(452 words counting)

Company valuation
David Jones Limited, ASX code: DSJ
Company position
David Jones limited is one of well-known department stores company, and it has high
competitive level in this industry in Australia. (IBIS world, 2014) David Jones limited
over 5 years David through, David Jones's revenue is forecast to contract by an
annualized 2.0% to $ 1.8 billion and it has a weak performance overall industry. David
Jones Limited had only held 9.6% of market share in industry.
Net profit Growth analysis

Figure 1: Morningstar AatAnalysis premium, 2014
From graph, David Jones limited has high net profit margin than Myer during past 5
years, and David had been managing good company to maximize turning their revenue
into their profit in last 3 years. During past 2 years, however, the revenue and profit of
companies had significantly dropped down respectively. However, David Jones has
increased their profit from 2012 to 2013 although both company dropped largely profit
compare to last 3 years. David Jones Limited is still having stable position in its industry.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
N
e
t

p
r
o
f
i
t

m
a
r
g
i
n

%

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Myer Holding limited 7.23% 7.11% 5.89% 5.89% 5.34%
David Jones Limited 9.04% 9.76% 8.41% 7.32% 6.62%
Net profit margin growth for DJS and MYR in year 2010-2014

Valuation
(a) Price Earnings Ratio

Figure 2: Morningstar AatAnalysis premium, 2014
From P/E ratio graph, it shows that David Jones Limited earning share price growth is
higher than the Myer holding limited from over 5 years. As the result, it can be concluded
that David Jones limited has better performance than Myer Holding Limited It means
that David Jones Limited has higher expected growth in future than the Myer holding
limited in same industry.
(b) Price to Book value ratio
0.00%
20.00%
40.00%
60.00%
P
/
E

r
a
t
i
o

%

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Myer Holding limited 39.02% 10.00% 7.18% 8.30% 9.23%
David Jones Limited 12.27% 11.56% 7.90% 8.99% 11.41%
P/E ratio for DJS and MYR in year 2010-2014

Figure 3: Morningstar AatAnalysis premium, 2014
The comparison between these two countries, David Jones limited definitely was having
higher P/B ratio, and investor could expect that David Jones would get high price gain
compare to Myer. However, P/B ratio is not enough for making investment decision.
From 2009 and 2013, David Jones had over 3% of P/B ratio, but share price had dropped
after one year later. Therefore, it resulted David Jones limited had good performance than
Myer although it holding only 9.6% marker share in its industry.
(c) EV/EBITDA ratio

Figure 4: Morningstar AatAnalysis premium, 2014

0.00%
1.00%
2.00%
3.00%
4.00%
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
P
/
B

r
a
t
i
o

%

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Myer Holding limited 2.14% 2.36% 1.41% 1.59% 1.58%
David Jones Limited 3.31% 3.10% 1.68% 1.61% 1.91%
P/B value ratio for DJS and MYR in year 2010-2014
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
E
V
/
E
B
I
T
D
A

r
a
t
i
o

%

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Myer Holding limited 5.91% 7.05% 5.41% 5.99% 6.76%
David Jones Limited 7.34% 6.94% 4.77% 5.16% 5.96%
EV/EBITDA ratio for DJS and MYR in year 2010-2014

EV/EBITDA ratio is one of useful tool for estimating value of company in it industry.
David Jones Limited and Myer holdings limited are well-known company in it
department store industry, according data David Jones limited was undervalue compare
to the Myer indicated by enterprise multiple.

Strengths Weaknesses (SWOT) analysis
Strengths Weaknesses
Store portfolio
Service portfolio
Broad Product and Brand
Portfolio
Weak profitability Indicators
Opportunities Threats
Business Transformation
Growth prospects: E-Retail
Brand Expansion
Business Expansion
Competitive Environment
Changing consumer preferences
Counterfeit good market
Table 1: SWOT analysis (OneSource, 2014)
Recommendation
David Jones Limited is considerable choice to invest, because it expected to increase to in
next 12 months in performance and sales. (IBIS World, 2014) David Jones Limited and
others competitors had invested heavily in technology to boost their performance better
than previously. David Jones did well in third quarter of 2014 than Myers, and it Price
earnings ratio, EV/EBITA ratio and Net Profit will be increased 20.4%, 9.9% and 104
million(AUD) in next 12 months respectively. (Deutsche Bank, 2014, para. 1)

Reference
1.) IBIS World. (2014). Major Companies: David Jones Limited. Retrieved from
http://clients1.ibisworld.com.au.ezp01.library.qut.edu.au/reports/au/industry/majorcompa
nies.aspx?entid=405#MP5767
2.) OneSource. (2014). David Jones Limited : Strengths/Weaknesses(SWOT). Retrieved
from
http://globalbb.onesource.com.ezp01.library.qut.edu.au/web/Reports/ReportMain.aspx?K
eyID=517305&Process=CP&CIK=&Report=STRENGTHWEAKNESS
3.) Deutsche Bank. (2014). 3Q14 sales: Going out on a high note. Retrieved from
http://globalbb.onesource.com.ezp01.library.qut.edu.au/Web/NewsAndReports/FetchAR
_TR.aspx?Process=CP&DocID=66567288&file=file.pdf

Appendices
David Jones Limited financial ratio

Myer holdings limited financial ratio


David Jones limited SWOT table