MU

Small Cap investor. Chartered Accountant

[S @20Ro27]

#KIST materially undervalued, 12 month target price of £6 for me.

1. H1-26 pro-forma EBITDA $205m
2. FY26 guidance: 20kboepd
3. Adj net debt $23m

Yet the market values #KISTOS at only 0.8x FY26 EBITDA!

Best guess c/f H2-26 & FY27 = $504m, mcap $294m. Explosive move incoming.

[SandemanStocks @Sandeman52]

If you never experienced the 80s or 90s, you missed out.

Probably the last 2 great decades.

[MU @MU_471]

@baroninvestment I’m in this too. Managed to top up on the drop this week, but in hindsight, should have bought a lot more. The psychology in investing eh!

[Shaiel Ben-Ephraim @academic_la]

There is no conclusive proof. But the circumstantial evidence that there is pro-Argentina bias in FIFA affecting the World Cup:

1) In the group stage opener against Algeria, Messi caught A��ssa Mandi with a studs-up challenge on the Achilles and escaped any card. FIFA later admitted the VAR officials got it wrong and sanctioned them.

2) The inconsistency became undeniable when the United States' Folarin Balogun was sent off in the Round of 32 for a near-identical foot-on-ankle challenge on Bosnia's Tarik Muharemović. Pundits directly compared the red card to Messi's uncarded foul on Mandi.

3) In the 2026 Round of 32 against Cape Verde, referee Drew Fischer did not enforce the tournament's new rule requiring an injured player to remain off the pitch after treatment. He waited for Argentina's Nicolás Tagliafico to return before allowing a Cape Verde corner. Several uncalled fouls in that game also went Argentina's way.

4) Today against Egypt, with Egypt leading 1-0, Mostafa Ziko finished off a long breakaway to make it 2-0. VAR sent Letexier to the monitor and the goal was disallowed for a Marwan Attia shirt-pull on Lisandro Martínez that occurred roughly 20 seconds earlier and nearly the full length of the pitch from goal.

5) Neutral officiating experts, not just Egyptian fans, called the decision wrong. Former FIFA referee Mark Clattenburg said he did not believe it was a foul and did not believe VAR should have intervened at all, adding that the call was inconsistent with the physical contact referees had allowed all tournament.

6) The winning sequence produced a second grievance. In the buildup to Enzo Fernández's stoppage-time winner, Egypt appealed for a penalty on a Salah challenge and for an Alexis Mac Allister shirt-pull, and VAR checked neither. Hassan cited the unreviewed Mac Allister pull directly in his post-match remarks.

7) The 2026 grievances land on top of a 2022 record In Qatar, Argentina were awarded five penalties, the most ever by a team in a single World Cup edition, with Messi taking all five. That same tournament, Messi handled the ball against the Netherlands in the quarterfinal and escaped a yellow card.

8) FIFA has appointed an all-Argentine crew, led by Facundo Tello, for Thursday's France–Morocco quarterfinal, the tournament's first all-same-country panel.

9) Comments attributed to Infantino after an Argentina match were widely discussed as suggesting bias toward Argentina before he later clarified them, and a deep Messi run drives far more global viewership and revenue than one without him. This establishes incentive.

FIFA cannot be trusted. Egypt was robbed. Argentina are coasting to another title under FIFA protection.

[Baron Investments @baroninvestment]

With quite a bit of news flow recently, I hope this post is helpful for those holding or looking at ASOS. I have tried to cover a bit more net debt and free cashflow.

Let's start with the positive adjustments in net debt and any confusion around that. Consensus for year end (based on 7 broker change made in the last 28-days) is now just below £100M. Some have asked why the discrepancy with the proforma £180M that was recently quoted by the company. The answer is because this figure DOESN'T include the seasonal working capital swing that offsets the H1 outflow. At the H1 point, management had guided to being broadly free cash flow (FCF) neutral for FY26 which means a £93M inflow for H2. So for simplicity, the attached chart uses a net debt closing position for FY26 at £87M - and slightly ahead of 28 days consensus. That would reflect the guide precisely.

The next financial year however (which starts in September) see's net debt dip further as the business continues to executes with the recent warehouse disposals built in. I haven't factored any of that into the £87M estimate for FY26 given they are recent announcements. For FY27, I am using a £12M free cash flow (FCF) boost (from those leasing/occupancy cost savings) and adding a further £3-4M for the interest benefit giving a clean and recurring £15-16M to ASOS ahead. A substantial upgrade.

Interestingly (I think so anyway!), one of the biggest bears in the market have been Barclays and pre these recent warehouse disposals they estimated that FY27 (which ends in August 2027) would result in approximately £25M of FCF to the company. That's obviously a huge step forward from "broadly neutral" but their estimate doesn't include the additional £16M (that I have mentioned above) which would bring them to £41M FCF. At the time of that note, they called the £25M estimate "interesting" but thought £40M would be needed for "a really compelling" FCF! So, maybe we see them bump their rating to HOLD ahead? In their note that day they highlighted these points from the earnings call - 1) Management called out strong progress in Womenswear and UK, which are areas of particular focus. 2) Test and React is going well, with the business aiming to reach >25% of sales by FY26; 3) Improvements in quality and selection are showing,
with the business calling out improvements in return rates and relaunch of 4505 driving strong
GMV growth; 4) The company onboarded 60 new partner brands, launching exclusive collaborations with 50 of them, which is driving a halo effect and strong sell through; 5) The business is focused on returning the UK to growth, increasing marketing spend and campaigns (recall the business launched their loyalty programme first in the region as well) and T&R; 6) The business sees improvements in the customer experience via AI, utilising search discovery and virtual try on in app; 7) The operational model continues to see efficiency gains, including
reduction in variable supply chain costs alongside improving return rates.

And then onto the next big item which is why are there now surging FCF estimates for the years ahead? Well, the most important feature is that the FCF improvement is primarily a cost and efficiency story and not a revenue growth story. Any growth however quickly elevate the shares to many multiples of the current levels. Why? The operating leverage is immense on a top line or gross margin improvement. Crucially, 2026 is the first year when ASOS are finally focused on growth again (any you can find all this in my previous coverage). Some further points on rising FCF expectations though as its really important:
- Continued cash flow improvement is anticipated. Analysts need EBITDA to grow modestly from the £165M FY2026 guided level and that can be achieved through the expected margin expansion (the CFO has repeated many times this as sustainable and expansionary), even on flat or slightly declining revenues. Management have explicitly guided to profitability improvement "independent of sales." - Fixed costs to remain strictly controlled and ebitda margins of 8% anticipated vs the 5-6% currently. On flat revenues, every 100bps of margin expansion is worth £25M and that flows almost entirely from cash from operations given the fixed cost based already set. The move from 5% to 8% drives £75M to the business which is very material relative to todays market capitalisation. Ultimately, the gross margin expansion to 50% is the engine. ASOS was at 48.3% in H1 and already 330 bps ahead of the prior year. The low point was 43.3% in 2024 which is a 790% bps deterioration from the FY28 peak of 51.2%.
- reduced discounting cannot be undermined here and a big part of the recovery. The deliberate shift to full-price selling has been a material driver in recent times.
- capex now being reduced to 3-4% of sales and down from the 13% peak!
- working capital stability with inventory already cut 62% from highs. That means no further structural working capital drag and the H1/H2 seasonal swing becomes the only moving part.
- £5M in annual cash interesting savings from the loan refinancing
- As per earlier, warehouse disposal savings deliver £15-16M of annualised lease and interest savings in FY27 (commencing from September 2026)
- Marketing ramping. ASOS had significantly cut spend to preserve cash but it had a cost. They are now only rebuilding sustained investment but with the discipline that is required. It really needs to be emphasised that a freed Balance Sheet = more marketing (again, the company has been constrained for years) = customer numbers build = revenue growth = material operating leverage kicks in)
- T&R is now over 20% of own branded sales and they are targeting 30%. Products in this model sell three times faster with 50% higher full-price sell-through.

#ASC

[Guz Khan 🥶 @GuzKhanOfficial]

If you have a shred of moral integrity and you care about women and children, just go through this.

The actions of Israel in its true form.

Murder, destruction, genocide of the Palestinian people.

[Baron Investments @baroninvestment]

#ASC absolutely phenomenal news for the company and shareholders. Another non core asset sold with net cash proceeds for Atlanta of £48m.

This newsflow will once again significantly boost free cash flow ahead given the warehouse savings and reduction in interest.

The shorts have all been trying to close as they know the recovery is on.

Well done ASOS, conviction raised.

[Baron Investments @baroninvestment]

Panmure Liberum on KISTOS - "when we look to 2027 – when the revenue and FCF generation truly reflects a full year of higher Norway and Oman output, we forecast the company moving into a net cash position – which would see our tangible NAV rise to 595p/sh"

#KIST

[Aaboom16🇸🇴 @aaboom16]

If this was an African countries’ tradition they would call it backwards and barbaric

[Samantha Asumadu @SamanthaAsumadu]

This is very... stark

[Harriet Williamson @harriepw]

Keir Starmer choked up with tears in his resignation speech - he didn't shed any for the 73,000 Palestinians ethnically cleansed by Israel in Gaza while providing diplomatic cover and material support for their killers

[MU @MU_471]

@anchovycapital Wild stuff

[MU @MU_471]

@anchovycapital Thanks. I’ve seen the news on Bloomberg that lenders have appointed Rothschild and that Q1 results were quite bad

[MU @MU_471]

@anchovycapital @wonkywalker87 What are K&E known for doing? Partners have used them for the initial issuance of debt for emeria

[MU @MU_471]

@anchovycapital @wonkywalker87 Octus reporting that lawyers have now been appointed for both Emeria and debt holders to start negotiating. LME in action? Can’t be a simple A&E can it

[Share Money @shareGBP]

#Slp for context, annual run rate from Q3 numbers EV of circa $270m and EBITDA of circa $190m. This company is way too cheap and this is post major capex to increase production runway

[The Swedish Rumble 🔰 @SwedishRumble]

I don’t get why people use “net spend”. It’s not net spend, it’s only transfer fees.

The below transfer window led to PSG making a world record loss of 386m in 21/22 — still they only “spent” 80m?

To be brutally honest, people who think ”net spend” means what they think it means, must think a little harder. 😅

People like Dougie Critchley fall for Pep’s nonsense about net spend. The City Football Group has spent billions on creating a global academy that funnel sellable talent to Man City. Last summer Man City sold Bobb, McAtee, Couto and Perrone for 90 million. This reduces City’s “Net Spend” with 90m. So what does that tell us? Arsenal have invested more in their squad that City. Okiii….

[MU @MU_471]

@Henrik115 How does EV and 2P reserves compare?