ASOS have dropped quite significantly in the past week for no particular reason and I view this as the perfect opportunity to invest as I can see them bouncing right back up to the 5.50p mark in the next 2-3 weeks. STRONG BUY!!

dil Good to hear from yo0u but surprised at the negative comment. My views, expressed recently is that the share is good value now on fundamentals and should be a definite buy after Monday's AGM with trading statment. I expect analyst forecasts to be upgraded as they do not reflect the improved margins from new warehouse, etc. and the year on year trading improvements exhibited on the hitwise charts. You seem to have a different hymn sheet; but then, being Welsh, you are probably still singing from Cwm Rondhha! Perhaps sd can give us a rendition, with appropriate yowling conclusion!

Eric

I can only be induced to sing Cum Dividend, sorry to disappoint!

sd

I do have one slight reservation with my analysis EW but not enough to make me change my opinion ... yet.

Good luck.

Eric,

This SD is a Londoner (Chiswick W4) Wales my adopted country ( Free House!!!)..SD

Dil - there are two things that rise to the top, cream and scum, as my fathher used to say.

Who cares, so long as they rise? I think you should have looked at the chart before you posted. One more push through the recent intraday high of 80p and we're back to the old high ground of the end of last year, on fundamentals greatly improved by ever increasing customers/visitors and a new warehouse.

Not a good day to sell in my humble opinion.

(On the other hand, if it falls back through the recent 65p low, then it's time to take a back seat on it till the next upswing.)

sd

sd , I looked at the chart a long time ago ... this time last year and as I said then I wouldn't argue with it.

dil: you can't look at a chart a year ago and come back with it etched on your memory. Well, perhaps you can but that's not good investment tactics. A year ago expectation had built up, not necessarily to an unsustainable level but a level that couldn't cope with subsequent warehouse problems. As is the norm, the reaction was then overdone, before the sp has climbed back to the evel a year ago without the hype present then. We will know more on Monday so should wait for then - who says to whom 'I told you so!'? A super company that is going places - good to have that sensible welshman, SD, on board. What, i says is, Cwm on ASOS.

Eric

No what I was saying EW was that I didn't like the company a year ago but the chart was screaming buy and I wasn't going to argue with that.

Looking forward to tomorrow to see what the AGM brings forth, can't exactly say that this particular company is good at promoting itself, it has an abyssmal PR department, if any at all. My charts say "Buy" the same as everyone else but I would still like to see more good press releases to keep people in the picture. Communication is so easy now....SD

SD The share was somewhat over-hyped a year ago as we have found with SEO this year. I personally prefer the current situation where the market really only reacts to a change in fundamentals. Thus, with my own expectation for tomorrow ahead of the market, I feel more confident that the market will respond positively to good news.

Dil: Not a problem. Take a good look tomorrow, i suggest, as the market could be slow to respond in terms of a re-rating: may want to wait for the Xmas season given the problems last year.

Eric

dil old bean i bought these at 70p not long ago....they are aimed at the younger "trendy end" of the market so I would expect you dont like them :-)

my missus must have spent enough on the site in the last year to double their bloody turnover.

lol , sorry to hear that Treb.

Treb

Many years a go now, with equal thoughts of doubled turnover in mind, I did attempt to launch a similar enterprise called ASOW (As Seen On Wife) but strangely, fashion being the fickle temptress that we all wish to encounter one dark night but never during the hours of daylight, the merchandising left a lot to be desired. It did however match up to my experience of the marital overdraft very shortly after launch.

Be careful - you may get what you wish for!

Here's to a highly prospective AGM tomorrow.

sd

Applying the announced 86% year on year increase in turnover to the finals, we get a projected turnover to March 2006 of about 25m, with a gross profit (slightly improved from 48% to 50%) of 12.5m.

Allowing last year's operating costs of 5.5m plus, conservatively, 1.5m for 6 new staff and increased cost of new warehousing and logistic systems, plus amortisation of 0.228m and interest received of, say 50,000, we get a net profit before tax of 5.322m.

With 75m shares in issue, this equates to an eps of 7.1p. With a relatively modest PE of, say, 15, we can project an SP of about 106p, 39% up on Friday's close.

How much value (or diminution thereof!) do we set by NR's rather downbeat closing remarks.

"I remain optimistic about the long term prospects for ASOS and we are putting in
the building blocks now to support continued high levels of growth. That said,
our first half performance should not necessarily be taken as an indication of
the outcome for the full year, especially with tougher comparables ahead and the
all important Christmas trading period still to come."

Does he expect turnover to actually fall in H2 from H1, or merely not increase at the same rate as H1 05/06 has over H1 04/05?

Anyone any alternative figures to suggest?

sd

stockdog nice post but there was no mention of margins which none of us saw coming last year when there were under pressure, might be the same this year ?looks like until results we wont know for sure.

woodie
H1 04/05 gross margin was 51% and H2 fell back to 47.5% making 48.75% overall for the year.

Assuming this has fallen to 45% (pessimistic) whilst old-warehouse stocks have been cleared and does not improve, gives net profit as above altered to 4.072m, or an eps of 5.43p. On a pe of 15 this gives an SP of 81.5p - as a safe position.

Only trouble with this post and the last one, is I have omitted consequences of tax, which I guess very roughly will run at about 20% rate, since there should be a considerable capital allowance for new warehouse and IT systems to bring it down from the full 30%.

Factoring this in we get an eps of somewhere between 4.34p and 5.68. On the current SP that's a pe of 13 to 17. Let's hope the market gives it a higher PE rating than I have allowed.

EPS 2005 was 1.30p giving an historic pe of 40.8. If prospective PE is as high as 28.4, and allowing an "average" between my two guestimates of fully taxed eps for 2006 of 5.0p, this is a PEG value of 28.4/((5/1.3-1)*100) = 0.1 quite low enough to justify the high PE. The projected SP would then be 28.4*5 = 142p. A more modest pe of 20 (and a tiny PEG of 0.07) suggests an SP of 100p - a not bad 35% increase over today's price.

Anyway, I encourage you all to do your own calculations and let me know what you come to.

sd

Update pending from Lemming Investor.com whom identified ASOS as a growth candidate at 7.25p.

sd: good work on the figures. very slow machine here so has taken half an hour to get this far. Your 50% gross margin sounds sensible. Regarding the closing comments, the same was said for the summer period in teh alst quarter trading statement so obviously trying to be down-beat. Not a bad thing as it will keep the price within reasonable bounds. No mention is made of the fact that the comparable period was held back by the inability to bring key lines to market that then needed to be sold off in extended sales in the new year. We know from previous comment that margins will improve with the new warehouse and IT systems. I take more seriously the optimistic comments about future trading: they have only made ripples so far in the total market. I believe, I'm sure lemmingsinvestor will agree, that we have several years of major increases in profits ahead. Current price is a give away. My own holding is relatively small at present and I am not going to make any more bullish comments. However, I am saying that ASOS is a Strong Buy and advise decent purchases at near the current price. OK, its said - I will only refer back to this in the New Year, or earlier if I have had the funds to build up my investment.

Eric

stockdog,

I believe the tax rate is nearer 10%, (due to New warehousing) rather than the 20% you mention. It is always best to be conservative with these numbers, but enquiries have unveiled better figures:-))

EWRobson,

Lemming Investor are more bullish than you:-))

Best wishes

Elric

elrico

good news - it brings 1.00 nearer to reality.

elperro