Eventually JBH will have to find new areas of business or they...

Eventually JBH will have to find new areas of business or they will saturate in the same way as Woolworths, with minimal annual growth based on population growth and inflation. This is OK, Woolworths for example is still a solid investment.

I have modelled JBH based on minimal growth and high dividend payout, as they won’t need capex for expansion. Based on a 13% discount rate, I get a valuation of $17 increasing 5% pa. The dividend rate will be close to 8% plus franking, so it is likely the market would value at a lower discount rate (giving a higher valuation).


This is the conservative valuation - if they are able to reinvest earnings to achieve growth, then the valuation goes up (even though dividend goes down).