Hml Share Discussion Threads

[rivaldo] 16/11/2016 08:57

Cheers Graham - with 3.8p EPS now forecast for this year ending in 4 months, and 4p EPS for next year (plus a 0.4p dividend), HMLH is looking pretty cheap imo.

A 45p share price would represent over 30% upside from here.

Chinahere, correct, amortisation is almost always the main difference.

[chinahere] 16/11/2016 08:28

Am I right in thinking that the main difference between the EPS and the adjusted EPS is the accounted increase (/amortization) of Intangibles?

How is this worked out?

[graham1ty] 16/11/2016 08:02

Rivaldo, I have sent you on the brokers note by email

[graham1ty] 16/11/2016 08:00

FinnCap increased forecast from 3.4p to 3.8p ( adjusted earnings). Target price remains 45p

[shanklin] 16/11/2016 07:37

rivaldo

Very good to see an adjusted EPS number albeit I would be marginally happier for the adjustment to exclude interest and share-based payments, both of which are ongoing genuine costs to the business.

Thankfully these are both small numbers, so the adjusted number is representatibe of business performance and emphasises HMLH as being on a very low P/E.

[rivaldo] 16/11/2016 07:11

Surprisingly good interims at first look this morning?

2.1p adjusted EPS (yes, they showed the adjusted EPS!) in H1 means they're likely to smash forecasts of 3.3p EPS.

Nice long-term work in Canary Wharf revealed too. Plus improvements in volumes, acquisitions integrating well....time for a re-rating perhaps:

[davidosh] 04/11/2016 15:33

I have arranged a results presentation at 12.45 on 17th November if any of you want to join us then do email me

[shanklin] 23/9/2016 15:51

OK, thank you Graham

[graham1ty] 23/9/2016 15:33

Shanklin, think it has always been in their offices

[shanklin] 23/9/2016 14:07

Good to see them have it in one of their own conference rooms rather than wasting money having it in central London

[cockerhoop] 23/9/2016 13:20

Graham1TY,

Many thanks for your views and info from the recent meeting, I would have loved to have attended.

Cheers

[cockerhoop] 23/9/2016 08:40

Graham1TY,

I agree that the profitability could be misleading with a private business (although the figures above HMLH state are NORMALISED whatever that means) but I think the price to sales ratio is directly comparable. Say if HMLH doubled margins (and their margins aren't great) by selling insurance it just highlights what a low margin business they've paid top dollar for.

The AR does contain numbers for contributions from acquisitions for the part year after the deal completes and also hypothetically had they been owned for the full 12 months. In the case of MLPL it states:

'If the acquisition of the shares of MLPL had been completed on the first day of the financial year, group revenues for the period would have increased by £438,000 and the group profit attributable to equity holders of the parent would have increased by £12,000. The business of MLPL contributed £116,000 to the Group’s revenue and increased the Group’s profit by £9,000 from the date of acquisition to the year-end date'

I would ideally like to see the next year as well but it suggests profitability isn't transformed.

Their acquisition policy has lead to a balance sheet stuffed with goodwill and intangibles leading to a negative NTAV.

I am though heartened by the investment in the new business team which has picked up £600,000 in new management contracts (saving 800,000 in acquisitions costs :-)) They would imo be serving shareholders much better if they aggressively pursued this route of growth and spent the acquisition money on buybacks or increased dividends.

As an aside it was mentioned by yourself or DS that it had been an aspiration to ultimately achieve 20% op margins in the future. Was margin improvement discussed at the meeting and is the current stalling of margins at 6 to 7% a temporary consolidation?

Best regards
Pat

[cockerhoop] 21/9/2016 17:53

Take the last acquisition that I have reasonable data for - MLPL

Price Paid £720K T/O 555k Normalised PAT 40K So we have P/S Ratio of 1.3 and PE of 18

HMHL P/S Ratio 0.7 PE of 9.3.

I'd say that was overpaying for companies that don't have the same systems in place as HMLH.

You'd never see a quoted car dealer paying pretty much double it's own ratios to acquire and integrate a single dealership.

[cockerhoop] 21/9/2016 13:39

Thanks Martin, although it hasn't really satisfied my concerns that they are overpaying for their acquisitions, some of which the purchase price appears to have been well above the 1-1.25 P/S ratio mentioned by DS.

If they are indeed adding value (op margins for HMHL's last 4 years have been fairly static at 6.2 - 7.2%) then it suggests the companies purchased are even more expensive.

[cockerhoop] 21/9/2016 10:32

Sorry I was talking about the acquisitions and how the company demonstrated they were earnings enhancing.

[buffetteer] 21/9/2016 10:07

They report eps not adjusted eps. The broker estimates are adjusted eps. Hml need to be quoting adjusted eps to be consistent so as to not confuse investors.

[cockerhoop] 21/9/2016 09:07

'Management stated that they were ( even though they appeared not in the statutory reporting process)'

Buffetteer - are you able to expand on the above?

[buffetteer] 21/9/2016 08:45

The directors got the message about adjusted eps being quoted in the results. It remains to be seen if they took on board much of the shareholder friendly requests PIs had . They are not communicating themselves well enough to the market and this attract a low rating rather than being a poor business.There was much discussion about whether acquisitions were earnings enhancing . Management stated that they were ( even though they appeared not in the statutory reporting process).
I would be surprised if earnings don't beat forecasts this year .
Only have 2% market share. Most are tiny - ripe for further consolidation .
Trade is good and there are plenty of opportunities for growth. A competitor was bought by Savills recently too.

[cockerhoop] 21/9/2016 07:52

How was the presentation Martin?

Was the walk through of one of the acquisitions informative? I'd love to have my fears allayed about them overpaying.

[shanklin] 21/9/2016 07:25

Adam,

I am 99.9% certain you are comparing apples and oranges. The 2.7p is an unadjusted number whereas the 3.4p is an adjusted one.

After yesterday's AGM, I would be surprised if we do not see adjusted EPS numbers provided, hopefully not just in the notes to the accounts. Not that it was raised yesterday, but a history of the adjusted number going back say 5 years could also usefully be provided.

All IMHO. Cheers, Martin