An outstanding result as flagged in January. Earnings of 14cps...

An outstanding result as flagged in January. Earnings of 14cps for the half year.

To the detail:
Cash flow of $64.7M (33.7 cps). Sounds too good to be true and seems it is. They saved $9m compared to prior years by not opening new stores other than to replace those closed. Plus cash flow peaks at this time of year because payables rise significantly (approx. $15m). So, smoothed cash flow is around the $40M mark or 20 cps for the half year.

No debt. SFH has no debt and cash on hand of $29M. This explains the 4 cps dividend. After paying $15m to get payables back to normal, $8M to the taxman and $7m for the dividend you'll see that the cash has been used up. Seems, management wants to have no debt when they renegotiate their debt facility and this is how they arrived at 4cps.

As to the future, it seems they will renegotiate the debt facility (unused at the moment) in anticipation of buying another brand or two in the first half of next financial year (according to the slides).

I'm expecting a fairly flat 2nd half compared to last year of 4 cps given the outlook statement. This gives 18 cps for the full year. So, at $1.35 that give a p/e of 7.5. Don't think there are any debt free retailers cheaper than that. I can't understand the markets pricing of SFH.