The company reported on 17 October that the first 7 weeks of FY19 (1Jul to 19 Aug) saw comparable sales of -0.5%. Then a rapid deterioration for the next 8 weeks (20 Aug to 15 Oct) of -3.9%. From 20 Aug to 15 Oct the ASX200 produced a series of steep drops to decline 8.2% from 6358 to 5837.
This is probably a bit of wishful thinking, but is it possible there is some correlation between the plunges in the stock market and the associated headline grabbing shock bulletins on the 6pm news and the recent talk of house prices "plunging", may have caused consumers to freak out a bit and clamp shut their wallets/purses during that period?
Following the -3.9% decline, the company has lowered guidance for 1H19 to $10-11m, stating "Whilst it is difficult to forecast consumer behaviour in the current environment, unless we achieve improvement to our recent comparable sales trajectory, the Company expects to report a reduced first half NPAT in the range $10.0m - $11.0m."
If that trajectory continues it may get a lot worse in 2H.
FY, H1 npat, H2 npat, total, eps
14, 16.8, -2.3, 14.5, 50.3
15, 12.8, 1.4, 14.2, 49.4
16, 18.3, -1.2, 17.1, 59.3
17, 17.5, -5.2, 12.3, 42.8
18, 17.7, -1.2, 16.5, 57.4
19f, 10, -5, 5, 17.3
I guesstimate FY19 to be as low as 17.3 cps, possibly much lower.
17.3 cps at 13 PE gives $2.24
17.3 cps at 12 PE gives $2.07
17.3 cps at 11 PE gives $1.90
17.3 cps at 10 PE gives $1.73
17.3 cps at 9 PE gives $1.55
17.3 cps at 8 PE gives $1.38
17.3 cps at 7 PE gives $1.21
The last 5 years the eps has averaged 51.82. I bought my first small parcel today hoping that at some point in the future it will reach 50 cps again. That seems a reasonable chance. I have probably been impatient and bought my initial parcel too early though. But if it once again achieves 50cps at some point in the future, the market will once again over react with an elevated PE and chances are I will make a reasonable return on todays price of $2.22
50 cps at 15 PE gives $7.50, or 237% return + any dividends and franking credits while I wait
50 cps at 14 PE gives $7.00, or 215% return + ....
50 cps at 13 PE gives $6.50, or 192% return + ....
50 cps at 12 PE gives $6.00, or 170% return + ....
50 cps at 11 PE gives $5.50, or 148% return + ....
50 cps at 10 PE gives $5.00, or 125% return + ....
50 cps at 9 PE gives $4.50, or 102% return + ....
50 cps at 8 PE gives $4.00, or 80% return + ....
I also note it performed well in the years following the GFC with eps averaging 79 cps in the 4 years Fy09-FY12.
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