H&t Share Discussion Threads

[tole] 10/8/2022 18:29

https://masterinvestor.co.uk/equities/ht-group-profits-upgrade-estimates-reinforce-the-27-gain-in-just-one-month-with-even-more-to-come/

[outsizeclothes.com] 09/8/2022 20:15

A really good set of half year results. Onwards and upwards.

[thorpematt] 09/8/2022 20:00

There are 2 BBs running on HAT as far as I can tell.

The general lack of interest on both is somewhat telling. To me HAT is a no brainer in this environment, let alone the progress it has quietly made the last couple of years.

I suspect things may get a little busy in due course. Nice half year statement.

[lord loads of lolly] 09/8/2022 16:38

spob - agreed, energy costs will only be a small part of their total overheads. But the fact they don't overlook small details like this impresses me. Retail is detail. And deciding to fix energy costs for 2 years last December shows real skill (or pure luck!) in terms of timing. I share your enthusiasm for their results (and therefore their share price) over the next year. Depending on how things pan out, the tail end of 2023 might be a decent time to take some profits. But for the time being, I'll bank their dividends and sit on my holding.

[spob] 09/8/2022 14:57

As for the results

I'll give them an A*


This company is going to shoot the lights out next year.

You haven't seen anything yet.

[spob] 09/8/2022 14:52

What percentage of a pawnbrokers costs are taken by energy ?

I'm guessing it is low on the list

every little helps though

[lord loads of lolly] 09/8/2022 11:21

A positive update this morning. Decent interim dividend increase too. I've always thought H&T is well managed and particularly like how they fixed energy costs in Dec 21 up to Dec 23. Smart!

[spob] 03/8/2022 07:46

UK risks deepening recession, warns think-tank


By 2024, millions will be left with no savings as cover, says National Institute of Economic and Social Research

Food and energy prices are set to remain at levels that will cause ongoing hardship for many people into 2024

Delphine Strauss


The UK economy is sliding into recession, with no let-up in sight in a cost of living crisis that will leave more than 5mn households with their savings exhausted by 2024, according to new forecasts by the National Institute of Economic and Social Research.

The think-tank expects GDP to fall “slightly” over the second half of 2022 and the first quarter of 2023 but said on Wednesday that the risks of a deeper recession were growing. It saw an “evens chance” that GDP would be lower at the end of 2022 than a year earlier.

It also said that regional disparities were widening, with London powering ahead of the rest of the country.

Niesr called on the next prime minister to step up direct support for the poorest households, rather than prioritising tax cuts, arguing that even if inflation slowed next year, food and energy prices were set to remain at levels that would cause ongoing hardship for many people into 2024.

“Political uncertainty in Westminster is untimely and will delay fiscal support to millions,” Niesr said. It urged the government to increase its energy grant to low-income households and boost benefits payments for at least six months when regulated gas and electricity prices rise again in October.

The £200bn of savings some households had accumulated during the pandemic could help prop up consumer spending in the second half of the year, Niesr said. But these were distributed “highly unequally”, with demand for foreign holidays “surging as millions are reported to be struggling with shopping for household essentials”.

The think-tank predicts that the number of households with no savings at all to fall back on will double to 5.3mn by 2024, with almost 7mn households living from one pay cheque to the next with savings worth less than two months of disposable income.

More than 1mn households could experience severe destitution, Niesr added, with food and energy bills exceeding their disposable income and forcing them “to choose between eating and heating” or to turn to loan sharks.

“There is no substitute for continued targeted welfare,” Niesr said, noting that the race for the Conservative party leadership had focused on tax cuts rather than the “urgent necessity to continue support for the most vulnerable”.

It also said that the government should use some of its fiscal room to raise public sector pay according to the needs of individual sectors, rather than “with an eye to inflation”, arguing that public services were generally provided without a price, so did not directly feed consumer price inflation.

The think-tank blamed both the Bank of England and the government for allowing high inflation to take hold, arguing that a premature tightening of fiscal policy had left monetary policymakers “reluctant to raise rates with demand still fragile”.

Stephen Millard, Niesr’s deputy director for macroeconomics, said it was now “up to the monetary policy committee to make sure inflation does come down next year and the new chancellor to support those households most affected”.

[spob] 31/7/2022 18:34

Pawnbroking surges in UK amid cost of living squeeze



Leke Oso Alabi and Siddharth Venkataramakrishnan in London

July 29 2022


The customers that walk through the doors of Ramsdens pawnbrokers use the lending service in starkly different ways.

“We’ve got a very good customer [with] a platinum Rolex, which is probably worth about £50,000 [or] £60,000,” said Peter Kenyon, the company’s chief executive. “He’s a builder and when his cash flow is short he gives us the Rolex, borrows between £10,000 and £20,000 . . . pays interest at 2 per cent a month, then pays us back when his cash flow improves.”

But Kenyon noted the chain also assists customers who need small sums because they’ve “got to feed the kids, or buy the school uniform”.

The UK’s pawnbroking sector is reporting strong post-coronavirus lockdown growth, as rapidly increasing living costs boost demand from borrowers seeking small loans, while a crackdown on high-interest lenders has left customers with limited options. Listed companies that offer “pledge lending” — typically small loans secured on assets such as jewellery and watches — have reported strong growth in sales and profits, boosting their share prices in recent months.

Shares in H&T Group, the UK’s largest pawnbroker, have risen 37.6 per cent this year, while those in rival Ramsdens are up 8.6 per cent over the same period as of the close of trade on Monday.

Kenyon said weekly customer numbers within Ramsdens’ shops were 20 per cent higher than pre-pandemic levels: “A lot of that is driven by what the consumer [is] facing and the cost of living increase, but we lend for a raft of reasons — we do lending to businesses . . . we’ve lent for school fees.”

H&T this month said its pledge book — loans linked to a customer’s asset — was worth £84mn in June, up sharply from £48mn in the same month last year.

“The cost of living, yes, absolutely that’s driving the need to borrow, but I think the larger of the two issues is that people have got less options open to them,” said H&T chief executive Chris Gillespie. “The need of people to borrow has returned . . . but that need has returned into a market where the supply of small sum credit is massively reduced.”
Line chart of Share prices rebased showing 'Pledge lending' boosts UK pawnbrokers

He added that the clear difference between pawnbroking and most other forms of lending was that “our only recourse is to the asset . . . we don’t and can’t ever go back to the borrower if there’s a shortfall [in repayment]”.

However, like other forms of lending there are risks associated with using pawnbrokers.

“Using a pawnbroker can be a relatively expensive way to borrow and you can usually only borrow a percentage of the value of the item you want to pawn,” said Caroline Siarkiewicz, chief executive of the Money and Pensions Service, which is sponsored by the UK’s Department for Work and Pensions.

Consumers can expect to pay a pawnbroker a higher rate of interest than they would for a high street loan — but less than a payday lender, according to the Money and Pensions Service.

If a borrower fails to repay the loan, ownership of the asset passes to the pawnbroker, who could sell it. They have to try to secure the best value for the item, and any surplus generated after the debt is paid must be returned to the customer.

Ramsdens said pawnbrokers typically charged 8-10 per cent a month. Customers have six months to repay their loan and more than 95 per cent pay the full loan back in one instalment.

Siarkiewicz noted that this method of borrowing can be tempting “because it is a quick way to get access to cash”. But she stressed it was important customers “shop around to find the most competitive rates and make sure they’re FCA regulated”.

Around 130 members of the National Pawnbrokers Association run 870 outlets around the UK, accounting for 97 per cent of the industry. The largest brands are H&T, Cash Converters and Ramsdens, but most members run just a single store.

Many of those companies have benefited from the demise of subprime lenders or non-standard finance providers, which prospered after the 2008 financial crisis, as mainstream banks became reluctant to lend to consumers with blemished credit files.

Ramsdens said it ended its own payday lending offering when market conditions shifted.

“It was scary where the pricing had got to, so people would borrow £100 and have to pay back £140,” said Kenyon.

The Financial Conduct Authority clamped down on the sector in response to fears about rising levels of consumer debt. The number of active high-cost, short-term lenders in the UK fell by almost a third between 2016 and the third quarter of 2020, according to FCA figures.

“The FCA have regulated the market almost to death,” added Kenyon.

Wonga, once the UK’s largest payday loan provider, filed for administration in 2018 after a surge of customer complaints. Provident Financial, one of the largest participants in Britain’s subprime market, shut a unit providing “high cost lending” last year.

Amigo Loans, which offers “guarantor loans” backed up by a borrower’s friends or family, has also been out of the market. The group is awaiting FCA approval to recommence lending for the first time since November 2020 following a backlog of complaints and uncertainty caused by the pandemic.

There are now concerns that people struggling to access credit may turn to buy now, pay later services, a type of short-term lending that allows consumers to pay for purchases in instalments.
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These services boomed during the pandemic as online shopping surged. However, according to polling data from debt charity StepChange, half of those with buy now, pay later loans in the UK said they found it hard to keep up with household bills and credit repayments.

Debt charities have also raised concerns about the increased use of pawnbrokers.

“With everyday costs soaring it’s no surprise to hear more people are using pawnbrokers,” said Theodora Hadjimichael, chief executive of Responsible Finance. “But you shouldn’t need to put your wedding ring or a family heirloom at risk to pay an unexpected expense.”

[wad collector] 25/7/2022 09:20

Was tipped by Simon Thompson last week in IC.FWIW.

[tonytyke2] 20/7/2022 09:15

More than £2m in 3 trades just gone through.

[eezymunny] 19/7/2022 13:10

If Mr Market ends up valuing this sensibly at clean book value 100m+(?) plus a multiple of future profits (10x?) this could well crack on to 600-650p IMO.

Mr Market has never been that sensible with HAT IIRC :)

[tonytyke2] 19/7/2022 12:52

Looking good, cracking through 400p today!

[lord loads of lolly] 08/7/2022 18:51

I can't see the gold price falling dramatically any time soon. Traditionally, it's always viewed as a safe haven when other assets are falling/volatile. I fully expect HAT to exceed its 16 year closing high of £3.90 within the next few months. And to trade closer to £4.50 at some point this FY. Could be wrong though!

[asagi] 08/7/2022 11:22

gold price in sterling terms remains high. Helpful chart here:

[...]

Asagi (long HAT)

[eezymunny] 08/7/2022 11:01

Not hard to imagine a miles ahead of forecast update on 9th August. Pledge lending 40% above pre-COVID. In the last pre-COVID year they did 20m ptp and current forecasts for just 15m ptp. I guess there´s a lag between a pledge and profit being declared on that transaction, so maybe this year is great and next year blows everything out of the water. The shares may be very very cheap, even after this little run.

A collapse in the gold price would possibly scupper things. And retail sales may be tougher as your average UK punter battens down.

Even so...risk/reward looks good here to me.

[tole] 06/7/2022 16:47

Nice write up here..https://masterinvestor.co.uk/equities/ht-group-trash-or-treasure/

[ymaheru] 04/7/2022 21:20

Good update.

1- Demand for pledge lending has continued to gather momentum in the first half of the year. The pawnbroking pledge book at 30 June 2022 was £84.2m (30 June 2021: £48.3m)

2- Gold purchasing has been buoyant, supported by a rising gold price which has driven both volumes and improved margins.

3- Foreign currency revenues have more than doubled in H1 2022

I can see divs being raised here, and hopefully share price gains (at least after Aug 9th results).

[taylor20] 22/6/2022 07:36

It is a tremendously good idea in principal and providing it through credit unions will definitely improve repayment rates and quality of screening. (94% repayment rates met to date).



However not sure it will scale well and once becomes more widely known about and is being backed by 'the government' rather than 'the community' repayment rates will probably fall off.

So still a market for HAT to work within just a smaller pool - not sure if the scheme will be taking the top or the bottom end of their clients, or if that is good or bad for HAT's margins. I presume in the long term it is better for HAT if pledges are redeemed? But in the short term it makes more if the pledges are not redeemed?

HAT loans in context:

Prime Loan 10%
Credit Card 30%
Pawn Loan 155%
Sub prime loan 500+%
pay day loan 1250%


Bottom line is the scheme is a big unknown in terms of impact to HAT...

[lord loads of lolly] 21/6/2022 10:46

HAT's share price is still well above March 22 & July 21 levels, so all is far from lost. I suspect its recent drop is due to No Interest Loan Scheme news. The scheme trial is small, but if rolled out after 2+ years, it could eventually reach 500,000 people, which is significant. However, that's some way off - indeed might never happen if the cost is deemed too high. In the meantime, HAT's prospects can only be good, given the current economic downturn. I plan to top up if the price falls below 300p. A yield of around 4% with decent growth/earnings visibility is about as good as it gets in the current market!

[ymaheru] 21/6/2022 10:19

I don’t see this scheme as any big event. It’s too small a trial to take much business from HAT, and besides, it’s only happening because of the favourable market for HAT.

I also don’t see gold prices plunging, or anything else negative.

I see interest rates raised slightly, taming inflation less than larger rises. This cuts consumer spending power, helping HAT.

Yet, share price plummets.

[lord loads of lolly] 21/6/2022 08:41

You may be right. Quite apart from anything else, there could be a change of government by the time the 2 year trial's over. Though presumably, the scheme's objectives are closer to Labour than Conservative principals. But the link I gave says "The pilot will aim to test several variables, including loan amounts (average loan value is expected to be £500), repayment periods and terms, and determine repayment rates." That final point implies a full roll out might not be on interest-free terms. Though lower than commercial rates, as it's not-for-profit. You never know, the Treasury may also be looking at the bigger picture. By helping the most vulnerable back on their feet, there may ultimately be less strain on the benefits system. That type of thinking would pretty much be a first though. Governments don't typically favour investment today for jam tomorrow. Probably because they may not still be in power to reap the rewards.

[riverman77] 20/6/2022 17:15

Nice idea, but the government simply won't be able to afford this in any scale, given massive levels of government debt and spiralling borrowing costs. Sub prime lenders need to charge high interest to cover their costs and high level of defaults. By offering interest free loans, governments would effectively be racking up massive losses.

[lord loads of lolly] 20/6/2022 16:45

Here's more info on the No Interest Loan Scheme: A 2 year pilot's being rolled out in up to 6 deprived areas starting Autumn 22. So in any case it wouldn't hit H&T significantly during that extended trial period. But initial share price reaction suggests it might impact longer term, as a full-scale roll-out (if implemented) could eventually reach 500,000 people according to a feasibility study conducted before the pandemic.