Edited post- I wouldn't want to mislead anyone. If a lot of PIs/customers ask for it, they will realise there is a lot of demand. |
Can you give us an idea of what he said ? Thanks |
well well well, the ceo was kind enough to reply to my letter! this technique has often worked for me in the past, it is quite rare people get old fashioned letters these days and they make more of an impact than emails. as i said before, pawnbrokers work on trust.
i don't wish to offend him by copying his reply here. |
Thanks for that |
kickingking - I believe it’s chris.gillespie@handt.co.uk
If that doesn’t work, ask Investor Relations to forward. They’re ir@handt.co.uk |
Llol, just trying to say what any negatives are. If there is weakness in any negative arguments, that means things are positive. |
Anyone know the email address to contact the CEO. Thanks |
sigmund - I’m slightly puzzled why you call gold price exposure & over-expansion “big risks”, when you go on to say of gold “any pullback is likely to be temporary” and of over-expansion “that is likely to be a drip-drip type increase in exposure which will keep that risk down”.
So risks, yes. Big risks, no? |
yes a lot of the debt was for the acquisition.
big risks i see are-
1. revaluation of gold price in negative direction - trend is obviously strongly up, so any pull back is likely to be temporary. expensive watches might well have peaked in value though.
2. expanding too quickly and taking on too much debt to do so. but they probably buy out small independent brokers whose children don't want to take over, rather than setting up in competition. so that is likely to be a drip-drip type increase in exposure which will keep that risk down. |
jm6783 - Agreed, though if the average loan duration is 94 days, won't they primarily be able to grow organically going forward, reinvesting loan interest profit?
A fair chunk of last year's extra debt was for the Maxcroft acquisition & IT upgrade, both of which were largely one-offs (barring additional acquisitions).
Obviously some debt will still be needed for things like new store openings & revamps though. |
One thing to look for is total debt and debt covenants. They only had around 20m of unused borrowing in place at the half year results. Also, they have a covenant that limits net debt to one third of the pledge book plus jewellery and this was already down to 3.7x by half year point. Given that they have grown the pledge book a lot since then, they must be getting close on both of these. Hence, growth might be constrained going forward.
But I do think the shares are extremely cheap. If they can hit mid-teens RoE, they should be trading well above book. |
Who, if anyone, holds bankers in high regard?
0 ;-) |
Splendid isn't it!
Have a lot and a lot of the pm miners too
Pawnbrokers are held in much higher trust by their customers than bankers, and this takes effort. So no surprise that they got back to you when you have asked lolly. I'll update if I get a response, others are more than welcome to ask on a webinar!
Great value at this share price Further top up planned if it dips to 320p |
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Gold price in sterling
5 year
1 year |
Agree fears overdone. The pledge book growth in H224 is going to more than offset the higher staff costs from apr25, new store openings and higher gold price provide further tailwinds so happy to buy here with a book value of 415 and DY approaching 6percent. Should really trade at book value which it historically has IMO |
Makes sense to me. They have increased debt to fund an increase in the pledge book. Short term costs rise in the form of higher interest costs. Longer term that turns around as the the larger pledge book generates returns that far outweigh the interest payments. IMO the shares are too cheap here. And yes, the directors should buy some shares. |
bend1pa - wot riverman said.
I'd add the risk is pretty minimal though, given the high interest rate differential between bank & customer loans. And the fact any defaults are likely to be covered by pawned collateral. |
Yes but that increased debt has been used to increase the pledge book (both through the existing business and through acquisitions). This in turn should drive higher returns going forward, albeit does increase the risk profile. |
"So the level of debt is not intrinsically bad, it _should_ be a sign of a growing pledge book and increasing future profits".
==============================================
I was referring to net debt, ie bank borrowings less cash, not what's in the pledge book. A few years ago HAT had no net debt. |
asagi - I'd second that.
Except - as I mentioned before - that their answers haven't always fully addressed my queries. Some have though.
I'll be pressing (again) for answers as to why Directors remain reluctant to buy shares in their own company, even at this - apparently - low level. It's not a great look. And I simply don't buy their excuse that Directors may not have the funds, given the amount they're earning. |
don't know why IR and exec comms are getting a kicking here. A shareholder myself, I have always enjoyed quick responses from CEO Chris Gillespie when I have emailed with a sensible question.
Or maybe my questions are the easy ones.
Whatever, this is NOT a management team with an attitude to ignore PIs. Bear in mind spam folders and corporate blacklisting, it's possible that they haven't received your communication at all.
Asagi (long HAT) |
My understanding is that they have £131m of money owed to them (the pledge book + interest) which they are charging 100% APR. Using cash and debt facilities charged at a rate of around 8-9%.
So the level of debt is not intrinsically bad, it _should_ be a sign of a growing pledge book and increasing future profits.
The only thing we don't know from the accounts is the value of the collateral held to secure the pledges, I always assumed this would be at least double the value of the loan (what with an APR of 100%).
Impairments (crystallised ones) should be relatively low for pawn broking.
I sold out when growth in profits did not seem to be following through from the growth in the pledge book, as much as I had anticipated.
I'm probably misremembering but I think this has traded close to NAV in the past? |
sigmund - I'd recommend registering for their next results webinar a bit nearer the time.
I've submitted several questions in the past and they have always read them out (and addressed them to some extent). I felt a few of their answers were a bit non-committal or evasive, but they tackled others quite well.
At least you get an instant response that way. And can see the whites of their eyes on-screen. Body language can often tell you more about how a company's faring than some carefully crafted response to a letter. |
Sigmund, I think it’s a win win win, so write to investor relations at least.
Win for consumer
Win for banks
Win for HAT |
if the equity is increasing, is the % of the debt therefore not decreasing, therefore less of a worry? i may have got this wrong and obviously future direction of IR always a concern
ps i decided to write an old fashioned letter to the ceo, it only cost a stamp, i have never done so before so looking forward to some form of banal response from their pa |
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