Citi upgrades rating to 'buy' on strong guidance, hikes PT

Warehouse

22/12/2020 21:11

** Citi Research hikes price target of consumer goods
retailer Warehouse Group  WHS.NZ  to NZ$3.00 from NZ$2.55 after
its trading update; upgrades rating to "buy"
    ** WHS expects H1FY21 net profit after tax (NPAT) to exceed
NZ$70 mln ($49.29 mln) vs H1FY20 NPAT of NZ$46 mln, as sales
performance was above expectation, posting Q1 growth sales  of
6.6% in its retail business  urn:newsml:reuters.com:*:nNZW22xJ6W
    ** Co also said it is in a good position to repay the wage
subsidy it received from the New Zealand government in response
to the coronavirus pandemic
    ** Citi Research says a combination of pent-up demand in the
retail sector and government stimulus is helping the business,
as closed borders and travel restrictions have increased
people's capacity to spend on retail 
    ** "Warehouse group is well positioned to benefit from the
increased retail spend due to diversion of funds from other
spending activities including tourism" - Citi
    ** Citi expects WHS to post FY21 earnings before interest
and tax of NZ$117 mln, up 31.3% from previous estimates  
    ** Stock down 2.9% this year, as of last close, compared
with an 11.75% increase in the benchmark S&P/NZX 50 index
 .NZ50  
 
 ($1 = 1.4203 New Zealand dollars)

 (Reporting by Harish Sridharan in Bengaluru
Editing by Matthew Lewis)
 ((harish.sridharan@thomsonreuters.com))