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Daily ShareChat: The Warehouse Group

By Jenny Ruth

Monday 8th February 2010

Text too small?
 Jenny Ruth

The Warehouse Group's report of flat trading over Christmas points to a lacklustre first-half result although recent share price weakness seems overdone, says Daniel Reynolds, an analyst at Craigs Investment Partners.

The low share price provides investors with an opportunity to receive an attractive yield, see capital growth and gain a free option on any mergers and acquisitions activity.

Reynolds is forecasting the first-half result, scheduled to be announced on March 12, will show a flat $57.1 million net profit in line with recent guidance.

The Warehouse has limited value-adding growth opportunities but it does have strong operating cashflows, he says. "We believe an increased dividend payout ratio or more frequent special dividends are a distinct possibility."

The retailer could lift its payout ratio to 90% in 2011 and beyond while still maintaining its long-run adjusted gearing within its 25% to 40% range as well as allowing for capital spending on an additional two small-format stores a year.

"In the short-term, however, and assuming no second-half property acquisitions, sufficient imputation credits exist for The Warehouse to pay a second-half special dividend similar to the 10 cents per share special paid in the second half of 2009," Reynolds says. He has a $4.31 12-month target price.

 

BROKER CALL:  Craigs Investment Partners rate The Warehouse Group as buy (raised from hold).

 

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

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Get quotes for The Warehouse Group Limited Ordinary Sha (WHS)
NZX Annoucements for WHS
12 Mar 2010 WAV/RULE: WHS: NZX Regulation- WHS - Waiver NZDX Listing Rule 11.1.1
12 Mar 2010 ADDRESS: WHS: 2010 Strategy Update Presentation
12 Mar 2010 ADDRESS: WHS: WHS Fixed Rate Bond Offer Roadshow Presentation
12 Mar 2010 GENERAL: WHS: The Warehouse Group Limited Bond Offer
12 Mar 2010 HALFYR: WHS: The Warehouse Group 2010 Interim Results Announcement
12 Mar 2010 ADDRESS: WHS: The Warehouse Group 2010 Interim Results Presentation
5 Mar 2010 GENERAL: WHS: Release Date - 2010 Interim Result
2 Mar 2010 RELINT: WHS: WHS - Staff Share Schemes
23 Feb 2010 GENERAL: WHS: THE WAREHOUSE GROUP - INVESTOR PRESENTATION SERIES
9 Feb 2010 GENERAL: WHS: The Warehouse Group Limited considers bond offer
5 Jan 2010 FORECAST: WHS: Trading Update

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The Warehouse Group Limited Ordinary Shares

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