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Briscoe Group BGP

Started by winner (n), Nov 03, 2022, 09:50 AM

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Basil

I had been hoping it was a good chance for index inclusion in the December rebalance.  Sometime in 2025 is still looking good either through WHS falling to position 56 in the index at some stage, (compulsory exit), current position appears to be 55, or through the Manawa takeover if approved by the commerce commission.

I have taken a moderate sized position averaging just over $5 at cost on a gross yield of 8% based on cost and am happy to hold and see what happens.  Overlaying the 6 month charts of TRA, HLG and BGP, all in a strong uptrend since the bottom of the retail cycle in Winter, suggests the market is front running a significant recovery in retail spending in 2025.

winner (n)

BGP chart looking a bit sad these days.

No inclusion in NZX50 and a profit downgrade not liked by market ......share price back to where it was a year ago.

Maybe later in year might be worth a punt.

Basil

#92
Ouch, yeah, clear breakdown through the 200-day MA looks ominous.  From a fundamental point of view at slightly above Rod's minimum $66m, say $67m, that's only eps of 30 cps and after three years of stagnant to declining earnings can anyone really say they are a growth company anymore?  Even if you say retail is at the bottom and its onward and upward from here and they can get back to 38-40 cps again in due course, with more competition coming from the inexorable growth of K Mart, Panda Mart, Cosco and others, I'm not convinced you can make the case it's a growth company.

As many know, I apply a cut through all the B.S., no nonsense PE of 8.5 to no growth companies.  Apply that to this year's earnings and my goodness that's a grim assessment of its spot value so must be wrong but apply it to recovered earnings in FY27 of say 40 cps that's still only 40 x 8.5 = $3.40.  I rate Briscoes a sell and note the TA is saying the same.  I think there's far more compelling investments in the retail space with huge runways for growth that are trading on compelling metrics, namely HLG and TRA, also noting the TA on those two looks very encouraging.