PGH/BRG
PGH
PGH AGM update was yesterday.
The AGM update contains quite the downgrade of NPAT relative to consensus…
…with the outlook well below street EBIT & NPAT estimates.
For a share price that’s collapsed, you’d think management would be more careful to explain what’s happening in their business segments. Look at the US retail comment, and compare to the retail sales trajectory.
I don’t want to be overly critical, but, it is their AGM, where they are speaking, in theory, directly to shareholders.
The stock is very, very cheap, and should survive the cycle. But it is not for the faint hearted.
BRG
The Breville management outlook commentary, was, I thought, quite weak. Their AGM result was a little while ago, and we wrote a note about it at the time.
I think that the working capital release eats all the margin (price discounting to move the goods, which do, in stark contrast to managements other comments, indeed depreciate in value the longer you have them in a warehouse and not on retailer shelves).
The commentary on trading conditions (goal posts, solid, steady, challenged) is maybe a shade from the “we are now coming in at the low end of the target range” type-framing, the first step in downgrading guidance more fulsomely.
It normally goes something like the above, then the “earnings will be weighted to the second half, but we maintain”, and then “we aren’t gonna make it”.
Now, none of that has happened, to be clear, but the set-up is familiar. We are very interested in Breville, thinking it a good, well managed business, and we’d like to own it, just that the composition of retail sales is evolving, demand for appliances is falling somewhat, and that we’ll get the chance a lot cheaper.
We shall see.
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.