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02/6/2015
11:55 | sharesoc: We are holding one of our popular Investor Masterclasses in Manchester so local investors and shareholders in JHD may be interested in attending as JHD is based nearby our venue... hTTp://www.sharesoc.org/manchester-masterclass.html
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16/4/2015
22:55 | wad collector: Just noticed it was tipped by Questor a fortnight ago....
James Halstead
330p-4.25p
Questor says BUY
JAMES Halstead [LON:JHD], the manufacturer of floor coverings, may not operate in the most exciting sector, but record profits, strong cash generation and a 40-year track record of rising dividends make the shares well worth a closer look.
The Manchester-based manufacturer has a 100-year history of production and has become one of the world leaders in vinyl flooring. Vinyl may sound very Seventies, but Halstead has invested in creating technically advanced flooring that is both low-cost and hard-wearing. These attributes mean it is demanded the world over by hospitals and schools. The company has been publicly quoted on Aim since 1948.
Halstead has an attractive business for several reasons. It is difficult for new companies to start up and compete because of the high cost of all the machinery required to produce its kind of flooring. The company’s manufacturing process also has years of technical expertise under its belt, which lowers cost and is difficult to copy.
Its global reach has reduced any reliance on one particular market and has helped spread any commercial risks. Halstead generates about 35pc of sales in the UK, 43pc from Europe, 15pc in the Far East, and 7pc from the rest of the world. The company is also helped by sales of flooring also having a certain degree of predictability. Gordon Oliver, finance director, said that about 80pc of business was refurbishment of buildings such as offices, shops and restaurants, with the balance going to new infrastructure projects such as hospitals and schools. Sales are, therefore, not dependent on big building programmes.
Halstead’s 10-year track record is also impressive; it has more than doubled revenue while pre-tax profits tripled.
Yesterday the company was confident as it released a record set of results. It said pre-tax profits for the six-month period to the end of December were up 5.3pc to £21.4m and revenue was 5.7pc higher at £117m, when compared with the same period a year earlier.
The strength of the pound has made exporting difficult, but the company is not making excuses. Geoffrey Halstead, the chairman, quoted Churchill in defiance alongside the results, saying: “Kites rise highest against the wind, not with it.” The Halstead family still retains a combined 40pc stake in the company.
Having weathered the strong sterling currency storm, the company should get help in the second half of the year from falling raw material prices. Halstead said the profit margins improved by 1pc during the first half as raw materials which, being plastics-based are partly linked to oil prices, fell by up to 6pc. That leaves market expectations for full-year pre-tax profits of £44m, giving earnings per share of about 16p, looking perfectly achievable.
Halstead also looks in good condition from a balance sheet perspective. The shares are backed by net assets of £96.6m, or about 47p per share, and there was £46.7m in net cash at the end of December. That cash level was 21pc higher than the same period a year earlier. The amount of cash generated in the six-month period rose to £28.3m, from £20.3m a year earlier. The cash covers the dividend payments more than twice and the interim dividend rose by 4.7pc, to 3.1p, ex-dividend on May 6 and payable June 5. The full-year dividend is forecast to rise by 10pc, to 11p, giving a prospective yield of 3.4pc.
The only issue is that the shares are looking expensive as they are near record highs, and trading on 20 times forecast earnings per share, which is a high rating given the single digit earnings growth. That said, the premium to the wider market looks justified, with Halstead’s track record of profits and return of cash to shareholders.
Questor is always wary about paying a high price for shares, and some investors may prefer to wait, but given the underlying quality they are a buy for the long-term.
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31/1/2013
15:20 | lundhousegreen: JHD flat'ish on the day, at 3-20pm. (298 / 305p). Investors now read the announcement thoroughly and properly?
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14/12/2012
16:23 | lundhousegreen: I think some shareholders who sold read too much into the chairman's statement.
The brokers have not changed their position, and some investors have been nicely mopping up JHD shares. (Nice one "wad collector" at 554p).
LHG
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16/10/2012
21:16 | westcountryboy: Hi Saint or Sinner
You may not see this retracing but on my calculation the PE ratio just after the results in each of the last five years has been: 2008 10, 2009 12, 2010 15, 2011 18, 2012 22. It just is not going to go on increasing at the same rate. All sorts of homely wisdom comes to mind, such as Buffett's 'you pay a high price for a cheery consensus'. All it needs is one slip and that premium PE ratio will disappear. You may think it's ultra-safe, but in my view it is rather high-risk. So, after nipping in and out quite a bit over the last eighteen months, I am now out altogether. But then I am a value rather than a growth investor. Good luck! It takes two to make a market.
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31/1/2012
13:31 | dashton42: Investors Chronicle reiterates its "Tip Of The Year" JHD buy recommendation today
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06/1/2012
07:21 | dashton42: JHD one of the Tips of the Year in today's Investors Chronicle...
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18/11/2011
12:07 | bda3490: Investors Chronicle today
JHD plans to buy back 2.5% of its shares....Effectively this is a bonus dividend....
BUY
I shall partake of the tender and revise my guess to 55%, and there is no chance of a special in my mind.
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10/10/2011
17:16 | bda3490: I like what Motley Fool said - a 35 year dividend machine. Or Investors Champion comment "forget commodities invest in Flooring". The Teesside plant is up and crawling wait till that gets swinging.
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27/5/2011
14:51 | zeppo: Cineworld gave us excellent coffee, tea or fruit juices etc and high quality biscuits.
I seriously expected mini-popcorn portions in ice-cream tubs.
Perhaps next year.
I am nervous of adding JHD.
It is a tremendous company but it is my second biggest holding after DVW.
lundhousegreen seems to have masses of these and he does add.
He is a wiser investor than myself having kept his stake in Youngs.
I try to diversify now and have added Greggs, Morrisons and Treatt on recommendation.
QQ. is such a disappointment. It rose 6p at first yesterday morning then fell back and is down a little further so far today. Sticking with it for now.
z
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PLUS1
