JB Hi-Fi Limited

Decent FY 19 Outlook: JB Hi-Fi Limited (ASX: JBH) is generally known for its organic growth at unswerving margins and approach to manage network expansion while it has high competition risk. JBH’s stock has risen 8.09% in three months as on October 3rd, 2018 after the company in FY 18 reported 21% rise in sales to $6,854.3 million and 12.3% growth in NPAT to $233.2 million. Further, in July 2018, the group has posted the total sales growth for JB Hi-Fi Australia of 2.9% compared to 9.3% growth in July 2017. The comparable sales growth of this segment is 0.3% (July 2017: 6.5%). For JB HI-FI New Zealand, the total sales growth was -2.1% (July 2017: -0.7%) and comparable sales growth was of 3.4% (July 2017: -7.6%). For The Good Guys, the total sales growth was of 2.7% (July 2017: 6.8%) while the comparable sales grew 1.4% (July 2017: 5.7%). However, the company has posted decent July sales figures due to the cycling of strong sales in the pcp and also due to the impact of the FIFA World Cup bringing forward TV sales into June. Additionally, for FY 19, JBH expects the total Group sales to be circa $7.1 billion, that includes JB HI-FI Australia to post $4.75 billion, JB HI-FI New Zealand (NZD) to deliver $0.22 billion and the Good Guys to record $2.15 billion. The company plans to open five JB HI-FI Australia stores, two The Good Guys stores and close one JB HI-FI New Zealand store in FY 19. However, it is exposed to high competition while the stock trades about 12x of next fiscal year’s earnings. As of now, we give an “Expensive” recommendation on the stock at the current price of $ 24.41 while it has immediate support at $23.8 and resistance at $26.40.
 

FY 18 Financial Performance (source: Company Reports)
 

Super Retail Group Limited

Decent LFL Sales Growth Across All the businesses in the first 6 weeks of FY 19: Super Retail Group Ltd.’s (ASX: SUL) stock has risen 7.51% in three months as on October 3rd, 2018 after the company for FY 18 reported 7% rise in Normalised Net Profit After Tax (NPAT) to $145.3 million, including the benefits of a reduced interest expense and favourable effective tax rate. The total group sales grew 4.2% to $2.57 billion, and the company delivered 5.9% growth in EBIT to $219.6 million. The operating cash flow in 2018 is $73.9 million higher to $308.4 million than pcp, including a timing benefit of $17m related to prepayments. SUL has completed the acquisition of Macpac for NZ$144.0 million and effective from 31 March 2018. The Net Debt has increased due to full debt funding of Macpac acquisition of $133.8m, which is offset by strong operating cash flow performance. Additionally, SUL has declared the final dividend of 27.5 cents, that brings a full year dividend of 49.0 cents. In addition, for the first 6 weeks of FY 19, LFL sales growth of Auto Retailing is circa 5%, BCF LFL sales growth is circa 3% and LFL sales growth of Sports Retailing is circa 3%. Meanwhile, SUL stock is trading at a P/E of 13.66x. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 8.860 while it has immediate support at $8.46 and resistance at $10.
 

Accent Group Ltd

Outlook for FY 19 & Beyond: Accent Group Ltd (ASX: AX1) for the first 7 weeks of the second-half, has reported the LFL retail sales growth of 4.6%. Recently, the group has been gaining traction once again owing to digital sales plan. AX1 expects mid-single digit EBITDA growth in FY19. On the other hand, the company has refinanced its debt facilities on 17 August 2018, which is in advance of their maturity. This new $154.8 million facility is provided by NAB and HSBC and consists of a combination of 3 and 5 year terms. For FY19, the company plans to pay fully franked dividends. The company is targeting a dividend payout ratio in the range of 75% to 80% of profit after tax. Moreover, based on the continued strength of new store performance, the company plans to open more than 30 new stores in FY19. Further, there is potential for a more 30-40 new stores across the group over the next 2-3 years. During the past 12 months, the company’s corporate store network has grown from 12 stores to 28 stores now under TAF corporate ownership in Australia. AX1 expects that more 5-10 Australian franchise stores will be acquired in the FY19. TAF has signed an agreement to repurchase the New Zealand (NZ) master franchise licence along with 6 NZ corporate stores and 3 NZ franchise stores. This is scheduled to take effect from the beginning of October 2018. Meanwhile, AX1 stock has fallen 3.06% in three months as on October 3rd, 2018 and is trading at a P/E of 19.26x. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 1.580 while it is again under focus post facing stiff competition from Amazon.
 

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