Hargreaves Services Share Discussion Threads

[netcurtains] 28/7/2020 09:15

From 2019 accounts
Current Assets: 160
Total Liabilities 120

Difference 40M
Market Cap 63M
2/3rds of a NETNET

NAV per share: 362.45p but share price to buy about 202-206p

This looks, at face value, a share that will potentially eventually
trade at NAV or higher (normally companies trade above NAV if doing OK).

My personal Target is 300p and will look again when reaches that figure (or near it)

recap: here are the interim results:
Trading statements after that all state that Covid is having no affect on the business apart from a housing development in Edinburgh (which I think has restarted now).

[harrogate] 13/7/2020 12:59

Hard to understand why this hasn't bounced a little after March dive like most other things. With 20p dividend coming and asset backing it looks cheap but there must be a seller or two about constantly. I picked some up today again at just above £2. Need to get my average price down !!! Patience needed here.

[castleford tiger] 01/7/2020 10:02

We are moving
Tiger

[saucepan] 19/6/2020 15:13

Opened a position today as looks as if HSP might be breaking out of its base.

Simon Thompson's value assessment adds a further bit of fundamental clout.

[boystown] 15/6/2020 21:52

Tipped in today's IC by Simon Thompson:

Hargreaves Services’ value opportunity

Hargreaves Services (HSP:217p) has transformed itself in the past four years, exiting legacy assets, refocusing the business on growth areas in the industrial sector, and is now set to realise the hidden value in its vast land bank through land regeneration.

Indeed, after I suggested buying the shares, at 206p, in my March 2020 Alpha Report (‘A high yielder offering significant hidden value’, 19 March 2020), the group’s joint venture, Unity, which is developing a 618-acre site surrounding the former Hatfield Colliery near Doncaster, exchanged contracts for the £25m sale of 32 hectares of land to a national retailer for construction of a 800,000 square feel (sq ft) distribution and training centre. This highlights the importance of the site from a logistical perspective, not to mention the potential to realise substantial value from the remaining 1.2m sq ft of industrial, commercial and logistics space with planning consent and 3,100 residential plots, too.

There are decent prospects of reaping hefty cash returns from the group’s flagship 390-acre site at Blindwells, East Lothian, a former open cast mine located 12 miles from Edinburgh. Hargreaves has planning for 1,600 new houses and has conditionally sold 10.75 acres to Bellway, and another 3.25-acre land parcel to Cruden Homes. The two land deals will realise more than £10m for 222 plots. The sales had been expected to complete before Hargreaves' 31 May 2020 year-end, but will now complete in the new financial year only because contractors had to down tools on infrastructure work due to the Covid-19 lockdown.

Importantly, management has confirmed that the property delays aside, underlying pre-tax results will be in line with the market expectations that had been in place prior to the UK lockdown. Analysts will reintroduce their forecasts at the time of the annual results on 29 July. This highlights the benefits of having a diversified revenue stream. For example, Hargreaves’ industrial services division has substantial long-term contracts in place, including one in Hong Kong to support the power generating operations of China Light & Power and Hong Kong Electric (mechanical, electrical, and access solutions at two coal power stations).

There has been good news on borrowings, too, as the directors confirmed that year-end net debt of £27.2m – equating to 21 per cent of net asset value and £8m lower than Investec had forecast – has fallen by a third from £40.3m last November. They are confident of securing appropriate facilities when the group’s £50m banking facility expires on 31 August.

As the lockdown lifts across Europe, expect investors to be on the look out for undervalued companies well placed to benefit from the economic recovery that will start next quarter. Hargreaves is one such company. Moreover, as economies return to some form of normality, albeit at lower levels of output than before, the board will be able to review the dividend policy and reintroduce guidance. It doesn’t have to be anything like the 20p per share of EPS analysts had previously been expecting in the 2020/21 financial year (prior to guidance being withdrawn) for the shares to rate a decent buy.

For good measure, Hargreaves’ share price has formed a solid base formation (between 195p and 220p) and looks poised to break out. On a near 50 per cent discount to book value, there is considerable upside to my 320p target price. Buy.

[harrogate] 02/6/2020 16:00

There is a very detailed note on the various provisions on this sort of stuff in the notes to the accounts. It is true they have lots of stuff that is difficult to get your head round ! The key fir me is that the dividend will increase to 20p declared in FY 21 although not paid until November 21. That will move the price I would think so I sitting right even though under water here. And of course Mills on the share register is always an added bonus

[muckshifter] 02/6/2020 14:55

Interesting update today, but the implications are extremely complicated I feel. Although HSL are going to make the provisions (ie. take the relevant losses) mentioned in the update, and possibly others as a consequence of ceasing coal operations, in this year's accounts, the cash implications are much more difficult to define - if I was a shareholder I would want to ask some questions at the AGM to get a feel for the cash outcome.

I would think that there has to be a cash outflow on reinstatement of opencast of the order of 6 - 7 million at least, which might be offset by plant sales to an unknown extent, over the next couple of years. Closure of the whole coal mining operation is likely to exacerbate this cost, unless Hargreaves find another mining operation to transfer men and machines to, ie. the normal incentive of a follow up job is missing.

The other thing that may have an effect is the terms of any equipment leases, ie. early lease termination provisions.

But this is all par for the course with Hargreaves and makes them a very difficult company to value with any confidence, imo.

[castleford tiger] 15/5/2020 06:50

had a few top ups just over the 200 mark
tiger

[hiraniha] 19/3/2020 17:20

The Company is this month's Simon Thompson Alpha Report tip in the Investors Chronicle.

Judging by the report, it looks like it was written before the market meltdown in February.

[cc2014] 25/2/2020 12:08

I have closed my position at 290p. I've made about 2% over 5 years plus the dividend stream.

So, not great. Could have better and for a long time was alot worse.

The issue with this company is there are lots of opportunities but also lots of risks. 6 months ago I felt they were definitely on the up but lately I've begun to worry about the return on investment on the new carbon pulverisation plant in Germany and about steel being made from hydrogen as a power source meaning coal won't be requried in the long term, so the timing of a new pulverisation plant seems poor.

Then there's the falling price of renewables.

On the upside we need lots of houses.

The MM were happy to take 13944 shares of me yeserday. I kept 1000 for some sort of sentimental reason but overnight I decided to get rid of these as well. It seems that 1000 was enough to collapse the bid. I guess I got lucky.

I have no idea where the share price is going next so I'll find a better trade. Good luck to those still holding.

[cc2014] 03/2/2020 12:15

The trade pattern after the results continues the same as before with some decent sized lumps going through which I assume continue to come from one party.

The challenge appears to be that if I look back over the RNS's there are a number of parties top slicing as the share price moves up.

The buyer seems patient enough but presumably now happy to pay 323.2. I wonder how long it will be before they push the price up again? They don't seem in a hurry so maybe a couple of days.

[harrogate] 29/1/2020 09:17

Someone might even buy a share!

[meijiman] 29/1/2020 09:16

Hope so! Yes agree with your synopsis...

[cc2014] 29/1/2020 08:57

Finally a decent set of results with no new problems. The market seems confortable enough with them this morning.

Looking forward to the trip back to 800p ;-)

[meijiman] 28/1/2020 12:51

Can't get over some of the disastrous decisions that have been made here. Chucking shareholder funds down the pan. Were they once near 800p?

[cc2014] 28/1/2020 12:26

Kind of agree. Well don't disagree. With money de-risking HSP would be a good place to put it, but for the last x years I've been used to HSP falling on bad days on FTSE so difficult to change my mindset.

Another 100k gone through at 300p and bid up to 302p with MM running away on L2.

Someone is definitely searching out volume for whatever reason.

Which is rather nice as HSP has been a rather difficult trade for me.

Still holding two thirds of my shares from the very bottom at 160p but regrettably the rest I paid just over 400p for. One day Rodders.

[meijiman] 27/1/2020 14:23

Not sure ....HSP seen as defensive and not linked to China or anything.

[cc2014] 27/1/2020 13:50

Hmm. If HSP share price is going up on a day when FTSE is down 170pts I'm minded to believe someone has a good idea what's in the results.

[cc2014] 23/1/2020 10:35

Some decent sized trades going through at 300p. No doubt matched by a MM for a commission.

So, has the buyer now bought everything they wanted before the update next week or is the seller at 300p now exhausted? Or have both of them called it a draw for now and will return for more trades later?

edit: 13:40. Another 150k trade gone through at 300p. If we are lucky we may get an RNS later.

[cc2014] 16/1/2020 09:17

bid 290p yesterday, 294p today. Feels like an algo is looking for volume and pushing up the price when unuccessful.

Fingers crossed. It would be good to see the share price beginning with a 3

[harrogate] 10/1/2020 14:24

They have already said results will be in line with expectations. For me this is all about waiting for the 20p dividend to kick in as per earlier announcements. That surely will push this towards £4 at least regardless of any upside from consensus EPS.

[cc2014] 10/1/2020 11:51

Maybe I'm being optimistic but a few buyers coming in as we head towards the results at the end of the month suggesting to me that someone knows something.

[castleford tiger] 10/12/2019 12:09

yes looks a good fit
tiger