H&t Share Discussion Threads

[lord loads of lolly] 02/2/2024 18:51

scotches - thanks. An interesting article (if only to instil faint mirth that the well-heeled have their own little struggles. Bless!)

Incidentally, if you begin links with www (rather than htt), they won't be hidden. But you're right, googling an article header is often the easiest way round pesky paywalls.

I take issue slightly with the FT article's conclusion on watches. At least in H&T's case. Yes, the market has clearly softened. And prices with them. But I'm not sure it has really tarnished the other side of the pawnbroking coin in H&T's case. After all, H&T's latest TU said:

"Sales of watches both by volume and value, grew in the fourth quarter by 15% year on year, at an average price point of £1,600. Margins are beginning to recover from mid-2023 levels."

What it has affected is JEWELLERY sales & profits. Cost of living pressures have led to people trading down from expensive, higher margin pre-owned jewellery to cheaper lower margin new pieces. That - rather than watches - is what's largely behind the more conservative forward guidance. But I'm confident interest rates will head lower in the second half of 2024. And with it, consumer confidence should slowly but surely start to improve.

[scotches] 02/2/2024 17:29

(Paywall but can sometimes get round by putting header into google and the link from there gives access)

"Even the posh are turning to pawnbrokers"

"H&T Group, the UK’s largest high street pawnbroking chain, says it expects to report record profits in its full-year results next month, up 40 per cent year-on-year.

However, cost of living pressures have tarnished the other side of the pawnbroking industry’s coin — the resale value of forfeited watches and jewellery. Regardless of their income level, consumers are less willing to spend their money on bling. This is being evidenced on the high street and in the secondary market for fancy watches, where average prices have fallen for seven straight quarters."

[lord loads of lolly] 24/1/2024 12:14

Though I generally think brokers blow with the wind, H&T's house broker makes some interesting points below. Well worth a read. My key takeaways are:

1) Growth over the next couple of years, whilst strong, will be slower than earlier forecasts. Largely due to softening retail sales (+ changes to mix) & increased costs - notably salaries. April 24's National Living Wage increase is likely to have a knock-on effect on higher paid staff too, to preserve the differential based on their experience & responsibilities. Of course, H&T may adjust their prices or negotiate even harder with their suppliers to offset some or all of this. But the former might have to be exercised with caution, assuming continued weakness in the economy.

2) Dividends will increase less rapidly. Hardman are "only" forecasting 16.75p FY 2023. This looks slightly low to me, given the 6.5p August 2023 dividend already paid. A final divi of 10.25p would only be marginally above last year's 10p. But management may well have guided them on this, so let's see when they declare it on 5th March.

3) Current share price valuation ranging from 406p to 630p, with a weighted average of 503p. Despite the "science" used to back them up, I never pay too much attention to these, especially when issued by a paid-for house broker.

www.hardmanandco.com/wp-content/uploads/2024/01/240123-Hardman-HT-Group-HAT-Growing-pawnbroking-core-will-drive-other-services.pdf

[elsa7878] 23/1/2024 16:10

Extraordinary to see that all time / near all time highs in stock markets are seeing such extreme reactions to profit downgrades in some stocks. The warnings from WOSG and RFX had indicated luxury watch difficulties and the share price was down 10% already from their reports and nearly 20% from early Nov 2023. If it was on a PE of 15 or something fair enough but was already under 8x and profits still grew 40%!

[riverman77] 23/1/2024 16:03

Simon Thompson reiterates as a buy. Shares the view that looks very odd for 40% increase in profits to be rewarded with a 14% sell off, merely because it was slightly below the arbitrary estimates of some broker.

[shallwe] 23/1/2024 11:39

I sold out of here a couple of month ago with a very nice profit, it's now got a great entry point again so will be looking to add back in.

[rimau1] 23/1/2024 10:43

Agree with others this is a good low risk entry level. Net Book value over £4 a share and that is tangible asset backed. Even with downgrades this will be on a 7x forecast 5% dividend and 20% discount to book value. Bought this morning and expect a Simon Thompson bounce and a return to £4 this year.

[saint or sinner?] 23/1/2024 09:48

Great buying opportunity. Added.

[lord loads of lolly] 23/1/2024 09:38

riverman77 - yes. All down to expectation rather than anything particularly troubling in the results.

I don't know if management over-promised or were just caught out by December's retail softening. Either way, November & December are make-or-break months for most retailers. So whilst this is only a part of HAT's core business, they should have perhaps guided slightly more cautiously, given the economic backdrop. After all, it was obvious well before Christmas that few retailers were in for a stellar end to the year.

[1pvh] 23/1/2024 09:29

Excellent entry level I reckon 5/6% yield and pe of what about 7? Bought a good few today

[babbler] 23/1/2024 09:01

Rfx dipped today too due to this..Perhaps an op for both

[riverman77] 23/1/2024 08:53

I think RFX are better on the jewellery side but I have concerns over their currency business which I suspect is in structural decline (payments will all be digital in a few years). However, the main interest for me is pawnbroking and HAT are overwhelmingly stronger there (pledge book about 10x bigger than RFX), so of the 2 I'd pick HAT.
The results were actually very good, but management clearly promised too much - they just need to remember to under promise and over deliver next time.

[taylor20] 23/1/2024 08:51

LLoL : yes, that was my point - I did not see it as a red flag for HAT when I read the RFX results.

[thorpematt] 23/1/2024 08:51

A 40& rise in y-o-y profit....a truly shocking under-performance!

---------------------

Shore Cap note is out:

Forecast changes: Our forecasts changes are summarised below and imply PBT growth of 40% in FY23F (reducing to 26% in FY24F and 10% in FY25F), which is 11% below the company-collated consensus of £29.9m, in line with revised management guidance.

----------------
2023, 24, 25 as follows

Adj PBT 26.6
Adj EPS (p) 48.4
DPS (p) 17.0

Adj PBT 33.5
Adj EPS (p) 57.4
DPS (p) 19.0

Adj PBT 36.8
Adj EPS (p) 63.0
DPS (p) 21.0

------------

[lord loads of lolly] 23/1/2024 08:50

taylor20 - I think those two statements are saying much the same thing, except Ramsdens maybe spun it slightly better.

Ramsdens’ new “value for money jewellery” will also be lower margin. And H&T had also detected the softening in certain premium watch brands, acting to reduce stock back in the summer.

[elsa7878] 23/1/2024 08:47

Ouch painful.

But £27 million pre-tax on a (now) £145 million market cap. I'll be adding.

[lord loads of lolly] 23/1/2024 08:45

wad collector - Agreed. Ramsdens also fell on results day (though “only” by around 10%).

It has since made up around half this initial drop and I expect HAT will do the same.

[taylor20] 23/1/2024 08:44

Yes Ramsdens span the narrative a lot more cleverly:

RFX: "Our online premium watch sales on retail finance have reduced while we have seen strong sales of new, second-hand and diamond jewellery throughout our store network. This is testament to our improved offering and greater customer awareness of the value for money jewellery Ramsdens offers"

versus:

HAT: "Trading conditions in the fourth quarter were challenging, given pressure on customers' disposable income. Against this backdrop, sales by volume of items increased 3% relative to the fourth quarter of 2022. However, customers displayed caution in their spending, with a significant shift towards lower priced items."

[wad collector] 23/1/2024 08:40

Ouch, didn't see that coming, but a 10% profit drop forecast wouldn't normally cause a 20% share price fall; it's a half empty market.

[babbler] 23/1/2024 08:39

Look for around 320 bid to buy some around 323. Perhaps.

[solarno lopez] 23/1/2024 08:30

Stick with Ramsdens

[riverman77] 23/1/2024 07:52

Hopefully falls as want to buy some of these - the pawnbroking side (where most of profit and growth comes from) should provide a very good hedge against a downturn.

[ntv] 23/1/2024 07:38

Shame profits look to be be about £27m FY
Obviously got ahead of itself but still a 40% increase in profits

[johndoe23] 23/1/2024 07:25

Yep, this is going to tumble

[1c3479z] 23/1/2024 07:22

'robust' trading but profits down, watches and jewellery, cautious consumer, pledge book expansion, mixed bag expect a price fall this morning. Will fall but ?may be not too far as there is as stated above a natural hedge between pawnbroking and the retail side...