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The announcement of a new Chair may also have contributed to today's slight price drop. Only it's not really a drop, it's just a correction of yesterday's anomalous rise.
Laughton - The TU matched consensus forecast. Full year results are also expected to be in line. Whilst good, this was kinda known already, so priced in. I imagine yesterday's price hike was down to some expecting the update to EXCEED expectations. Which unfortunately they didn't. So we're basically back to trading in the range we've been at for the last few months.
Oh well, I called that one wrong but Trading Update today looks really positive so I've taken the opportunity to top up at lower price than available yesterday.
That's probably as good a signal as you will get that the SP is set to go lower still ;-)
Up 19p today!
And they claim that no-one who knows in advance what's going to be in Trading Updates can buy the shares :-)
Sub 450 is my target to buy more too
Within the next couple of weeks, we should hear how H&T’s been faring recently. I’m not expecting any major surprises, but the share price reaction is harder to call. It’s already risen a bit in anticipation of good times ahead. I sold a small portion of my holding at 503p, intending to buy back if the price fell below 450p. It hasn’t yet & I’m undecided whether to buy back now or hold fire & await the update. I’ll probably wait & see, which may mean I miss the opportunity to buy back lower. But I’ll still have a decent amount here and can’t help thinking current stock market buoyancy may not last, so am happy to hold slightly more in cash.
Laughton - haven't seen that anywhere, but it doesn't surprise me if they have. The vast majority of brokers & analysts make Liz Truss look like she knows exactly what he's doing.
So Shore Capital (House Broker) reiterates it's recommendation - with a target price of 322p.
Lazy!
BILLBURSIO - fair enough. We all want different things from our investments and will have a different take on them accordingly. I agree P/Es can be a useful guide. But they're largely backward-looking, as any forward P/Es are based on future profit estimates. Whilst I fully expect HAT's P/E to drop significantly over the next 12 months, you perhaps do not. 2020 was really BEFORE HAT started showing its full potential in a slowing economy. So of course the metrics looked better then, as many investors either hadn't spotted where it was heading or didn't believe it would get there. Plus we were in lockdowns for a chunk of that time, when all bets were off. I was lucky enough to anticipate correctly with this share (it doesn't happen often!), buying throughout the FCA investigation period at around £3, again at £2.50 & again just below £2. HAT's been paying me a decent yield ever since, as well as generating a strong capital return to date (though this can really only be judged when I come to sell). Personally, I think this share's got another year or so's growth in it and will temporarily re-rate above £5 at some point during that time. But that's just my hunch and I could well be wrong. As your 2020/22 buy/sale demonstrates, timing is everything with HAT. This is not a share to tuck away & forget. The difference between making 20%-30% and >100% is vast in anyone's language. DA_MATSER - Yes the dilution will have a dividend impact. But that potentially ignores what HAT does with the extra money raised. If it increases its pledge book & store estate prudently using the proceeds, this should lead to higher sales & profits. Which in turn should a) boost the share price and b) allow it to increase dividends further. The spread on this share can be wide, but it also fluctuates. So again, timing can make a significant difference. And as the 3 year figures on the chart link below show, by buying in Oct 20 and selling mid-Sept 22, you’d have made around 114% excluding dividends. Even with a 3% spread, that's a great return! hTTps://www.hl.co.uk/shares/shares-search-results/h/h-and-t-group-ord-gbp0.05
@lord I bought and sold roughly then but didn't get anywhere near that return because of the awful spread! And that 10% dilution will certainly "devour divvies"
@Bill I agree with you. The metrics were far superior in 2020 and was it trading below NCAV. Way too late to be buying or holding this counter-cyclical and the falling price of gold is another nail.
I did enjoy holding this though.
lordloadsoflolly - Very true, I should have hung on. But I'm unhappy with a P/E of over 15 for small firms and want a ROE better than currently available with HAT (not hard to find). However, I notice that the CEO draws a salary that consumes about 10% of FY21 net profit. Now that's what I call a good return. Many thanks for your robust challenge. I don't get out much and it's quite possible that I'm too bearish about everything. If you don't think the tide is going out, that's fine, but I can't see anything other than the danger of too much momentum. On most metrics, it looked a better company in 2020 than it does today.
BillBursio - a rising share price doesn’t “devour divvies”, it simply reduces the yield for new buyers. What’s more, HAT has already increased its dividend in line with higher sales & profits and has implied this will continue assuming it continues to grow. So all a bit of a red herring. You were unlucky not to make a lot more than 20% buying in 2020 and selling in 2022. Had you bought in Oct 20 and sold mid-Sept 22, you’d have made 114% excluding dividends.
I'm sorry if my earlier post sounded harsh. It was not my intention to offend or enflame. However, I am sincere in my belief that the share is underweight. My not entirely random figure of 320p was based on the 200 week MA, and a number of others things. By "poor quality earnings", I was referring to the ROCE, ROE and ROA, all of which have declined a bit since 2020. I also don't like its Debtor’s Turnover Ratio compared to others. As for being an AIM share, I note only that over 90% of its shares are already on the market, just like a grown-up, main market company. I bought a small number back in April 2020, in anticipation of the recession, kept them through some bad times and sold them in May this year , a gain of about 20%. It seemed a long wait. So, I was surprised to see it go as high as it has recently, devouring the already slim divvies on the way, but now look what happens; the company cashes in on the elevated share price.
I've got nothing against HAT, it's on my watch list and I'd buy it again if the price were right. I'm just not sure it is.
I hate these primary Bid offers - specially the ones that only last a few hours - it's a matter of luck whether or not shareholders find out about them. Also this said it is available via PB's partner brokers etc., of which one is ii according to their website, but there was nothing on the ii site.
Nope. Very positive trading update but SP could go lower over the next day or so.
I hold a fair few of these but do I want to own even more? They don't want people to have any time to consider so, probably not at the moment.
Not much of a discount?
hardboy - I didn't arrive at 320p! It was BillBursio who threw this random figure out there last Friday. I simply tried to offer valid reasons to discredit it.
I agree with my Noble Lord. But I wonder how you arrived at 320 being a fair price. Consistently profitable companies are always expected to be valued considerably above their net asset value, HAT's NAV is 348. At the interims their EPS was 13.1. If we double that for the full year (which is probably conservative) to 26.2. What do regard as a reasonably PE? 15? That would suggest a share price of 393. And business is booming: at the half year stage profits were up over 20%. Growth like that usually commands a higher PE.
And I wonder what the reference to being an AIM share means. AIM shares may often be more "dodgy" but HAT have been in business over 100 years.
Oh and good luck BillBursio in getting in below 320p any time soon.
BillBursio - your post sounds either highly ill-informed or deliberately mischievous to me. HAT does NOT have poor quality of earnings. Take a look at its financials over the past 5 years, then explain to us all what exactly's poor quality about them. Net debt has indeed gone up, partly due to a recent acquisition which will be earnings enhancing from year 1. The dividend is already increasing and is likely to continue doing so, this financial year & next. At around 3%, I wouldn't call it unexciting. Sure there are racier yields around, but with a higher yield comes the greater risk of a divi cut. HAT has also delivered significant capital growth this past year, which higher yielding shares rarely do (often quite the opposite in fact). Apart from all that, I totally agree with you.
Hadn't you heard, Bank of England says we're now in a recession. Perfect conditions for firm such as H&T.
The share price is above all rational expectations, given poor quality of earnings, rising debt and unexciting divvy. A fair price for this AIM share is in the region of 320p (on a good day).
Ramsdens' financials look nothing like as sound as HAT's to me. Their respective market caps are irrelevant IMHO. What matters is scale in this business. And here, RFXR very much plays second fiddle to HAT, with around a third its turnover (hence the market cap difference). That's not to say you won't make money investing in RFXR. Pawnbroking's certainly a good sector to be in right now. And - if anything - of the two companies, Ramsdens has delivered greater returns in recent years. But to me, HAT looks a much more stable business which has grown well thanks to good management & smart acquisitions. Plus its yield is currently much higher.
Ramsdens are tipped today by the Investors Chronicle with a price target of 250p. H&T are also mentioned in the article. Ramsdens shops are mainly located in the North while H&T are mainly located in the south. The market capitalisation of H&T is about three times that of Ramsdens.