Forum Archive Index - February 2002

["Peter" <pmaiden@today.com.au>]

Difficult to say whether the latest WHS sales release was much to get 
excited about. Growth a bit subdued, but probably a sign of the times 
in New Zealand. Maybe the headlines about the great NZ economy don't 
tell the whole story.

Red Sheds rolling 4 quarter sales are still growing at 14%. However 
this measure is held up by strong Q301 and Q401 sales which were 15% 
and 26% ahead of the same quarters in the previous year.

A better indication of sales growth in the Red Sheds is that H102 
sales are only 9.4% ahead of last year.

It will be interesting to see whether the strong sales achieved by 
the Red Sheds in H201 will be repeated in H202.

Red Sheds rolling 4 quarter sales are now $1,222 million. I would 
anticipate FY02 sales to be in the order of $1.275 million. This is 
10% more than FY01.

Warehouse Stationery sales growth is being maintained at high levels 
even though this growth seems to have peaked. However I would 
anticipate FY02 Warehouse Stationery sales to be in the order of $130 
million - an increase of 40% over FY01.

Australia sales in the latest quarter were 18% up on last year. This 
followed 3 quarters of no growth. It appears that ongoing growth will 
be forthcoming and FY02 sales will probably be approaching $500 
million - compared to FY01 of $400 million.

Total FY sales fo9r WHS therefore in the region of $1,900 million.

What profit on these sales is the big unknown. On last years margins 
this would give earnings of about $70 million. Improved margins and 
earnings closer to $100 million. Earnings therefore somewhere between 
23 and 33 cents a share.

So huge expectations are still built into the WHS shareprice with a 
p/e of between 22 and 30. Bear in mind the whole market is at around 
16 to 17 so WHS remains to trade at a 30%-70% premium to the market. 

I am sure that the market will not want to see only improved profit 
margins to justify the current share price of $6.79. They will expect 
to see earnings come from continued dtrong growth - growth that 
currently is slowing in NZ.

As in the past the market will be looking for the next big initiative 
to provide the future growth platform. I wonder what that is?

As Hugh said not much comment on WHS sales. Anything else to add.

Cheers

Peter

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