Hml Share Discussion Threads

[rivaldo] 08/4/2019 07:18

Another small acquisition announced today. With the founder leaving the acquiree's profitability will presumably increase nicely, but there's no way of telling given no figures have been released.

I think Finncap need to have "sought" out a decent RNS editor/spellchecker....

[rivaldo] 08/3/2019 09:17

Thanks for setting up the new thread igoe104.

Good to see another small earnings-enhancing acquisition whilst I was on hols.

Next month's year end trading update will hopefully confirm results at least and possibly better than forecasts at 4.3p EPS with a 0.5p dividend, especially given 2.2p EPS in H1.

Forecasts for what will then be the current year to March '20 could then be say 4.7p EPS upwards following the two recent acquisitions and with just a little organic growth.

At that point we could easily see a nice bounce with a little buying interest up to say 45p-50p - or more, especially if the market agrees with HMLH about the regulatory/statutory changes which they say are benefiting them.

[outsizeclothes.com] 22/2/2019 15:54

Although an interesting read, the Master Investor article bases it's case on HML continuing to buy to expand. We know that that hasn't led to value creation in the past 10 years. (ie £17m+ acquisitions total now = £15m company valuation)
So why should it be different in such a compelling way as to justify his 50p price target going forward ?
I'd much prefer to see them generate free cash flow organically and give decent divvys.

[paleje] 22/2/2019 15:30

The article from MasterInvestors you found was interesting too, I've pasted it below, handy for anyone new looking in.

hxxps://masterinvestor.co.uk/equities/hml-holdings-undervalued-with-at-least-50-upside-potential/

[paleje] 22/2/2019 15:25

That's better igoe thanks.

[igoe104] 22/2/2019 08:23

Started a new thread, with all charts, gents.

[igoe104] 22/2/2019 08:21

Web- site

Growth opportunities.

HML is now expecting new legislation for estate agents and lettings management, due in April this year, will see many companies be offered to them by owners who do not want the hassle of complying with the additional regulatory restrictions. However, to HML they see this being a big opportunity for further expansion.

Finn cap upgrade.


The results were slightly ahead of expectations in virtually all respects. The business model continues to deliver consistent growth and cash generation and the group remains well positioned to benefit from any further tightening of industry legislation. We have raised our target price by 8% to 57p, implying potential share price upside of 68%

[davidosh] 21/2/2019 11:35

Is it possible to add the three charts to this page so we can see how they are doing ?

[igoe104] 20/2/2019 12:05

Interesting.....


* HML is now expecting new legislation for estate agents and lettings management, due in April this year, will see many companies be offered to them by owners who do not want the hassle of complying with the additional regulatory restrictions. However, to HML they see this being a big opportunity for further expansion.

[igoe104] 20/2/2019 11:46

Property management specialist HML Holdings is seriously undervalued at up to 50p per share, argues Mark Watson-Mitchell.


hxxps://masterinvestor.co.uk/equities/hml-holdings-undervalued-with-at-least-50-upside-potential/



he Richmond, Surrey based HML Holdings (LON:HMLH) is one of the largest providers of property management, insurance and ancillary services to residential property blocks in the UK. It has had an excellent record of organic growth over the last few years and is now expanding through sensible acquisitions around the UK.
The late November 2018 £496,000 takeover for cash of the block management business of Dauntons Soar Management, a sister company to the Belgravia estate agents Dauntons Soar, brought in another 600 units in 110 blocks in the SW1 area, as well as a very useful incursion into the central London marketplace. A strategically important acquisition.
With over 20 offices across the country HML is now expecting new legislation for estate agents and lettings management, due in April this year, will see many companies be offered to them by owners who do not want the hassle of complying with the additional regulatory restrictions. However, to HML they see this being a big opportunity for further expansion.
HML was originally set up by LTC Holdings plc in 1991 to manage their property portfolio. In 2001 the management embarked upon an expansion programme and has since grown significantly, both organically and through acquisition. It was demerged from the LTCH group in June 2006 and came to the AIM market later that month.
Its acquisitions have been structured geographically, allowing it to create local property management hubs throughout London and the south of England. More recently, before the Dauntons purchase, the company has branched out in the North West of England by acquiring businesses in Cheshire, Greater Manchester and Eastbourne in addition to acquisitions in Bristol, Cheltenham and Bath.
The Group focuses on providing the best possible property management services, together with the provision of professional and tailored services. It offers: Residential Property Management; Lettings; Concierge Services; Company Secretarial; Health and Safety; Building Surveying; Insurance; and House Builders and Development Management Strategies.

On the face of it that is a lot of services to offer for an as yet small group, but a determined efficiency programme is ongoing to streamline its systems, especially as it expands. It is consolidating into one back office operation in West Croydon, whilst growing its cross-selling opportunities intragroup. It is now developing its Regional Director structure and expects to gain efficiencies from consolidating the group’s databases.
It also anticipates further establishing its lettings division and it will focus on specific new build structures in gaining additional business. It had just 19,000 units under management when it came to the market in 2006 – it now has over 76,000 properties supervised.
The end September 2018 Interim figures are a good indication of the balance of the revenue earned from each of its services. Out of a first half total of £13.56m (which were up 7% on the 2017 half timers) they showed the following: Block Management fees brought in 49.4% of the total; Company Secretarial 4.5%; Lettings fees 3.2%; Insurance Brokerage 10.5%; Surveying fees 4.7%; Pre-contract enquiries and consents 5.1%; Accountancy and Administration fees 3.1%; Concierge Management 10.7%; and other fees and charges 8.6%.



I consider that to be a good spread of services on offer and a well-balanced contribution to the Group’s earnings.
Over the last six years the steady management of this group has shown through with a progressive growth from £12.8m revenue to end March 2013 up to £26m in 2018, with pre-tax profits increasing from £0.76m to £2.2m last year. Despite a somewhat difficult property market in the last year or so the company, which is cash generative (£1.56m in the first half), saw a reduction from £1.47m to just £0.96m in net debt.
For the year to end March 2019, even against an uneasy market, brokers finnCap expect revenue to increase to £27.3m, whilst pre-tax £2.3m is estimated, giving earnings of 4.3p per share.
I would rate these shares, currently 32p, as being seriously undervalued. It is obviously a well-managed business that is very capable of steady expansion in a marketplace that is soon to offer more opportunity for growth.
The shares have 50p written all over them and even at that level, as growth continues, they will look cheap.

[bertiebloggs] 20/2/2019 10:51

Graham1TY - take a look at hxxps://masterinvestor.co.uk/

[graham1ty] 20/2/2019 09:21

Has HMLH been tipped somewhere ? Signs of life....

[briangeeee] 19/2/2019 19:33

Perhaps £20m+ in dividends? Most of mine were probably lost in the post.

[graham1ty] 19/2/2019 08:01

Fact of the day. In the last ten years HMLH has made acquisitions at a total cost of £17.6m*.

The current market cap is £14m.

Value destroyed.

*That is the total consideration announced, including deferred in total. The total initial consideration is £13.2m and in most cases the deferred consideration has been paid in full, thought this is not separately confirmed

[graham1ty] 19/2/2019 07:55

One thing that is worth noting is that this acquisition is on less than 1x revenue. The initial consideration is way less than HMLH usually pay, and even with the deferred in full, it is only just over 1x

I do always question their “immediately earnings enhancing” claim. If you take the Faraday acquisition for example, it was claimed in the acquisition RNS to have normalised profits of £0.4m. Yet, in the first full year on ownership ( year to March 2018) reported group operating profit rose just £180,000. Did that mean HMLH destroyed the profitabilityof Faraday in its first year of ownership ? Or that it remained profitable and other group businesses went backwards ?

[graham1ty] 19/2/2019 07:48

Another acquisition soaking up free cash flow with the continued obsession with expansion and greater numbers. The problem is that this does NOT lead to marginal improvements in profitability. Margins at the gross level, and operating level have been in decline for five years. There is no history of easy integration and economies of scale.

It looks to an outsider as if HMLH ended up as whole ragbag of acquisitions, in different premises, on different systems. The original idea was to allow autonomy so that each business continued its name, its staff, its niche.

That has not worked, and after nearly ten years of acquisitions, for the first time they seem to be trying to integrate, share back office functions in Croydon, get everyone on the same systems. And this continues with the last RNS referring to major operational changes and in 2H moving everyone onto the same database platform. What could possibly go wrong ?

I am sure this is not the story that Mills bought into. How long will his patience last ?

[davidosh] 12/2/2019 14:10

With so many investors clearly giving up on HML ever delivering what is needed here ?

1. Action from Chris Mills ?

2. New management ?

3. A change in strategy ?

4. A bid from a competitor or larger property group ?

5. Concentrate on organic growth and pay a fabulous dividend instead ?

Which would bring you back or attract new investors ? As a large holder getting more and more stale by the day I just wonder ....

[cockerhoop] 17/1/2019 08:34

I'd suggest that's a positive sign - quiet BB and all that.

It certainly didn't outperform when everyone was tipping it ;-)

[graham1ty] 17/1/2019 08:13

Shows how out of favour HMLH is. In the U.K. Stock Challenge, one of the largest competitions for stock picking, 412 people entered, each choosing five stocks that will do well this year. So, 2060 stock entries.

HMLH got one nomination.

In a sample of 412 investors, only one put it in their top five. Rubbish

[stemis] 03/12/2018 10:27

I sold my holding about six month ago

[cockerhoop] 03/12/2018 09:18

Personally think it's healthy to have a 2 way debate on the merits of any share. I have been a holder of HML buying a opening position in Nov 2014 before realising it wasn't for me and eventually selling in late 2016. Pretty sure I was posting doubts well before I sold.

A change of management or strategy could make the company attractive again - the model should be a successful one. Christopher Mills may agitate for change. Who knows but it does no-one any favours to only have positive voices on a board so long as it's carried out in a respectful and factual way imo.

[graham1ty] 03/12/2018 09:03

Lomax, because Rob’s original promise was £20m revenue and 20% margin ( see my note on Stocko from Sept 2014).

Instead we have net margin of 8.3% !!!

[lomax99] 03/12/2018 08:43

Not being mischievous, had considered an investment here several years ago. Some good posts on here dissecting continued underperformance. It seems to be the same posters complaining about them overpaying for acquisitions, their inability to create any value/capture any economies of scale, etc - genuine question - just wondering why you bother to stick around?

[graham1ty] 03/12/2018 07:32

And look at revenue and profit. Five years ago ( 1H 2013/14) they reported £7.2m revenue and £546,000 profit from operations. These interims show revenue of £13.6m , an increase of £6.4m revenue, or 88%.

However,the interims last week show profit from operations of £782,000 an increase of just 43% in five years. Put another way, only £236,000 of operating profit has been added from increased revenue of £6.4m a conversion rate of just 3.6%.

That five year period contains most of the big acquisitions, about £13m gross. Which would imply a notional conversion rate of c2%.

Oh yes, and eps ? Statutory eps in November 2013 ......1.2p
Statutory eps in November 2018.........................1.3p

[graham1ty] 03/12/2018 07:22

David, you say “pay out of £9m”. Well, I reckon that they they have now paid c£16m for acquisitions since 2010. It is not possible to see how much deferred consideration has been paid throughout the period, but it seems to run at about 75% of that due. Cash consideration paid has been c£12.5m with gross consideration paid ( if deferred paid in full) is just shy of £17m now. So, a guess of £16m actual paid is about right.

At 28p bid, the total company is now worth c£12m........