE of 17ish is still nowhere near cheap, the super-negative sentiment, £20m lost from pulling out of Russia, freight costs etc. Just way too many negatives. Can easily see the Covid low of 1000 being tested. This has definitely got further to fall.

ASOS - General Discussion

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Cwatson

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