Bingo. I only have a tiny tiny tiny holding (say <1% of the...

First 12 Last

Share
Profile

Follow
Fairclough

586 Posts.

31

15/02/22

22:36

Post #: 59594936
Share

Originally posted by Togmo: ↑

While on closer inspection I would say that this report isn't all fairytales and happy times I don't think there is anything too concerning in there for mine but some people are very hard to please.

The revenue after the cost of obtaining that revenue is up and the margin on that revenue is up which I don't think anyone can say is a bad thing or should bring them to suggest this is junk. Sure they are spending a fair bit on marketing (and perhaps not getting the return on this spend that most would want) and they are giving employees some pretty good bonuses by the looks of it but the business is on an upward trajectory. If was being priced at $5 a few months ago and is largely meeting the targets that were expected of it at that price point (although I will admit I would like to see more growth which would have been priced in - but the share price did nearly halve recently) I don't see why anyone would sell this off at half the price.

As austinngo117 said the cash sheet is $4M dollars worse off for the half year but that was the increase in marketing expense. They put $7M more in the inventory which is as good as cash on the sheet so I would argue if anything they have a higher cash balance than the 6 months prior. Supporting this is that their total assets and equity have increased during this time frame. Talk of having to raise capital in a year (or two, or three) seems like madness to me? Am I missing something?

To top all this off I think this sort of business is being hit by supply issues more than most businesses being an on-seller and this would surely be affecting their bottom line. As we come out of the global pandemic and supply chain issues become a thing of the past I think this business is in a good position to satisfy their customers even more so helping them gobble up even more market share and will improve their margins further. I am holding and wasn't planning on buying anymore but if the knife drops too far I will definitely be thinking about selling out of another position to bolster this one up further.

Expand

Bingo. I only have a tiny tiny tiny holding (say <1% of the portfolio) as i am more value. If growth rates continue with custom retention, it could become very profitable as the underlying margin is decent. Mainly as at a point the advertising spend will drop off as a percentage of sales when it ends the growth phase.

My view early stage, the results aren't "bad" but you have to have a very long time horizon for this investment to play out. Particularly when you are considering Myer is the same market cap, similar product margin and double the online sales (growing as percentage of their total revenue, but the top line is stagnate). So adore doesnt look cheap, incomparson but has an overall top line growth, just the question is how long will it compound at 18% for.

Last edited by Fairclough: 15/02/22

ABY Price at posting: $2.48 Sentiment: Hold Disclosure: Held
Upvote

0 Great analysis

Reply