Will Harvey Norman’s Profit Growth Endure?
Increased Australian franchisee sales have generated exceptional profit growth for Harvey Norman in the latter stages of FY20 but will this heightened state endure?
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News
Harvey Norman Shares Lift On Rare Profit Upgrade
Harvey Norman shares rose nearly 5% in yesterday’s weak market after it surprised with a very rare profit estimate before the end of the financial year. The shares ended up 4.9% to $3.62 after the company announced a measure of earnings would be up around 20%.
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Pandemic Buying Delivers Special Dividend At Harvey Norman
Harvey Norman (HVN) shares jumped sharply yesterday after the electronics, whitegoods and furniture retailer revealed a special dividend for shareholders after reporting five months of booming sales during the coronavirus lockdown.
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Harvey Norman Shares Hit 11-Year Low Amid “Subdued Retail Sentiment”
On the last day of the 2019-20 interim reporting season, the retailer reported a fall in pre-tax profits due to weaker local sales and higher support payments to its almost 200 franchisees. Weak as that was, the outlook for the current year is even more alarming.
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Offshore Sales Save Harvey Norman Result
Furniture, white goods, and electronics retailer Harvey Norman will pay a steady interim dividend of 12 cents a share after an indifferent performance in the six months to December.
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Analyst Views
HVN – Credit Suisse rates the stock as Neutral
First-half results were largely in line with expectations. However, Credit Suisse notes comparisons are unfavourable with The Good Guys ((JBH)) and Nick Scali ((NCK)), as Harvey Norman's Australian franchisee performance weakened in the second quarter relative to the other two.
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HVN – Morgan Stanley rates the stock as Underweight
Harvey Norman Australian franchisee numbers deteriorated in September/October signalling to Morgan Stanley that the demand backdrop is soft.
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HVN – Credit Suisse rates the stock as Neutral
FY19 results missed forecasts. The company has announced an equity raising of $173m. Credit Suisse suspects this will exacerbate investor debates regarding gearing. The franchisee segment was affected by weaker profitability and also increased expenditure on compliance.
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HVN – UBS rates the stock as Neutral
After a tour of the Malaysian and Singaporean operations, UBS is more positive, increasingly confident in both store targets and margin upside. The broker lifts estimates for earnings per share by 1-2% for the group and Asian operating earnings forecasts (EBITDA) by 1-9%.
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HVN – UBS rates the stock as Downgrade
UBS found little to like in the first half result, which was softer than expected. Net debt was higher and the dividend disappointed. Comments regarding capital management suggest this is less likely in the near term.
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