"Does another profits upgrade from AIM-listed pawnbroker, gold trader and lender LSE:HAT:H&T hint at outperformance continuing in 2018, and also an improvement in its rating?Â H&T's pre-close update omits to clarify how far it is ahead, but cites ..."
Very strong trading update this morning. Full Year Profits will be ahead of expectations. Projected EPS was 27.65, so we can probably expect something above 30, which gives a PE of just over 10, which is cheap for a profitable, growing business. The dividend should be hiked too. The interim was raised by 10%, so if they match that with the final dividend we'll get over 10p, which gives a reasonable yield.
All in all things look good for the business. Having said that what does a 94% rise in personal loans say about the UK economy. Batten down the hatches, it's going to be a tough year.
H&T came out with an excellent update 3 weeks ago for the Q3, and the share price understandably rose nicely, since then it has just drifted lower each day. I would have expected that update to put some strength under the share, but it appears it hasn't.
"Do strong interims from pawnbroker LSE:HAT:H&T Group portend an upgrade in forecasts and rating? The AIM-listed firm, which used to be listed as Harvey & Thompson, has achieved a 62% advance in pre-tax profit to Â£6 million for the six months to ..."
1. H&T seems to have hit and bounced off a 76% fib retracement, which, in the short term could mean a bounce up to 271p.
2. Following the recent fall it is now back at the bottom of its long term trend line, with the trend on the upside.
Looking at fundamentals:
1. P&E 12.4
2. P to Tang Book 1.14
3. PEG 1
Based on this, I will be adding to take into account the short term dip, as this is a quality growth company, at a good price.
"We retain a positive long-term stance on H&T. The current year P/E of 16x looks extended but we feel H2 upgrades may well address this the sterling gold price is up 20% vs H1, while delivery during 2017 from new products should confirm this years upward share price momentum....Solid H1. Interim results confirm progress is on track. PBT increased £1.1m to £3.7m. EPS increased 44% to 7.99p and the dividend was raised from 3.5p to 3.9p. The pledge book grew 4.3% to £39m but importantly the personal loans book grew 85.3% to £6.3m. Group debt was £6.9m, down from £8.9m."
Read Stockdale Securities's note on H&T GROUP, out this morning, by visiting https://www.research-tree.com/company/GB00B12RQD06
"The 2015 final results showed that H&T has come through the downturn in the pawnbroking industry in recent years brought about by the reduction in the gold price (and corresponding reduction in gold purchasing/scrap profits), as well as increasing regulation (which has hit most of the pay-day lenders). It has responded by focusing on its core business and introducing new revenue streams. With its strong balance sheet the business is well- positioned to deliver further dividend growth on top of the 67% increase for 2015 and the 12.5% forecast for 2016...."
"H&T GROUPÂ (LSE:HAT)Â must presumably be a favourite of Paddy Ashdown, though I doubt he could eat them in one sitting. As the chart shows, the share price is reacting to a long term downtrend currently with the implication it needs close above ..."
It seems a well & prudently run company with sound balance sheet.It is "the market";over crowded,competitive;at least when it comes to finding half decent customers,& it probably has too many underperforming stores which it will have difficulty closing thats the problem.
While I am sure it will remain in business.I don't see decent profits anytime soon.Pleased for holders that the shareprice has held up reasonably well recently but does n't seem especially good value if you are putting in new money.I know it is trading at around book assets but if you are not making a decent return on them....which is why I sold up.
Reasonable update from H&T. In line with market expectations and encouraged by the current focus on reducing debt levels (more than halved to £9.7m) which contributed to the fall of ABM. I can see the recent changes in the rules for pay day loans taking out some competition that is currently on the high street adding to the consolidation that they refer to in their statement. With debt potentially cleared in 12 to 18 months and consolidation in the industry I am reasonably optimistic for the long term. Any alternative views?
With retailers you have significant off balance sheet liabilities namely property leases on which we are forced to pay rentals,rates etc until they expire essentially this played a major part in Albemarles failure and other retailers like JJB they were unable to downsize and close unprofitable outlets because in todays market nobody wanted to takeover their leases.I do not think our asset value which includes significant intangibles is presently realisable.
We are in much better shape financially but I suspect we still have a fair number of loss making outlets that will take time to close,the market is over supplied with lenders.We do have a better and more diverse retail offer than most and the company is making efforts to widen it but to be candid the going is far tougher than I expected.
"They are buying 'everything' - no longer just gold based jewellery"
Is that a bad thing?
If gold is losing its value, and they can make money out of other items - surely it is good business.
As for the PE it always surprises me that no one has come up with a ratio (like (P-N)/E say) which combines price, earnings and asset value. With some businesses, like property, most of the value is in the asset base. In others, like e bay, the value is all in the earnings. With most businesses, it is a combination of both; but to my way of thinking, provided the book value is more or less realisable, then if a business is trading below book value, as long as it is at least breaking even, it is cheap.
Not great, but not expected to be. The company is still profitable. Management seems to be very much on top of markets, and quick to react and change strategy. Net debt has come down very well, and overhead costs reduced. With a book value of around 240, this still looks cheap.
That would make sense,I think I must have seen an incorrect announcement.Interim results are usually produced very promptly and as first half ends 30/6 it would be pointless to have a trading update unless there was something untoward.
I believe the only formal announcements they must make are the finals & interims - which they usually do in March & August. Last year they also gave Trading Updates in late May & Mid October; but I don't think these were scheduled events as much as updating the markets in view of changing conditions.
So, unless we get a Trading Statement which will probably not be pre-warned about, then we have 2 months to wait for the interims.
Today's announcement is a surprise. Presumably the A&B administrators should be maximising the value they can obtain for A&B's assets; and one would suspect that the assets H&T want would not all be able to be sold for more than H&T would offer.
We expected them to be poor, and we got what we expected; but they are still profitable, reducing costs, reducing debt, adapting quickly to changing situations & legislation. I always get the impression of a very well run business. Not afraid to upset investors by cutting dividends (I think that's good - not the cutting of dividends, the not being afraid to do so.) Looks like the future will be tough; but there should be opportunities. It will be interesting to see what happens to A&B's estate.
Even with the cut dividend they are still yielding 2.8%. I think this a hold and wait and see how things turn out over the coming months
I think it is actually a good and reassuring statement. Despite the gold price falling 29% - and plunging in recent months - they are going to meet market expectations. Furthermore, they are reducing debt rapidly - offering significant reassurance that they will not get into the mess that ABM find themselves in. To answer your retail vs scrap question, Hardboy, it is my understanding that jewellery that is pawned and not reclaimed will often be molten down into scrap at high gold price levels, but at a lower gold price, the items can usually be sold at more attractive prices to retail buyers,so providing a partial hedge to the falling gold price. Overall, I am pleased with what they are doing on the retail side and particularly pleased that they halted the store expansion. They appear to have the intelligence to manage their business sensibly and they need to continue to manage capacity and improve profitability in a less attractive environment.
This reads a bit like a curate's egg - some good some bad.
The impression I get is the pawnbroking & associated sectors are going through a serious transition phase, which is causing problems, but I get the impression that H&T are on top of these changes, and taking advantage of the opportunities presented.
The statement that they are looking to buy profitable pawnbrokers, leads me to think they are not thinking of buying A&B but would be interested in individual stores.
One thing I did not understand is this: "the switch in disposition from scrap sales to retail has shown good results" I understand what scrap sales are; but how do you switch selling scrap to retail? Are they saying that items they used to sell as scrap they are now able to sell as items? If anyone can clarify, I would appreciate it.
Overall this is not a great statement, but bad news is already in the share price. The company is still profitable, and reducing costs appreciably, so I'm happy to hold.
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