Business Summary Harvey Norman Holdings Limited (HVN) engages in franchising operation, integrated retail business, property development and digital system. HVN operates under a franchise system in Australia and operates wholly-owned or controlled stores in overseas markets. Australia Franchising Operations: The division consists of the franchising operations of the company. The franchisees offer products in the following categories: electrical goods, furniture, computerized communications, bedding and manchester, small appliances, carpets and flooring. Oversea Retail Operations: The division consists of the wholly-owned operations in New Zealand, Ireland and Northern Ireland and the retail trading operations in Singapore and Malaysia under the Harvey Norman and Space brand names, and in Slovenia under the Harvey Norman brand name. Non-Franchised Retail: The division consists of the wholly-owned operations under the Clive Peeters and Rick Hart brand, the retail trading operations in Australia which are controlled by HVN. This business unit includes the Space Furniture brand in Malaysia. Retail Property: The property portfolio consists of Harvey Norman, Domayne and Joyce Mayne complexes in Australia, Harvey Norman and Norman Ross stores in New Zealand, properties located in Singapore, four Harvey Norman stores in Slovenia, properties held under joint venture agreements and land and buildings in Australia for development and resale. Latest Research 1H18 Result – Competitive Intensity Ramping Up Harvey Norman delivers weak 1H18 result — The Australian Franchisee business saw profitability fall despite good LFL sales momentum, as investment in price and service outweighed operating leverage on a flat underlying cost base. The earnings outlook is challenging, as competitive intensity ratchets up and the housing cycle moderates. We downgrade FY19e EPS by 5.5% and reiterate our Sell rating and reduce our target price to $3.40 (from $3.50). For more information see research 01 Mar 2018. GICS - Retailing Harvey Norman Holdings Ltd ASX Code: HVN Price: $3.50 12 Mth Target Price: $3.10 Rating: Sell Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is general investment advice only and does not constitute advice to any person. Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended. Snapshot Date Market Cap. Shares on issue 12 Month High 12 Month Low 15 June 2018 $3,900m 1,114.2m $4.62 $3.32 Rating Rating 12 Mth Target Price Capital Gain Gross Yield Implied Total Return Sell $3.10 -11.7% 9.0% -2.7% Investment Fundamentals FYE 30 Jun 2017A 2018F 2019F 2020F Profit $m 391.0 378.0 352.0 334.0 Profit (norm)* $m 391.0 378.0 352.0 334.0 EPS* ¢ 35.0 34.0 32.0 30.0 EPS Growth % 16.7 -2.9 -5.9 -6.2 P/E* x 10.0 10.3 11.0 11.7 P/E Relative % 0.0 0.0 0.0 0.0 DPS ¢ 26.0 24.0 22.0 23.0 Yield % 7.4 6.8 6.3 6.6 Franking % 100.0 100.0 100.0 100.0 * Adjusted for goodwill and unusual items Source: Based on Citi estimates Share Price Chart Total Return on $10,000 Investment
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Harvey Norman Holdings Ltd ASX Code: HVN Price: $3.52 … · Business Summary Harvey Norman ... operations under the Clive Peeters and Rick Hart brand, ... properties held under joint
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Business SummaryHarvey Norman Holdings Limited (HVN) engages in franchising operation,integrated retail business, property development and digital system. HVNoperates under a franchise system in Australia and operates wholly-owned orcontrolled stores in overseas markets.
Australia Franchising Operations: The division consists of the franchisingoperations of the company. The franchisees offer products in the followingcategories: electrical goods, furniture, computerized communications,bedding and manchester, small appliances, carpets and flooring.
Oversea Retail Operations: The division consists of the wholly-ownedoperations in New Zealand, Ireland and Northern Ireland and the retail tradingoperations in Singapore and Malaysia under the Harvey Norman and Spacebrand names, and in Slovenia under the Harvey Norman brand name.
Non-Franchised Retail: The division consists of the wholly-ownedoperations under the Clive Peeters and Rick Hart brand, the retail tradingoperations in Australia which are controlled by HVN. This business unitincludes the Space Furniture brand in Malaysia.
Retail Property: The property portfolio consists of Harvey Norman, Domayneand Joyce Mayne complexes in Australia, Harvey Norman and Norman Rossstores in New Zealand, properties located in Singapore, four Harvey Normanstores in Slovenia, properties held under joint venture agreements and landand buildings in Australia for development and resale.
Latest Research1H18 Result – Competitive Intensity Ramping Up
Harvey Norman delivers weak 1H18 result — The Australian Franchisee
business saw profitability fall despite good LFL sales momentum, asinvestment in price and service outweighed operating leverage on a flatunderlying cost base. The
earnings outlook is challenging, as competitive intensity ratchets up andthe housing cycle moderates. We downgrade FY19e EPS by 5.5% andreiterate our Sell rating and reduce our target price to $3.40 (from $3.50).
Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.
Snapshot
DateMarket Cap.Shares on issue12 Month High12 Month Low
15 June 2018$3,900m1,114.2m$4.62$3.32
RatingRating12 Mth Target Price
Capital GainGross Yield
Implied Total Return
Sell$3.10-11.7%9.0%-2.7%
Investment FundamentalsFYE 30 Jun 2017A 2018F 2019F 2020F
* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.
Principals & DirectorsPrincipals
Company Secretary Mr Chris Mentis
Directors
Mr Gerald Harvey(Executive Director,Executive Chairman)Ms Kay Lesley Page(Chief Executive Officer,Executive Director)Mr John Evyn Slack-Smith(Chief Operating Officer,ExecutiveDirector)Mr Michael John Harvey(Non-Executive Director)Mr Christopher Herbert Brown(Non-Executive Director)Mr Kenneth William Gunderson-Briggs(Non-Executive Director)Mr Graham Charles Paton(Non-Executive Director)Mr David Matthew Ackery(Executive Director)Mr Chris Mentis(Chief Financial Officer,CompanySecretary,Executive Director)
To access further Research or for information regarding our recommendations and ratings please seewww.bellpotter.com.au