Harvey Norman Holdings Ltd (ASX: HVN) requires a closer look following last week's release of its encouraging half-year results.
As I wrote this week, I now view the Harvey Norman share price in the buy zone. And I'm not the only one.
Bell Potter has maintained its buy rating on Harvey Norman and increased its share price target to $6.00.
With Harvey Norman shares currently changing hands for around $5.15, that represents a potential upside of more than 16% over the next 12 months.
And while the Harvey Norman share price trades at around 15x earnings, others also see value in the company's stock.
Citi, UBS, and Macquarie analysts have also raised their price targets for Harvey Norman shares, though none are quite as bullish as Bell Potter.
What do analysts like about Harvey Norman?
Harvey Norman's vast property portfolio and expectations of improved economic conditions in Australia in 2025, amid projected rate cuts, appeal to potential investors.
In its latest half-year results, Harvey Norman highlighted its revenue grew by 6.6% over the prior corresponding period to $2.29 billion.
The company's retail arm produced the bulk of that revenue figure, bringing in $1.49 billion.
Harvey Norman has stores in New Zealand, Asia, Europe, and the United Kingdom, in addition to its operations in Australia.
And it's the Asian market where I still see strong growth potential, particularly South-East Asia.
Harvey Norman recorded sales of $161.44 million in Malaysia, up 8.4% on the prior half.
The company said the increase in sales was primarily driven by opening three new stores in Malaysia during the half.
It also attributed the gains to the launch of its expanded Malaysian flagship store in October and revenue generated from the stores that opened last year, as contributing to the company's sales figures for the full duration of the half.
Expansion plans in a growth market
Harvey Norman had big plans to expand in Malaysia and grow to 80 stores by 2028.
However, the company stated that those plans suffered setbacks "due to the challenges of locating and negotiating suitable sites and obtaining the relevant authority approvals."
Harvey Norman has pushed back the expected completion date for those 80 stores to 2030.
The company also announced that its plans to open up to 10 stores in Malaysia over the financial year have been revised, and it now plans to open just 4 stores.
Still, for Harvey Norman, Malaysia presents opportunity.
The country's economic outlook and growth momentum remain positive, at least in the near term. The International Monetary Fund projects growth of 4.7% in South-East Asia's sixth-largest economy by 2025.
Harvey Norman's sales in Malaysia represent a small fraction of the company's revenue.
And the addressable market in that country and across South-East Asia remains significant.
I'm keeping Harvey Norman shares on my watch list, and I'm particularly interested in how its Malaysian expansion plans progress.
