Hargreaves Services Share Discussion Threads

[pcok] 17/12/2012 20:00

So pleased they have agreed to the enhanced redundancy package. Many have shared the gains so its only fair those who have lost the most are treated in a manner befitting of a quality company. Christmas is coming and redundancy is the word you don't want to hear.

Well done Hargreaves in a difficult situation.

[simon gordon] 17/12/2012 19:51

Yes, hat's off to the BoD for meeting 2013 targets after Belgium and all the problems at Maltby.

I was very impressed by the depth of the trading update and how well they are treating the miners at Maltby.

The company reeks of professionalism and candour.

I can see these back at c.10x in 2014, which probably means c.1300p. It looks a high probability doubler within 18 months.

They've just been through an unlucky spell....

[castleford tiger] 17/12/2012 19:20

I think it makes for great reading. Unless u are a miner there. poor lads.

Targets will be met. New targets will rise next year now you take out the looses at Maltby.

Up 100p in early trading.If not as its been said its as cheap as chips.
Look at yield alone!!
Tiger

[jamielein] 17/12/2012 17:41

Doesn't make for great reading but I think they have a good future. Initial reaction was down but closed up so we'll see what tomorrow brings.

[simon gordon] 17/12/2012 16:53

Half expecting a terrible update with it being put out at 4.27pm.

Glad to see the Beligium problem is isolated and that Germany and Poland are unaffected, this was a major concern in the market.

With Maltby now a dodo the opportunity for a higher rating is ahead.

Expansion into the steel sector, Europe and Asia should keep the growth story intact.

At 600p it is the best value share I can see by a country mile.

Maybe the Belgian problem, with the closure of Maltby, will focus HSP to put down physical infrastrcuture in Northern and Central Europe.

Prelims 2010:

Europe

Whilst these markets are served today by a range of well-established competitors, we believe that the unique model we have developed in the UK is transferable to many of these markets. Five years ago our market share in the UK was a fraction of its size today. Through offering the broadest portfolio of quality products to customers and leveraging our supplier relationships and bulk buying power, we are confident that we can continue to win market share both in the UK and will also be able to replicate our model in Europe. We believe that this strategy can be delivered largely by organic means without the need for major capital expenditure or commitment. In the short- and medium-term, investment in strategic assets is an option but not a requirement as the product flows in Germany, Belgium and Poland can be built using third-party stockyard and transport service providers.

[meijiman] 17/12/2012 16:49

Its out. Rather detailed with alot of pluses and minuses. Closure of Maltby, and a fairly detailed trading update. The full detail on Belgium still to come.
Overall I see more positives than negatives but Mr Market may see it differently.

[castleford tiger] 15/12/2012 08:45

IMS this week. will settle nerves? I HOPE !!

Tiger

[simon templar qc] 10/12/2012 12:17

Here is the story from the FT...

[simon templar qc] 10/12/2012 12:17

Here is the story from the FT...

[meijiman] 10/12/2012 11:18

Interesting piece in FT today (page22 markets section)on UK coal related stocks-or what is left. HSP gets a mention though the piece adds nothing new to the story.

[andyh78] 10/12/2012 09:17

I would expect a quoted company to have some form of internal audit, or certainly stringent internal controls.
If it is down to the auditors to find a stock difference then there is something very wrong.

[castleford tiger] 09/12/2012 15:00

I think thats worst case.

There may also be a case against KPMG if the stock audit has not been done correctly.
All companies are exposed if you get a bad manager or senior person.
I would assume its not physical stock loss rather than credits taken against invoices etc.
It will unravel and there is a chance of recovery from those involved.
This is not a huge division and as such i expect a much better outcome than the market has priced in.
I trade coal/smokeless etc as part of one on my companies. HSP never wanted my business i was too small.
This is no reflection on the company but a bad manager is only stopped at year end/audit. It happens if the top brass is bent!!

Tiger

[deanowls] 08/12/2012 13:32

The question is where has it gone, either it's stock that was never delivered or stock given away? I would expect that there's fraud somewhere and can any of it be recovered, where do you physically lose 15m of coal?

[castleford tiger] 08/12/2012 08:36

Lets assume its a 15 m write off.
How can that take 50 million off market cap?

I am a big holder now at sub 600p.
I am also aware that Winter 2012/13 has started very strong with a cold November and colder December than 2011.
Europe is facing a big freeze and stocks were not replenished after a milder last winter.
Serious shortages mean more profit for HSP divisions.

The story has not changed here. Of course you can wait until the all clear but by then you may well be 20% behind.

I remain of the opinion that this is a blip.

Tiger

[thaiger] 07/12/2012 10:03

You obviously did not read the statement thoroughly.....your £10m was at least 40- 50% off....
[It is difficult for the Board to evaluate the potential financial impact of this event at this early stage but for conservative guidance purposes the Board does not believe that the potential impact of this balance sheet write off could exceed £15m.]

[theprovosts] 06/12/2012 15:42

Takeover candidate anyone?

Just doubled my holding here. Big volume at mid-price today which will be institutional, seller seems to be abating and buyers will return once the trading update clarifies the loss will not exceed the maximum sum of £15m.

£50m wiped off market cap for more likely a £10m bad stock take?

A buy imo.

[simon gordon] 06/12/2012 15:32

I made contact with WH Ireland and their forecast, ex-mine and post Belgium, for 2014 is:

PBT - 54.6m

EPS - 135.2p

600p = 4.43x

Say they crawl back to 7x 2014 = 946.4p

NAI, DYOR

[simon gordon] 06/12/2012 12:21

According to Investegate the Trading Update is a week tomorrow.

NE Business - 6/12/12:

N+1 Singer Equity Research in Newcastle said the issue was likely to affect Hargreaves' results for the full year 2013 and 2014.

James Tetley said: "We understand that the Belgian business has been managed independently of the other European operations (Germany, Poland, European thermal coal JV) and that the issue is related only to the trading of anthracite coal.

"We had been assuming a continuation of Belgium's recent reported profitability and we therefore downgrade our FY13 and FY14 EBIT forecasts by £2m in each year."

Hargreaves' share price dropped on the announcement.

Mr Tetley said: "The discovery of these irregularities is clearly disappointing and the share price reaction reflects investors' concern and uncertainty as to the extent of the issues.

"To our mind, although the issues that have been uncovered appear to be isolated to the Belgian business, we do not expect a meaningful recovery in the share price until the forensic investigation offers reassurance that this is the case; we await further details with the pre-close update, which is due in the next two weeks."

Hargreaves is due to publish its routine interim pre-closing statement in the next fortnight but said that in the meantime, the rest of the group is trading well and in line with its expectations.

The company also said it expects to make a speedy decision on the future of Maltby Colliery.

It has been consulting on whether to mothball the deep mine near Rotherham, which employs around 500 people, because of ongoing health and safety, geological and financial concerns.

It had asked unions to put forward any alternatives before November 30.

The discovery of these irregularities is disappointing and the share price reaction reflects investors' concern.

[simon gordon] 06/12/2012 10:36

Yesterday was the biggest volume day since September 2009:

[simon gordon] 05/12/2012 19:58

Questor - 8/11/12:

"The current May 2014 earnings multiple is five times earning forecasts; however, downgrades have yet to make their way into the system. A 20 per cent cut in earnings would make the 2014 multiple about 6.1."

====

It appears that there are no offical EPS forecasts for 2014 that factor in Maltby and Belgium.

Questor's forecast was made when the share price was c.730p.

730p divided by 6.1x = 119.6p

Knock off 7.5p for Belgium = 112.1p @ 600p = 5.35x for 2014

[castleford tiger] 05/12/2012 19:24

Guys
By the time they have said its all right it will be back north of 700p.

How can a write down of even 15 million mean a market fall of 60 m on market cap.

KPMG will be in line for the chop, unless they sort this and quick.

Always one to take the opposite view and when they are back at 900p i will be history.
Buy on the bad days sell on the good.

tiger

as every DYOR

[simon gordon] 05/12/2012 16:16

Analyst Nick Spoliar said: "Yesterday afternoon's update from Hargreaves Services revealing that the company has uncovered irregularities in its Belgian business causes us to downgrade our current year and 2014 forecasts by around 4% and to take our recommendation back from buy to hold pending conclusion of enquiries that Hargreaves Services is making.

====

WH Ireland forecasts prior to the Belgian problem:

2013
PBT - 46.3m
EPS - 112.9p

2014
PBT - 64.3m
EPS - 160.4p

[tanfastic] 05/12/2012 16:02

As mentioned above HSP downgraded by WH Ireland from buy to hold.

Saw this piece on broker forecasts which gave an analyst quote on the Belgian discovery!

I'm just pleased I wasn't the auditor...

Anyway, here's a link to the piece I saw:

[simon templar qc] 05/12/2012 12:35

Need to look at revised forecasts, unfortuantely not much been said in the press probably due to late announcement mid afternoon yesterday.

[loverat] 05/12/2012 12:32

Thanks ST.

Just looking at the chart and the massive dip in September - and a massive rise which followed. I know people always saying something is undervalued but this really does look undervalued.