H&t Share Discussion Threads

[aishah] 12/3/2024 08:22

Latest forecasts today FY24: PBT 33.5 +27%; EPS 57.2 +17.5% (p/e 6); divi 5.4%; NAV 403.3. Directors were buying well above 400p last year.
Mkt cap £150m.

[aishah] 12/3/2024 08:12

Added at the open. PBT +39%, EPS +31%, NAV + 8%, Divi +13%.

Outlook

Looking to the year ahead, we will continue to build on the progress achieved in 2023. We believe that demand for our core pawnbroking service will remain high as the ongoing impact of inflation on customers' disposable incomes creates record levels of demand for small sum, short term lending, at a time of severely constricted supply. We are also seeing growing demand from customers who are business owners, seeking finance for working capital against pledged personal assets and this formed part of the rationale for the acquisition of the pledge book of Maxcroft.

Further expansion of our store network remains a focus, although this will always be in a controlled and measured manner. It is likely that between 8 and 12 new stores will be opened in 2024.

[rimau1] 12/3/2024 08:08

Priced for a 2024 profit warning so i have now bought back in. TBV 4.00 so this is a realistic short term target, crucially retail has recovered in the first 2 months of 2024 so all my concerns have been addressed. Yes inflation is a concern but this is essentially a fixed cost business and tailwinds this year are the pledge book growth, gold price and fx. RFX still trades at a premium to book value so there is value here.

[1c3479z] 12/3/2024 07:30

core pawnbroking performing nicely, though consumes capital and business facing NLW increases for many of 1500 employees next month, jewellery buying ought to be doing well as gold price rises, and company derives a benefit from higher gold price overall though this is cyclical.

[ntv] 05/3/2024 08:45

Price of gold has shot up recently so this should help margins if it holds a new level

[lord loads of lolly] 23/2/2024 17:07

riverman77 - I agree to an extent, but think you're being unduly harsh referring to "constant own goals".

The two you highlight - plus piecemeal top-up funding since 2023 - are the main ones that spring to mind. Sure, that's not great, but there's still a LOT the company's doing right. They wouldn't be announcing record annual profits otherwise.

The current storm clouds remind me of the period when H&T was under FCA investigation for its HCSTC loans. All was doom & gloom then, with the share price feeling like it was on a permanent downtrend. I took the view/gamble that any fine (& reputational damage) was likely to be fairly insignificant & short-lived. So I added several times at prices between £3 & just under £2, as the share price continued to nosedive. Not only have I benefitted from the dividends since, I've also made a half-decent return on capital - even allowing for recent corrections.

I'll be doing the same again this time if March's Preliminary Results cause any further significant correction (unless there are any more curved balls of course).

On the issue of RFX v. HAT. Both have their strengths and both have suffered significant share price declines since summer/autumn 2023. So it's not all down to management. There's a change in sector sentiment at play here too. Which I suspect will be fairly short-lived.

As for a potential merger with RFX, I very much doubt that would ever be waved through. Or indeed even contemplated by either party. But you never know!

[riverman77] 23/2/2024 12:58

Good company and very cheap, but very frustrated with these constant own goals which keep knocking the share price. First, the failure to keep brokers updated with the correct forecasts leading to a completely unnecessary profit warning. Now the failure to explain the rationale for this acquisition - presumably there must be some logic behind it, but from reading the RNS alone looks an odd deal, so pretty poor communication. More generally, HAT completely fail to engage with private investors - RFX much stronger on that front. Ideally would like a merger with RFX, with RFX to take over management, although not sure competition authorities would allow this.

[taylor20] 23/2/2024 09:06

Yes the other way to view the purchase is it highlights how undervalued HAT is.

But I'm with zchaka5, the strategy of late does seem a bit erratic.

I guess the actual view from HAT and their lenders is that rates are not going to come down anytime soon. (The Lloyds facility is SONIA + 3.3% - 8.8%).

[thorpematt] 22/2/2024 20:49

Well, I was able to add a fair few of these this afternoonat target price. I assume someone is dripping stock into the market. THat may continue for a few days.

I rather liked the possibilities with the acquisition. I think there are different expertises on display with Maxcroft. This may lead to a diversification for selected other locations.

Interestingly Shorecap have left forecasts unchanged. I think that is a measure of the scale being relatively modest (about +3% on pledgebook?) but also that the increased loan interest will cancel out the acretion in earnings in the first instance.

That term loan is c.8.3% annually I believe. I wouldn't want to pay 8% but then again HAT's pawnbroking rate for the £4k (ave loan for Maxcroft) is 9%...per MONTH.

So yes the increase in headroom will allow expansion for sure.

[pugugly] 22/2/2024 15:50

Some of those msrked as sells are buys - Can buy at £3.442.

[zchaka5] 22/2/2024 14:50

Been holding H&T for years, the old Chief Exec was absolutely solid but I'm not convinced by the current one and less so recently. I've sold out today. Feel there's more likely to be bad news than good and any (e.g. a right down of items like high end watches on the pledge book) would really see things slide.Shame.

[the cronk] 22/2/2024 11:45

If 350 breaks this could get interesting.

Yesterday's deal clearly hasn't impressed the market

[pugugly] 22/2/2024 11:25

MM's widening spread - Bid 350 offer 364, They do not want these shares. Suggests a very large overhang to me.

[gopher] 22/2/2024 10:56

My thoughts as well when I read it & market is having a rethink on yesterdays markup. A conference call would have been useful.

[lord loads of lolly] 21/2/2024 15:42

eezymunny - yes, I still feel they've significantly overpaid, relative to the multiples RFX and H&T trade on.

Whilst the acquisition could open up new avenues for small business/self employed loans, Maxcroft's pledge book value seems to be static/declining YOY at the moment.

[muzmanoz] 21/2/2024 14:48

But in the £7m of debtors on Maxcrofts last b/s is a £2.3m debt due from Meadvine Limited, a company under common control of the directors. Would want to know what that's about.

[ntv] 21/2/2024 14:19

Maybe they should do a tv programme on it like they do in the states :-)))

[ntv] 21/2/2024 14:18

Interesting when you compare the loan book they have just bought in comparison to the RFX one.

[eezymunny] 21/2/2024 13:37

At the last b/s date book value was c. £7m and they had made c. 800k net profit in the previous 12 months and 570k the year before.

Pledge book down a bit since, but looks quite a good buy to me (from what little info available) at pledge book plus a modest earnings multiple?

Are you sticking with your "extremely overpriced" comment lolly?

[pugugly] 21/2/2024 10:18

LOL> Very fair comment and good analysis.

[lord loads of lolly] 21/2/2024 09:31

pugugly - Whilst I normally have total confidence in H&T's management, the £11.3m acquisition of selected Maxcroft assets looks dubious & EXTREMELY overpriced to me.

As far as I can see, Maxcroft only has one outlet. Google it. It looks like a small converted house in a largely residential, non-retail area. And the main acquisition is their pledge book, valued at "just" £6.1m. Plus they'll assume the cost of Maxcroft's five (yes, only five) employees.

I get that Maxcroft's customer profile offers diversification, with a far higher pledge loan mean value. I also realise its employees may have some expertise in targeting a different customer demographic. But £11.3m? Really?

That said, so far the market has reacted positively to this morning's RNS, including news of an additional £25m financing at relatively high fixed interest rates.

If the share price nudges slightly further up, I'll be banking profits on the additional shares I bought at 319p when their TU was first released on 23 January. But that would still leave me with a sizeable holding here, as I remain confident in H&T's 1-2 year prospects. Just don't want to be over-committed to any one company.

[pugugly] 21/2/2024 07:57

New debt seems expensive given the forecast of falling interest rates but timelines look favourable.

[lord loads of lolly] 05/2/2024 17:40

Yes, interestingly a stronger recovery here than at Ramsdens since H&T's TU on 23 Jan.

It wouldn't surprise me if H&T re-visited 400p before its preliminary results are released on 12 March. But for now, much above that would probably be a psychological barrier until we know a bit more about the general state of the UK's spring retail figures.

[saint or sinner?] 05/2/2024 14:37

Nice price recovery (as expected).

[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.