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!!

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

elrico: like that. what is more bullish than a 'strong buy'? OK; PYMOI (put your Mrs on it!). sd: 1 pound is history; roll on the sewcond pound.

elrickie (known as el tricky to some)

99% sells today and the price has only dropped 1p - is it safe to assume the MMS believe this will go higher in the near term?

Another crap trading statement pending xmas profit warning.

All imo of course , just be careful guys.

Dil - do you hold any shares in ASC? If so, follow your own advice and sell at not a bad price currently. It would have been unluckily hard for you to have bought in higher (did you?).

If not, why the altruism? Why the emotional response to a balanced statement - can't be good for your trading style?

All the best

sd

What trading style stockdog? Only fear, hate, intrigue, and some deep, inner self-loathing perpetuate dil's bb comments. Everyone enjoys reading balanced postings but his are always negative and never about shares he actually owns!

Dil: What a crap comment on a helpful and positive statement. Clearly laying the building blocks for continued expansion at significant levels; where else can you find a company with trading improvement of 86%. The note of caution hardly seems relevant as the company has clearly learnt the lessong from last year. Having said that, I recall you weere on Wales to beat England at Rugby last year and are probably anti anything at all English, particularly success stories like ASOS.
By gum, sd let you off lightly; you're not a postman by any chance (just do crap posts!)?
Eric

Well said sd and Eric..........Dil you are a plonker !!!!! SD

I think I can spot a postman, coming up the path by now.

sd

What ASOS now needs as a TV Channel. Using this they can shift surplus stock which is not selling from the website. This will give them such a great expansion and a constant stock flow. I hear that some people who are stuck at home are almost addicted to channels like 'price drop'. In addition there is the possiblity of a TO by people like Phil Green who are stuck in the high street.

Interesting article on the Internet in Tuesday's FT - couple of days behind here. Suggests another internet boom coming. Big advertising money going at the portal providers. Is there a better internet trading share on the market than ASOS? Is there a better sector for internet trading than fashion? How relatively easy to enter the US market. Increase volume by icon's from portal providers. Still waiting lemming Investor but suspect they will have a juicy picture to portray. Hugely undervalued on a two to three year view. Oh no, I said I wouldn't say it and I've said it!

Eric

saturn5 - what correlation is there between stay-at-home addicts (unwaged?) and telesales actually made? I doubt it's huge.

sd

I agree. I wouldnt say that market is huge but it will be the way forward.
I am a very big fan of ASOS and it must be one of the best shares to buy now.
Any other posters who can suggest a better one having done some research ?