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By HotStockRockets | Friday 30 March 2018
Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Sosandar (SOS) has announced results for the nine months to 31st December 2017 – yes, they show a £2.1 million operating loss on revenue of £0.9 million, but remember its website only went live in September 2016 and momentum is very positive indeed…
The company saw opportunity with; “its inception was the result of the founders' combined 35 years' experience in the media and fashion industries where they identified an increasingly growing market of women who have graduated from other online high street brands and were now looking for affordable clothing with a premium, trend-led aesthetic but felt largely underserved”.
This is being proven - with the noted performance ahead of initial expectations and “momentum has continued into the first three months of this year… we are already seeing encouraging early spring trading”. The company is also financially well set; period-end cash (net) £5.3 million and total current assets of £6.3 million comparing to liabilities of £0.5 million.
Also noted is “economies of scale that come with increasing order quantities” – and all of the above means the broker forecast of sales reaching £1 million for the full-year to 31st March will clearly be well beaten and so, we continue to expect, will be the £3 million which was pencilled in for the new year about to start. We continue to expect £4 million + and a better than breakeven bottom line. The next year brokers were looking for comfortably in excess of £5 million and those economies of scale to help into profitability. We expect £6.5 million + and way into seven figure profitability.
But we don’t expect to have to wait anywhere near that long in share price terms.
As this growth trajectory - particularly in this ‘hot’ sector - is proven and recognised, we expect significant share price progress from the current 12.5p, capitalising the company at sub £13.5 million. It is still to be properly shown as yet, but we can expect another trading update shortly after the year-end and then and thereafter the growth here should become ever clearer.
Valuing a business that will do sales of £4 million and breakeven at least in the year starting on Monday on EV of just £8 million is ludicrous. STRONG BUY.
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