WHS - Warehouse Group

[whatsup]

WHS slowly slip sliding away $2.42 now !

[Ogg]

What's the all time low?

[bull....]

What's the all time low?

I had around or just under 2.50 that's looking at my data last 10ys whos knows what it was before that 2.50 looked like huge support just been breached not uncommon to get a big fall when major support is broken

[Baa_Baa]

I had around or just under 2.50 that's looking at my data last 10ys whos knows what it was before that 2.50 looked like huge support just been breached not uncommon to get a big fall when major support is broken

Yeah I have 2.48 low week of Feb 17 2012, so this is a major breakdown below all time lows. Might trigger a few stops eh.

[bull....]

bounced of it in mid 2015 too just too confirm the level = agree looks bad on the chart - I think in mid 2015 I was saying it was stuffed too and the normans buying was the only thing holding it up .

[Balance]

In retail you either go forward or you end up going backwards very quickly.At the present time WHS has to find a strategy that will work.Whether they can or can not means it is a very poor,or dangerous punt.
Therefore one must be very careful on valuing WHS on dividend yield,PE or whether the Normans will make a takeover bid.

Strategy? WHS has been re-positioning since 2006 when Ian Maurice was CEO. Remember Warehouse Extra? Warehouse Cellars? Warehouse Pharmacy?

He and subsequent CEOs had the luxury of a very strong balance sheet (with company owned freehold stores and land as backup assets) and still high levels of cash flow to pursue all those 'failed' re-positioning and restructuring.

Nick Grayston does not now have the benefit of a very strong balance sheet or very strong cash flow to have the same flexibility - the need to raise equity in 2014 is testimony to the lack of balance sheet strength.

The recent announcement of a change in operating model is really only about staff cuts imo. When a company embarks upon staff cuts to effect cost savings, usually means it is bloated in the first place or it is running out of ideas. As Roger has pointed out, Warehouse stores have hardly enough staff as it is! Contrast with K-mart where there are staff everywhere to tidy up, re stack shelves and to answer customers' queries.

PS. reminder to not to invest into a downtrend.

[macduffy]

I had around or just under 2.50 that's looking at my data last 10ys whos knows what it was before that 2.50 looked like huge support just been breached not uncommon to get a big fall when major support is broken

Big Charts "All data" shows a closing price around $1.25 in 1997 and prices around $1.50 for a month or two. Hard to be definitive as the data is compressed to cover around 20 years' worth!

[Balance]

Forest would be very disappointed in the hound if he didn't weigh in with an opinion on this so here goes, all data based off average forecast analyst earnings off 4 traders website and focus is on next year's earnings which exclude any current year restructuring charges.

Market always looking ahead so I focus on FY 18 data.
WHS forecast PE 13.1
HLG forecast PE 12.3.

I would argue HLG is an extremely well run company with excellent well refined business practices and has no systemic issues that require dramatic restructuring of any kind and note top line sales growth is very comfortably outstripping the extremely modest rate WHS is "growing" their sales at.

As noted in previous posts and as noted by the CEO of WHS himself WHS faces ongoing significant potential restructuring issues and I would argue extremely serious challenges turning their finance operations around.

Given the known headwinds and slower growth rate and the fact that HLG is known to be a far more efficient retailer with best of breed stock turn I would argue the WHS should trade at a PE discount of at least 1, more fairly 2 to HLG.

If we said a fair FY18 PE for WHS was a 2 discount to HLG a PE of 10.3 there is potential for the current SP to fall from a PE of 13.1 to 10.3 = 21%.
If we said a PE discount of 1 is warranted there is potential for the current SP to fall from a PE of 13.1 to 11.3 = 14%.

In my opinion an ex dividend price of about $2.00 might be fair / good value going forward IF you believe, (I don't), in the current directors and management's business model and believe they can turn around the finance arm so its doesn't act like a sea anchor on future earnings.

Best comparison may be Briscoe?

Take out the $60m cash and BGR is trading on a historical PER of 15.7 times.

WHS compared to BGR should be trading on a discount of at least 25% to reflect i) earnings downtrend vs BGR's uptrend & ii) weak balance sheet vs BGR's cashed up overcapitalized financial position.

So WHS should trade on a PER of 11.8 times on EPS of say, 15.5c = sp of $1.83.

Your $2.00 is in the same ball park direction of what WHS is now worth! Scary!

[bull....]

I thinking this maybe the last 10c div unless they can grow profit and margins or it could be 10c for the yr guess the well cemented trend is falling profits and falling dividends.

Im sure some people will try and catch falling knife for the div - not a sure fire way to wealth unless you get the shares real cheap today but what is real cheap? or a bargain

[winner69]

Hey Balance, you mentioned Warehouse Pharmacy of days gone by

Whether Nick actually said this or not I can't tell but they seem to be back on the agenda -

Chief executive Nick Grayston said e-commerce only makes up about 10 percent of the New Zealand market, much lower than in other developed countries. But Warehouse has to prepare for increased disruption and part of the response is to move away from a "transactional relationship" with customers where price is the only determinant, to "an engagement model" which could include walk-in health clinics, a return to pharmacies, financial advice and mobile services.

http://www.sharechat.co.nz/article/5...-services.html