Hargreaves Services Share Discussion Threads

[muckshifter] 21/2/2022 13:18

The time to get a bit over excited about the contents of today’s RNS is probably about 30 months away Smithie, assuming all has gone well by then.

Whether or not there is much of a saving of further expenditure on road access requirements, is really of very limited importance and will have been taken fully into account in the deal, I would think. The design and build of this sort of distribution road should be low risk, provided inflation costs are reimbursable under the contract terms. Also I don’t agree with your statement that this transaction “shines a light on the value of the remaining land” as the value attributed to the land is not disclosed.

The big risks attached to this contract, imo, are related to the JV undertaking to build the two distribution centres. That sort of contract is, again just in my opinion, well outside any competence that I’ve seen in HSP. Distribution centres tend to have extremely tight specifications on floor levels and punishing damages provisions if the tolerances are either not achieved, or there is subsequent settlement in use. The ground conditions around Hatfield are very poor, iirc, and depending on how far this part of the development is from the old colliery shafts, there is always the added possibility of mining induced settlement.

Just as an indication of the sort of potential problem I’m writing about, years ago I did well out of shares in Keller, one of the biggest ground remediation / foundation companies in the world, and after selling them remained interested in their progress. Probably five to seven years ago they did the design and installation of piling etc in bad ground for a major distribution centre, which the client refused to accept on completion , iirc, and after years of dispute, arbitration, insurance claims (unsuccessful I think) etc they bought the completed development back from the client and declared something like £25m hit to profits.
The other risk that springs to mind is what happened to John Laing. I knew them as perhaps the “cleverestR21; big civils contractor when I was a young man, but they became too confident of their own ability and undertook a couple of very high risk contracts on unacceptable terms, which finished them as contractors.

But, being more positive, Bernard Schrier’s family outfit, the other half of the JV, is very contractually savvy, I would think, so if they are dealing with the contractual side it would considerably, but not completely, reduce the risks.

[smithie6] 21/2/2022 10:46

Has anyone calculated what % of logistics/commercial land is still left & what its value is if sold at the same price per acre/hectare ?

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I bt 10% more. I'm a fan !

[smithie6] 21/2/2022 10:14

Surprisingly few trades this morning. Today's RNS shines a light on the value of that area of land at Unity for logistics use. Not surprising next to a motorway junction.

And shows that development costs are reducing & moving more to phases of sales & profits. :-)

And mention of possible distribution of some cash is good.

Quite a few hectares left imo.

[smithie6] 21/2/2022 10:11

Who is the expert for the Unity site ?

Is the road etc to original logistics centre completed, or underway now ?

(If it is underway now then the same workers/equipt. can do any extra needed, for these 2 new sales/sites/units. With a contract addition, paid of course)

[smithie6] 21/2/2022 09:30

Interesting that the RNS says that the JV intends to distribute the money if it doesn't need the money.

(Most of the development cost for big logistics sites has already been invested by the JV, for the spur to the motorway junction, & then providing a road to the first big logistics centre, which hopefully also services these 2 new logistics facilities except perhaps for short extensions. (If the original centre is on one side of the road & these 2 are on the other side then perhaps/ hopefully no new road is needed or just short connections/extensions, ie. higher nett profit % :-)

[castleford tiger] 21/2/2022 08:57

Far too cheap still

[smithie6] 21/2/2022 07:58

Ah ha. Good info.
Thanks for sharing.

So this £50 million is in addition to the previous sale agreement with 1 client which was for £25-£30 million for the JV I think I recall.

[slopsjon2] 21/2/2022 07:47

Singer note:

"Hargreaves has announced the exchange of conditional contracts at both Unity and Blindwells, continuing recent momentum on these important developments. The two contracts at Unity (for a combined c.570k sq ft of distribution/ industrial space) will generate revenue of >£50m for the JV in Hargreaves’ FY24, prompting a 9% upgrade to our earnings forecast. With further evidence emerging of the value within the Land portfolio, we increase our TP to 620p (from 590p) and reiterate our Buy recommendation. "

[harrogate] 19/2/2022 20:05

Read the broker note - that will tell you the answer

[smithie6] 19/2/2022 19:35

The Mail on Sunday on ~23rd January, predicted profits to rise from June 2022.

Do posters agree & reasons for the growth in the financial year '22-23 ?

Land sales at Blindwells or Unity ?
Or from the German JV ?!

[smithie6] 18/2/2022 09:41

Ah. Ok.

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Chart is looking strong.
That the pullback after the big rise from ~£4 to ~£5 has finished & the price seems to be heading back upwards.

[harrogate] 18/2/2022 08:35

Given he updated 10 days ago I would doubt he will update again so quickly when there is nothing new to report

[smithie6] 17/2/2022 14:57

It is Thursday, so perhaps the price is being helped today if there an update about HSP from the financial writer Simon T. who writes for Inv. Chr. I think, part of the Fin. Times group.

[smithie6] 17/2/2022 13:16

The pullback after the rise from 400p to 520p has perhaps now phps consolidated

With some top slicing going on, & others buying those shares.

Perhaps now going to trend upwards ?
The last few weeks look good on the 6 month chart.

[smithie6] 08/2/2022 17:51

Ooooh

Late reported buy.

506.64p @ 17:12:35

9,868 shares

~£50k !

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Looking good for tomorrow. :-)

[smithie6] 08/2/2022 16:27

Good news. A rush of trades have gone thru.

Pat on the back for Simon.

[harrogate] 08/2/2022 16:15

Just retipped by ST - think that is behind the late rise

[smithie6] 08/2/2022 13:40

A snippet of text from an iron ore company.

(Last year the HSP JV sold 285k tonnes of iron, pig iron. Its main use is for making steel)

"Crude steel production outside of China increased by 12.6 per cent to 804 million tonnes in the 11 months to 30 November 2021, returning to pre-COVID levels. The pandemic remains a clear risk, but we are encouraged by the prospects for growth in global steel demand this year {2022}"

[smithie6] 07/2/2022 14:25

In 1 month the price of European steel has gone up 8% according to website LME (London Metal Exchange).



If you need to register to open this page, it is free)

(Pig iron (= iron cast in the shape of piglets suckling, hence the name !; Or perhaps more like a tree ?). Iron
is the main ingredient of steel, so pig iron should have gone up a similar amount imo. (Roughly speaking, steel is iron with carbon added)

(I assume/guess that making steel from (pig) iron is much easier than making it from iron ore; & I guess that it also uses less energy per tonne to make steel from (pig) iron than from iron ore, which is surely very relevant in these months/years of high energy costs)

(The HSP JV in Germany sold 285k tonnes of pig iron last year I think, a product of their recycling process, unique in Europe)

[smithie6] 07/2/2022 11:08

Low volumes in recent days.
Perhaps the pullback from 515p has now ended, that sellers/slicers have finished.

[smithie6] 04/2/2022 18:18

Good stuff

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I found some interesting info about DK recycling.

"DK in Duisburg is the only producer worldwide that produces pig iron of guaranteed highest quality out of ferrous residual materials. For our partners of the European steel industry, there is no industrial alternative regarding the accumulating dusts and muds. The ferrous materials of this kind, which are not recycled by us, would otherwise have to be deposited elsewhere"

(The original text was created in German & the English version created from that, so it doesn't flow 100% imo. "deposited elsewhere" effectively means put in landfill unless someone finds any other use/need for it. Some uses are ruled out since I understand that the waste can absorb water (which can cause problems, including due to expansion if freezes) & also have on-going chemical reactions.

So, the DK business appears to have very big barriers to entry to any competition from Europe. And the distance/cost to other continents should rule out the shipping of the furnace slag to be recycled in another continent & then the pig iron shipped back to make steel to make cars in Germany & Europe.

[red ninja] 04/2/2022 12:06

Shares magazine has HSP as an investment idea :-

HARGREAVES SERVICES
(HSP:AIM) 515p

Gain to date: 60.9%
Original entry point:
Buy at 320p, 25 February 2021

UNTIL THE PUBLICATION of its first half results,
shares in industrial and property services group
Hargreaves Services (HSP:AIM) were trading at
just 400p, but the reaction to the numbers was
bullish with the stock gaining 17% in a day.
This optimism reflected the huge strategic
progress the company has made during the
pandemic and management’s promise of
materially higher earnings in the next few years.
The six-month period to 30 November showed
a near 10-fold jump in pre-tax profits to £10.4
million thanks to an outstanding contribution
from its German materials business.
Alongside its German operations, the firm’s
UK land business made significant progress on
both the residential front, where it cleared nearly
£10 million on the sale of a site in Edinburgh to
Persimmonn (PSN), and the commercial front,
where it develops space for warehouses and the
logistics sector.
Meanwhile, the services business has ‘started
work in earnest on HS2’, the extension to the UK’s
high-speed train network, with monthly revenue
of more than £2 million as the project gears up.
With a large cash pile from the sale of part of
its German asset, the company is paying out a
raised dividend and a special dividend for the
foreseeable future.

SHARES SAYS: 
Long-term investors should continue to add to this
exciting business. [IC]

[smithie6] 04/2/2022 10:11

Have to disagree on that last point.
It made £9 million PAT in H2 I think & £9 million PAT in H1. :-)
£18 million/12 months. PAT !

It makes much more profit than the rest of HSP.

Sehr gut. !

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Value.

Just pay me my part of the profit of the German JV.
£18 million /33 million shares.

54p/year

& I won't think about how much the German JV is or is not worth !!!

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Although another idea since HSP now doesn't want to sell it is to list it on the German market. Probably higher P/E ratings there. Although I guess that HSP & the owners of the 16% would need to sell some shares to the public. Although listing it would just add costs, one off cost & then annual costs.