Analyst Note| Johannes Faul, CFA |
Wide-moat-rated Wesfarmers hasn’t been immune to the recent rise in Australian coronavirus cases and the retail trading restrictions which were in effect in the first half of fiscal 2022. The conglomerate estimates profits declined by between 12% and 17% in the first half of fiscal 2022, versus the previous corresponding period. Subdued foot traffic to retail outlets has presented a challenging start to the fiscal second half but we expect recovery during the period. For the full fiscal year 2022, our underlying NPAT estimate of AUD 2.2 billion is unchanged—a decline in EPS of 10% versus fiscal 2021. And we still expect a strong 11% rebound in earning in fiscal 2023, driven by a post-pandemic recovery at Kmart Group and earnings growth at the core Bunnings business. From fiscal 2024, we expect solid earnings growth in the mid-single digits, underpinning our unchanged fair value estimate of AUD 39.50.