The Reject Shop (TRS) - almost hit $15

[OneUp]

Tommy, I agree with you that TRS is still definately a buy: a rare high growth company with low risk.

IMHO: there is no big risk factor for TRS.
1. It has many suppliers, many customers and many stores.
2. Enjoys very strong cashflows, allowing it to both pay a genrous dividend and continue to expand without needing to issue new shares and dilute our stake.
3. No debt
4. Competitive advantage.
5. Strong in all economic conditions (in recessions, people try to stretch their pennies further and will go to a Reject Shop rather than a higher prices store to stretch their pennies further; in booms as now, people have more spend anyway). This alone deserves a premium!
6. Still small - plenty of room to grow

No one kink can derail this train (like Safenet could do to Senetas; or Vodafone did to ENG when it went by the name Mobile Innovations). Maybe a better analogy would be a tank, TRS is near bullet proof!

TRS deserves a much higher PE than 16. At a PE of 30 I might agree with you Patsy, but currently more than happy to hold it nice and tight.

[tommy]

http://www.heraldsun.news.com.au/com...55E664,00.html

Small has big rewards
By ANTHONY BLACK, Your Money Editor
19mar06


INVESTORS should not overlook some of the small to medium-size companies in the Australian sharemarket, analysts say.

While the big market capitalisation stocks attract attention, the analysts say smaller companies are also rewarding investors by posting solid results.

They say there should be room in a balanced portfolio for good performing smaller companies despite the higher risk compared with bigger market caps.

Analyst Mike Kendall, of Goldman Sachs JB Were, says Select Harvests, an almond grower, has put on $4.64 a share in the past year.

He says first half-year net profit was up 32 per cent to $12.5 million on the previous corresponding period and sales were up 31 per cent to $115 million. It will pay investors a fully-franked dividend of 30c a share on April 3.

Mr Kendall says the well-managed company is set to benefit from possibly higher almond prices resulting from a frost cutting California's crop.

Mr Kendall says Select Harvest's market capitalisation (the number of shares multiplied by the latest share price) is about $565 million and rising with a higher share price.

In comparison, the market capitalisation of BHP Billiton, the world's biggest miner, is about $87.8 billion.

"Good performing smaller companies can make up to 20 per cent of a balanced portfolio," he says. "Any more than that means investors are exposing themselves to increasing risk."

Select Harvest's share price finished at $14.10 on Friday.

Mr Kendall says investors in smaller companies can be disadvantaged by a limited number of stock holders and shares, sometimes making it difficult to match what a seller wants and what a buyer is prepared to pay.

He says IT services provider Oakton's share price has doubled in the past year after its first-half net profit was up 58 per cent to $6.56 million on the previous corresponding period and sales rose 55 per cent to $37 million.

"Oakton continues to win new contracts and it offers a bright outlook," he says. "This Melbourne-based company should lift revenue as it expands to Sydney and Brisbane."

Oakton's share price closed at $3.10 on Friday.

Investors made gains if they bought and held Domino's Pizza Australia and New Zealand since listing in May last year.

Shares in the float were priced at $2.20 each and Domino finished at $3.81 on Friday.

MR KENDALL says Domino's half-year net profit rose 80.6 per cent to $6.5 million on the previous corresponding period and sales were up 42 per cent to $88 million.

He says Domino's offers a proved franchise model and the number of stores along the eastern seaboard rose from 387 to 415 between June and December last year. The company is aiming for 436 stores by June and its longer-term target is between 550 and 620 outlets.

"Some of these smaller companies offer real businesses, revenues and profits," Mr Kendall says.

But while investing in smaller companies can result in healthy gains, they often need more monitoring than the bigger players.

"Investors need to do their homework in order to identify which small companies offer the best prospects – I cannot stress that enough," Mr Kendall says.

He says investors should check the capital demands of a company.

"Quite often a company will go back to the market to raise more cash to fund its expansion plans or growth objectives," he says.

"Issuing more shares dilutes the value of existing stock."
[b]
Sharemarket analyst Michael Heffernan, of Austock, says The Reject Shop posted a good first half-year net profit of $8.65 million, a 20.4 per cent increase on the previous corresponding half.

That is reflected in its share price rising more than $2 in the past year to finish at $5.25 on Friday.

Mr Heffernan says The Reject Shop is shielded from any slowdown in consumer spending because the price of its products appeals to people with tight budgets.

HE SAYS reasonable margins o

[Halebop]

More than a few are laughing all the way to the bank.

[OneUp]

quote:Originally posted by OneUp

Fundamentals:
• TRS recently listed on the ASX at $1.80. Has been in an uptrend since that time, hitting a high of $2.75, but has since retraced to $2.60-ish.
• Market capitalization = circa $60 million
• Price/Earnings = 11; Price/Sales = 0.33; Yield = 6% (forecast), EBIT multiple of 7. These ratios indicate good value.

Future Outlook
• Forecast NPAT of $6.0-$6.2 million. Dividend at 60% of NPAT.

Hi AA, it was on an historic PE of 10.5 and a forward looking PE of a shade under 10. As it turned out, TRS beat its own forecasts by some way (which has become something of a good habit with this company!).

[tommy]

http://www.heraldsun.news.com.au/com...55E664,00.html

Salesman socks it to them

Fleur Leyden
08apr06


BARRY Saunders, the boss of discount variety chain The Reject Shop, did not come from a long line of retailers.

The closest blood ties Saunders can think of in retailing stem from the fact that his father and grandfather once ran milk bars.

But a lack of retail lineage didn't prevent the industry from finding him.

"Whenever I did anything else I was always interpreting it in terms of retail," explains Saunders.

"Even when I ran the Western Australian Turf Club, as far as I was concerned those tote windows were just checkouts."






Saunders plans to retire when his contract at The Reject Shop expires in 18 months.

As managing director since 2000, he helped navigate the company through a stock-exchange listing, increased its footprint to more than 100 stores and delivered consistent profit growth despite a sometimes vicious retail cycle.

The company's shares have grown to more than $5 from a $2 issue price.

Saunders is a hard man to crack, revealing little about his personal life.

He does say that he is married for a second time and has a 19-year-old who is studying arts at Melbourne Uni.

Whether his offspring is a son or a daughter is unclear and it just doesn't feel right to ask.

Saunders is similarly reticent about disclosing any details to do with his three children from a previous marriage.

He simply says: "One's a philosopher and the other two are in the computing industry."

Saunders began his career selling socks in the basement of the Myer emporium.

It was 1963 and he was on the first week of his induction program at the company.

Although in charge of a small market research unit, he still had to prove he could make a sale.

"I can recall we used to look at the cash register every hour and if we were falling behind the day's budget we'd throw another sock in," says Saunders.

"So five (pairs of socks) for 10 shillings became six for 10 shillings.

"I guess I was impressed at that time about working intensely on the hour-to-hour, day-to-day of retailing but at the same time developing a strategic sense of the bigger picture that came from running a market research unit."

Saunders describes the Myer emporium -- which later merged with G J Coles & Co. to form Coles Myer -- as an environment rich in retail experience.

"When I went into Myer it was absolutely the training ground for all young fellers who wanted to get into retail and there were so many great teachers," says Saunders.

He describes (former Myer chief executive) Ken Steele as "rigorous and demanding"; (former Myer executive) Tony Roberts, for whom he later worked for at Target, as "relentlessly logical"; and (former Myer chief executive) Keith Rosenhain as "a more sympathetic character".

"There was a whole bunch of people who had a lot of self-belief but had some good reasons for it," says Saunders.

"And it's a bit sad to see some of the pain that the organisation is going through at the moment." Saunders, along with most in the retail industry, closely watched last month's $1.4 billion sale of Myer to a consortium led by private equity firm Newbridge Capital.

Asked whether a private equity owner, rather than a trade buyer, was a good outcome, Saunders says: "Well, I think they (Newbridge Capital) would say they can buy it (retail experience).

"I guess if they look hard enough and in the right places they'll be successful.

"When you do go off the path a bit it can be a bit of a hunt to find the right sort of people to get you back on the track." He adds that Myer's new management will need to overcome the "inherent expensiveness" of the department-store format if they are to succeed.

"I think that the department store brief is probably the hardest one in retailing and I've got a lot of admiration for those who are . . . making a pretty good fist of it," says a diplomatic Saunders. "I'm a lot more comfortable in our end of t

[tommy]

http://www.smh.com.au/news/Business/...521308091.html


The Reject Shop opens first WA shop


April 11, 2006 - 11:14AM

Discount chain The Reject Shop Ltd will open its first store in Western Australia in June with plans to have up to eight stores operating there within three years.

The Reject Shop managing director Barry Saunders said the store will be located in Perth's city centre with another store to open in Booragoon in the southern suburbs.

"Western Australia is now our number one expansion priority with plans to create a network of up to 20 stores in the long-term," Mr Saunders said.

"Our decision to expand into this dynamic market follows extensive internal planning and research over a three year period, allowing us to secure the optimum store locations."

He believes the West Australian consumers will respond well to the Reject Shop format and its range of low priced everyday needs and discount variety items.

Mr Saunders said it will recruit local people to manage and operate the stores with a goal of creating 500 full time jobs in the long term.

Shares in The Reject Shop improved five cents to $5.70 by 1100 AEST Tuesday.

[tommy]

http://www.heraldsun.news.com.au/com...55E664,00.html

Reject Shop in WA push

12apr06

DISCOUNT variety chain The Reject Shop says it is waiting for the crucial Easter trading period to pass before it can assess its first-half performance.

The company yesterday announced its first foothold in Western Australia, with plans to open a Perth city store in June. A second store in the Perth suburb of Booragoon will follow.

The company's chief executive Barry Saunders said store growth in all states was important, however, the WA market headed the list.

Between six and eight WA stores are earmarked in the next three years, with the company's presence in the state expanding to between 15 and 20 stores in the long term.

"Western Australia is our number one expansion priority with plans to create a network of up to 20 stores in the long-term," Mr Saunders said.






The long-term expansion in the state is expected to cost $5 million.

Mr Saunders said the company, which has 113 stores around the country, was likely to boast a total of 150 stores within three years. He said this would drive future profits.

"The real importance of the (store expansion) is what it does to profits, two, three, four years out, rather than . . . in the immediate 12 months."

He added that The Reject Shop was trading "reasonably well" but that its first-half performance would be assessed once Easter trading could be accounted for.

"(Easter is) an important spike in the year -- it's the second-biggest spike after Christmas trade," he said.

"So you never quite can say we are doing well or not doing so well until you have got through the March and April period."

Shares in The Reject Shop closed 5 stronger at $5.70.

[tommy]

http://sg.biz.yahoo.com/060412/15/400kz.html

Wednesday April 12, 11:12 AM

INTERVIEW: Australia's Reject Shop Rollout On Track

By Susan Murdoch
Of DOW JONES NEWSWIRES


MELBOURNE (Dow Jones)--The managing director of Australian discount retailer The Reject Shop Ltd. (TRS.AU) says its store rollout is on track.

Barry Saunders said the group will have 115 stores by June and plans to open its first outlet in Perth, Western Australia. It is aiming for 125 stores by the 2007 financial year end.

The Reject Shop is expected to face tougher competition following the A$200 million merger last December of rival outlets Chickenfeed, Crazy Clarks, Go-Lo and Warehouse to create the country's largest discount variety retailer.

New Zealand's Warehouse Group Ltd. (WHS.NZ) and Australia's Miller's Retail Ltd. (MRL.AU) offloaded the underperforming stores to private equity investors Catalyst Investment Managers and CHAMP Private Equity. The new owners will benefit from increased buying power as they consolidate the 450-store portfolio.

However, Saunders says it's not yet clear whether there will be pressure on margins as the new outfit unfolds.

"They're involved in some store rationalization, so it might just be that their work is to make what they've got operate a bit more efficiently in fewer locations," Saunders told Dow Jones Newswires in an interview Tuesday.

"It's really too early to comment..other than to say we've seen nothing adverse impacting our business so far," he added.

The Reject Shop has the capacity to pick up sites that might become available provided the stores meet its criteria, he said.

In February, the discount variety store operator increased its full year profit forecast by at least 6.7% to a range of A$8 million to A$8.2 million.

Saunders said he had "no bad news" to report but it was difficult to gauge trading conditions for the second half until after the Easter period.

The full year outlook implies a loss in the traditionally weaker second half, which will be weighed down by increased capital expenditure. The company is opening a new distribution center in Melbourne.

The group was in strong position to withstand higher petrol prices, he said.

"Our stores have been going comparatively well, there's been no adverse affect," Saunders said.

"It would seem that no-one's immune from big trends, but in as much as they impact people, we maybe get a moderated affect," he said, adding consumers "tend to turn to us a little more" when petrol prices are higher.

A recent rise in world oil prices is expected to flow through to Australian fuel prices, putting pressure on consumer purse strings.

The former head of discount retailers Big W and Target said his contract expires in June next year when he will retire. He said the board had a couple of internal successors in mind but an external search for candidates will also begin at the end of this year.

At 0310 GMT Wednesday, the company's shares were flat at A$5.75 giving it a market capitalization of A$144 million. The stock touched a record high of A$5.75 Tuesday.

[tommy]

TRS seems to have started to lose momentum after interest rate rise... is the retail sector out of favor now? At times like this when petrol prices are high and interest rate increases, I would have thought that a company like TRS would be in a better position to deal with the impact of changes in consumer spending patterns...

But the market does not seem to agree with me, buy side is getting thin.

PE ratio of 17 looks very reasonable to me.

I wanna pick up more on the cheap, would love to accumulate more below $5[]

[tommy]

I have been topping up TRS lately in anticipation of good results for this fiscal year... cannot believe it's ready to hit the $6 mark despite the negative market sentiment[:0]

Sell side very thin (who would want to REJECT this stock?) but still reasonably priced at PE of 18, IMHO[:I]