JB Hi-Fi Limited

Decent 1HFY19 Results for JBH: JB Hi-Fi Limited (ASX: JBH) is one of the largest retailers of home consumer products in Australia. The company comprises three segments JB HI-FI Australia, JB HI-FI New Zealand, and The Good Guys. It is engaged in both online and in-store sale of broad product categories that include consumer electronics, mobile devices, games and consoles, music and audio systems, home theatres, car sound, instruments, cooking appliances, and white goods. The company focuses on achieving sales targets through scaling, low cost operating model, quality store locations, supplier partnerships, and multi-channel capabilities.

Recently, the group has announced its half-year results for FY 2019 wherein it reported a net profit after tax (NPAT) of $160.1 million and total sales of $3,843.7 million of sales, showing a decent rise of 5.5% and 4.2% on PCP basis, respectively.As a result, the Board of Directors declared a fully franked interim dividend of 91 cents per share for its shareholders and it will be payable on March 08, 2019 with the record date of February 22, 2019. It represents a 5.8% rise over the prior corresponding period. On the balance sheet front, Inventory turnover in HY19 came in at 6.1x as compared to 6.2x in HY18. The additional inventory carried at 31 December 2018 sold through in early January 2019, with inventory levels now consistent with the prior year. Its payables reduced year on year due to the earlier purchasing of inventory for the ‘Black Friday’ promotional period. Its operating cash flows and operating cash conversion continue to be strong, with the reduction year on year due to the increased inventory levels and timing of purchases year on year at 31 December 2018. Its CapEx remains well controlled as it continues to invest in the store portfolio, digital offers, and strategic initiatives.


1HFY19 Financial Summary (Source: Company Reports)

As per the announcement, the group intends to open five JB HI-FI Australia stores and two “the Good Guys stores” in FY19. Further, the group is also expecting to close two JB HI-FI Australia stores and one JB HI-FI New Zealand store. The group is anticipating its total Group sales to be around $7.1 billion in FY19. Further, the company is expecting its FY 2019 NPAT to be in the range of $237 Mn to $245 Mn, showing a rise of 1.6% to 5.1% over the prior corresponding period. Additionally, for FY19, the company is anticipating net debt to be around A$320 million to A$350 million, signifying a reduction of approx. A$50 million to A$80 million as compared to FY18.

Meanwhile, the share price has fallen 4.70 per cent in the past three months as at February 11, 2019 and is trading below the average of 52 weeks high and low level of ~$24.04 with PE multiple of 10.90x. As per ASIC report, the stock has seen over 14.89% of the short position as at 6 February 2019. On the daily chart, 20 DMA is crossing 50 DMA from below which shows a trend reversal. On the weekly chart, it is yet to cross its trending resistance. The fundamentals of stock are good but on the technical front all time frames are not completely indicating for strengths toward a 'buy' opportunity; hence we put our watch stance on the stock at the current market price of $23.11 and wait for the right time for investments. 
 

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.