Sfh: worthless or trading at 2 times ebitda?

This must be one of the more interesting plays on the ASX at present.

On one side you have the gloomy outlook; Amazon, soft consumer sentiment, household stress, heavy discounting, Oroton and others going broke, Myer downgrading forecasts, long leasing commitment tail, analysts deeply negative on the sector, all of which are not to be understated.

On the other side, on closer inspection, you have a business in a state of restructure, actively culling loss making stores, most of which will be done by 30 June, a brand portfolio that whilst often criticized as old etc, still permeates the consciousness of many and continues to have a really strong Australian consumer following in niche markets (Millers / over 50s, City Chic / larger women etc), US growth option, heavy online investment, strong distribution system, growing online sales, net debt of around $10m, landlord rent renegotiation upside, +75 cents USD fx rate and cheap multiple if one assumes it does not go bust. Management forecasting a $17m midpoint ebitda, in press coverage says that includes funding and write offs for store closures, a critical point. On a brand royalty relief method type valuation, at a royalty rate as low as 2.0%, pared sales in the range of $600m gets you a valuation several times the current price.

If it fails, naturally worthless, if it doesn’t and successfully gets its online and physical store mix right, will be worth many times what it is trading today.