Nick Scali Limited (ASX:NCK)

Growth in the store network- Nick Scali Limited is an Australia-based furniture retailer operating on the east coast of Australia. The Company is engaged in the sourcing and retailing of household furniture and related accessories. The Group reported an increase of 8.1 per cent in sales that amounted to $128.0 million for 1HFY18 (HY17: $118.4 million) and it was driven by the new stores which were opened in FY17 and HY18. Further, NPAT increased by 15.0 per cent and amounted to $23.5 million (HY17: $20.5m). The Company declared an interim dividend of 16.0 cps for HY18 (HY17: 14.0 cps). It maintained a strong cash position and total 6 new stores were opened (out of which 5 were in Australia and 1 in New Zealand). It is expected that it will open one new in Morayfield (QLD), will relocate one into a larger site (Bundall) in FY18 and with 5-6 planned for FY19. It was worth noting that new stores were loss making during the initial opening phase and typically reached the breakeven after 6 months. It is now expected that net profit after tax for the full year to June 2018 will be 5-10 per cent higher than the previous corresponding period. FY19 is expected to benefit from the substantial increase in the store network which will be established during FY18. In the meanwhile, Perpetual Limited changed its substantial holding in the Group from 14.91 per cent to 13.53 per cent since 29 May 2018. Recently, one of its directors,Anthony Scali, disposed of 11,039,473 shares. The stock price was declining since the start of the year and was down by 3.33 per cent in last five days as on 28 June 2018. The stock looks “Expensive” at the current market price of $6.73 looking at its trading level, while the margins are at risk owing to housing scenario in key markets.


Revenue and NPAT Performance (Source: Company Reports)
 

Myer Holdings Limited (ASX:MYR)

Asset Management -  Myer is Australia’s largest department store operator with 67 stores in locations mostly spread across eastern states. The Group announced its Q3 FY2018 sales for the 13 week period ending on 28 April 2018. The total sales ($635.3 million) were 2.7 per cent down  and 3.1 per cent up on a comparable store basis, while online sales were up by 49.4 per cent. This was better than what market expected from the group. While the market was expecting a drop in sales of about 5 per cent, the group has capped the fall up to 2.7 per cent only.Further, the unseasonably warm start to winter has impacted sales, particularly in winter apparel, shoes and accessories, which may impact profit in the fourth quarter.  In the meanwhile, one of its director John King acquired2,432,432 Rights. The stock got removed from S&P/ASX All Australian 200 Index (in June 2018 Quarterly Rebalance) effective from 18 June 2018. It is currently considering to establishing separate business units for the Myer One and Myer Online businesses. By adopting a more single-minded approach, the Group believes that it will be able to drive these assets in a better manner. The share price has been falling in the past one year and was down by 58.43 per cent and slipped by 6.33 per cent in last five daysas on 28 June 2018.The Company has faced a significant short interest rise. We maintain our “Hold” recommendation at the current market price of $0.37, while the group has sensitivity to household scenario and consumer position.
 

Financial Metrics (Source: Company Reports)

 
Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.