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JBH - JB Hi-Fi

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Lolz, what an idiot (the analyst) JBH debt is about $250m. The vast majority of which was used to buy back 10% of the shares on issue.

There still spinning awesome amounts of positive cashflow.

The results look impressive if you dont take into consideration the $$$ set a side for restructuring Clive Anthonys. Which has turned out to be a bit of a drag on the company and stock, but now that its mostly taken care of they can continue to focus on other things.

Will be interested to see how they go with there music streaming service set to start in FY12.
 
As much as I do like JB. As a shop not a buy, The music streaming idea tossed up after the word restructure after the hot shot captain has moved on, Just rings alarm bells for me.
Like what? The netizens are going to flock to JBs website to stream music. You have to be joking
 

I saw that, and wondered how long that will last. Unless there is some compelling reason to join JBH's streaming service I can't understand why anyone would. They are also getting outside their circle of competence. Their online store isn't even that great.
 
Traditional old world retailers are just way out of their depth on line.
They have no idea about that culture.
They'd be better off creating awsome coffee shops, or gimmicks of some sort like gamming competitions with prize money or prize PS3 every week, including a grand final to lure people in their doors.
 
What caused JB Hi-fi to jump nearly a dollar today?
I was execting there to be a positive announcement but there arent any.
 
zac said:
What caused JB Hi-fi to jump nearly a dollar today?
I was execting there to be a positive announcement but there arent any.
Click to expand...

Im assuming it was driven by the Bureau of Statistics report that stated Australian households are spending an average of $1200 a week. Despite the doom and gloom. I cant find you a link, but I remember reading it this morning.

But im not really sure. I think some retailers did actually look quite attractive in the last month. I was even looking at DJS but didnt buy.

At one stage today JBH was up about 7% or so !
 


Ive just noticed the annual report is being delivered tomorrow.
 
From my observation, JB store will report more store decline earning
going forward, lot of windows shopping not much at the checkout.

those Westfield rent start to get expensive
 
ROE said:
From my observation, JB store will report more store decline earning
going forward, lot of windows shopping not much at the checkout.

those Westfield rent start to get expensive
Click to expand...

Its difficult to interpret store earnings though when the majority of stores being opened now are there less profitable 'tier 2' variety. Im not sure if rent is the most important issue for there business atm. As long as they contain there CODB I think they'll be fine this year. With household savings backing up for the last 12-24 months I have a feeling it could be a big christmas period for the local retailers this year. Having dealt with Clive Anthonys last financial year might even see JBH suprise on the upside. But wait and see.
 
JBH (JB Hi Fi)- 10.10.2011
==================================
Price has been corrected as far as %61.8 fibo ratio:



More importantly JBH has touched its valid longterm support line,



normally this support line should hold price from falling but if not we would see more downtrend from this Australia's Largest Home Entertainment Retailer
 
TA of JBH 30-10-11
==========================

as I said before share had been touched the long-term support line around $14.00 which was at fibo 61.8% too. Also it has the horizontal support line (the green) which once was the resistance line of the share but when sp has been passed it up successfully now is acting as the support line.

But sp around $17.00 is facing the horizontal resistance level (peak in 2007-blue) and also the lower (red) line of the channel. if share would manage to pass these resistance levels we could see the sp above $20.00 (the upper red resistance line(upper line of the channel)



For more details:

 
TA of JBH - 28 Nov 2011:
=================================
JBH has a strong support around $15.00 (the blue support line and previous low around 15). if this level works, the price could be anticipated to test 16.75 again.
but if price falls below 15.00 and stay there for more than 2-3 days, we could say we might are having the double top which the target would be around 14.00.



but more importantly, the price around 14-15 has a very important, valid long-term blue support line.
in this picture we could see the main white resistance line. in a normal situation JBH would move between these support resistance lines.

 
Fundamental Analysis of “JB Hi-Fi Limited (JBH)” - Part 1 - 04/12/2011
================================================
General Information:

JB Hi-Fi Limited (JBH) is a specialty discount retailer of branded home entertainment products. The Group's products fall into consumer electronics, car sound systems, and music and DVDs and white goods. JBH does not operate a warehouse; instead all stock is delivered directly to each store and largely stored on the shop floor.

Company Strategy
Growth is driven by a store rollout program which adds around 13-15 sites per year with a long term goal of 214 national stores. The product mix is constantly revised to ensure competitiveness.

FY2011 financial statements:
Income statement Analysis:

Revenues:
Revenues in FY 2011 was 2,959 m$ compare to 2,731 m$ in FY2010 which shows 8% increment. Fig 1 shows that from 2003 to 2011, sales have been increased continuously.
Consumer Electronics (CE) which represents around 75% of all sales grew by around 15% in FY2011.


Fig1 – Sales (Revenues)

Cost of goods sold and Gross margin:
In FY2011, the Gross margin was 22.03% compare to 21.76% in FY2010 which shows around 1% improvement. This consistency shows that JB HiFi has its own reliable supplier and has a Gross margin around 22% to follow. (Fig 2)


Fig2 – Gross Margin

Improving the gross margin , increased the gross profit of the company by 10% to 652m$ in 2011 from 594.2$ in 2010 (Fig 3) . (Combination of 8% improvement in Sales and 1% improvement in Gross margin)


Fig3 – Gross Profit

Operating Income:
As we saw sales was up only 8% in 2011 from 2010, because of the better gross margin, Gross profit was improved by 10%. Now we could see that operating income has been improved further by 12% in 2011 compare to 2010.It shows that company could successfully manage to keep the operating costs and cost of doing business lower than before. (Fig4)


Fig4 – Operating Income

As we mentioned above, we see the operating margin which was 6.62%, improved by 3% from 6.40% in FY2010. This margin has been improved continuously from 2006 (fig5) which is very interesting.


Fig5 – Operating Margin
=============================
End of Part 1
 
Fundamental Analysis of “JB Hi-Fi Limited (JBH)” - Part 2 - 06/12/2011
==============================================

Interest expense:
Interest expense was 6m$ in FY2011 compare to 5.4m$ in FY2010 (FIG 6). Company predicted that will have 13m$ -15 m$ interest expense. This is because of “Share Buy-Back “plan that company had in 2011 and its long-term debt became increased. We will consider this in predicting FY2012 Company’s performance.as the result of this buy-back , number of “share outstanding” decreased which will increase EPS and ROE as we will study in details.


Fig6 – Interest Expense

Net Profit:
Net profit has been decreased by 8% from 118.7m$ in 2010 to 109.7 m$ in FY2011. We saw that operating income was up by 12% in 2011 from 2010. This unusual cut for net profit happens because of $33.35 m$ cost for “restoring Clive Anthonys stores”. This was only one-off charge and it is reasonable to take it out from the 2011 performance in order to compare it with previous years and FY2012 prediction. From now on we have the assumption that we exclude this charge from FY2011 performance.

With taking out $33,352.00 for “restoring Clive Anthonys” expense which had after tax effect on final profit by 24.72 m$, we would reach to Net profit of 134.4m$ in FY2011 which is improved by 13% compare to FY2010 (fig 7).
We also see continues improvement of Net profit of JB HiFi from 2003 to 2011 which is admirable and interesting.


Fig7 – Net Profit

These outstanding results had been accomplished by increasing the “sales” and at the same time keep the “margins” improved. In Fig 8 we could see that Net profit margin has been improved from 2006 to 2011 continuously. This ultimate margin was 4.54 in FY 2011 compare to 4.35 in 2010 which shows considerable 5% improvement. This margin was merely 2.73% in 2006. (Fig 8)


Fig8 – Net Profit margin
 
Fundamental Analysis of “JB Hi-Fi Limited (JBH)” - Part 3 - 09/12/2011


EPS:
EPS was 124.7 cents per share in FY2011 up 14% from 109.7 cents per share in FY 2010.
Fig 9 shows the EPS from has been increased from 2003 to 2011 which shows the success of JB HiFi business model.


Fig9 – EPS

The 124.7 was accomplished because of the increasing the Net profit to 134.4 m$ and also reduction in “share outstanding “ due to company buy-back plan which reduced the average “shares outstanding” in FY2011. Fig 10 shows the “shares outstanding” from 2003 to 2011.But we should keep on mind that the average of the share outstanding has been used for EPS calculation for every FY.
This new number of shares will be applied for FY2012 for EPS and DPS calculation. Which will increase EPS and DPS but in the cost of increasing debt & interest expense and also reduction in shareholders’ equity which we will study in the following sections.



Fig 10 – Shares Outstanding


DPS:
Dividend was paid to each share in FY2011 was 77cps , up 17% compare to 66cps in FY 2011.
Fig 11 shows DPS paid to shareholders from 2003 to 2011, we could see continues improvement in DPS which shows a good return to investments during these years for shareholders.
The company announced that it has paid 60% of its Net Profit (exclude one-off charge = 134.4m$). it means that company has paid around 80.64 m$ to its shareholders, with a simple math we could reach to the average number of shares equal to 104.7 million shares in 2011 which received dividends. This reduction in numbers of shares was due to buy-back program which happened in FY2011.


Fig11 – DPS



DPS/EPS:
JB HiFi has paid 62% of its EPS to shareholders in FY2011. In FY2010 this ratio was 60%.
Fig12 shows this ratio from 2004 to 2011. The board announced that they will grow dividends in line with earnings. We will assume that 60% of EPS will be given as dividend to shareholder in FY2012.


Fig12 – DPS/EPS
 
Fundamental Analysis of “JB Hi-Fi Limited (JBH)” - Part 4 - 12/12/2011
==============================================
Balance sheet Analysis:
Assets:
The Asset part of JB HiFi balance sheet from 2008 to 2011 could be seen in Table-1.the changes from FY2011 from FY2010 is calculated in the last column.

​
Table 1 – Assets​

Cash and the Equivalents:
The cash was 27.2 m$ which has been decreased by 47% in FY2011 compare to 51.7 m$ in fy2010. We could assume that part of this reduction was happened because of 33.35 m$ “restoring Clive Anthonys “charge.

Inventory:
Due to the kind of business, Inventory is the most prominent number in Current asset for JB HiFi. This figure was 406.9 m$ increased by 22% from 334.8m$ in FY2010.(Fig 13)


​
Fig13 – Inventory, Current and Total Assets (m$)​


The inventory has a direct relation with the number of the stores. When a new store is open, it will increase the inventory (products in hand which will be sold) . with normalising the inventories with store numbers we see that inventory value in FY2011 was very near to the average inventory normalised by shares numbers. (Fig 14)


​
Fig14 – Inventor per Stores

Total current asset was 501.1 m$ in FY2011 compare to 454.5 m$ in FY2010 which shows 10% increment. Total assets was 767.1 m$ in FY2011 compare to 714.3 m$ in FY2010 (7% up) (Fig 13)

Liabilities:
The Liability part of JB HiFi balance sheet from 2008 to 2011 could be seen in Table-2.the changes from FY2011 from FY2010 is calculated in the last column.


Table 2 – Liabilities​

The current liabilities has been reduced by 5% to 345.9m$ from 363.1 m$ in FY2010. But the total liabilities was up by hefty 46% in 2011 (From 421 m$ in FY 2010 to 614.8m$ in FY 2011). The reason for this as we could see in the table, was because of increment of Long-Term Debt from 34.7m$ in FY 2010 to 232.9m$ in FY2011 (up more than 570 %!). (Fig 15)

​
Fig15 – Liabilities (m$)​

The reason that Long-Term debt increased by 570% is due to company share Buy-Back plan in 2011 which was completed by purchasing 10.8 million shares with 173.3 m$ value.
The fund for this buy back considers as Long-Debt.
The reduction in “Shares Outstanding “(Fig 9) will improve EPS, DPS and ROE (Return on Equity) but at the same time Long-Term Debt and Interest expenses will be increased (as announced by company FY2012 Interest expense will be in the range of 13m$ to 15m$ ). These should be considered in 2012 performance prediction.
 
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