By Matthew Smith
HVN is not an ordinary retailer and is being recommended as a long term buy and hold.
HVN happens to own 35% of the stores it operates out of. So apart from earning franchise fees and its owned store profits there is also rental income from both franchisees and other attractive corporate tenants that lease from these Harvey Norman complexes.
The fact that over 50% of HVN assets are its property portfolio aids in demonstrating the robustness of this business model and also is favored over that of its competitors.
The management own 47% of HVN which is great to see, as this allows for interests to align with other owners of the business. HVN’s intrinsic value lies somewhere between $4.45 - $6.00. An educated estimate of fair value lies somewhere around the $5.00 per share or $5.3 billion level.
Whilst HVN is not trading at ridiculously cheap prices right now, beginning to build a parcel of this business now at a sane price is a great idea.
If HVN were to drop heavily inline with any broader market fall and deviate even further from its intrinsic value a strong accumulate alert will be issued on this stock.
This is a good long term buy in the current market conditions at the current price, if you have some already I would look to top up your holding if not, then now is the time to start buying into this stock.
PS. For more information on Harvey Norman (HVN) please call us on 07 4771 4577.