Asos (ASC) enjoyed improved demand in the first half, with total orders up 28 per cent at 29.9m, active customers up 17 per cent, and website visits exceeding 1bn for the first time. Revenue momentum has been maintained, although it fell short of the lofty 37 per cent growth rate seen one year earlier.
While the group’s trading performance was overwhelmingly positive, an initial share price markdown suggests investors may have been spooked by the group’s raised guidance for capital expenditure. This will now be between £230m and £250m for both this financial year and next; a marked increase from earlier guidance. Increased commitments are already reflected in a substantial rise in inventory and plant/equipment from a year earlier, with the resultant fall in net cash also partly stemming from the reimbursement of creditors after slower payments in 2017.
The planned expenditure will benefit Asos’s technology platform – for example, chief executive Nick Beighton highlights the need to improve localisation of its international websites – while also accelerating investment in distribution and logistics, including plans to bring forward the Atlanta warehouse opening. Overall, management targets £4bn in future net sales capacity.
Broker Numis forecasts pre-tax profit of £101m and EPS of 97.9p for the year to August 2018, against £80m and 77.9p in FY2017.
Asos (ASC) | ||||
ORD PRICE: | 6,936p | MARKET VALUE: | £5.8bn | |
TOUCH: | 6,930-6,936p | 12-MONTH HIGH: | 7,770p | LOW: 5,338p |
DIVIDEND YIELD: | nil | PE RATIO: | 86 | |
NET ASSET VALUE: | 447p* | NET CASH: | £37.7m |
Half-year to 28 Feb | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2017 | 0.91 | 27.3 | 26.4 | nil |
2018 | 1.16 | 29.9 | 29.4 | nil |
% change | +27 | +10 | +11 | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £205m, or 246p a share |