Forum Archive Index - December 2001

["Matthew Van Veen" <mattvanveen@hotmail.com>]

Thanks Peter for your figures. They do seem to reiterate that PRG is the 
retail share to buy.
The Warehouse stores are always filled with all types of people no matter 
where you live. Briscoes is the store you go to to find homeware products 
that you have seen advertised in a sale so you must go and get it now (good 
advertising). PRG stores are more if you are looking for home appliances, 
computers and HIFI equipment plus Living Earth). To me all three are 
different and all could survive independent of each other. I would say that 
Farmers stores provide sturner competition to Briscoes than WHS as does 
Harvey Norman who seem to be getting better in NZ.
The growth for me is Rebel Sports stores. None of the above stores stock 
ranges of sporting goods (apart from small qtys in WHS). Franchised Stirling 
Sports is the only main competition around. For anything sporting whether 
goods, shoes or clothing Rebel Sports have the lot. I see the money they 
raised from the IPO will go towards opening more of these stores. I went to 
my 1st Rebel Sport Store in Aust a few years ago and thought then that it 
would be a great retail winner in NZ.
It will be interesting to track the share price in the next 3 months. I 
missed out on the IPO and still have not brought any. Will do so IDC but may 
will wait until hype dies down - unless they skyrocket away.

Matt


>From: "Peter" <pmaiden@xtra.co.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: <sharechat@sharechat.co.nz>
>Subject: Re: Re: [sharechat] Briscoes
>Date: Sun, 16 Dec 2001 10:02:52 +1300
>
>Hard to judge short to medium term trends from a Briscoe's chart - one 
>candlestick does not say too much, but it shows a positive picture.
>
>So will have to look at the fundamentals, especially how Briscoes are 
>currently priced compared to other retailers on the NZSE.
>
>Some comparisons.
>
>Profit Margin (NPAT to sales) - Briscoes are expecting to return 6.0% in 
>the year to January 2002. PRG achieve 3.2%, Kirks 5.8%, Hallensteins 6.8%, 
>Michael Hill 5.3% and The Warehouse 3.5% ( 6.3% in 2000). So Briscoes 
>margins are much in line with other retailers. Briscoes margins are nothing 
>special and would not warrant any share price premium because of this.
>
>Price to Sales ( Shareprice as a percentage of sales) - Interestingly 
>Briscoes current price values them at 1.2 times sales which is the same as 
>the The Warehouse trades at. Michael Hill and Hallensteins are both trading 
>at 1.0 times sales. Kirks is at 0.7 times sales while PRG is at a low 0.3 
>times sales. On this basis the market is valuing Briscoes at the same level 
>as The Warehouse and higher then other retailers.
>
>Price Earnings ratio (PE) - At current price of $1.42 Briscoes PE is about 
>20 - if they achiieve current years earnings. This is much the same as 
>Michael Hill with a PE of 19 and higher than Kirks at 12 and Hallensteins 
>at 14. The Warehouse is at 33 times last years earnings and the market is 
>obviously expecting improved profits, esp from Astralia, in the future. If 
>The Warehouse had achieved the same profit margins last year as in the past 
>their PE would be closer to 20. On the basis of PEs Briscoes is valued at 
>the higher end compared to its peer group on the market.
>
>>From the above it appears that the market (no doubt as assessed by 
>analysts) has valued Briscoes in line with The Warehouse.
>
>As such it is hard to see the price rising much than it's current level in 
>the short term. Over time the share price will no doubt move in line with 
>their performance. If you buy into the growth story than steady shareprice 
>gains will be paid.
>
>The above numbers does confirm the independent appraisal  that PRG is 
>undervalued. It also shows that there is substantial value in the likes of 
>Michael Hill, Hallensteins and Kirks.
>
>In looking at these numbers I was quite surprised at the robustness of 
>these retailers. Profits generally have been improving over the last few 
>years - driven from both sales and margins growth. As a group they possibly 
>have been neglected by the market.
>
>However we have to admire the performance of Harvey Norman (ASX). A profit 
>margin of 15%. No wonder they can trade at 35 times last years earnings and 
>5.5 times sales. Maybe the Gerry Harvey connection adds something to 
>Briscoes.
>
>Cheers
>
>Peter
>
>
>
>




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