WHS - Warehouse Group

[winner (n)]

Joan told Nick we've got to support the share price and demonstrate our confidence in the future peso we both need to buy some shares

Well done Joan on your purchase of 15,000 shares and even greater kudos to Nick for purchasing 20,000 shares

ALWAYS A GOOD SIGN WHEN CHAIR AND CEO BUY SHARES

[Basil]

Joan told Nick we've got to support the share price and demonstrate our confidence in the future peso we both need to buy some shares

Well done Joan on your purchase of 15,000 shares and even greater kudos to Nick for purchasing 20,000 shares

ALWAYS A GOOD SIGN WHEN CHAIR AND CEO BUY SHARES

Hang on a minute...didn't the share price tank the last time those two bought shares 

[entrep]

Honestly, I don't think it means anything when insiders buy.

[Hectorplains]

Nick invested just on 1% of his salary  His total holding works out at around $170k... He's not got a lot of skin in this game.

[Hectorplains]

Trademe's result offers some insight into the struggle for WHS Marketplace, given that Trademe too operates essentially as an aggragator and it has been in this game for a whole lot longer.

Trademe's online 'marketplace' made a net loss of $2.3m from revenue of $348.6m this last year.  It's the same story as WHS - they're making lots of sales to lose $$$

The classified division, that is property, motoring and job advertisement listing fees, is their biggest earner, pulling in $225.6m.  WHS Marketplace does not have the luxury of this income stream.

Trademe and WHS both enjoyed debt blow outs and made extravangant payments to management (a scarcely believeable $7.6 million in Trademe's case of "incentive payments" and "exercised equity options." Paying great money to generate poor results.)

[User 358696]

I would love to discuss more about Titan Parent NZ Ltd's (aka Trademe) results but there's no dedicate topic for it.

Looking at the 2022 results a few things jump out - the increase (7%) in marketplace revenue (guess those no fee days do actually pay off) but also the 60% jump in interest bearing loans of which 70% of that was used to pay back the private equity.

If they do IPO they'll need to use some of the funds raised to get rid of some of that debt.

[Buzz]

I would love to discuss more about Titan Parent NZ Ltd's (aka Trademe) results but there's no dedicate topic for it.

Looking at the 2022 results a few things jump out - the increase (7%) in marketplace revenue (guess those no fee days do actually pay off) but also the 60% jump in interest bearing loans of which 70% of that was used to pay back the private equity.

If they do IPO they'll need to use some of the funds raised to get rid of some of that debt.

Beware when private equity are looking for their exit, no good will come from it for subsequent or current investors. They'll stack the company with whatever they need to to get their money, ramp it to the moon and suck in the next tranche who won't see a return on their investment for a decade, if ever. Rinse and repeat. It's so obvious that it is deplorable, but seems to work for them every time.

[winner (n)]

What spending zillions on digital market does for you. From a tech guru -

I see @1day up to their usual crap again. Got a refurbished phone for somebody from The Market that's a US model that doesn't support all NZ bands.

No issues with the quality of the phone - it's just not the model they're advertising or what the box says (G970F). US model G970U is only single SIM not dual SIM.

[winner (n)]

"Pink Tax' in action they say

Got to make more dosh out of those who prefer pink eh Nick


https://www.thewarehouse.co.nz/search?q=avoca%20aero%202



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[BlackPeter]

"Pink Tax' in action they say

Got to make more dosh out of those who prefer pink eh Nick


https://www.thewarehouse.co.nz/search?q=avoca%20aero%202



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Maybe the pink ones are sponsored by Synlait? This would makes sense ...

[winner (n)]

Maybe the pink ones are sponsored by Synlait? This would makes sense ...

Good one ...makes sense lol

[Basil]

https://www.marketscreener.com/quote/stock/THE-WAREHOUSE-GROUP-LIMIT-6491364/financials/

Who hasn't heard the tired old refrain... Are we there yet ? from one's kids when on a journey.

So now the shares are at $1.85 it's been quite the journey so far so it's a great question to ponder.
My goodness the analysts have taken the knife to their eps estimates in a huge way and only forecasting 10 cps this year for a PE even at this heavily correctly price of a whopping 18!  Wow, just as well eps is going to recover so much in the years ahead...or are we really so sure of that any more ?

Let's, just for the sake of this academic exercise say we believe the analysts are right and FY23 really is deep trough earnings and a one-off, let's take expected FY24 eps of 16 cps at face value and even further recovery in FY25 (eps of 22 cps) even if analysts are forecasting only nominal growth in sales at below the rate of inflation.

On reflection after all the surprises of the Covid era, and gosh haven't there been a lot of them, I think one thing is very clear with the WHS.  This is not a growth company and its never going to be.

So, if I use my time-honored methodology that has served me so well over the years when valuing no growth companies, the Ben Graham no growth PE of 8.5 and we take out the super normal eps of FY22 caused by covid and average the previous two years actual results and the forecast of the next 3 we get eps of 19,13,10, 16 and 22 = 80 /5 = 16 cps average.  Put a no growth PE of 8.5 on that gives us fair value of $1.36.  Even if we include the anomalous FY22 earnings of 26 cps and apply the same PE that gives us $1.06 / 6 = 17.67 x 8.5 = $1.50  Hmmm,
I think the answer is, sorry kids, we're not there yet.  Just a thought.  What if earnings don't bounce back in FY24 and FY25...oh my goodness, what's fair value then?

In due course if the price stays south of $2, and clearly, I see it quite some way south of there, it's likely to get booted out of the NZX50 which is another risk to consider in terms of possible further downside pressure.  I can't see any reason to buy back in.  A catalyst to possibly change my view would be the removal of Nick and his whacky idea's about the market and all the losses pertaining to that.

Can't think of any reason to own this company on a current year PE of 18 when you can buy high quality, well managed retailers like HLG and TRA who really do have genuine growth prospects in the years ahead, on a FY23 PE of about 9.

[winner (n)]

From todays market close round up -

Warehouse Group decreased 8c or 4.32% to $1.77. The Warehouse, which listed in 1994, is now trading at the same level as 1996, and over the past two decades its share price has fallen 68%, while rival Briscoe Group has increased 240% in the same period.

Some effort by WHS ...just as well they've paid some divies along the way

[Basil]

News is full of the new gigantic 24 hour K Mart store they've opened in South Auckland.
Doubt it will be their last new mega store.  Costco also expanding.

Chatted with a good mate about this the other day.  All that new white wear and brown wear people brought during Covid from Noel Leeming (like we brough a giant new freezer), probably won't need replacing for more than a decade.   Between that fact sucking the wind out of Noel Leeming and WHS sales and K Mart and Costco expanding and a cost of living crisis, maybe there's real risk around next years average analyst projected eps of 16 cps ?

Looked at through the lens of average analyst estimated eps of only 10 cps this year and applying a no growth PE of 8.5, this is potentially only worth as little as 85 cents    

They really need to jettison vast numbers of entitled executives on ridiculous salaries for this very ordinary company to have any chance of doing okay going forward.   The board should be held accountable for allowing a culture of greed to become all pervasive within management of this company.
Salaries and numbers of executives making them I have posted details about a while back, (post#221) are egregiously unreasonable for a company making peanuts in earnings.

[winner (n)]

JB HiFi NZ sales Jan/March period up 10.8% on pcp

Their YTD (July/mar) sales up 14.8% pcp

Noel Leeming nowhere near achieving these growth rates ...Noel Leeming being taken to the cleaners

Interesting NZ sales much stronger than in OZ ...OZ sales flat in Jan/March