Forum Topics Nick Scali Ltd General Discussion
Brisvegaxe
2 weeks ago

I think its getting near to the top of the cycle for these types of stocks .  All the stimmy with no-one going on holidays has meant much forward bought homewares .   Once people start travelling again the home will become less important , Growth will wane even possibly stagnate  .  If there is a large part of growth premuim in these stocks its time to start discounting that  . Not knocking the company in any way just putting some balance out there , I do not hold in any way  

 

Edit : earnings growth evident in recent forward multiple projections , watch this space , revisions be updated in next couple weeks 

 

https://imgur.com/gallery/a11fxKS

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Noddy74
2 weeks ago

4 May 2021

Trading Update & Profit Guidance

Nick Scali Limited (“NCK” or “the Company”) today wishes to issue the following trading update. As highlighted in the Company’s Announcement on 4 February 2021, total written sales orders for the group grew by 52% in H1 FY21. This positive trading momentum has been maintained with growth in total written sales orders of 50% through Q3 FY21, which includes same store written sales order growth of 41%. Written sales orders remained strong in April with growth of 242% compared to April 2020, which wassignificantly impacted by widespread store closures. Written sales orders for April 2021 were in line with March 2021 and up 37% compared to April 2019.

Notwithstanding container availability continuing to affect the Company’s supply chain, FY21 year-to-date sales revenue growth is approximately 44% to the end of April and is expected to continue through Q4 FY21. Consequently, EBITDA for the year ending 30 June 2021 is forecast to be approximately $120m (includes net repayment of JobKeepersubsidies received in H1 FY21) and resulting Net Profit After Tax for the year ending 30 June 2021 is expected to be in the range of $78m to $80m, an increase of approximately 85% to 90% on the previous financial year. This guidance remains subject to no further delays or adverse material impacts on container availability in the lead up to 30 June 2021. The order bank at the end of April continues to remain at elevated levels which provides a good foundation for revenue growth as the Company enters FY22.

***

Reaffirmation of Nick Scali's growth trajectory today.  The market is trying to decide whether or not it likes the result, after closing at $10.70 it initially fell below $10 at the open before rebounding to almost $11.  It's a super high quality business with steady consistent growth year after year since listing.  ROE is close to 50% in normal years.  The question mark is how much demand has been brought forward by COVID and given the nature of it's products it does seem suseptible to this.  A slight caution in what is otherwise a very positive announcement is the mention of orders at 'elevated levels' - at the half they quantified this so this announcement represents reduced transparency.  Given management's history I'll keep holding for now.  At some stage heat will temporarily come out of demand and the SP will suffer but it pays such a good dividend I suspect I'll still be ahead and holding a super business.

[Held]

 

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doktorspleen
2 weeks ago

Agreed, super high quality business, but prior to Covid they had been reaching the end of their growth trajectory. I've held NCK since 2015, and they've done great for me, averaging at 45% p.a. They are a very easy company to think of a bear case scenario for, everyone I've told how well they've done for me has been pretty incredulous. 

Prior to Covid the FY19 company reports had taken on a decidedly more bearish tone. Their sales are linked to housing, and with the housing downturn (and with the regulatory cooling of the investor market), less was being spent on home furnishings. I think there will be some pullback post covid, but how much is questionable, and there is probably a bit of a chance they'll outperform again, dependent on how the housing market goes over the next year or two? Or maybe wishful thinking? 

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Noddy74
2 weeks ago

Over the past 9ish months the conversation has been very macro in terms of retail - 'people are stuck at home, cashed up and "retail" has benefited'. It's very level 1 thinking. When we did go to the next level down it was only to differentiate into online, bricks and mortar and omnichannel. That worked fine because everyone was getting a lick of the ice cream. I suspect as we open up that level of thinking will hurt returns. For retail COVID=good, no COVID=bad is too macro. There may eventually be a hangover for all retail but I suspect it won't be on the same timeframe for all.  Companies like James Hardie, CSR, Brickworks are smashing it right now and I think there are retail names -I'm hoping NCK might be one - whose cyclical cycle will follow a similar trajectory. Making money over the past 12 months has been Uber easy. It's about to get a lot tougher

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