Harvey Norman Holdings Ltd

HVN: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$1.80	Kktf	Shkjdth

Harvey Norman Faces a Challenging Second Half With Sales Declining in Key Markets

Johannes Faul

Feb 28, 2023

We maintain our AUD 3.90 fair value estimate for no-moat Harvey Norman following a weaker-than-expected fiscal 2023 first half to December 2022, and soft trading update for January 2023. We lower our fiscal 2023 earnings estimates by 10% to AUD 0.40, mainly due to a faster-than-expected decline in profit margins in the Australian franchisees and overseas retail segments. However, we still expect group profit margins—defined as profit before tax as a percentage of global sales—to stabilise at long-term maintainable levels of 7% from fiscal 2024.

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