Harvey Norman Holdings Limited

HVN Details

Financial Highlights for FY19: Harvey Norman Holdings Limited (ASX: HVN) is an Australia based company with principal activities of integrated retail, franchise, property and digital enterprise. The company owns three leading brand names: Domayne®, Joyce Mayne® and Harvey Norman®. The market capitalisation of the company stood at $5.19 billion on 10^th October 2019. The company reported consolidated PBT of $574.56 million, up by 8.4% in FY19 which was mainly achieved from the continued dominance of 90 Harvey Norman® company-operated retail stores overseas, the sale of equity investments during the year and the improved profitability of the property segments.



Historical PBT (Source: Company Reports)

The trend of strong growth and profitability in Harvey Norman®’s company-operated retail operations continued during the year and increased by 11.7% in offshore profitability to $129.70 million.The impressive results and robust sales performance of each of the overseas Flagship stores have increased market share gains and an elevation of the brand name which resulted in an increase in brand awareness and consumer traction to existing stores in the regions.

Dividend for the Year: The company declared a fully franked final dividend of 21 cents per share which will be paid on 1^st November 2019, and the ex-dividend date is 10^th October 2019.This makes a total dividend of 33 cents per share for the whole year FY19, which represents 96.77% of the profit after tax and non-controlling interests. There were higher dividend payments in FY19, which amounted to a total of $342.12 million as compared with the dividend payments of FY18.

Stock Recommendation: The top-line of the company registered a CAGR growth of 6% over the period of FY15 - FY19, which shows that it has performed well in the past and is possessing decent revenue-generation capabilities. The annual dividend yield of the company stood at 7.5%. The stock has generated positive returns of 8.90% and 17.12% in the three months and six months respectively. Currently, the stock is trading above the average of 52-week trading range. Hence, considering the aforesaid facts and current trading levels, we advise investors to watch the stock at the current market price of $4.180 per share, down 5% on 10^th October 2019 and wait for better entry level.

 
HVN Daily Technical Chart (Source: Thomson Reuters)
 

FlexiGroup Limited

FXL Details

FlexiGroup Adds New Retailers to its BNPL Platform, humm: FlexiGroupLimited (ASX: FXL) is a diversified financial services group which provides no interest ever payment products, leasing, vendor finance programs, interest free finance, credit cards and other finance solutions to consumers and businesses. The market capitalisation of the company stood at $914.99 million on 10^th October 2019.

FlexiGroup announced that it had added many high-profile retailers to its Buy Now Pay Later (BNPL) platform, humm. These retailers show a good momentum across humm’s target verticals of retail, home improvement and health.
Highlights for FY19: FlexiGroupattracted 134,000 new customers to its products, which resulted in the active customer base of 1.76 million during the year. The company also added 5,000 new partners to its network, increasing its valued partnerships with retailers across Australia and New Zealand to 65,000.

This growth momentum in retailers and customers was on account of transaction volumes which increased by 12% to $2.56 billion, with a total receivables of $2.64 billion, an increase of 11% on the prior year.


Group’s Financial Highlights (Source: Company Reports)

Dividend for the Year: The company declared a fully franked final dividend of 3.85 cents per share which will be paid on 11 October 2019 and the ex-dividend date was 5^th September 2019.This makes a total dividend of 7.70 cents per share for FY19, in-line with the previous year. At the current market price of $2.220, annual dividend yield for the stock stands at 3.32%.

Stock Recommendation: The company’s net margin has improved from -1.9% in FY18 to 12.6% in FY19. Thus, it can be said that the company has improved its capabilities to convert its top-line into the bottom-line. The stock has generated positive returns of 43.65% and 60% in the three months and six months, respectively. Since, the company has managed to declare the same level of dividends in FY 2019 as in FY 2018. Hence, considering the aforesaid facts and current trading levels, we give a “Hold” rating on the stock at the current market price of $2.220 per share, down 4.31% on October 10, 2019.

 
FXL Daily Technical Chart (Source: Thomson Reuters)

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