WHS - Warehouse Group

[nztx]

Bonds $125 M

Was the fixed rate bond of 5% redeemed.

Yes - Repaid in H2 2020 Year - shows in 2 Aug 2020 12 months Cashflow Statement as going out


It's interesting that even after repaying Wage Subsidies ($67.5 m) in Jan 21 H1 - WHS still managed
to stack up another roughly $50 m in an improved Net Current Assets/Current Liabilities position -
up from roughly $20 m in the two published comparatives.

I guess part of that increase is attributable to no dividends being paid in 2021 Jan H1, which normally
would have appeared going out & been reported in the period.


5.0 cps Special Div paid Mar 2021 ($17 m) made a dent in the cash pile post 2021 H1 balance date
followed by Apr 2021 Interim 13.0 cps (say $44 m) - cash pile increase gone, plus some more

2021 H1 Balance Sheet shows a pretty fluid balance sheet, no borrowings

Very similar to HLG, a fairly clean balance sheet - it comes down to future good periods of
trading, with hopefully no more local lockdowns, supply disruptions etc.

if WHS keep the trading fine tuned, there could be some impressive results going forward, IMO

Inventories down roughly $90 m on the interim comparative suggests WHS is being quite careful
- maybe due to the current Covid affected times elsewhere globally. Cant knock that stance.

Wonder how these guys are going with lead times on imported goods due in ?
The coverage they must need for store acreage must be very large, but obviously
they are able to move to control things fairly well, if the figures coming through are any indication.

GST at end of 2021 H1 appears down too - depending on trading or input patterns maybe it got paid earlier
or offset, if as I imagine they're probably monthly GST filers .. it may all be in timing however or for any number of
reasons, who knows..

[nztx]

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

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

Could it be that these assets etc have been expensed faster than the pay down rate on the liabilities ?

Rather than a Liability - could we consider this to be an early overstatement of expenses (ie the show has theoretically
done better but for the Beancounter's applied magic policies) giving rise to increased Ca$h in the bank ?

The Liability due or programming of pay down of them wont likely change, but the matching of the expensing has possibly been
advanced forward for whatever reasons ?

Perhaps the new Accounting Policies have shortchanged Stakeholders in earlier periods ?

[Beagle]

I'll have a really good look through the FY21 accounts in due course. In the meantime I am focused on the extraordinary metrics this company is trading on with a PE of just 6.6 and a possible FY22 yield of nearly 15% gross.

As noted yesterday there is the possibility of an outsized final dividend this year, (which isn't that far away from being payable) as net adjusted profit after tax at the half year point was $111m (32 cps) and they only paid dividends of 18 cps. A minimum payout ratio of 70% would have suggested interim dividends of 0.7 x 32 = 22.4 cps so there's 22.4 - 18 = 4.4 cps conservatism (below the stated minimum 70% payout line) inbuilt from the first half trading and dividend payments related to that.

WHS metrics are miles out of whack, (astonishingly so), with any other retailer in N.Z. and I am comfortable with the direction they're travelling and the efficiencies they are extracting from the business. It looks like the best value opportunity on the NZX at present, frankly, by a country mile.

I foresee retail as being a LOT stronger for a LOT longer than the analysts are projecting and I am happy to put my money where my mouth is with large stakes in this, HLG and TRA.

Disc: I will be adding to this over the next few weeks and its already my #1 listed investment position.

[Entrep]

beagle and winner whipping WHS punters into a frenzy

[Waltzing]

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

was looking for a break down geographically to show possible exposure to global Baltic Dry.

You can take the basics from the PL and Balance sheet but that doesnt give the break across the whole group as there are 3 separate business.

If an investor is going to go over weight as MR B is suggesting its a bit more complicated than just buy a single retailer like HLG or MHJ.

Those 2 just sell one retail sector.

This is a Group selling many items across a broad range of sectors although perhaps its small enough to just go with these very basic figures.

A break down of sectors would be good but it doubtful they will go into the depth of data required for an over weight position as being suggested.

Would want to see a much deeper presentation of information.

Something like the presentation for SKL which shows its geographic depth of market and product.

The local bike shops for example are starting to complain of real supply issues.

Dont consider the basic opening / closing stock to be anywhere near good enough to make a over weight decision on.

Business like EBO for example in there reporting provides in depth product reporting allowing an investor a deep insight into the business model and if the investor is comfortable they can go over weight if that suites there exposure.

Big lack of depth in this groups reporting.

[Beagle]

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

---------------------------------------

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

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

---------------------------------------------------------
Thanks for crunching those numbers nztx
Very encouraging trend there with annualised stock turn for FY21 likely to be around 5 which is very impressive for this sector.

[Rawz]

...

I foresee retail as being a LOT stronger for a LOT longer than the analysts are projecting and I am happy to put my money where my mouth is with large stakes in this, HLG and TRA.

...

This is also how I see it and is based on personal buying experience over the last 12 months and behaviors I am seeing in multiple friend groups. The wallets are coming out. No point in saving for a holiday to Europe or North America..

Retail is the place to be invested right now. WHS, MHJ, HLG, TRA for the win.

And if you get it wrong you won't be losing money because the multiples are already so low.

The market is offering up some punts here (WHS and MHJ especially) with great upside but little to no downside. Worst case scenario is a great dividend with no capital gain.

[Waltzing]

average of 4 is good enough to cover the current assets / current liabilities for sure.

want to see in depth reporting on group products to go over weight.


else


spread it over average of


"WHS, MHJ, HLG, TRA " as suggested by "RAWZ"


although TRA is questionable but you have drive something in a country with no fast regional trains and a large long demographic.

and dont forget EBO for retail as you should all have that in your portfolio as well.

EBO's financial reporting of product sector break down is excellent.

Consider this groups needs to up the game on its retail stock reporting in the financials.

Notice they used the term "Finished Goods" but this group doesnt "Finish Goods".

For that you budding accountants out there can get your heavy duty tomes out for in deep Cost Accounting.

[winner69]

Waltzingman …….WHS sector/group/segment pretty robust

Segment sales and profitability as well as capital employed all shown in reports etc.

[Beagle]

EBOS on a FY 21 forecast PE of 25.