BGR - Briscoes Valuation

[Beagle]

PE ratios have a degree of relativity with in a sector

Be a boring world if there was a rule that all retail stocks shall have the same PE multiple

‘Best of breed’ seem to get rated highly …..RYM, MFT etc etc

Yeah that's fair to a point but then sometimes a best of breed stock gets priced so high for perfection relative to its peers it badly underperforms for years afterwards...RYM a perfect example of that in recent years.

[emearg]

When Briscoe was listed in December 2001, it had an IPO value of just $210 million. This was slightly ahead of the market values of Michael Hill and Hallenstein Glasson at the time, but 90% below Stephen Tindall’s The Warehouse, which was worth $2.01 billion in late 2001.

WHS cap is now 1.3 billion. So it has reduced by 700 million which appears on the surface of it to be a rather bad thing. Is there other factors that mean it is not as clear cut as this? Maybe a return of capital to shareholders or ??? Rather a newbie question I know but all insights are appreciated.

[nztx]

WHS cap is now 1.3 billion. So it has reduced by 700 million which appears on the surface of it to be a rather bad thing. Is there other factors that mean it is not as clear cut as this? Maybe a return of capital to shareholders or ??? Rather a newbie question I know but all insights are appreciated.

How much of the reduction is due to Foodstuff's exit & rapid sell-down from the WHS Register ?

Things were ticking along quite nicely until that happened

How much possibly due to the other large Competitors from across the ditch & US potentially
approaching within firing range of the local retail turf ?

[Rawz]

When did the supermarkets pay stupid money for 10% blocking stakes? Could be that.

[winner69]

WHS cap is now 1.3 billion. So it has reduced by 700 million which appears on the surface of it to be a rather bad thing. Is there other factors that mean it is not as clear cut as this? Maybe a return of capital to shareholders or ??? Rather a newbie question I know but all insights are appreciated.

No return of capital to shareholders - even raised over 100m to go into financial services

When Briscoe listed WHS share price over $7

Decline has come about from years and years of disappointing performance / failed acquisitions etc etc etc .... a dog of a company and the share price reflected that --- thus the decline in market cap.

The Foodstuffs / Progressive share purchases were to block WHS entry into groceries and potential takeovers.

Just as well all that's changed and this time it is truly different

[nztx]

When did the supermarkets pay stupid money for 10% blocking stakes? Could be that.

Was it stupid money at the time they jumped in ?

Possibly not - it may be just looks that way on values at end of their little ride ..

[nztx]

No return of capital to shareholders - even raised over 100m to go into financial services

When Briscoe listed WHS share price over $7

Decline has come about from years and years of disappointing performance / failed acquisitions etc etc etc .... a dog of a company and the share price reflected that --- thus the decline in market cap.

The Foodstuffs / Progressive share purchases were to block WHS entry into groceries and potential takeovers.

Just as well all that's changed and this time it is truly different

I'm listening to my favourite resident Dogs & Winners on this one

[Rawz]

How much did BGR tip into KMD? Bit of a fail. Double fail not participating in KMD equity raise at $0.50 covid low.

Guess WHS fails way worse.

[nztx]

How much did BGR tip into KMD? Bit of a fail. Double fail not participating in KMD equity raise at $0.50 covid low.

Guess WHS fails way worse.

Only the initial ingoing Investment I believe plus one further investment, and they didn't take up the KMD CAP Raise entitlement last year

At a guess in bottom of the Covid dip last April, I estimated $100m revaluation write down guestimate on previously revalued
holding, which has reversed since and looks like the opposite (a surplus) now on fair valuing the holding from BGP's view ..


Note 4.1 - BGP Jan 2020 FY Financial Statements:

4.1 Investment in Equity Securities

During 2015 and 2018 Briscoe Group Limited acquired a total of 42,673,302 shares in Kathmandu Holdings Limited
(Kathmandu) for a cost of $74,250,932.

In October 2019, as part of the capital raising programmes initiated by Kathmandu in
relation to their acquisition of the Rip Curl business, Briscoe Group Limited acquired a further 5,334,163 shares for a cost of
$13,602,116.

This increased holding represented a 16.27% ownership in Kathmandu Holdings Limited as at 26 January 2020.

These shares are equity investments, quoted in the active market, which the Group has elected to designate as a financial asset
at fair value through other comprehensive income (FVOCI). An adjustment was made at period end to reflect the fair value of
these shares as at 26 January 2020 (Note 1)


1. Fair value determined to be $3.21 per share as per NZX closing price of Kathmandu Holdings Limited as at 24 January 2020 (2019: $2.39) (Level 1 in the fair value hierarchy)..

[Rawz]

Briscoes best retailer because of;

1) watch margins
2) watch market share

No reinventing the wheel. No big acquisitions. No expanding in Aussie. Very simple. Rewarded with consistent eps growth and therefore highest p/e of all the retailers.