H&t Share Discussion Threads

[martinthebrave] 08/1/2018 11:21

Graham Neary report from Stockopedia. He seems happy enough!

H & T (LON:HAT)
•Share price: 338p (+3.5%)
•No. of shares: 37.4 million
•Market cap: £126 million

Trading Update

Another positive update from this pawnbroking group which I have held in my portfolio since 2013.

Profit before tax for the full year will be ahead of current market expectations.

The Group has delivered another good performance in its lending operations. The pledge book increased 11.6% to £46.1m (31 December 2016: £41.3m) as a result of the higher gold price, the concession format and an increase in loans on quality watches. The Personal Loans book has increased by 94.7% to £18.3m (31 December 2016: £9.4m) as a result of the expansion in our longer term, lower interest rate loan product.

Like its smaller rival Ramsdens Holdings (LON:RFX), H&T realised that there major opportunities in products related to pawnbroking. As you can see, its personal loans offering has taken off very well. I'm hoping to see it keep growing in size and maybe even start to rival the pawnbroking pledge book in the years to come.

Jewellery retailing is reportedly also going well, including through the development of click-and-collect online sales.

Finally, the outlook statement is confident. CEO comment: "Demand for our products remains strong and we look forward to the future with confidence."

The updated EPS forecast now is likely to be pushing 30p, based on increasing another 7-8% from here.

Checking some gold/GBP charts, the average price of gold in 2017 was indeed materially stronger compared to 2016.

H&T has a lot more going for it, though, than just the price of gold.

The personal loan product (see here) is very competitive for that segment of the market which has been shut out by the banks. Although daily bank overdraft fees can also have a huge implied APR, something which is easily overlooked!

Increased lending on quality watches is also worth a mention. When a customer presents an item to pawn, H&T has a facility which lets it send high-definition images of the item from the stores to central office, where jewellery experts determine its value. Expertise in watches is an important part of the company's overall offering.

Funnily enough, I agree that Quality is not especially strong for H&T. It's essentially a financial firm, and it's never going to compound in value to generate exponentially larger returns, like some rare stocks can do.

But it is the undisputed leader in its sector, its management is highly competent as demonstrated by how they have navigated through both benign and difficult macro conditions, and it has discovered some exciting growth opportunities, particularly in personal lending.
On top of all that, thanks to the improved performance, the stock remains quite cheap on conventional valuation metrics, trading at a PE ratio of just 11x.

What else can I say, except that I'm a happy holder.

[cfro] 08/1/2018 11:15

I have also been a buyer this morning with my first initial purchase.

I am keen on RFX which is my largest pf holding currently and also keen on this sector in general.

By my reckoning the PE is around ten which looks too low imo.

[spob] 08/1/2018 11:04

surprised this has not advanced more on the back of that statement

so i've doubled my holding

[spob] 08/1/2018 11:00

As of the last final results


current assets minus total liabilities = +73m

relative to a market cap of 127m


means this stock is a lot cheaper than it looks in terms of the standard forward PE ratio


very strong balance sheet

[spob] 08/1/2018 10:57

yeah and a very stupid one

LOL

[mathewawood] 08/1/2018 10:37

Bizarrely after 2 good upgrades (3rd Nov and 8th Jan) EPS estimates for 2017 gone from 22.5p to 31p+. The share price remains at 340p as it was on the 1st Nov.
Definitely a big seller out there.

[pnetol] 08/1/2018 10:08

There appears to be a decent supply available at 340, I don't know how long it will be there, I've just picked up another 4,000 shares in 2 lots. On L2 it only shows a few shares so I would recommend setting a limit of 340 to see if the bid gets reloaded and you get filled. I did on both of my purchases. While the supply is there it's an opportunity to top up on the cheap IMO. GLA

[fruitninja84] 08/1/2018 09:46

Took a small position today. Already hold RFX and am slightly surprised this is not up more on positive news. So i took advantage of the "weakness" and hopefully will get £4 in time. Gla.

[spooky] 08/1/2018 08:58

I agree but there has been a seller around for a while, he's still there and he's not small. Surprised an institution hasn't taken him out.

[aleman] 08/1/2018 08:38

So these numbers will be beaten, then:

2017 2018
Broker Date Rec Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)
Consensus 12.65 27.64 10.50 14.21 31.01 11.50
FinnCap 06/11/17 BUY 12.50 26.90 11.00 15.00 32.30 12.00
Numis Securities Ltd 03/11/17 ADD 12.80 28.40 10.00 13.40 29.70 11.00

That should mean we are looking at something like earnings of 30p then 34p, which make the shares look cheap at anything under 400p.

[martinthebrave] 08/1/2018 07:45

Above Expectations again! Pledge book increased 11.6% to £46.1m as a result of the higher gold price, concession format & increase in loans on quality watches. Personal Loans book increased by 94.7% to £18.3m. Good sign also for #RFX I hold both.👍

[topvest] 08/1/2018 07:45

A very good update indeed.

[spob] 08/1/2018 07:01

The Board is pleased to announce that, following a strong quarter four performance for pawnbroking and retail, we expect the full year profit before tax to be above current market expectations.

"The Group's performance over the past two years demonstrates the success of our strategy to access new customers and markets. Demand for our products remains strong and we look to the future with confidence."

[slaccs] 28/11/2017 12:22

ALEMAN - Thanks for that.

[pnetol] 28/11/2017 12:21

He has sold his 2008 options , 92,293 shares exercisable at £1.75.50. Who can blame him a very nice bonus. However he has not sold any of his current shareholding of1,079,520 which represents 2.88% of the company. The shares he exercised and sold only represented 8.55% of his existing holding. To me a great opportunity to top up further ahead of anticipated and expected good results

[aleman] 28/11/2017 12:13

The CEO took up his share options and then sold them in the market. Small investors are nervous at the moment and small caps seem to sell off on any hint that things are not storming ahead. Pawnborkers tend to be countercyclical, though. The numbers should lift the shares again as they come through.

[slaccs] 28/11/2017 12:03

Any ideas why the sudden drop this morning?

[pnetol] 28/11/2017 11:50

A cheeky little too up for me, this is now lower than before the profits upgrade. I also liked the Ramsdens results yesterday and have quite a few shares in both. I'm still wondering if there still might be another small profits upgrade before they release their finals GLA

[aleman] 27/11/2017 08:00

Strong results from Ramsdens probably bode well:

[aleman] 06/11/2017 16:33

Is that is higher figures from Numis.

2017 2018
Broker Date Rec Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)
Numis Securities Ltd 03/11/17 ADD 12.80 28.40 10.00 13.40 29.70 11.00
FinnCap [A] 25/05/17 BUY 11.30 22.90 11.00 12.80 26.00 12.00

[aleman] 05/11/2017 11:21

Last year was about gold and could have been a bit of a one off. This year is about banks cutting back subprime lending and increasing rates as defaults rise markedly, if the B of E quarterly lending survey is anything to go by. Subprime borrowers will be getting increasingly refused by banks and PFG has exploded. There will be a lot of subprime borrowers looking for new homes and expecting to pay higher rates. This is great for demand but, at the same time, HAT will have to maintain lending standards or charge higher rates to account for inferior borrowers' higher default rates. It is not an automatic win but could be very profitable if they get it right. This is not a one off like gold but is a new trend that will likely be sustained for a few years.

[luckymouse] 04/11/2017 01:50

Back upto c.400 then

[essential] 03/11/2017 13:37

Bought into these - looking strong technically and a great robust business