I am often wrong but opened another substantial (for me at...

I am often wrong but opened another substantial (for me at least)short position in WES a few minutes ago at $37.46. Its on a PE of 18.64 (FY12 earnings) and using Morningstar forecast EPS of 209c for FY13 a fwd PE of 17.92. However retail figures just released show retail sales in November were poorly (cannot find link) and December wasn't looking to good either. Plus latest figures show job vacancies are the lowest in 30 months (see link below).

Couple this with a renewed price war (did it ever end?) between WOW and WES (see link below)and it affects margins significantly. Another article from Businessday (see link below) states that department stores such as Myer and David Jones are beining forced by online buying to reduce prices of their brands 'permanently'.

Hence, all-in-all i can't see how WES can continue growing earnings at the same phenomenal rate achieved over past several years. Large super funds are seeking stks with growing dividend yields. Will WES post another record div amount in FY13? i think it will but it won't compensate for the substantial rise in SP that has occurred over past few months. WES have being paying most of their earnings back as divs. There is limited amount left to pay for further development. WOW however pay out ratio is significantly less at around 70%.

Finally price for coking coal has fallen substantially from 12 months ago. FY13 vols will be significantly higher but at reduced margins. Roger Montgomery feels WES faces strong headwinds, and so do I. The interim result and outlook statement will tell the story.

http://www.smh.com.au/data-point/job-vacancies-plunge-as-confidence-slides-20130109-2cguy.html


http://www.businessday.com.au/business/woolies-follows-coles-into-convenience-store-price-war-20130110-2cixi.html

http://www.businessday.com.au/business/retailers-forced-to-step-into-line-on-price-20130111-2cjx8.html