H&t Share Discussion Threads

[ymaheru] 21/1/2021 20:36

Thanks, Spob.
Quite the opposite of what I and a few others were thinking.

Bodes well for HAT.

Gold prices held up ok, also.
Footfall near stores will have been greatly down, though.

[smithie6] 12/1/2021 09:05

indeed

& due to the Covid crisis many businesses (especially linked to the financial world) have sought to reduce risk (eg. lse:mcl has also increased its cash held)

& holding cash reduces risk

& as the co. increases in confidence it will , I assume, reduce that amount of cash held & put it to work by accepting :-

- a higher % of loan requests

- a higher % of pawn requests (or at better prices that are taken up by a higher % of pawn requests)

- a higher % of offers of items offerred to HAT to buy, including jewelry, watches

[ymaheru] 12/1/2021 08:59

I understand where you’re coming from, but we don’t fully.

It’s also because they’ve not been doing new short term cash loans. They’ve just been collecting on older loans, and hopefully because they’ve generated profits.

Cash is always nice. It’s there when needed, so in a pickup of demand they’ll be ready.

[boonkoh] 12/1/2021 00:02

High cash position is bad.It means they're not doing as much pawnbroking business as they would like.Less pawnbroking, lower fees/interest earned.

[ymaheru] 11/1/2021 15:38

THORPEMATT, I was thinking it would be a good medium term winner also.

However, with all the government handouts and payment/ eviction holidays it seems it could be a loser for H2 2020.

Gold has risen a little, which helps.
Also, the loss of the short term loans book may have been negative this year (though bad debts are way down, so not clear cut).

I love that their cash position rose £30m in the first 4 months of H2, though.

So, I’m not sure exactly what to expect from full year 2020. However, I agree that medium term 2021-23 they should do well, so long as the high unemployment actually happens.

[thorpematt] 11/1/2021 15:00

db260
As an avid reader of Ben Graham's work I completely understand and respect where you are coming from. And as I mention, it is truly the most importnt thing that individuals should be comfortable with their own investments.

Value investing has been somewhat unfashionable of late and so many of the concepts of Graham's work has been lost on many. Should we ever return to a situtation whereby companies do start to be wound up on any scale, those liquidation values will be important and will serve you well I a m sure.

As Buffet famously once said: "It’s only when the tide goes out that you learn who has been swimming naked."

From my perspective I am looking at HAT as a mid term winner on COVID restrcitions and I am definitely valuing it on on "ongoing business" methodology.

[db260] 11/1/2021 13:12

So do you prefer more of a growth standpoint of HAT rather than value?

[smithie6] 11/1/2021 11:12

the answer to the question in post 977
is of course
d) Great Portland Estates. GPOR

(btw GPOR. NAV 814p (ref. advfn) & share price ~645p. typical current discount wrt NAV for a property company with assets like GPOR)

(HAT is NOT valued by the mkt based on its NAV, nor is NEXT nor Rolls Royce nor Inditex et al but generally on their profit & future profits)

(& note that some companies producing decent/good profit margins per £ of share while having low NAV per £ of share are often given high p/e ratings by the mkt because they need little cash-NAV-assets per £ of share to produce their profits (eg. Inditex-Zara ) & hence can grow without needing to raise new money (= dilution, = 'bad' !)) (ie. they have operational gearing)

[smithie6] 11/1/2021 11:11

you buy/sell all your shares based on 'liquidating value' ?!

book liquidating value of the following cos. is imo a small fraction of their current cap. value

- Next
- Rolls Royce
- Inditex (Zara)

etc etc

because the mkt doesn't value them on their 'liquidating value'.

(nor should HAT be valued like that
....companies retailing/selling to the public are normally valued on profit & future profits with adjustments for various factors)

[db260] 11/1/2021 10:25

Again; HAT;
Earning Growth/Stability
Dividends Growth/Stability
I'm just commenting on how it is not at a 20% discount to liquidating value.
Still strong stock/company to invest in

[smithie6] 11/1/2021 10:00

quiz question

which "one" of these companies is valued by the mkt based on its nett assets ?

a) - HAT
b) - NEXT
c) - Rolls Royce
d) - Great Portland Estates (property company). GPOR

(anyone that answers a) please go to the blackboard & pick up the chalk & write 20 times
"I must give my full attention in class" )

[db260] 11/1/2021 09:49

Thanks for your reply: I talk of "liquidating value" upon which I take current assets and subtract all liabilities from. This gives me a margin of safety as if you take non-current assets such as goodwill you will likely only be able to liquidate them at about 15% value.

[mrbeaky] 09/1/2021 22:25

Great post and explanation

[thorpematt] 09/1/2021 21:17

OK so its important to compare current aasses and current liabilites or total asset and total liabilities

Definition: -

NAV PS
Net Assets Value per share ratio, is defined as Shareholders' funds attributable to equity interests divided by the number of shares in issue.

Net assets is the total assets less the total liabilities i.e. the total shareholders funds plus preferences and minority interests. Figure is expressed in pence (currency being GBP) and the formula is the following:

= (total equity / shares in issue) * 100

So you would have to use TOTAL assets not current assets of you wish to deduct TOTAL liabilities.

This is particularly important with the new IFRS16 accounting standard (which counts long term leases as debt and the property value as assets). With this standard long term debt is increased so as to include all future rents (bar those due within 1 year).*

Long term debt at interims equates for £17m and the long term leases £16. If you count those you would have to consider that the TOTAL assets figure should be applied £161m, or at very least you should add the property assets back in £26m.

Now, one additional thing to note is that loan books create debt on the balance sheet in the same way that mortgage lenders always look highly indebted.

I hope this is help.

Ultimatly of course we all have to be comfortable with our investments. Should we be fortunate enough to see a retrace in price here then the additional margin of safety on any purchases will be welcome. For the record I added a few on Friday since
a) I thought that the value offered here is not that easy to find elsewhere
b) I think that this lockdown will essentially be the low point
c) The chart appears to be an inverse head and shoulders which is often a very good time to buy.

--------------------------------
*A quick note here is that SCS is a good exanple of a company with a lot of long term "debt" based on its lease obligations.

Unlike the high street stores I believe its out of town leases are an asset. IMO future rents are neither an asset or a liability: Because a long term rental agreement for a prime site is a great thing, whereas a long term lease for a soon to be obselete site is not.

In SCS's case the future rents (listed as debt) make the stock look heavily indebted when in reality it has a tasty cash pile and very healthy cashflow (which can readily pay rents, dividends and anythong else for that matter).

In HAT's case the high street stores are prety modest. High street stores are needed and of course the rents aren't genereally prime for pawnbroker shops as they don't reside in prime locations.

[db260] 08/1/2021 09:05

current-asset value of £1.90; calculated by total current assets of £109,864 (000 omitted) minus total liabilities of £34022. Sum = £75842. Divide by shares outstanding 39865.

[thorpematt] 07/1/2021 20:54

Interims current assets were £110m

40m SII

=£2.75 / share


ADVFN lists NAV @ £3.07 per share

Stockopedia has Book value or shareholders equity at £127m or £3.175 per share (going by latest interim numbers).

Now, all of which (from my perspective) is very good indeed if you consider it as balance sheet strength when compared to most listed companies at present.

GRG (a quality outfit) being just one example. Most companies are now a little burdened with debt. Not so HAT.

Book values are great if you are looking to liquidate a company or if you are seeking some sort of return on a failed investment or a margin of safety. For me, I am looking for companies to flourish and so I look for profits versue EV.

I believe that HAT will continue to make around or above £10m p.a PBT on an EV of around £110m which is excellent value - backed by a very strong balance sheet.

The fact that we could liquidate the compnay at a profit is of only theoretical concern at this juncture.



P.S those figures are with intangibles stripped OUT.

[riverman77] 07/1/2021 19:47

I don't think those figures are right. This is trading at a 20% discount to book value, or about in line if you strip out goodwill.

[db260] 07/1/2021 19:26

Still too high for me; net asset value of about £1.90 compared to £2.60 current going price

[podgyted] 06/1/2021 19:26

Wish they'd stop manipulating the closing share price with sub-£1k UT's everyday.

[ymaheru] 21/12/2020 11:44

Yeah, the government is dishing out more cash so what’s the need for pawnbrokers (yet)?

[boonkoh] 21/12/2020 11:02

Puzzled by drop today. All stores remain open as classed as essential.The latest covid strain and the fact that no Brexit agreed should be good news for H&T, more strain financially for many people unfortunately.Only thing I can see hurting H&T is extention of furlough by one more month.

[boonkoh] 15/12/2020 13:44

Read the Ramsden update today. Nothing new that was unknown. Nov Lockdown had an impact on revenue, despite stores being open.Pawnbroking loan book continues to decrease, as govt support flushes people's wallets with cash, so less need for pawnbroking.Will be interesting to see if govt keeps extending support after March.

[mighunter] 15/12/2020 10:59

Across the fence, finnCap upgrades Ramsdens RFX from 135p to 185p following results today

[rimau1] 23/11/2020 17:06

Yes boonkoh, payment holidays in pawnbroking, however its all factored into the earnings estimates of a fall in eps to 18p this year but increasing 50% to 27p in 2021. Still compelling value here vs RFX