H&t Share Discussion Threads

[thorpematt] 31/1/2023 19:06

taylor20,

I ain't no accountant, BUT: -

basically when the pledge book rises HAT is lending more money out.

Each loan comes with a credit risk. IFRS9 dictates that you MUST record an impairment charge against those loans in case you don't get them paid back. This is called Expected credit loss (or ECL).

Incidentally, the other thing that goes up when HAT is doing well is the debt (a bit like it does for banks). Both of these things are (contrarily) good signs for future profits.

simple terms:-


complex terms:-


One effect of all this is that your current profits are reduced by future possible impairments (this happens when your "sales" are rising, it unwindss when falling). Naturally in periods when loan volumes level off there is no net increase in impairment or decrease). Again counter-intuitively increased impairment due to rising pledgebook is a good sign.

[taylor20] 31/1/2023 16:35

It was this line in the Interims that I wanted to understand:

"The growth in the pledge book was the driver of a net increase in impairment charges as required by IFRS 9, of GBP6.7m (H1'2021: GBP1.7m), which reduces reported profits in the short term."

[ymaheru] 31/1/2023 15:42

Hi Taylor20, I don’t know if it’s either if those things.

They were doing short term unsecured loans (payday lending), and I think most impairments came from that. So much so that I didn’t think it was a valuable business at all.

A lot of those loans are probably still outstanding, so that is what the impairments could be. I don’t know for sure, though.

[tole] 30/1/2023 20:12

https://masterinvestor.co.uk/latest/ht-group-trash-or-treasure-2/

[thorpematt] 28/1/2023 18:38

House Broker shore capital markets has these figures for the next 2 years. The divi payout ratio is based on a 40% payout ratio (so more than twice covered).

2023 estimates
PBT 32.6
EPS 57.9
Divi 23.0p


2024 estimates
PBT 39.2 £M
EPS 69.69
Divi 28.0p

Forward yields by my calculation are 5.3% and 6.5% at the current share price.

PE ratios are: 7.4 and 6.2

So, yeah I'd call that a value stock....but also ithas growth metrics which depending on your measures could be about 20% y-o-y.

[lord loads of lolly] 27/1/2023 18:13

asagi - see 18 Jan post below for one broker’s 2023 forecast. They could be wrong of course, but there’s little doubt current year results will be strong when published in March.

[asagi] 27/1/2023 11:26

does anyone know what the EPS forecasts are here please?

Asagi (no position)

[lord loads of lolly] 25/1/2023 09:54

Thanks scotches. Questor's conclusion in this Telegraph piece is that HAT is a hold at its current price. But that's just one opinion and media tipsters don't always get it right. Far from it in fact. Personally (barring any further global or UK-specific black swan events for now), I expect HAT to exceed 550p at some stage this year. At which point, I'd be looking to reduce my holding somewhat.

[scotches] 24/1/2023 10:40

....pawnbroker H&T. The shares have already gained almost 40pc since our initial tip in August 2019, with dividends on top, and the £199m stock still ticks a lot of the right boxes: a strong competitive position, as the leader in its field in a fragmented market; ongoing investment in that competitive position, in the form of new store openings and a new IT and point‑of‑;sale system; a sound balance sheet; good interest and dividend cover; and an undemanding valuation, since the shares trade at 13 times forecast earnings and come with a 3.3pc yield.

[lord loads of lolly] 18/1/2023 16:12

thorpematt - I agree H&T is continuing to trade well, steadily expanding both organically & via acquisition. I think it's a well run business & Shore Cap's forecast may prove right. Who knows? But it's worth remembering that 3 years ago (year ending 31/12/19), Operating Profit was £22.49M, EPS 43.88p with an Interim only Dividend of 4.7p. The share price then was around 360p-380p. H&T has always traded on a lowish P/E, despite its decent yield & track record. That said, I suspect we'll see the £5.00 share price level breached again within the next year. I just hope it nudges below £4.50 at some stage before then, so I can buy back the small part of the holding I sold at £5.03. If not, I'm confident the shares I retain will deliver anyway. But I'd be happy to increase my exposure here, as it seems one of the safer options currently (as much as any share ever is!) UPDATE: My limit buy order was triggered this morning (20 Jan) at £4.485. I'm happy with that, as It reinstates the value of the fractional holding I sold for £5.03 a share on 1 Dec 22. And it'll boost my final dividend payment in June. Given H&T's store expansion & the economic backdrop, I reckon it still has at least 1 years' decent growth left. But I'll be monitoring carefully, with a view to reducing again, if the share price nudges above the £5.50 level later this year.

[thorpematt] 18/1/2023 12:27

In line is really good here. The reason being that 2023 will end with about 19 more stores than 2002 start and that the forecasts are so much higher for 2023 than 2022

Brokers forecast will remain unchanged.

Shore cap. are saying in their note this morning

2023 estimates
PBT 32.6
EPS 57.9
Divi 23.0p

ROE is rising now to circa 15% so I like this one in the mid-term. Lots of good tailwinds and very cheap still on fPER, 8ish plus a very nice forward divi to boot 4.7%

[lord loads of lolly] 18/1/2023 11:49

ymaheru - not sure about that. Latest inflation rate was only marginally down & the market is expecting it to halve this year. So I'd have thought any inflationary impact was already priced in to shares like H&T.

[ymaheru] 18/1/2023 11:36

There’s also downward pressure due to better inflation news. If that shortens the cost of living crisis, then HAT earn less.

[lord loads of lolly] 18/1/2023 11:18

Today's TU was in line with market expectations, with no surprises likely when full year results are released in March. Yesterday's share price rise was possibly caused by some expecting the update to exceed market expectations. So today's reaction is really just a correction of yesterday's over-exuberance. I guess the announcement of a new Chair in April could also have contributed to today's downward pressure. But we're really just reverting to the trading range we've been at for the past few months. So I've no real concerns (assuming the new Chair is up to it).

[ymaheru] 22/12/2022 17:11

I sort of see what you’re saying, but it’ll happen everywhere, especially low volume stocks.

Overall, the trend has been positive since buying at 221p (Oct, 2020), so on a daily basis, you’re right, but monthly the price has some meaning.

[lord loads of lolly] 22/12/2022 16:46

ymaheru - I think you've missed my point. The spread is being manipulated at the margins to allow daily midprice rises/falls to be reported. It's not always that wide a spread. One day there might be a 5p gap between bid & ask, the next it could be 15p. And that's what influences the reported midprice. You only have to look at today's alleged 2.1% share price "rise" to realise it's a total fabrication. Good luck buying in at 220p any time this decade, with the midprice currently around 470p!

[ymaheru] 21/12/2022 19:00

I’m quite sure it’s not fully bogus. If you bought in at 220p, I’m sure you’ll see a profit selling tomorrow.

I know there tends to be a large spread, though.

[lord loads of lolly] 21/12/2022 17:49

As I've already mentioned on the LSE board, the daily reported H&T share price rise/fall is totally bogus. It's almost always done by marketmakers simply widening or narrowing the spread between one day & the next. In other words, one day the share price might end on 480p Bid, 485p Ask. The next, it ends 470p Bid, 485p Ask. It's actually no cheaper to buy shares on Day 2 than Day 1. But the share price shows a fall of 10p (or just over 2%), as the Bid value has dropped. Then, as if by magic, next day or soon after, the spread narrows again, suggesting another share price rise. And rinse & repeat.

[spob] 19/12/2022 19:14

Half the country is on strike

The NHS is broken and nurses are using food banks

When energy bills start dropping through letter boxes after the winter, many will be shocked.


Over the long run, the share price will take care of itself

[malcolm caton] 19/12/2022 18:12

Write up in Daily Mail hasn't done much for share price !

[lord loads of lolly] 14/12/2022 15:42

I think it's more a case of the share price getting a bit ahead of events when it breached £5 recently (an all-time high). Which is why I sold a small portion of my holding at just under 503p. I retain the bulk of my holding though, as I fully expect the price to exceed £5 again at some point in the next 12 months. And if it falls back below £4.50 in the meantime, I'll repurchase the amount I sold. I think you're right that interest rates will rise again tomorrow. But they'll probably now peak lower than the consensus view of just a few weeks ago. The gold price (though still strong) is also below its recent November peak. In short, investors already know the economic downturn will benefit HAT, which is well-positioned. Short term fluctuations in its share price are little more than noise.

[saint or sinner?] 14/12/2022 13:32

Shaking out the weak holders who recently bought in.

[outsizeclothes.com] 14/12/2022 10:22

I find it peculiar that this is drifting:- on the cusp of yet another rate rise, and with gold started to climb again.

[spob] 08/12/2022 22:43

lots of dividends before then

Lol