This report is an updated version of the report published on 1 September 2023 at 3:35 PM AEST.

Harvey Norman Holdings Limited (ASX: HVN)

Harvey Norman Holdings Limited (ASX: HVN) is an integrated retail, franchise, property, and digital systems enterprise. It operates under a franchise system in Australia with Harvey Norman®, Domayne® and Joyce Mayne® brands providing products in categories including electrical goods, furniture, computerised communications, bedding, kitchen, and appliances, etc.

Recommendation Rationale – SELL at AUD 4.14

• Financial Decline: During FY23, EBITDA and NPAT declined by AU$305.85 million and AU$364.36 million against FY22, respectively.
• Emerging Risks: The macroeconomic headwinds, significant deterioration in consumer confidence in New Zealand, and rise in finance costs could impact the share prices.
• Technical Indicator: The momentum oscillator, 14-day RSI is trading ~78.54 levels, indicating the overbought zone. Thus, the stock price can face correction in the short term.
• Overvalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, EV/EBITDA, and Price/Cash Flow) are higher than the median of the Consumer Cyclicals sector.

HVN Daily Chart

Valuation Methodology: Price/Earnings Approach (FY24E) (Illustrative)

Considering the resistance, current trading levels and risks associated, it is prudent to book profits at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 4.14 (as of 1 September 2023, at 10:30 AM AEST).

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for price data is based on 1 September 2023, and all other data are as of 5 September 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.

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