Coles Group (CGJ) Shares

Coles Group (CGJ) have a Neutral 2 shares recommendation and an unchanged price target of $15.90 from market analyst UBS. The company reported H1 07 EBIT of $737.5m or $675m pre one-offs versus the analyst's $699m est. Underperformance was mainly due to Kmart. Food & Liquor companies are declining further into Q3 07 with Bi-Lo rebadge failing to lift sales. Cash generation was weak. FY 07 & FY 08 guidance was reiterated but this requires faith in improved execution, in their view. The analyst's revised FY07E NPAT is $755m or 4% below guidance. Their FY08E forecast of $930m implies 23% growth but is still below CGJ's guidance of $944m. A thorough consideration of ownership options including full or partial sale/demerger of all or some businesses should ensure greatest bidding tension for CGJ. Despite the Chairman citing $15.25 as substantially undervaluing CGJ, the analyst believes this may change if deteriorating trading continues. CGJ believe the sale process may take close to 6 months but given the Myer experience we believe it may take longer. Their $15.90 price target is unchanged & assumes some form of corporate action. It is based on the average of their passive valuation & bull-case LBO. The market analyst continue to prefer Woolworths (WOW) over Coles Group (CGJ) given WOW's superior execution & uncertainty over CGJ's ownership & operational outlook.

Coles Group Limited is listed on the Australian Stock Exchange (ASX) under stock code CGJ. You can view their investor website here. The chairman of Coles Group is Richard Allert, AM and the CEO is John Fletcher. Coles Group Limited is one of Australia's largest retailers with more than 2,900 stores throughout Australia and New Zealand. With over 350,000 shareholders, more than 165,000 employees. The company carries the following retail brands: Coles, Bi-Lo, 1st Choice Liquor Superstore, Liquorland, Vintage Cellars, Officeworks, Target, K-Mart, Harris Technology and Pharmacy Direct. Find out the meaning of the recommendations in this primer. CGJ was listed on the ASX on 24 September, 1929. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade CGJ. Check your charts and good luck with your share trading!