Gerry Harvey’s icon of Australian retail has almost halved over the past year, another casualty of the increasingly tough times being endured by the Australian consumer. Being underweight domestic retailers (-21% over the last year) has become a crowded trade, and while the concerns are understandable, the sector could easily experience a sharp snapback into Christmas. We covered HVN in detail last month here, and with the stock having already tested our support level our interest has increased – the stock is on our Hitlist.
Importantly, like most in the sector, HVN’s decline has been driven far more by multiple compression than collapsing earnings which have proved relatively resilient, suggesting the sell-off reflects a significant loss of confidence in the Australian consumer rather than an equivalent deterioration in HVN’s underlying profitability.
- We can see HVN testing $5 if the ASX tracks the MM roadmap into Christmas, +18-20% from yesterdays close, plus a more than 6% fully franked yield.
MM is bullish towards HVN around $4.20
Add To Hit List
