BGR - Briscoes Valuation

[Muse]

Briscoes have done an outstanding job of improving their business the last few years - regardless of the boom in retail spend. They got KPMG on board years ago to undertake a massive piece of work on their procurement strategy that is showing its value with impressive improvements in gross profit margins. Lots of good work refining their promotional activity, improving stock sourcing, growing margins, refitting the existing store network and steady growth in expanding the footprint. Came at the right time with the boom in retail sales. Gotta love the 100% fully imputed dividends.

I'm an admirer of HLG but as am overweight in briscoes never invested. A comment on the former thread got me thinking what my performance might have been had I split positions or invested into HLG instead. The answer was a laydown for briscoes - my return would have been half of what I have gotten in briscoes. Of course it depends on when you invested, but for the vast majority of investors at varying investment timeframes, briscoes has been a superior investment than HLG. I used sharesight to calculate the returns (including net cash dividends), and wasn't selective in choosing the dates, I ran the test for each date available in Sharesights share checker drop down menu. Haven't bothered to add MHJ (as we know it would be tops for the last year or so but pretty bad all other periods) or WHS (similar if less pronounced to MHJ).

Attachment 13389

Attachment 13389

Beagle thinks BGR is more expensive than HLG, which I don't agree with. Assuming last fridays close price (as did this over the weekend), using briscoes 85m for NPAT and adjusting for its $72m stake in KMD gets you to a PE of about 16.77x. Not cheap. Its a bit harder to calculate HLG as they don't provide any guidance (just up or down), we know their current FY22 year will be down. As a proxy I assume 20% down YOY - could be a lot more, or a little less. It gets you to the same answer.

note the spreadsheet snapshot a little messy - i was intending to do EV/EBITDA and EV/EBIT multiples but couldn't be bothered so just focused on good ol PE. For briscoes I looked at it net of its KMD stake which - IE briscoes marketcap less the spot price value of its KMD stake. Briscoes will likely have rec'd ~$2m in dividends from KMD so that should be adjusted out of Briscoes npat if you are trying to find a true PE ex KMD (too lazy to fix it up) - let's just say I assume briscoes will do $87m npat, less the 2m, so 85

[Mr Slothbear]

Agreed fiordland moose.

i have held since 2015 and have been very happy with them and have repeatedly increased holding since then


there have been times it has looked expensive but when you look at EV to include the often strong warchest and KMD holding its often much cheaper than it appears.

there are very few companies in this country in such capable, experienced hands
where the incentives are aligned with shareholders and we can see the results

not once for a second have I doubted return of capital or earnings stability and absolutely no returns were sacrificed for peace of mind, you get both.

[bull....]

Briscoes have done an outstanding job of improving their business the last few years - regardless of the boom in retail spend. They got KPMG on board years ago to undertake a massive piece of work on their procurement strategy that is showing its value with impressive improvements in gross profit margins. Lots of good work refining their promotional activity, improving stock sourcing, growing margins, refitting the existing store network and steady growth in expanding the footprint. Came at the right time with the boom in retail sales. Gotta love the 100% fully imputed dividends.

I'm an admirer of HLG but as am overweight in briscoes never invested. A comment on the former thread got me thinking what my performance might have been had I split positions or invested into HLG instead. The answer was a laydown for briscoes - my return would have been half of what I have gotten in briscoes. Of course it depends on when you invested, but for the vast majority of investors at varying investment timeframes, briscoes has been a superior investment than HLG. I used sharesight to calculate the returns (including net cash dividends), and wasn't selective in choosing the dates, I ran the test for each date available in Sharesights share checker drop down menu. Haven't bothered to add MHJ (as we know it would be tops for the last year or so but pretty bad all other periods) or WHS (similar if less pronounced to MHJ).




Attachment 13389

Beagle thinks BGR is more expensive than HLG, which I don't agree with. Assuming last fridays close price (as did this over the weekend), using briscoes 85m for NPAT and adjusting for its $72m stake in KMD gets you to a PE of about 16.77x. Not cheap. Its a bit harder to calculate HLG as they don't provide any guidance (just up or down), we know their current FY22 year will be down. As a proxy I assume 20% down YOY - could be a lot more, or a little less. It gets you to the same answer.

note the spreadsheet snapshot a little messy - i was intending to do EV/EBITDA and EV/EBIT multiples but couldn't be bothered so just focused on good ol PE. For briscoes I looked at it net of its KMD stake which - IE briscoes marketcap less the spot price value of its KMD stake. Briscoes will likely have rec'd ~$2m in dividends from KMD so that should be adjusted out of Briscoes npat if you are trying to find a true PE ex KMD (too lazy to fix it up) - let's just say I assume briscoes will do $87m npat, less the 2m, so 85

nice post , was always in your camp about briscoes being better than hlg as an investment

[winner69]

Yesterday saw Briscoes share price was 10% off its recent high --- correction territory they say

Good to see it recovering today ...heading back to 7 bucks plus

[Waltzing]

not much of a day in the end for most retail... Boo..dont panic ...yet.

[Muse]

Yesterday saw Briscoes share price was 10% off its recent high --- correction territory they say

Good to see it recovering today ...heading back to 7 bucks plus

ended flat, a relative outperformance.
Nothing much will happen until announcement a early february when BGR announce 4th quarter sales/margins & pre release FY22 figures. It will be a fine result, strong growth on the prior year, expansion in margins, big cash balance, and big dividend.
devil will be in the guidance, if they give any.

I can't see a scenario where briscoes can escape the impact from rising interest interest rates (medium long term worry) & omni blues (short term worry).

Ironically - KMD, and specifically the KMD brand not ripcurl, may have the most specific upside as adventure tourism is highly linked to international travel. So that could actually disproprotionately benefit when international tourism opens up, at least in the first year or two, over and above other headwinds. But it also reflects why KMD has been stuck in such a rut compared to other retail. At least the ripcurl acquisition has been kind to them.

My biggest gripe about briscoes was they didn't take up their pro rata during KMDs rights issue, but I suppose at the time it was every man for himself.

[winner69]

I reckon Q422 sales will down quite on lot on pcp - Q421 was a real bonanza one and unlikely to be repeated. After Q3 sales being down 14% on pcp H2 sales looking pretty dismal - but in saying that just reverting to long term trend

Rod never disappoints so if he says F22 profit going to be $85m plus it will be that - up from $73m pcp .... though Rod did say somewhere between $73m and $85m .... don't think market would like $74m though.


That should keep punters happy

[Muse]

I reckon Q422 sales will down quite on lot on pcp - Q421 was a real bonanza one and unlikely to be repeated. After Q3 sales being down 14% on pcp H2 sales looking pretty dismal - but in saying that just reverting to long term trend

Rod never disappoints so if he says F22 profit going to be $85m plus it will be that - up from $73m pcp .... though Rod did say somewhere between $73m and $85m .... don't think market would like $74m though.


That should keep punters happy

Yeah i just meant f22 would be up. 2h will be well down.

[Waltzing]

surely if the market sells off Winner its one of the few NZ retail that is a BUY.

looking forward out to 31 march 2023.

NZ eco likely to cruise out to there on GDP brought forward.

[winner69]

Rod says NPAT to be between last years 73m and 85m

About this time last year BGR share price hung around the 570 mark ....NPAT 73m remember

Methinks the market is assuming that that this year will be about the 73m .... and nowhere near the touted $85m

As such the share price heading to 570 (maybe 580) - a price that reflects actual performance

Even then at 570 the of about 17 - and so could go lower .....maybe the market love affair with Rod is coming to an end