Australian Retail: Post-reporting season model updates

About the author:

Author name:

By Alexander Mees

Job title:

Co-Head of Research and Senior Analyst

Date posted:

21 March 2023, 7:00 AM

Sectors Covered:

Gaming and Retail

• We have reviewed the earnings estimates of all the companies in our coverage universe after the first half reporting season in February. We have updated our models for four stocks.
• Our FY23 NPAT estimates rise by 4% for Accent Group (tax rate); 3% for JB Hi-Fi (lower opex); and 5% for Universal Store (tax rate); and reduces by 7% for Lovisa (LTI provision).

Accent Group (AX1, Hold)

We have increased our NPAT estimate by 2% to $89.3m, 4% below Visible Alpha consensus of $93.0m.

This is due to a lower forecast effective tax rate, partially offset by a 2% reduction in forecast sales. Our target price remains (login to view).

JB Hi-Fi (JBH, Add)

We have taken our FY23 EBIT margin assumption up from 7.3% to 7.5%, 10 bps lower than Visible Alpha consensus of 7.6%.

This results in 3% higher NPAT at $483.6m, 3% lower than consensus of $496.6m. Lower peer multiples take our target price down from (login to view).

Lovisa (LOV, Add)

We have increased the forecast LTI expense booked in 2H23 by $4m, following the indication from Lovisa that the second half expense is likely to be similar to that booked in the first half.

Our FY23 NPAT forecast reduces by 7% to $74.3m, although we are still 2% above Visible Alpha consensus of $73.0m. Our target price moves from (login to view).

Universal Store (UNI, Add)

Our NPAT forecast increases by 5% to $30.4m, 1% lower than Visible Alpha consensus of $30.9m, due mainly to a downward adjustment in our forecast effective tax rate.

Our target price reduces from (login to view) due to lower peer multiples in apparel.

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