This report is an updated version of the report published on 6 May 2025 at 11.45 AM AEST. 

Harvey Norman Holdings Ltd (ASX: HVN)  

HVN is an Australian-based, multinational retail company that operates a franchise system of stores selling products across several categories including electrical appliances, computers and technology, furniture, bedding, flooring, and homewares.

Recommendation Rationale – SELL at AUD 5.250 

• Financial Highlights: HVN’s gross profit declined by 0.75% YoY to AUD 457.08mn in 1HFY25 vs AUD 460.55mn in 1HFY24. Cost of sales increased by 1.58% YoY to AUD 1,033.03mn in 1HFY25 vs AUD 1,017.00mn in 1HFY24. Cash from operating activities decreased by 9.90% YoY to AUD 448.10mn in 1HFY25 vs AUD 497.31mn in 1HFY24.
• Trading Near the Resistance: HVN stock has surpassed its R1 level recommended on 8 January 2025 and is approaching its R2 level. Therefore, share price can face some consolidation before moving higher.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash flow) are higher than the median of Consumer Cyclicals sector.
• Market Risk: HVN's performance is heavily reliant on consumer spending on big-ticket items like furniture, electronics, and bedding. Economic downturns, rising interest rates, and decreased consumer confidence can significantly reduce demand and negatively impact sales and profitability.

HVN’s Daily Price Chart

Valuation Methodology: EV/Sales Approach (FY June'26E) (Illustrative)

Stock might trade at a slight premium to its peers considering the successful store expansion in Malaysia, increased revenue in 1HFY25, and planned further expansion in the UK. For conducting valuation, the following peers have been considered: Wesfarmers Ltd (ASX: WES), JB Hi-Fi Ltd (ASX: JBH), Accent Group Ltd (ASX: AX1), and others.

Considering the rally in share price, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 5.250, as of 6 May 2025, at 11:20 AM AEST.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

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

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 6 May 2025. 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: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.