Tradefair & Financials
Welcome to Live View – Take the tour to learn more
Start Tour
There is currently 1 person viewing this thread.
07 Jul 10
11:46
Joined:
Date Joined:
25 Feb 06
Since I've spent more than £300 with Ocado over the last year or whatever, it seems I'm elligable to take part in their share offer for floatation. The minimum I can put in is a grand and the is 12k.
I'm wondering whether it's worthwhile or not.
Factors:
some of their biggest contracts for automation equipment are with eurozone companies and budgeted at 1.10EUR to the GBP and are worth many millions over a few years.
they are the biggest independent online food retailer in the UK.
They are heavily reliant on Waitrose.
They have ONE large warehouse where they pick most orders.
They are not a profitable company, but the trends in their books suggest they will be in a year or two.
Now I'm a pretty conservative investor (copper was my last punt a few years ago and it paid off nicely) and don't feel comfortable investing in loss making businesses that are not in the very young stage. They have been running for years now and have not yet managed to turn a net profit. They have quite a lot of debt, too.
What are everyone's opinions on ocado?
I'm wondering whether it's worthwhile or not.
Factors:
some of their biggest contracts for automation equipment are with eurozone companies and budgeted at 1.10EUR to the GBP and are worth many millions over a few years.
they are the biggest independent online food retailer in the UK.
They are heavily reliant on Waitrose.
They have ONE large warehouse where they pick most orders.
They are not a profitable company, but the trends in their books suggest they will be in a year or two.
Now I'm a pretty conservative investor (copper was my last punt a few years ago and it paid off nicely) and don't feel comfortable investing in loss making businesses that are not in the very young stage. They have been running for years now and have not yet managed to turn a net profit. They have quite a lot of debt, too.
What are everyone's opinions on ocado?
Show More
Do not touch them, other online retailers are making big strides with new developments at the min.
Tescos are opening another large depot to handle 400 vans in the London Area. Waitrose have their own home delivery that has been boosted since offering free delivery.
Both supported by profit making companies, how will occado go once their are shareholders after a return on their investment in your opinion?
Both supported by profit making companies, how will occado go once their are shareholders after a return on their investment in your opinion?
Do not touch with a barge pole.
Their fortunes are directly tied to what Waitrose does. Whilst Waitrose are a steady company, there won't be much growth there. I also think that the £1 billion value placed on Ocado is seriously overvaluing it. There will be an overall decline in share price after it is floated I think, so not worth investing in.
Another small note, Amazon have just launched an online grocery store, so would expect this to cut into Ocado's profits further.
Their fortunes are directly tied to what Waitrose does. Whilst Waitrose are a steady company, there won't be much growth there. I also think that the £1 billion value placed on Ocado is seriously overvaluing it. There will be an overall decline in share price after it is floated I think, so not worth investing in.
Another small note, Amazon have just launched an online grocery store, so would expect this to cut into Ocado's profits further.
The amazon one is rubbish go take a look, a multi pack of crisps £12.
yeah, M&S might be about to launch theirs, too. That would bring some serious competition. BTW Waitrose ownbrand home delivery is restricted to within the m25 (or is it outside the m25?) either way, theres some deal going on there with ocado - but it cant last.
I think I'm going to pass this one.
I think I'm going to pass this one.
The good thing about the amazon one is that it's an open market. AFAIK you can even have amazon handle your stock and pick it for you so prices will very quickly fall. I just cant see how it can all work properly together?
I am actually waiting to short this as soon as it comes online. I've never seen a bigger dog in waiting...
Having said that, buy the shares and sell them day 2. I think GS are doing the book support which means they support the price for about two weeks while they try to sell the excess to little old ladies so it won't crash straight away.
Having said that, buy the shares and sell them day 2. I think GS are doing the book support which means they support the price for about two weeks while they try to sell the excess to little old ladies so it won't crash straight away.
Not interested in taking that kind of risk. Good luck on the short, sounds like a pretty good bet.
The Amazon launch looks terrible, you dont even get a delivery time so how does that work, you buy from 3rd parties so could end up with multi delivery costs too, I think they have set it up for bulk purchases.
http://www.iii.co.uk/articles/articledisplay.jsp?section=Markets&article_id=10104691
After many announcements from the company and the sponsoring banks, as well as a huge amount of media cover, Ocado has at last confirmed the timing and details of its initial public share offer.
The prospectus has now been published and may be downloaded at ocadoshares.com by those investors interested in analysing the company and its offer in more detail.
Ocado is offering up to 257 million shares for sale at a price to be set on 21 July of between 200p and 275p per share indicating a potential market valuation for this loss-making company of between £1 billion and £1.5 billion. The closing date for share applications is 18 July with full dealings on the main market due to start on 26 July, although conditional dealings are scheduled five days earlier, on 21 July.
The share offer is open to institutional investors as well as to existing Ocado customers who have spent at least £300 with the company during the past year.
Is it worth it?
The main problem with evaluating Ocado is that however good its customer service and however attractive its image may be as an associate of the highly regarded Waitrose, the business remains in the red after eight years' trading.
This is despite the fact that sales have been rising in each of the past three years, reaching £402 million for the last full year to 29 November 2009. Similarly, losses have been reducing with pre-tax losses falling from £40 million in 2007 to £25 million in 2009.
Given the absence of any positive earnings figure, it is not possible to compare Ocado's record at this level with listed grocers such as Tesco (TSCO) and Sainsbury's (SBRY) or with the very successful online retailer ASOS (ASC).
However, higher up the accounts tree it is possible to make a comparison with major listed retailers and it is not favourable to Ocado. In fact, it is extremely unfavourable as the indicative £1 billion valuation placed on Ocado in this offer is just over 100 times greater than the company's 2009 EBITDA (earnings before interest, taxation, depreciation and amortisation) of £9.2 million and around 40 times the estimated 2010 figure of £25 million for the current year. In comparison, Tesco and Sainsbury's are valued on single multiples of between seven and eight times EBITDA.
Thus, in terms of basic share valuation most analysts appear to be putting a price of between 120p and 150p per share on Ocado rather than the prospectus price of between 200p and 275p.
This very high valuation placed on Ocado by the selling shareholders and their expensive banking advisers has brought forth more negative comment on this initial public offering (IPO) from analysts, institutional investors and the financial press than has been seen for many years.
Apart from the over-valuation, the principal criticisms relate to the doubts as to the sustainability of the Ocado business model given that Waitrose, their main supplier, is planning to develop their own online delivery service. There will also be increasing competition from the major established chains such as Tesco, Sainsbury's and others.
Apart from the high valuation being put on the company in the offer a further negative is the fact that the founding investors are intending to sell up to £200 million of their existing holdings, hardly an encouraging omen for new investors.
Are there any good points?
Yes, there are certainly some strong investment pointers. It's not all bad news.
The company has built up a customer base of some 1.3 million and is generally reported to deliver a very reliable service with low levels of customer dissatisfaction. Ocado believes that the heavy investment in their centralised delivery system can be replicated throughout the UK and indeed overseas and have first mover advantage as the largest online home delivery grocery service in the world.
Ocado may well prove to be a highly profitable business in the future. The problem is that a lot of these expectations are already priced in the offer with no room in the valuation for failure and for the likely impact of increasing competition from well established retailers.
Many professional investors apparently think the issue is too expensive.
In short, the vast majority of informed opinion believes that this offer is greatly overpriced. In the words of Richard Buxton, the head of equities at Schroders, the offer is only suitable for those seeking to create capital losses. In fact, so great has been the negative reaction from institutional investors that a large number of large City institutions are apparently shunning the issue altogether and many private account stockbrokers are advising their clients against putting their money into this offer.
For those interested in participating in forthcoming IPOs, that of Fairfield Energy may well prove to be worth examining in detail when the prospectus is available.
After many announcements from the company and the sponsoring banks, as well as a huge amount of media cover, Ocado has at last confirmed the timing and details of its initial public share offer.
The prospectus has now been published and may be downloaded at ocadoshares.com by those investors interested in analysing the company and its offer in more detail.
Ocado is offering up to 257 million shares for sale at a price to be set on 21 July of between 200p and 275p per share indicating a potential market valuation for this loss-making company of between £1 billion and £1.5 billion. The closing date for share applications is 18 July with full dealings on the main market due to start on 26 July, although conditional dealings are scheduled five days earlier, on 21 July.
The share offer is open to institutional investors as well as to existing Ocado customers who have spent at least £300 with the company during the past year.
Is it worth it?
The main problem with evaluating Ocado is that however good its customer service and however attractive its image may be as an associate of the highly regarded Waitrose, the business remains in the red after eight years' trading.
This is despite the fact that sales have been rising in each of the past three years, reaching £402 million for the last full year to 29 November 2009. Similarly, losses have been reducing with pre-tax losses falling from £40 million in 2007 to £25 million in 2009.
Given the absence of any positive earnings figure, it is not possible to compare Ocado's record at this level with listed grocers such as Tesco (TSCO) and Sainsbury's (SBRY) or with the very successful online retailer ASOS (ASC).
However, higher up the accounts tree it is possible to make a comparison with major listed retailers and it is not favourable to Ocado. In fact, it is extremely unfavourable as the indicative £1 billion valuation placed on Ocado in this offer is just over 100 times greater than the company's 2009 EBITDA (earnings before interest, taxation, depreciation and amortisation) of £9.2 million and around 40 times the estimated 2010 figure of £25 million for the current year. In comparison, Tesco and Sainsbury's are valued on single multiples of between seven and eight times EBITDA.
Thus, in terms of basic share valuation most analysts appear to be putting a price of between 120p and 150p per share on Ocado rather than the prospectus price of between 200p and 275p.
This very high valuation placed on Ocado by the selling shareholders and their expensive banking advisers has brought forth more negative comment on this initial public offering (IPO) from analysts, institutional investors and the financial press than has been seen for many years.
Apart from the over-valuation, the principal criticisms relate to the doubts as to the sustainability of the Ocado business model given that Waitrose, their main supplier, is planning to develop their own online delivery service. There will also be increasing competition from the major established chains such as Tesco, Sainsbury's and others.
Apart from the high valuation being put on the company in the offer a further negative is the fact that the founding investors are intending to sell up to £200 million of their existing holdings, hardly an encouraging omen for new investors.
Are there any good points?
Yes, there are certainly some strong investment pointers. It's not all bad news.
The company has built up a customer base of some 1.3 million and is generally reported to deliver a very reliable service with low levels of customer dissatisfaction. Ocado believes that the heavy investment in their centralised delivery system can be replicated throughout the UK and indeed overseas and have first mover advantage as the largest online home delivery grocery service in the world.
Ocado may well prove to be a highly profitable business in the future. The problem is that a lot of these expectations are already priced in the offer with no room in the valuation for failure and for the likely impact of increasing competition from well established retailers.
Many professional investors apparently think the issue is too expensive.
In short, the vast majority of informed opinion believes that this offer is greatly overpriced. In the words of Richard Buxton, the head of equities at Schroders, the offer is only suitable for those seeking to create capital losses. In fact, so great has been the negative reaction from institutional investors that a large number of large City institutions are apparently shunning the issue altogether and many private account stockbrokers are advising their clients against putting their money into this offer.
For those interested in participating in forthcoming IPOs, that of Fairfield Energy may well prove to be worth examining in detail when the prospectus is available.
Post Your Reply
Please login to post a reply.
Wonder
Instance ID: 13539