30-July-2020: In this LivewireMarkets Buy-Hold-Sell segment, Vishal Teckchandani discusses CCX (City Chic Collective), TPW (Temple & Webster) and UWL (Uniti Group, formerly Uniti Wireless Group) with Tobias Yao from Wilsons (Wilson Asset Management Group) and Arden Jennings from Ausbill.
Tobias and Arden both rate CCX, TPW and UWL as BUYS, and Arden said that both UWL and CCX were high conviction positions for Ausbill, with CCX in both their Ausbil Small Cap Fund and their Ausbill Microcap Fund. However, both WAM Funds (Wilsons) and Ausbill clearly hold all 3 companies in their respective funds.
Tobias also likes IFM (Infomedia) and Arden likes LIC (Lifestyle Communities).
Warning: Vishal's puns could elicit the odd groan...
26-May-2020: Wilsons: O/W: Online well ahead of expectations
Wilsons have an "Overweight" call on CCX and a 12-month PT of $3.25. I would have gone more PC and said "Plus Size", but there you go...
25-May-2020: COVID-19 Update
City Chic Collective Limited (CCX, formerly Specialty Fashion Group Limited) is up over +16% so far today on the back of this positive update.
31-March-2020: Wilsons: City Chic Collective (CCX): “Third chances”
Wilsons have maintained their “Overweight” call on CCX.
Really?! I would have thought “Plus-Sized” would have been more PC.
In response to the escalation of COVID-19 in Australia and New Zealand City Chic has closed all of its Australian and New Zealand stores. This follows a trading update on 19 March 2020. We have accounted for the store closures in our forecasts which decline materially. However, we retain an OVERWEIGHT recommendation given; (i) strong and growing online business in Australia and North America; (ii) attractive multi-billion dollar end market; and (iii) potential early recovery story amongst listed peers.
Valuation: TP of $2.00/share reflects a downgrade of 33.2% (vs. prev.) and is based on a DCF methodology. CCX is trading on FY21e PE of 10.8x vs peers on 14.8x and the XSO on 9.9x.
Model changes: Material changes to forecasts. Our EBITDA forecasts decline 15.2% and 9.9% to $30.2m and $39.2m in FY20e and FY21e respectively. FY20e forecasts reflect 2H20e EBIT of $11.2m (+40.8% yoy) and conservatively assume six weeks of store closures in Australia and New Zealand. Operational cost reductions only provide a small offset (not standing down staff).
Store closures: CCX closed its New Zealand stores (11 stores) on 25 March 2020 and its Australian stores on 29 March 2020. We assume all stores are closed for a period of six weeks in our revised forecasts, which negatively impact 2H20e revenue by $8.6m. CCX has small wholesale operations in North America and we forecast some impact in that business too.
Online model: CCX has the most diverse, robust and high growth online business in our consumer coverage universe. Underlying revenue increased 52.2% yoy to $54.4m in 1H20a (51.9% of group sales), with the full benefit of the Avenue and Hips & Curves acquisitions yet to be realised. Our revised forecasts reflect Australian and North American online stores an alternative channel for store inventory and also the likely channel to experience faster growth once macro conditions stabilise.
Capital event: As at 1H20a CCX had net debt of $2.3m. We forecast this to increase to $8.9m in 2H20e due to softer sales and the acquisition of Avenue. While we also expect working capital to increase in 2H20e, CCX is a cash generative company and unlikely to require equity in the near-term.
Risks and catalysts
Key risks: 1) Poor Spring trading period; 2) aggressive discounting by peers; and 3) headwinds from US wholesale customers.
Key catalysts: 1) Stronger-than-expected LFL sales growth; 2) MOZ trading…
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