Forum Archive Index - July 2000

["G Christie" <bayvu@ihug.co.nz>]

Does anybody have any information about this co.? They had a ' major
announcement' to make this week, I thought. Ord Minett have just bought 32K
shares, buying up. This tells me that something could be just around the
corner. (We've waited long enough!) Regards Graeme
-----Original Message-----
From: Peter Maiden <pmaiden@today.com.au>
To: sharechat@sharechat.co.nz <sharechat@sharechat.co.nz>
Date: Friday, 14 July 2000 07:51
Subject: [sharechat] WHS still undervalued


>Based on NZ earnings alone my own DCF (at a modest risk rate) is 520-550
per share. Add to that acquired Aust earnings at a higher risk rate over all
DCF is in excess of 900.
>
>The driver of any attempt to put a value on WHS has to be how long can the
incredible revenue growth in NZ be sustained. For me the answer to that
question is for at least another 4-5 years.
>
>Why? The answer has to be in the socio-economic fabric of NZ. Who would
have thought that the phenomena of red sheds would have transcended across
so many boundaries. Not many years ago there was a large proportion (the
more better off) of the population too embarrassed to be seen in them - now
you see well heeled investment managers in dark suits visiting stores and
wondering why they did not invest in them earlier.
>
>This change has happened because of the way the distribution of wealth in
NZ has moved over the last 10-15 years - the poor are getting poorer, the
middle class are getting poor and the rich getting richer. And then there is
the dis-enfranchised old.
>
>Current government policy is accelerating this trend.
>
>A trend that only increases it customer base - and a greater share of
existing customer's share of wallet.
>
>The way that NZ is heading The Warehouse customer base can only increase
(Idoubt that many of the beneficiaries of the 'closing of the gap policy'
will beable to trade up to Hallensteins, Bond & Bond etc).
>
>I have also observed the attractiveness of The Warehouse even to the young
woman of the world. When Dad pays Doc Martins are the only choice - when one
becomes a student and need to support oneself $29 black dress shoes from The
Warehouse are more than acceptable to wear to your part time job with a
merchant bank.
>
>There is no reason that this business that has grown from nothing to $1B in
revenues in 10 years and has ( I think this was the number I read somewhere)
a third of the population visiting it stores each week should not continue
to grow as it has - the countries social fabric will ensure that it will. A
good trend to look at is what share The Warehouse has of total (excluding
motor vehicles)
>retail sales as provided by Statistics NZ.
>
>The Warehouse is also competing on-line and no doubt could increase this
part of their business quickly if any competitive
>pressures were put upon them
>
>There remains many other opprtunities to expand their business beyond what
they have now.
>
>If the Australia acquisitions are managed the same way and overall margins
improve then imagine what any substantial increase in revenues will do to
the bottom line.
>
>The DCF is based very much on a cash driven company but revenue growth
expectations nothing like that built into amazon.com or the like.
>
>From a traders point of view WHS will always be a stock that will bring
incredible gains. Not just holding but because it is not a glamorous stock
(and people only too willing to see it fail) it will always be subject to
falls along the way. The falls will always be compounded by this feeling
 ie Tindall has high blood pressure will take 100 of the share price but
Warehouse doubles revenue will only add 100 - get the picture). That is the
time to make even more as WHS will always rebound to new highs. Pity it
didn't reach 600 this week. It will soon and then sentiment will take over
and there will
>be a fall to 550-570. Within a short time back to 600 and then higher to
even more greater levels.
>
>Thoughts
>
>Peter
>
>
>
>
>--- Move to a better address ---
>       + today freemail +
>    http://www.today.com.au
>
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