Stocks’ Details
 

Premier Investments Limited

Record Premier Retail Sales:Premier Investments Limited (ASX: PMV) operates a number of speciality retail fashion chains within the speciality retail fashion markets in Australia, New Zealand, Asia and Europe.

FY19 Results: In FY19, the company reported net profit after tax amounting to $106.8 million, up 27.7% on FY18. During the year, the company generated net cash of $123.3 million, up 32.3% on pcp. Total global sales for the year were reported at $1.27 billion, up 7.5% on prior corresponding year. Full year dividend was reported at 70 cents per share, up 12.9% on prior year.

Premier Retail reported record sales of $1,270.0 million, up 7.5% on FY18. Underlying EBIT for the period stood at $167.3 million, up 11.5% on prior corresponding period. Apparel brands continued to deliver strong sales growth momentum with FY19 sales, rising by 6.9% in comparison to previous year.


Premier Retail Performance (Source: Company Reports)

Stock Recommendation: Over a period of 6 months, the stock has generated a return of 10.42%. The stock on 20 September 2019, gained 15.341%, pursuant to the release of FY19 financial results that came out with a significant increase in profits, particularly, due to strong growth in the apparels segment. FY19 was characterised by strong cash flow and balance sheet, supported by cash on hand of $190.3 million at the end of the period. Dividend during the year also reported a record increase of 12.9%. The company delivered a record result for Premier Retail, including remarkable online sales and record growth across key metrics. Moreover, the company has delivered 8 consecutive years of underlying EBIT growth for Premier Retail. The company’s ongoing investment in product and merchandise teams helped deliver growth during the year. Based on the above factors, we give a “Hold” recommendation on the stock at the current market price of $18.120, up 15.341% on 20 September 2019.
 

Domino’s Pizza Enterprises Limited

Growth in Market Share Across all Regions:Domino’s Pizza Enterprises Limited (ASX: DMP) is engaged in the operation of retail food outlets and the operation of franchise services. The company recently updated that Don Meij, Managing Director of the company, sold a total of 43,343 shares in the company, in order to meet the financial obligations relating to taxation.

FY19 Performance: During the year, online sales were reported at $1.9 billion, up 18.2% on prior corresponding period. EBITDA for the year stood at $282.4 million, up 8.9% on pcp. The company generated cash flows amounting to $84.9 million, rising 132.4% on prior corresponding period. During the year, the company continued to grow market share in all regions, with online sales remaining particularly strong. On 12 September, the company paid a dividend of AUD 0.5280 per share.


Group Results (Source: Company Reports)

FY20 Trading Update: Same store sales continued to achieve positive momentum into the first trading weeks of FY20, with an upliftment of 4.7%, as compared to pcp growth of 4.4%.The company constructed and opened 9 organic new stores for trading.

Outlook: Unlike the 12 months guidance, the company now provides a long-term outlook for a period of 3-5 years, on sales and store count growth. At a group level, the company expects Same Store Sales growth in the range of 3% - 6% annually and store count growth of 7% - 9%.

Stock Recommendation: The stock of the company generated returns of 7.30% and 24.22% over a period of 1 month and 3 months, respectively. In FY19, a very strong response to new initiatives increased the company’s sales by 13.6%, largely from new customers. All markets in Europe reported positive same store sales, lifting network sales by 11.0%. The company has an EV/EBITDA multiple of 16.0x, higher than the industry median of 9.4x. Price/Earnings multiple of the company stands at 35.16x which is again higher than the industry median of 17.7x. Considering the aforesaid facts, we are of the view that majority of the positive factors have been discounted for in the current market price. Hence, we give an “Expensive” recommendation on the stock at the current market price of $47.650, up 0.021% on 20 September 2019.
 

JB HI-FI Limited

Growth Across all Business Segments:JB Hi-Fi Limited (ASX: JBH) is engaged in retailing of home consumer products. The company recently announced its full-year results for FY19 wherein it recorded total sales amounting to $7.1 billion, up 3.5% on prior corresponding year. Total sales for JB HI-FI Australia increased by 4.1%, with key growth categories being Communications, Audio, Fitness, Games Hardware and Connected Technology. Total sales for JB HI-FI New Zealand rose by 2.0%, with growth attributable to Communications, Fitness, Audio and Small Appliances. Sales growth of 2.2% for The Good Guys came in from Laundry, Refrigeration, Televisions, Dishwashers, Computers and Communications categories.

Net profit after tax stood at $249.8 million, up 7.1% on pcp.During the year, earnings per share amounted to 217.4 cents, up 7.1% on previous year.


FY19 Highlights (Source: Company Reports)

FY20 Trading Update: In July 2019, the company reported total sales growth of 4.1% for JB HI-FI Australia as compared to growth of 2.9% in July 2018. Sales for JB HI-FI New Zealand declined by 0.4%. The Good Guys reported a decline of 2.1% in total sales as compared to growth of 2.7% in July 2018.

Guidance: Total group sales for FY20 are expected to be around $7.25 billion, comprising $4.84 billion from JB HI-FI Australia, $0.24 billion from JB HI-FI New Zealand and $2.18 billion from The Good Guys.

Stock Recommendation: The stock generated returns of 45.37% over a period of 6 months. Currently, the stock is priced close to its 52 weeks high level of $34.950.Over the period covering FY15 to FY19, the company has seen an upward trend in the dividends paid with FY19 dividend amounting to 142 cents per share, up 7.6% on FY18. Performance in all the segments reported decent growth. The company has an EV/EBITDA multiple of 9.9x which is higher than the industry median of 7.7x. Price/Earnings multiple of the company is 15.79x which is again higher than the industry median of 12.4x. Considering the aforesaid facts coupled with current trading levels and stretched valuations, we give an “Expensive” recommendation on the stock at the current market price of $34.860, up 1.514% on 20 September 2019.

 
 Comparative Price Chart (Source: Thomson Reuters)

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