Holdsport trading update

15-SEP-11

We'll look at Holdsport first, the guys who own Sportsmans warehouse, Outdoor warehouse and First Ascent.

The one from Holdsport looked good, stating that the company expected earnings to be up over 20% against the last comparable period. Remember these guys only listed a few months ago so we don't actually have a comparable period. Fortunately they gave us the actual expected headline earnings which fall between 137c and 147c for the 6 month period. In terms of valuations this makes Holdsport look very cheap in comparison to some of the other retailers. The stock trades at 3020 giving Holdsport a forward PE of 10 assuming they manage to maintain these earnings. To compare, Mr Price trades on a PE of 17.6, while a diversified retailer like Foschini who own TotalSports trades on a valuation of 15.

I know Holdsport is different in certain aspect to these comparisons but as we have seen, the entire retail sector, especially in this space is doing well and growing earnings in double digit figures. I guess the market is still "sussing" this one out and waiting for the actual results to be released. It's a very competitive industry as we have spoken about before and there is not much liquidity for the stock. None the less it's a great space to be in and possibly a good buying opportunity.