H&t Share Discussion Threads

[asagi] 08/8/2023 06:50

Hi rimau1,

"I have a very prudent full year eps of forecast of 39p so we are trading at a smidge over 10x if cost inflation does fall back there is upside risk."

brokers are forecasting more like 54p.

Asagi (long HAT)

[asagi] 08/8/2023 06:46

online jewellery, travel money and pledge book all at record levels.

Results here:

Asagi (long HAT)

[rimau1] 08/8/2023 06:46

I can’t see anything material in the results or outlook to warrant the recent fall here. HAT are aggressively growing the pledge book and as a result net debt has increased accordingly. The key points in the results for me were (1) yes costs are higher than expected in H1 but lower cost inflation expected in H2 (2) the UK trading environment is positive across the entire product range (3) net 6 new stores opened with more planned in the second half. The pledge book at £115m will likely exceed analyst expectations of £115m-£116m FY. The only negatives are the well flagged cost inflation, associated margin contraction and pledge book customer behaviours of paying back loans quicker. The latter is not material i was just trying to find amber flags!
I have a very prudent full year eps of forecast of 39p so we are trading at a smidge over 10x if cost inflation does fall back there is upside risk.

[izztre] 08/8/2023 06:35

Seems to me like a very good interim update. however impossible to predict how the market will react. Good Luck holders

[ymaheru] 07/8/2023 19:59

Yes, I see that they could borrow for that reason, similar to banks.

I found their net debt was £2.8mn at end of 2022, using £15mn of the facility (£12.2mn cash at hand), but they had net cash of £17.6mn the year before. So, they don’t always seem to borrow to lend, though I can see how this year might be more lucrative.

Overall, not much debt (costs £0.3mn if they carry that debt all year). That shouldn’t be enough debt to cause negative sentiment for HAT if the market was sensible.

[zchaka5] 07/8/2023 19:07

They borrow to effectively lend at much better rates of return. They can fund a larger loan book and scale their profits. Looks like a great time to top up as that loan book will be backed in gold/silver/other high value goods and a bad debt is reversed when a pledge is retained.

[ymaheru] 07/8/2023 15:44

Hi LLOL

How much is this finance facility for, please?
I didn’t know they were borrowing.
I thought they loaned out their own cash.
I don’t follow it closely enough, obviously!

Thanks in advance

[lord loads of lolly] 07/8/2023 15:30

Yes - weird price movement around 3.45pm today, which has since largely reversed out. The recent interest rate rise & HAT's increased finance facility may have spooked a few, though it's hard to see why. H&T will simply increase its loan rate to compensate the former. And the latter is intended to fund its growing pledge book & update stores, both of which look like sensible uses of cash. Rising interest rates & stubborn inflation might increase its overheads & slow its jewellery sales. But the economic backdrop will also lead to more customers seeking short term loans. And the dismal UK weather should boost its Forex sales. I nearly added at 396p today, but left it too late, so I've decided to wait & see what tomorrow's results bring. Can't imagine there'll be any nasty surprises though, as they issued a positive TU just a few weeks ago.

[prettygreen] 07/8/2023 14:14

Tree shake before results ?

[ymaheru] 03/8/2023 18:58

Hi NTV

Yes, aware.
I never saw any real benefit in short term loans. HAT’s bad debts plummeted when they stopped those. I think they were just in that space cos it was eroding their normal lending. So, Government crackdown has been a blessing.

[ntv] 03/8/2023 18:22

ymaheru
They don't do short term loans anymore

[izztre] 03/8/2023 14:34

A great buying opp as the last update was very strong and in the current climate I can only see this going from strength to strength. Much less risk than many other companies

[ymaheru] 03/8/2023 12:50

Yep, pledge book was up 28% in trading update, to £128 million.

Also, jewellery sales were also up.

Finally, FX volumes were up 19%, which will probably continue as airlines have had a strong season.

Net debt only £2.7 million, so don’t see that being any big drag.

[ymaheru] 03/8/2023 12:40

I didn’t know they were geared at all.

Interest is at 5.25%, so their charges on loans must be far higher than a year ago.

Their (probably outdated) website says:
“ The highest monthly interest rate is 9.99%, which is for loans between £1–£500, while the lowest is 3.5%...”

As rates have risen by 5.15%, I’m averaging out and assuming they’re getting triple the interest of a year ago.

I don’t think H&T have borrowings, so their cash is reaping more rewards now.

What is probably also true is that more people need loans, so volumes and returns should be rising on loans.

I’m not sure about other parts of the business (eg sales of goods might be plummeting).

[jm6783] 03/8/2023 12:10

3x more than a year ago? Please explain.

Anyway, I see this as trading at around end of 2023 book value now for a company that will earn around 15% RoE this year and probably closer to 20% next year and will not be highly geared. Seems pretty strange to me.

[ymaheru] 03/8/2023 11:49

Yes, rimau1, I see higher rates as positive.
HAT loans out its own cash, which will now earn 3x more than a year ago.

[scotches] 03/8/2023 10:50

An ebbing tide lowers all boats.

We'll see if the Aug 8 report confirms the current period as one of the most favourable in the company's history.

[rimau1] 03/8/2023 10:50

I hope not Pugugly! I am adding here because net net HAT should benefit from rising rates. It can choose whether to grow its pledge book using the credit facility and price the book accordingly to always benefit, like a bank. Rising rates should also mean more customers. If someone can demonstrate HAT is a net loser from rising rates i will sell out!

[pugugly] 03/8/2023 10:26

Could it be possibly be worries about possible increase in interest rates on debt?

[jm6783] 03/8/2023 09:47

Anyone know why this has fallen so much today ?

[ntv] 30/7/2023 19:05

Results due 8th August

[lord loads of lolly] 11/7/2023 13:41

Yes, a good update - as expected. Difficult to know exactly how H1 profits will turn out. Retail jewellery profits significantly down. However RNS states that's "substantially" offset by the boost in profits from jewellery disposal. Looking extremely positive for full year. I guess the share price hasn't run away (yet!), as most of this was to be expected, given previous announcements.

[interceptor2] 11/7/2023 07:28

Nice strong update, the way I read the statement is that interims will be inline with expectations due to some margin pressure in Jewellery sector yet higher turnover, but that H2 will be very strong with higher margins and strong pledge book feeding into H2 and resulting in some ahead trading updates before the full year results.

[solarno lopez] 11/7/2023 07:21

Will it reflect on Ramsdens, I think so !