H&t Share Discussion Threads

[jm6783] 19/5/2024 11:19

Please see above for last year’s agm trading statement.

I hear what you’re saying - I just think they need to get to ‘mid-teens RoE’, as they have promised, very soon. And they can’t have asked for a better environment on the revenue side overall, given the cost of living crisis, the gold price boom and people taking lots of foreign holidays. Yes, they have always been profitable, but I think it would be very hard for the market leader in this sort of business to lose money.

And my point about buying back a few shares to keep number of shares stable is just lemming-like behaviour. Again, either the share price is undervalued - in which case, buy back as many shares as you can - or it is not, so don’t buy back any. Don’t just buy back a few shares just to keep number of shares stable when exec options are being given out. That sort of irrational behaviour is what concerns me.

[lord loads of lolly] 19/5/2024 08:55

Thanks jm6783. Fair enough on the loan book figures.

Could you point us to last year’s RNS/TU, giving pledge book growth figures for the first four months of 2023, as I don’t recall seeing that.

I think investors form an overall opinion on management, based on how close to guidance things turn out. Over the past 5 years, HAT has consistently been profitable. It certainly took a knock during Covid (hardly surprising given the enforced store closures during lockdown). But it’s bounced back since, creating over £7m more operating profit in 2023 than in 2019. And barring a major black swan event, 2024 looks set to comfortably beat 2023. There aren’t that many companies with such an unbroken string of profits, not to mention a decent yield & a progressive dividend policy.

That’s not to say they haven’t made mistakes or that they’ve foreseen every downturn. Last year’s multiple loan facilities & the raise weren’t best handled I agree. And the jewellery sales downturn pre-Christmas could perhaps have been better predicted, given cost of living pressures. But they did take some remedial action, both in terms of luxury watch stock reductions earlier that summer and in price adjustments/loan interest increases to restore the overall margin. I’m not totally convinced by the price paid for their Maxcroft acquisition either. But the early signs are it’s performing as expected. And by transferring Maxcroft’s evident forex expertise to the rest of the business, they may well improve overall performance in that division.

Personally, I don’t have a problem with their performance share plan options. Unlike many other company schemes, their options only vest if fairly ambitious EPS & TSR targets are met. And that would be good for private investors too.

[jm6783] 17/5/2024 17:49

Thanks loads.

To be clear, I said the book was roughly flat rather than down because the 105m excludes accrued interest, whereas the 6.1m maxcroft book includes it.

Agreed, there were similar trends last year in terms of redemptions, but the pledge book still grew by several million in the first 4 months of 2023.

And, honestly, why do you trust management so much? They haven’t covered themselves in glory in terms of costs, jewellery sales or fx over the past couple of years. And they raised equity capital they didn’t really need when they could have borrowed more.

I see today that they are buying back a few shares to fund their options. Either the share price is undervalued, in which case they should buy back a lot more shares or it is not - in which case, do not them back at all.

[lord loads of lolly] 17/5/2024 15:11

c3479z - that's good if redemptions are following a similar pattern to LY.

I imagine they are, as HAT's management strike me as trustworthy & they said in yesterday's TU: "Consistent with last year, redemptions in March and April were higher than average".

In terms of RFX v. HAT, it's true RFX yields more & has a slightly lower P/E. But things are usually cheaper for a reason.

For one, you're paying a small premium to invest in the market leader.

Also, comparing RFX's share chart to HAT's over the past 5 & 10 years, I'm glad I chose HAT. That said, neither company is a "tuck away & forget" kind of share IMHO. Perhaps more than many other companies, you need to time your buys & sells reasonably well to maximise gains here. That particularly includes knowing when to exit - which for me will probably be somewhere around the mid to late £5 mark (assuming we get there within my timeframe).

[c3479z] 17/5/2024 12:20

think they reported a similar pattern of redemptions last year, if one remembers correctly so llol your seasonality conclusion may be correct,
saw on stockopedia various opinions that RFX was cheaper on most metrics, though in my opinion and other commentators', HAT has a better business mix.

[lord loads of lolly] 17/5/2024 11:35

jm6783 - good spot! Maxcroft's pledge book was worth c. £6.1m on acquisition, so it looks like HAT's total pledge book may actually have dipped slightly this FY.

(£105m - £6.1m = £98.9m versus £101m @ 31 Dec 2023).

That said, the pledge book grew well between 30 April & 31 Dec 2023 (from £91m to £101m). I imagine there's a fair bit of seasonality here, with more people wanting to raise funds for summer hols & Christmas than over the winter months.

To me, it's reassuring yesterday's TU states "All key pledge book metrics remain in line with expectations". Though I'm slightly less convinced when they say March & April's higher than average redemption rate will reverse in the coming months. Unless that's been a consistent pattern in previous years.

Overall, not unduly concerning for me yet, but definitely worth keeping an eye on.

[jm6783] 16/5/2024 21:05

Is anyone else concerned that pledge book growth appears to have stalled?

Aside from the maxcroft acquisition, the pledge book is roughly the same size as at the start of the year. Now, I know that apparently redemptions were higher in March and April as ‘people wanted their jewellery back for special occasions, etc’ but, nonetheless, that is a sharp slowdown after years of rampant growth. I think, going forward, management should comment on net growth of the pledge book, rather than talking about ‘record’ months of (gross) lending, which does not consider redemptions - hence zero growth in the pledge book.

[ntv] 16/5/2024 20:01

I bought and sold with H&T a few times
Dealing with the Colchester branch
They certainly have been very polite and friendly
On a recent visit there was quiet a queue so went back later.
I bought a few more shares that afternoon!!

[lord loads of lolly] 16/5/2024 14:05

ntv - yes, that was interesting about the council in a relatively deprived area denying permission to open an H&T store.

For those who didn't listen into the AGM, it was intended to illustrate entrenched (& often misguided) views of modern pawnbroking. Something the company is trying to address - mainly through employing what they regard as friendly, welcoming staff who generate a relaxed modern store environment & strong word of mouth referrals.

[ntv] 16/5/2024 13:58

Agree sound quality was poor

[ntv] 16/5/2024 13:57

They also mentioned that the local council in one area had refused permission for them to open a shop.

[ntv] 16/5/2024 13:32

Just watched the AGM
Not much said really just the formalities really
Only 3 shareholders attended including a relation of the original people who started the business
One shareholder who spoke had never even visited a shop WTF

[saint or sinner?] 16/5/2024 11:28

Always better to temper expectations then over deliver, rather than raise expectations and create unnecessary risk, since there are always factors completely outside of your control.

[aishah] 16/5/2024 10:48

Stockopedia analyst positive on today's update:

It’s a pleasant “in line” AGM trading update. The pawnbroking pledge book continues to grow as, evidently, consumer conditions still drive robust demand for alternative loans. But retail margins are also improving as expected. I remain a huge fan of this business and the stock remains attractive to me at PER of 7x.

[ymaheru] 16/5/2024 08:51

Thanks for posting AISHAH.

Seems really positive, but share price hasn’t moved.

[aishah] 16/5/2024 08:05

Appointment of Joint Broker



H&T Group plc, the UK's largest pawnbroker and a leading retailer of high quality new and pre-owned jewellery and watches, is pleased to announce the appointment of Canaccord Genuity Limited as Joint Broker, to work alongside Shore Capital, the Company's Nominated Adviser and Joint Broker, with immediate effect.

[lord loads of lolly] 15/5/2024 11:55

Not attending in person. But looks like it's being livestreamed via webinar, so I've registered for that.

Here's the link for anyone interested:

us02web.zoom.us/webinar/register/WN_My5LKDy-TOuHMAkcLzd_LQ#/registration

[ntv] 15/5/2024 08:46

AGM tomorrow
Anyone going?

[lord loads of lolly] 01/5/2024 17:29

wad collector - me too! It certainly has been a short, sharp return to form.

I was lucky enough to set a 375p limit buy order on HAT back in January 2024. This was triggered at 319p on 23 January (day of their TU with the profits "miss") - albeit still a pretty darn good set of results.

I'd originally planned to average down on my latest January tranche if the price hit 415p (a 30% return in 3 months). But given how close we are now to 30th May ex dividend date, I plan to hang on and take the divi. Depending on how the share price looks then, I may bank some profit before July's TU just in case! You know what they say about profit warnings coming in threes, though I personally doubt this will be the case with HAT.

As for £5, it wouldn't surprise me if we hit that at some point later this year - or in Jan 25 when the next TU comes out. I've always had a mental note to reduce my holding significantly if we got to 550p+ and that remains the case. Given I bought in as low as 196p and my average is a tad over 300p, I'd be quite happy with that (especially once dividends are factored in). It never pays to be TOO greedy & HAT is currently my largest holding, so I'm conscious that I'd be heavily exposed to any unforeseen downturn here too.

[wad collector] 01/5/2024 15:13

I do like this share price recovery ; well done anyone brave enough to add in March. Galloping back up to £5 might be a bit optimistic but it surely will return there this year?

[lord loads of lolly] 26/4/2024 09:23

"a management team that seem astute at finding new opportunities for the business".

I agree with that generally. Not so sure in the case of Maxcroft though (or more precisely, the price paid). Time will tell.

[saint or sinner?] 26/4/2024 09:13

Low PE, very decent div yield and loads of growth to come ... oh, and a management team that seem astute at finding new opportunities for the business.

A growth stock opportunity for broken Britain.