Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

JB Hi-Fi Limited (ASX: JBH) is an Australian retailer operating through divisions, namely, JB HI-FI Australia, JB HI-FI New Zealand and The Good Guys. The retailer provides technology solutions, consumer electronics and home appliances. The product range offered includes computers, tablets, TVs, cameras, Hi-Fi, speakers, home theatre, Blu-Ray and DVD movies, TV shows and stacks, etc. The company has supplier relationships both locally and globally. Kalkine’s Dividend Income Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~42.02% of the total shareholding. AustralianSuper and The Vanguard Group, Inc. are holding a maximum stake in the company at ~14.59% and ~5.26%, respectively.

1.4 Key Metrics: The company reported a high asset turnover ratio of 1.56x in 1HFY23 as compared to 0.69x of the industry median. Further, the company also reported a high return on equity of around 24.3% in 1HFY23 relative to the industry median of 10.1%. Below is captured the trend of net profit after tax and net sales:

Section 2: Business Updates and Financial Highlights

2.1 Business Updates:

2.2 Results Highlights of 1HFY23 (For the Period Ended 31 December 2022): The company reported a 14.0% year-on-year jump in EBIT to AUD 479.2 million in 1HFY23.  

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

The stock has witnessed a jump of ~5.71% in a month, and over the last 6 months, it has gone up by ~10.5%. The stock has a 52-week low and 52-week high of AUD 36.690 and AUD 53.280, respectively and is currently trading slightly below the average of a 52-week high-low average. JBH was last covered in a report dated ’27 February 2023’.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is April 20, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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