Wesfarmers Limited (ASX: WES)

Trading at a higher level- Wesfarmers move to divest its Bunnings UK and Ireland business was noted to be on a positive side by many market experts and shareholders. WES is divesting the business to a company associated with Hilco Capital. According to the terms of the transaction, the Group will participate in a value share mechanism whereby it would be entitledto 20 per cent of any equity distributions from the business, and according to the Company, this will be in the best interest of Wesfarmers’ shareholders and will support the ongoing reset and repositioning of the Homebase business.


Divisional EBIT Contribution (Source: Company Reports)

It is expected that WES has a strong suite of businesses, with market-leading positions and Bunnings will continue to perform very well following industry consolidation.Its BANZ business remains focussed on delivering on all parts of its strategic agenda, with a particular focus on providing greater value and better experiences to customers. It is expected that its Coles Business under new leadership, could leverage the undemanding comparable numbers and margins to drive performance.

While the group is positive about the move, however, some investors have a cautious approach. Primarily, Wesfarmers expects to record a loss of between $323 million and $406 million on the disposal of Bunnings UK, and this is raising some issues although the underperforming business is being ripped off.

Meanwhile, the Group is targeting a higher capital weighting towards businesses with strong earnings growth prospects. Since the start of the year, the stock was up by 2.5 per cent and by 4.2 per cent in last one month. The stock is inching towards its 52-week high level and looks “Expensive” at the current market price of $45.57.

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.