Premier Investments Ltd (ASX: PMV)

PMV Details

Boost from Smiggle and Peter Alexander stores: Specialty Retailer, Premier Investments Ltd.’s stock slipped about 2.5% on September 25, 2017 with the release of group’s year end results, wherein net profit growth was subdued at 1.2% to $105.1 million in 2017. There was a 5.7% rise in total sales to about $1.09 billion but a mere 1.1% rise in like for like sales across the group on a constant currency basis. The profit was lower than expected owing to softness in sales in fashion brands Portmans, Dotti and Jacqui E coupled with impact from a weaker pound. There was further an impact from one less week’s trading and one-off costs that included $3 million in legal costs incurred for a failed attempt to prevent a former chief financial officer from taking a new job at Cotton On Group. On the other hand, opening of new stores helped achieve strong sales at Smiggle stores (28.8% up to a $238.9 million) in Australia and overseas, and Peter Alexander stores (14% up to $190.9 million). For online channel, the total sales were of the order of $68.1 million, which is up 44.3% over last year; and the segment is expected to deliver sales exceeding $100 million sooner than 2020. 

Online Sales (Source: Company Reports)

The group’s underlying earnings before interest and tax at Premier Retail was up 7.3% to $136.0 million. The group also enhanced its final dividend by 8% to 27 cents per share, leading to the full year payout to 53 cents. While the group expects to drive growth from Smiggle global expansion, Peter Alexander and online channel; looking at the stock performance, potential and momentum required, we give an “Expensive” recommendation at the current price of $ 13.40


PMV Daily Chart (Source: Thomson Reuters) 

Retail Food Group Ltd (ASX: RFG)

RFG Details

Positive Outlook: Retail Food Group Ltd, the food and beverage company running chains such as Gloria Jeans and Donut King, recently announced that its mobile coffee franchise, Cafe2U, has been recognised in the top ten ranking at the annual 2017 topfranchise Awards and was placed ninth as a franchisor of choice in the overall brand category. The chain is targeting for an increase in market share via aggressive expansion plans and focussing on select territories throughout Australia and globally. Further, RFG’s newest mobile coffee franchise, The Coffee Guy, has been recognised in the annual 2017 topfranchise Awards, and was placed fifth in the expansion category for best practice and performance within the franchising sector. Meanwhile, RFG had reported its underlying FY17 NPAT rising 14% to $75.7 million while revenue from ordinary activities surged 27% to $349.29 million over FY16. The full year dividends were up 8.2% to 29.75 cents against 27.5 cents of FY16. The group has witnessed challenges in some of its chains, however, the growth in earnings and dividends has been worth taking a note of. RFG’s underlying earnings per share growth has been 7.9% in FY17 over prior corresponding period (pcp). RFG is also optimistic of its future performance wherein commissioning of a whole of business program focused on transformational development of internal capability is expected to drive benefits, while boost from organic growth across all divisions in FY18 will contribute to forecast FY18 underlying NPAT growth of circa 6% (excluding acquisition, integration and restricting costs).We maintain our “Buy” recommendation on the stock at the current price of $ 4.32


RFG Daily Chart (Source: Thomson Reuters)

Domino’s Pizza Enterprises Ltd (ASX: DMP)

DMP Details

Expecting growth from opening of new stores: Domino’s stock has plunged about 32.4% this year to date (as at September 22, 2017), while the year-on-year FY17 NPAT growth of 28.8% was lower than upgraded guidance of 32.5% (upgraded from 30%). Primarily, Domino’s Pizza reported its NPAT up 28.8% to $118.5 million for the year ended 30 June 2017 while revenue from ordinary activities were $1,073.1 million, up 15.4% over FY16.  The profit was impacted by lower than expected France trading in H217, as a result of technical customisation issues with OneDigital. On the other hand, the group had increased its full year dividend to 93.3 cents compared with 73.53 cents of last year with the final dividend declared as 44.9 cents.
 

Guidance Assessment (Source: Company Reports)

The group’s segment-wise sales results were also below its upgraded guidance. While the group expects momentum from its increasing number of outlets (178 in FY17 with 66 new organic stores opened in ANZ), efforts to drive same store sales, and strong France trading in FY18, concerns around sluggish growth do prevail. We give an “Expensive” recommendation at the current price of $ 44.90


DMP Daily Chart (Source: Thomson Reuters) 

JB Hi-Fi Ltd (ASX: JBH)

JBH Details

Decent FY17 result but declining sentiment weighing over the stock: JB Hi-Fi is one of the most shorted shares on ASX as per the September trading scenario. The stock has slipped 11.8% in last one month (as at September 22, 2017). JBH had otherwise reported NPAT growth of 13.3% to $172.4 million for the year ended 30 June 2017 while revenue from ordinary activities soared up to $5.6 billion indicating a 42.32% increase over last year. JBH expects to open five JB Hi-Fi stores in FY18 and will monitor opportunities from new The Good Guys Stores. On the other hand, headwinds for the group from the entry of Amazon in Australia have now weighed against market sentiments. We give an “Expensive” recommendation at the current price of $ 23.06


JBH Daily Chart (Source: Thomson Reuters)

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