WHS - Warehouse Group

[Beagle]

Time will tell

[winner69]

Achieve $180m ….that’s 52 cents a share ….PE of say 13 and one gets about 7 bucks

Even their own forecast of $160m at Same PE as BGR makes 344 look VERY VERY CHEAP

[Beagle]

Achieve $180m ….that’s 52 cents a share ….PE of say 13 and one gets about 7 bucks

Even their own forecast of $160m at Same PE as BGR makes 344 look VERY VERY CHEAP

Yeap, no argument from me which is why this is my #1 investment position. They are ridiculously cheap. I'm comfortable with your $180m which as you say is
52 cps so the shares are on a FY21 PE of just 6.6 which is as you say, quite frankly completely out of whack compared to other retailers. It doesn't make any sense to me.

Those figures I quoted earlier which are average analyst numbers are $140m this year and $120m for FY22 and FY23 are the before tax figures. Company itself is guiding "adjusted NPAT for the full year is expected to exceed $160 million" with the major item of adjustment of course being the repayment of the wage subsidy.

Store within a store efficiencies and staff and management efficiencies will reap dividends in FY22 and beyond and their weighted average lease term was 4 years as of the half year result so there's plenty of scope for store rationalisation in the future as the company becomes more focused on omnichannel sales.

The prognosis you outlined at post #4394 looks entirely plausible to me in terms of what's going to play out in the short term. Next year we should get NZX50 inclusion and all the time we're being paid very handsomely with high dividends. I think the risks and rewards looked pretty heavily skewed towards the latter.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-websit...678/343023.pdf

Dividend policy is to pay out at least 70% of adjusted profit, (see page 6) so if they do $180m that's 52 cents per share so they will pay out at least 52 x 0.7 = 36.4 cps in dividends for FY21.
They've already paid a special of 5 cps + an interim of 13 cps so this suggests a final divvy for FY21 of at least 18.4 cps fully imputed. WOW !

If they can repeat $180m after tax for FY22 that's at least 2 x 18.2 cent dividends during the year = 36.4 cents fully imputed = (36.4 / 0.72) = 50.56 cps gross dividends. On $3.44 that's a Prospective gross yield for FY22 of 50.56 / 344 = 14.7%.

Hey Winner, remember in August 2016 how we bought HLG on a ridiculously low PE at a prospective yield of 15% gross at $2.75 ?...worked out "pretty good" for us eh (Lots of people thought we were mad back then and retail and especially the rag trade was in trouble)....but we knew better and proved the sceptics wrong.

History never repeats...surely we won't nearly triple our money in a few short years, or maybe, just maybe, history does repeat

Final thought for the day, Oh my goodness I'd nearly forgotten about how strong their balance sheet is with $183.6m cash on hand and no debt, (page 4), that's 53 cps in cash at the half year with zero debt. WOW !! I'd better buy some more...these are so cheap its completely nuts !!

[Waltzing]

"remember in August 2016 how we bought HLG "

Yes ....

[Gunner]

More disposable income due to no overseas holidays and people feeling flush due to property prices get spent at places like the Warehouse, Noel Leeming and Torpedo. This will continue for the foreseeable future...who knows how long. Benefits increased, increased efficiencies and market share can only mean good news for this stock.

[Habits]

http://nzx-prod-s7fsd7f98s.s3-websit...678/343023.pdf

Dividend policy is to pay out at least 70% of adjusted profit, (see page 6) so if they do $180m that's 52 cents per share so they will pay out at least 52 x 0.7 = 36.4 cps in dividends for FY21.
They've already paid a special of 5 cps + an interim of 13 cps so this suggests a final divvy for FY21 of at least 18.4 cps fully imputed. WOW !

If they can repeat $180m after tax for FY22 that's at least 2 x 18.2 cent dividends during the year = 36.4 cents fully imputed = (36.4 / 0.72) = 50.56 cps gross dividends. On $3.44 that's a Prospective gross yield for FY22 of 50.56 / 344 = 14.7%.

Hey Winner, remember in August 2016 how we bought HLG on a ridiculously low PE at a prospective yield of 15% gross at $2.75 ?...worked out "pretty good" for us eh (Lots of people thought we were mad back then and retail and especially the rag trade was in trouble)....but we knew better and proved the sceptics wrong.

History never repeats...surely we won't nearly triple our money in a few short years, or maybe, just maybe, history does repeat

Final thought for the day, Oh my goodness I'd nearly forgotten about how strong their balance sheet is with $183.6m cash on hand and no debt, (page 4), that's 53 cps in cash at the half year with zero debt. WOW !! I'd better buy some more...these are so cheap its completely nuts !!

I think that they're saving the cash to spend on a takeover or acquisition which indeed will create more focus on the stock and possibly a re-rating. Thanks for the yield calcs, I was very surprised at the size of the last dividend which of course was only 13cents and this next one could be 50 percent more. Come in WHS!

[Snoopy]

Final thought for the day, Oh my goodness I'd nearly forgotten about how strong their balance sheet is with $183.6m cash on hand and no debt, (page 4), that's 53 cps in cash at the half year with zero debt. WOW !! I'd better buy some more...these are so cheap its completely nuts !!

I couldn't help noticing a few things about the HY2021 Warehouse balance sheet.

1/ Inventory was down $83.6m or more than 14% on pcp. This is explained as good sales over Christmas. But if that level of sales is to continue this year, the WHS will have to spend $83.6m to bring their inventory back to previous levels.

2/ The difference between 'trade and other receivables' and 'trade and other payables is a whopping: $86.1m-$501.6m = $415.5m. I guess not paying your bills is one way to increase the cash in your bank account?

3/ I notice the 'lease liabilities' exceed the 'right of lease assets' by $910.1m - $751.4m = $158.7m

So adjusting for those 'hidden debts' and subtracting the cash on hand gives a net debt position of:

( $83.6m + $415.5m + $158.7m ) - $183.6m = $473.3m

That net level of operational debt is of the order of 3 times net profit. Nothing to be concerned about, but it would be misleading to say the company was 'debt free'. I would class WHS as having a medium level of indebtedness, based on that HY2021 balance sheet.

SNOOPY

[Waltzing]

From Item 9.
-----------------------------------------
Local trade creditors and accruals 307,257
Overseas trade creditors 146,591

would like to know the break down of these 2 items geographically to see how much comes from which suppliers. Will the continuing supply problems put more pressure on their current liabilities.

well laid out financials but a fuller PL would be good to see.

Was the fixed rate bond of 5% redeemed.

From last year Inventory down YTD, payables up YTD, cash at bank up YTD.

What its rate of stock turn nothing to calc this, pitty.

TOTALCURASSETS - TOTALCURLIAB = SOLVENT.

Hidden debt?

They will need to turn the stock over but there are no current hidden liabilities on the balance sheet.

Dont see a cash reserve for special dividends such as a sale of an assets.

large amount of the cash on hand is pretty much committed to back stopping inventory by the looks.

Looks like it can maintain its dividend.

[nztx]

Looking at Stock Turn with averaging Opening & Closing Stocks -

First of all Interim First Half - (All in $ m)

2021 H1 to 31 Jan 2021:

Opening Inventory $ 393.61
Closing $ 497.1

Ave Inventory $ 445.355 m

Interim Retail COGS $ 1152.9 m

Stock Turn - 6 m = 2.5887

-

2020 H1 to 26 Jan 2020:

Opening Inventory $ 517.758
Closing $ 581.3

Ave Inventory $ 549.529 m

Interim Retail COGS $ 1117.3 m

Stock Turn - 6 m = 2.0332

-

2019 H1 to 27 Jan 2019:

Opening Inventory $ 523.84
Closing $ 542.771

Ave Inventory $ 533.3055 m

Interim Retail COGS $ 1107.308 m

Stock Turn - 6 m = 2.0763



-

Secondly Full Year - (All in $ m)

2020 FY to 2 Aug 2020:

Opening Inventory $ 517.758
Closing $ 393.61

Ave Inventory $ 455.684 m

FY Retail COGS $ 2137.95 m

Stock Turn - FY = 4.6917

-

2019 FY to 28 Jul 2019:

Opening Inventory $ 523.840
Closing $ 517.758

Ave Inventory $ 520.799 m

FY Retail COGS $ 2042.722 m

Stock Turn - FY = 3.92228

-


2018 FY to 29 Jul 2018:

Opening Inventory $ 487.274
Closing $ 523.840

Ave Inventory $ 505.557 m

FY Retail COGS $ 2003.396 m

Stock Turn - FY = 3.9627


All base figures have come from published Company Interim & FY Accounts

Perhaps Snoops can check my back of the envelope calculations etc, above

Not sure if any inventory impairment expensed elsewhere, but these figures
use the basic figures in P&L & Balance Sheet that the company has released.

The HY to 31 Jan 2021 obviously reflects quite a bounce - presumably the post Covid
Lockdowns Retail trading bubble coming through into Inventory movements out the door

2020 H2 looks like it must have been pretty good to kick Stock Turn upwards for FY as well,
for duration of Covid lockdowns on reduced Inventory levels. Or maybe I'm missing
something here ?