JB Hi Fi reported a good 1H22 result given the very elevated base from the prior corresponding half. Given its update in mid-January 2022, the new insights from the release showed solid January 2022 sales trends and a good gross margin result in The Good Guys. We expect stable sales and continued healthy gross margins to result in a fade in earnings rather than a fall off the cliff over the next two years. JB Hi-Fi also announced an off-market buyback of $250 million. We expect the company to continue holding a net cash position at the end of FY22e even after the buyback.

Metcash reported 1H22 EBIT up 14%. The growth was driven by a full-period contribution from Total Tools in Hardware. Total Tools still has a runway for further growth given imminent store acquisitions. The company has also fundamentally stabilised its market share in Supermarkets. Metcash has a much better business mix and industry structure than historically and as a result the shares should trade at a higher multiple.