WES - Wesfarmers Limited

[greggles]

Wesfarmers to spin-off the Coles supermarket business.

http://www.abc.net.au/news/2018-03-16/wesfamers-to-demerge-its-coles-supermarket-chain/9554658

Wesfarmers has done a lot to turn around the Coles business and successfully re-position it in the market. That being said, is demerging Coles into a separate listed entity in the best interests of WES shareholders?

 

[PZ99]

Wesfarmers to spin-off the Coles supermarket business.

http://www.abc.net.au/news/2018-03-16/wesfamers-to-demerge-its-coles-supermarket-chain/9554658

Wesfarmers has done a lot to turn around the Coles business and successfully re-position it in the market. That being said, is demerging Coles into a separate listed entity in the best interests of WES shareholders?

Long term, I'd say yes. There are some big players entering the supermarket business over the next few years and the Coles / Woolies warfare has taken its toll on profits for both sides.

Curious where WES are going... maybe property aka Goodman etc ?

 

[greggles]

Long term, I'd say yes. There are some big players entering the supermarket business over the next few years and the Coles / Woolies warfare has taken its toll on profits for both sides.

WES certainly needed to do something to generate some excitement. Its share price has been mostly range trading between $39 and $45 for the last five years. Not the most compelling stock on the ASX but with a market cap of almost $50 billion it's certainly one of the largest.

It's up around 6% this morning to $43.67, so perhaps the Coles news will see it break through $45 convincingly in the near term.

 

[Knobby22]

Wesfarmers to spin-off the Coles supermarket business.

http://www.abc.net.au/news/2018-03-16/wesfamers-to-demerge-its-coles-supermarket-chain/9554658

Wesfarmers has done a lot to turn around the Coles business and successfully re-position it in the market. That being said, is demerging Coles into a separate listed entity in the best interests of WES shareholders?

I reckon it is, though I don't own. From a duopoly to strong competition, it needs to be run by a single minded team and can't afford to be part of a conglomerate anymore. Also I can't see great levels of growth in the future so why not free up the balance sheet.

 

[PZ99]

Wesfarmers profit down 58pc to $1.2 billion as impact of UK experiment hits home
By business reporter Stephen Letts

Wesfarmers brief, expensive and ultimately failed foray into the UK home improvements market has dragged down its full year profit by almost 60 per cent to $1.2 billion.

The Bunnings UK operation, which was sold earlier this year for the token amount of 1 pound, carved $1.4 billion off the profit.

However, that wasn't the only hit to its bottom line with earnings at its Coles supermarket chain falling 7 per cent to $1.5 billion.

Underlying earnings, stripping out one-off items, was down a more moderate 3.5 per cent to $2.8 billion on last year, but ahead of market expectations.

The company has maintained the full year dividend at last year's level of $2.23 per share.

http://www.abc.net.au/news/2018-08-15/10120354

 

[Garpal Gumnut]

WES certainly needed to do something to generate some excitement. Its share price has been mostly range trading between $39 and $45 for the last five years. Not the most compelling stock on the ASX but with a market cap of almost $50 billion it's certainly one of the largest.

It's up around 6% this morning to $43.67, so perhaps the Coles news will see it break through $45 convincingly in the near term.

View attachment 86627

It all happened today.

WES has been a lazy div buy/sell later stock for me for many years.

WES shareholders to get 1/1 New Coles shares.

WES keep KMart, Flybuys, Bunnings, Officeworks, Industrials, Mining and some more.

Market in WES flailing this arvo. Up n down like a bride's right to bear arms.

gg

 

[bigdog]

Amazon Australia now sells pantry food

WES SP down $-0.16 and ASX up 52 points today

WOW $27.585 $+0.095 +0.35%

 

[Lantern]

https://reneweconomy.com.au/wesfarm...-electric-cars-australia-should-follow-50346/

Just months after selling the last of its thermal coal assets, Wesfarmers – one of Australia’s leading business conglomerates – has made a $776 million play to enter the lithium market and tap into the opportunities of the global switch to electric vehicles.

The rest of the country should take note.

Last December, Wesfarmers complete the sale of the last of its thermal coal mines – the type used to power generators in Australia and overseas – and happily for its shareholders pocketed a massive profit of around $680 million from the $860 million sale price.


It said at the time that the Bengalla coal mine in New South Wales was a world-class asset. That probably made the buyer – New Hope Coal – feel good about its purchase. But it hasn’t turned out so well: New Hope’s shares have slumped badly as investors wake up to the idea that betting the house on a coal-based future may not be such a grand idea.

 

[sptrawler]

Wesfarmers getting into the online retailing space with a splash, buying up "catch of the day" for $230m, I guess they have a ready built platform to build on.
https://www.google.com/search?q=wes...e..69i57j33.8115j1j7&sourceid=chrome&ie=UTF-8

 

[Miner]

WES and COL holders (to be repeated on COL)
I thought to share the snippet from Motley Fool Share Advisor - the following are their reported performance following recommendationi in 2015 (I have not checked the calculation) and today 20 June they have said SELL both the shares.
Incidentally at the COB today 20/6, both WES and COL closed with increased price.

Wesfarmers Limited and COLES GROUP DEF SET ASX:WES ASX:COL 26/06/15 BUY N/A N/A 53.2% 43.8%

"Today we have decided to close out a recommendation we made back in 2015 by selling Wesfarmers (ASX:WES) and Coles (ASX:COL).

As you’ll likely know, Coles was spun out of Wesfarmers, giving us a (smaller) parent and a newly listed child. We sat on them both while we waited for the dust to settle, but now we know enough.

And, unfortunately, there’s a twist in the tale. Read on, Fool!

Coles was always a curious case.

The business is arguably one of the most mature businesses on the ASX. Despite some newer players, such as Aldi, taking market share over the past few years, the supermarket duopoly between Coles and Woolworths (ASX:WOW) remains strong with both players still owning around 30% of the market each according to Roy Morgan." ​

Disclaimer - I do hold COL and always mix wine and salt with MF recommendations. DYOR

 

[Dona Ferentes]

Wesfarmers is taking advantage of record highs in the Coles share price and generally buoyant conditions in equity markets to sell off $1.1bn of its stake in Coles, representing one third of its total holding, marking the next step in its demerger and eventual sell down of its holding in the supermarket group.

After the market closed on Tuesday, and following the release of Coles’ first half results, Wesfarmers announced it had entered into an underwriting agreement with two lead managers to sell 4.9 per cent of the issued capital of Coles. Following the sale process, Wesfarmers will retain a minority interest of 10.1 per cent in Coles and its right to nominate a director on the Coles board, maintaining the ongoing relationship between the two companies since the demerger of Coles from Wesfarmers in November 2018.

The sell down comes as Wesfarmers managing director Rob Scott is continuing to reshape Wesfarmers, which has seen him in the past few years generate billions of dollars in revenue from the sale of its Bengalla coal mine, the sale of Kmary Tyre and Auto as well as the sale of Quadrant Energy.

Bunnings and Lithium conglomerate, with a dash of data analytics/ IoT tech?

 

[Miner]

I feel it will help Coles on medium to long term without being under cradle and utilise cash.
Mind you Wesfarmer will still have interest on rest of the capital and a Director on Coles board.
In short profit is good but WES would look after balance 2/3 of the investment.
Hope market takes a short term pain (?)

 

[Dona Ferentes]

WES sold another 5.2% of Coles. Received slightly less than earlier offload, and will bank $1.06b. plus gave up director seat.

Some are saying this move builds a war chest for future acquisitions (possible) but it could prudent positioning. A cash buffer may be needed to meet considerable financial obligations, with a potential scenario of enforced retail closure and reduced demand but still having creditor payments.

Last financial year, Wesfarmers had $2.3bn of net financial debt, trade and other payables of $4.1bn and provisions, mostly relating to employee entitlements, of $1.1bn.

“Under a scenario of reduced retail demand... creditors still need to be paid and new season’s stock needs to be bought,” analysts said. "If employees are stood down, leave balances need to be paid.”

Based on the first six months of the 2020 financial year figures, the potential cash outflow related to creditors and employee entitlements is more than $5bn.

- can see why they want Kmart and Target to stay open. All that stock.

 

[Garpal Gumnut]

WES got a bit of a run in the SMH via an advertorial type article for it, amongst others, courtesy of Macquarie, wizards of the stunted universe.

My guess is it will stay around $30 for a while before consolidating with a small possibility of hitting $20. Talk of it taking over Qantas. I'm loaded up on it in my SMSF, but may add especially if hits mid to low $20's.

A chart, a monthly over 10 years. If this bug don't get me I'll keep it for another 10. It's a survivor.

gg

 

[matty77]

A consistent non out performer I guess, but you know what you are going to get.

Makes me wonder if they are accumulating cash to make some purchases post Corona, divest some COL and use that for something else.

Officeworks and Bunnings are having a bumper time at the moment, sales up over 40% during March period alone, this probably cant be sustained over the long term though so expect to slow down as Corona takes over and people hide..

Bunnings never do anything unless forced, think when Masters came in they got their $hit together big time to compete, no more sloppy admin and wasting of money and automatic growth, they had to work harder and smarter. Anyway it seems the Corona may have now woken them to the importance of online sales and delivery and this will be a big focus going forward for them with lots of potential. Lots of inventory optimization and changes going on in the background which will bring more money back into the business, think along the lines of a far superior GMROI.

QAN.. ? now that would be a interesting one..

 

[sptrawler]

Wes are cashed up and patient, as GG I also hold and will add on weakness, the trick is timing IMO.

 

[Dona Ferentes]

The wishlist of who others think WES will buy and the likely outcome are probably far apart.

Bunnings, data and lithium - I doubt there is another conglomerate like it. Hope their discipline holds in the coming buyfest.

 

[sptrawler]

The wishlist of who others think WES will buy and the likely outcome are probably far apart.

Bunnings, data and lithium - I doubt there is another conglomerate like it. Hope their discipline holds in the coming buyfest.

I cant see QAN being on the wish list myself.

 

[sptrawler]

The wishlist of who others think WES will buy and the likely outcome are probably far apart.

Bunnings, data and lithium - I doubt there is another conglomerate like it. Hope their discipline holds in the coming buyfest.

The problem is what is worth buying in Australia, even if it is cheap.
Buy a bank and you have the problem of being expected to lend money to everyone, even to those who would rather spend their money on something else, rather than pay it back.
Buy into superannuation, why, everyone expects to make money not lose it.
So it becomes the next banking Royal Commission, already some super funds are asking for help due to insufficient liquidity and the baby boomers haven't even retired yet.
Mining well that works well ATM, but eventually when it is the last business standing, taxation will come down hard.
Manufacturing, there isn't any manufacturing that is going to take the World by storm and anything that looks promising moves offshore to bigger markets and lower taxes.
So what WES buys will be very interesting IMO, it may well give us an indication of where the big money sees growth.

 

[Garpal Gumnut]

I cant see QAN being on the wish list myself.

I am told QAN have no cash.

WES were cashed dup to the nines even before this bug hit. Selling down more COL is icing on cake.

IF WES directors get the nod from the Feds they will be in like Flynn imo.

gg