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WES - WESFARMERS LIMITED


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  • 4 weeks later...
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Yippppeee its back on the shorting list

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  • 3 weeks later...

for the longtermers there is a bit of an arbitrage on WES and WESN

 

there is an embedded call in WESN.

 

WESN holders may receive up to 0.25 extra shares (per share) if the price of WES is below $34.49 scaling down to 0.00 if the price is over $43.11 up to 7 november 2011 this date can be moved 4x (so out to 2015) if asx200 is below 6500.

 

more or less this is the nuts and bolts of it.

 

assuming you are holding these in a superfund or other low tax environment or are looking to take a capital loss and have a long term view on WES then this might suit you.

 

they are trading at parity as we speak so there is little downside in holding WESN other than less liquidity but all the potential upside of 25% bonus shares.

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  • 2 weeks later...

Coles (Wesfarmers) is generous :biggrin:

 

"Transferred" 45 supermarkets and 8 liquourlands to the independent grocery retail group, Foodworks

 

and provided Vendor Finance for the $35M sale

 

one reason is to increase average store size as transferred stores are smaller than average

 

all part of the "Store Renewal Plan"

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  • 1 month later...

WES Ann today

 

"Bunnings relishes the opportunity to compete with any new entrant in the $36 Billion Australian home improvement and outdoor living market.."

 

after WOW "Passionate about Retail" - announced purchase of Danks (Home timber and hardware, Thrifty link, Plants plus garden centres)

 

and development of its own large format destination stores

 

said "The Australian hardware and home improvement sector is worth $24 Billion plus" 36 vs 24 is Outdoor living the difference?

 

and in JV with US giant Lowes

 

It will be an interesting tussle with a Focussed Retailer WOW vs the WES conglomerate model with 66% of Div EBIT in Retail

 

Bunnings at 21% of Div EBIT alone

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  • 2 months later...
  • 4 months later...

That short opportunity didn't last very long last November.

On a shorter trading horizon, there was a nice Long trade from mid-$28s to high $32s; I took the stop on 5/03 when MACD turned Bearish.

Today looks almost like a bottom reversal candle - but that kind of doji isn't reliable enough to jump back on just yet. May wait for confirmation by early next week.

 

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  • 4 weeks later...

Still holding WESN in SF

 

From CitiSB

 

Coal price strength - We increase our forecasts for Wesfarmers to reflect higher coal price assumptions. We increase our FY10e EPS by 2.2%, FY11e by 13.0% and FY12e by 3.7%. The combination of higher Resources earnings and higher peer multiples has contributed to an increase in our target price to $32.30. We maintain our Hold / Medium Risk rating. Hard coking coal to peak at US$300/t - The coal market dynamics are favourable with tight supply and continued demand growth from developing economies. In addition, the market has moved to quarterly pricing adding to volatility to the division's earnings. Citi Commodity Strategists forecast hard coking coal prices to rise to US$300/t in the December 2010 quarter. Margins to peak in FY11e - We forecast Resources EBIT of $1,078 million in FY11e. The combination of high prices, minimal cost pressures and the nature of the Stanwell rebate calculation all contribute to a significant spike in earnings. We forecast FY12e EBIT to fall to $654 million as the dynamics in FY11e become less favourable. Valuation disparity - We value the Resources segment at $4.6 billion. There is a disparity between the components of our valuation. Our sum-of-the-parts component is $5.5 billion and our DCF valuation is $3.6 billion. The strong sum-of-the-parts component is a function of the spike in FY11e Resources earnings and potential corporate activity in the sector boosting peer EV/EBITDA multiples. Our view - We maintain our Hold / Medium Risk rating on Wesfarmers. The coal segment accounts for 11% of our group valuation, but appears to have a greater influence on the share price. The strength in the coal market will support EPS growth over the next two years. However, we believe the positive outlook in coal is already reflected in the share price.

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  • 4 months later...

From CitiSB (still holding WESN)

 

Net profit up 8% - Wesfarmers reported FY10 NPAT of $1,661 million, excluding one-off items of $96 million. The result was impressive in the retail and industrials segments, while Resources disappointed. The company had a strong increase in cash flow and dividend of 125 cents per share, an 87% payout of earnings. Positives - 1) Food & Liquor margins above expectations: Coles Food & Liquor achieved a 2H10e EBIT margin expansion of 55bp on pcp, an acceleration of the run-rate from 12bp in 1H10. 2) Industrials surprise: Chemicals & Fertilisers division more than doubled EBIT, while the Insurance and Energy segments were also ahead of expectations. 3) Solid dividend payout: The company increased its dividend to 125 cents per share, representing a 87% payout ratio (vs 68% in FY09). Negatives - 1) Resources disappoint: The Resources segment EBIT declined 76% to $165 million for FY10. Cash cost reductions faded in 2H10. 2) Goodwill write-down for Coregas: Wesfarmers reported an additional 2H10 one-off item associated with the Coregas impairment. This amounted to $52 million, post tax. FY11e outlook - Wesfarmers has said it is "well placed to benefit from any further upturn in the Australian economy". They remain cautious about 1H11e retail sales conditions, but the Resources division should benefit from rising coal prices. We forecast FY11e NPAT of $2,405 million, which is growth of 45% over FY10. Our view - Wesfarmers FY10 result showed encouraging momentum in the retail divisions. In particular, Coles improvement in sales and profit margins shows the turnaround approach is sustainable. We expect the shares to be well supported given improving earnings momentum and the high dividend payout.

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