Wellington: Shares in Pacific Retail Group (PRG) have hit a seven-month high as investors eye its dividend potential and recent foray into the English appliance market.
PRG shares closed up 8c, or 3.2%, at $2.55 on Friday, their highest level since mid-February.
Chairman Maurice Kidd said the Auckland-based company might review its no-dividend policy this year, but made no promises.
“In the absence of further opportunities to effectively deploy the capital within the business, we may consider dividend payments as existing investments start to realise their potential.”
At PRG’s annual meeting, Mr Kidd also waxed positive about the acquisition of United Kingdom appliance retailer PowerHouse for $48 million this month.
“The UK appliance market is estimated at £12.5 billion – that’s $32 billion New Zealand dollars – so we believe there is much to be gained in re-establishing this business.”
He also said the company’s first-half earnings had been hampered by “difficult trading conditions” and its failed bid for the Australian-owned Farmers department store chain.
Forsyth Barr analyst Jeremy Simpson said there had been positive market sentiment surrounding the PowerHouse acquisition.
“That’s probably created a bit of momentum in the stock and perhaps people are looking at it again,” he said.
He noted that from April until last week, PRG had been trading in the $2 to $2.30 band, but said it was not immediately clear whether PRG would consolidate its recent gains.
“It’s still a stock that looks pretty cheap on most valuation criteria,” he said, declining to give Forsyth Barr’s valuation of the company.
ASB Securities head of advisory Stephen Wright also believed the PowerHouse acquisition was underpinning PRG’s surging share price.
He believed PRG shares were worth about $3 each.
PRG, which is 73.2% owned by expatriate businessman Eric Watson, owns retail brands Noel Leeming, Bond & Bond, Living & Giving, Bendon and Big Byte. It also operates Pacific Retail Finance. It returned a March-year net profit of $18.21 million, but paid no dividend. – NZPA