HVN : 21.10.10
The share could not pass the resistance line (white) and recently broke down the support line (Purple) and now testing Fibo 50% . if this can not hold it we should expect the next support level at around 2.96$ (Fibo 61.8 %) Momentum also is near important 0 level and passing down this level could cause more downtrend (Fig 1)
from another point of view share price is testing another support line (yellow). this line can be Neck Line for tilted Head & Shoulders pattern. If the line passed down the target could b around 1.8$ which is the lowest price of HVN in FEB 2009. (Fig 2)
Still good value now that the result is out with a 9% lift.
Market respond quickly with a lift and since has gotten nervous.
My main concern is WOW selling white goods in their new Hardware thingy. Still with only one WOW store in Melb for the moment you'd think Harvey can still make a bit. Buying a bit around 2
If you take the cap rate used to value the properties as being an accurate then yes they are still good value. However, I was speaking to a guy who works in commercial property and he said Harvey's were using an inflated cap rate to value the property. I did a bit of research and a few brokers have noted the same thing, the cap rate was below market rates a few years ago and is now above. On the positive side it was good to see HVN vacancy rate fall after 4 years of rising.
My biggest concern with HVN at the moment (aside from the fact their business model is probably in long run decline) is that so far, as you've noted, whitegoods prices have held up pretty well. If the Koreans decide that they want to have a crack at seeing how much of the whitegoods market they can take then it could see the same price deflation as browngoods have.
At $1.80 it is probably fair value (I'd prefer a bigger MoS) for it's real estate assets, although the problem with the breakup scenario is it won't happen while Gerry is still alive.
Hi McLovin,
Any idea of what cap rate HVN was using to value their property at?
8.77%.
I agree ROE, if anything I think 8.77% is too conservative.
I used to work for a property developer and they were constantly using a cap rate of 7 to 7.75%.
Given alot of HVN's prop is large space/bulky goods/stand alone store type configuration I think a cap rate of between 8.25 and 8.75% would be fair.
Isn't the value of the property somewhat derived from the success or otherwise of the retail businesses which it hold? If a shop is to shut due to bad sales then the value of the property will also take a hit. So the two sides of the business may not be as diversified as one would hope.
Although it is probably relatively more attractive than buying a retail trust at a higher cap rate, given that you get a retail business on the cheap... as long as the retail side doesn't start making losses.
investorpaul said:I agree ROE, if anything I think 8.77% is too conservative.
I used to work for a property developer and they were constantly using a cap rate of 7 to 7.75%.
Given alot of HVN's prop is large space/bulky goods/stand alone store type configuration I think a cap rate of between 8.25 and 8.75% would be fair.
Trough cycle nation average bulky goods cap rate of 10.15%
Current nation average bulky goods cap rate of 9.35%
Peak cycle nation average bulky goods cap rate of 7.63%
Also over the last 5 years HVN's cap rate has gone from a discount to a premium to the prevailing market rate.
What do you make of this in the report? I don't see them deviate much
unless you count a few basis points as a massive deviation from the norm..
Australian Property Portfolio Statistics
Weighted average capitalisation rates
FY2007 FY2008 FY2009 FY2010 FY2011
8.69% 8.21% 8.36% 8.7% 8.77%
You're only looking at one side of the equation. Either HVN has adjusted their cap rate or the market cap rate has adjusted and HVN's has remained unchanged.
So what you saying HVN manipulate the figures and no one else has?
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