myer v david jones

Look at the chart of most of these big name aussie retailers - they most have doubled or more....in short time, since IPO.

Myer can also double its share price over an 18 month period....(strange it may seem, their may even be a squeeze for stock in the short to medium term - explained later here.)

David Jones reported $156.5m FY09 profits...and guided 0 to 5% profit growth in FY10. Myer IPO prospectus profits are very close to that of DJ,s - yet David Jones has a market cap 25% bigger than DJS.

That 25% represents an extra $1.25 to the Myer share price should both companies capitalisation match their earnings.

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In fact since that September 2009 David Jones guidance...
we have seen a much stronger aussie dollar and much improved senitiment. NOTE here comments from the RBA governor:-

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RBA ramps up growth outlook for 2010 The Reserve Bank of Australia has ramped up its forecasts for economic growth out to the end of 2010 and signalled more interest rate increases.
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.06.11.2009 04:29 PM

The Reserve Bank of Australia (RBA) has forecast the local economy to grow more strongly than predicted three months ago, with an interest rate rise next month still on the cards, economists say.

In its quarterly statement on monetary policy released on Friday, the central bank upgraded its forecasts for the Australian economy to see growth hitting its long-term trend by the second half of 2010.

The RBA forecast gross domestic product (GDP) to grow by 1.75 per cent in calendar 2009, before expanding by 3.25 per cent in the year to December 2010.

This is an upward revision to the previous statement in August where the RBA forecast GDP to grow 0.5 per cent in calendar 2009 and expand by 2.25 per cent over the year to December 2010.

Australia's GDP grew by 0.6 per cent in the year to June 2009, recent official data show.

The nation's long term trend economic growth rate is around 3.25 per cent.

The RBA said the upward revision to its growth estimates reflected overall stronger economic data since August and an improved outlook for the local economy.

"Confidence has improved and spending has been supported by stimulatory settings for both monetary and fiscal policy," it said.

"The Australian economy has also benefitted from the strong bounce-back in Asia, particularly China, with export volumes remaining broadly unchanged during a period in which global trade fell markedly."

TD Securities senior strategist Annette Beacher said the quarterly statement was optimistic.

"The big picture is the bank expects good economic times ahead, with a possible return to near-term capacity constraints and house price pressures as supply lags demand," Ms Beacher said from Singapore.

"This implies higher interest rates and an elevated exchange rate for some time."

The Australian dollar has appreciated near 40 per cent against the US dollar since March, leading to lower prices for imported goods. That combined with a slowing in wages growth would further ease pressures on prices, the RBA said.

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My comment:

Both retailers look to have much improved bottom line margin growth, at the Australian economy returning to more normalised growth trends.
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Half the float was sold to brokers with the other half to Myer card holders...........

(Only members of the public who hold a Myer One card are able were able to take part in the float, with greater entitlements available to bigger spending customers.

The retailer says its membership has soared since the announcement of its IPO.

A Myer spokeswoman said more than 11,200 members had joined last week, almost double the average weekly sign up of 6000.

Of 3.2 million cardholders, 21,500 are gold members and 487,000 are silver members.

Myer One gold members, who spend a minimum of $7500 annually, are entitled to a maximum $25,000 of shares.)

Only 50% going to the instituations is low compared to other $2 billion companies. Problem is index fund managers must have a balanced allocation of shares for companies within that index. It is certain that Myer will go into the ASX 200 next time S&P do a revision. (Already we have seen a disclosure of Westpac buying 4.8m new shares on market, since listing day.

Surprising to me also...ordinary retail stock exchange investors were not able to take part in the float.

Myer will announce a dividend ...yield 6.5%, should that come on the back of a strong Christmas period, its suggested this stock will test $5 in 2 months time.

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