Stock Pitch
Company Overview
Harvey Norman is an Australian-based retail chain with 230 stores in Australia, New Zealand, Slovenia, Ireland, Northern Ireland, Malaysia, Croatia and Singapore, offering a huge range of electrical, computer, furniture and bedding goods. It is effectively a franchisor of other Australian retail chains including Domayne, Space Furniture, Ariston Appliances and Joyce Mayne.
Financial Summary (Annual report for the year ended June 30, 2012)
Favorable change
A 5-year track record of positive earnings
Retained earnings to total assets up 4.3% to 49.5%
One main reason for favorable change in Harvey Norman is Australian consumer confidence has recovered from 52-week’s low 95 to new 52-week’s high point at 110.54 by Westpac, which means there are more optimists for Harvey Norman’s share price.
Unfavorable change
Total revenue down 7.8% to $A2.5b
Net profit after tax slumps 31.6% to $A172.5m
EBIT Margin down 26.5% to 19.7%
Net Debt/EBITDA(x) from 1.1 to 1.8
Debt to equity up 16.7% to 0.4
Department store sector fell 0.1% in terms in Feb 2013 while the other retail sector rose 0.4% (released from ABS in Apr 4 2013)
One main reason for unfavorable changes in Harvey Norman is Australian electrical goods sales struggled over the past year as the strength of the Australian’s dollar pushed down selling prices of imported products while the consumer’s demand is weak.
Macro Factor
Although the global growth in the foreseeable future is likely to be slower due to European potential recession after the debt crisis and Asian lower GDP growth rate, the risk in downward side is reducing and the IMF monetary policy and interventions begin to work. Additionally, American economy begins to recovery and the growth in China has stabilized. Those signs implicate market is going to take a turnover which will have positive impact on Harvey Norman’s share price.
From Australian perspective, according to RBA report in 2 Apr 2013, the exchange rate is
Harvey Norman is an Australian-based retail chain with 230 stores in Australia, New Zealand, Slovenia, Ireland, Northern Ireland, Malaysia, Croatia and Singapore, offering a huge range of electrical, computer, furniture and bedding goods. It is effectively a franchisor of other Australian retail chains including Domayne, Space Furniture, Ariston Appliances and Joyce Mayne.
Financial Summary (Annual report for the year ended June 30, 2012)
Favorable change
A 5-year track record of positive earnings
Retained earnings to total assets up 4.3% to 49.5%
One main reason for favorable change in Harvey Norman is Australian consumer confidence has recovered from 52-week’s low 95 to new 52-week’s high point at 110.54 by Westpac, which means there are more optimists for Harvey Norman’s share price.
Unfavorable change
Total revenue down 7.8% to $A2.5b
Net profit after tax slumps 31.6% to $A172.5m
EBIT Margin down 26.5% to 19.7%
Net Debt/EBITDA(x) from 1.1 to 1.8
Debt to equity up 16.7% to 0.4
Department store sector fell 0.1% in terms in Feb 2013 while the other retail sector rose 0.4% (released from ABS in Apr 4 2013)
One main reason for unfavorable changes in Harvey Norman is Australian electrical goods sales struggled over the past year as the strength of the Australian’s dollar pushed down selling prices of imported products while the consumer’s demand is weak.
Macro Factor
Although the global growth in the foreseeable future is likely to be slower due to European potential recession after the debt crisis and Asian lower GDP growth rate, the risk in downward side is reducing and the IMF monetary policy and interventions begin to work. Additionally, American economy begins to recovery and the growth in China has stabilized. Those signs implicate market is going to take a turnover which will have positive impact on Harvey Norman’s share price.
From Australian perspective, according to RBA report in 2 Apr 2013, the exchange rate is