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Article from Master Investor on H&T today. I'm a bit more reassured after reading this. Amy even add a small amount before the finals.
"H&T Group (LON:HAT) – £11.3m Cash Buy And Additional Funding
My long-term favourite pawnbroking group yesterday announced £25m of additional financing from Pricoa Private Capital, to be used to support the future growth of the business.
The UK’s largest pawnbroking operation also made an £11.3m cash acquisition of Maxcroft, the Gants Hill, Ilford-based pawnbroker.
It has a £6.1m pledge book, with an average loan of £4,063, almost ten times larger than that of H&T’s £423 average loan.
CEO Chris Gillespie, H&T chief executive said:
“We are very pleased to be able to announce these two transactions, both of which underline the Group’s focus on growing and broadening its core pawnbroking business and investment in the store estate.
We are also delighted to have further diversified and enhanced the Group’s funding arrangements through the relationship with Pricoa.
We look forward to updating the market further on the 12th March, when we announce our results for the year ended 31st December 2023.”
Analyst Gary Greenwood at Shore Capital Markets considers the Maxcroft deal to be moderately earnings accretive.
His estimates for the year to end-December last, are for adjusted pre-tax profits to have risen to £26.6m (£19.0m), with earnings of 48.4p (37.2p) easily covering a dividend of 17.0p (15.0p) per share.
For the current year underway he goes for £33.5m profits, 57.4p earnings and a 19.0p dividend per share.
I still rate very highly the prospects for this £165m-capitalised business – as far as I can see its shares, which touched 389p yesterday, are a real bargain at last night’s closing price of just 370p.
Having broken through my 500p Target Price in late October last year, before easing back significantly, I now feel that the shares are ready for another upward climb.
(Profile 06.07.22 @ 332.5p set a Target Price of 400p*)
(Profile 30.01.23 @ 429p set a Target Price of 500p*) "
Hardboy - I wouldn't pay too much attention to Gary Greenwood (or any other analyst come to that).
In Feb 2023, he was predicting for FY 2023: "£32.6m profits, 57.9p earnings and a 23.0p per share dividend".
Now it's "£26.6m, with earnings of 48.4p and a dividend of 17.0p per share".
Most nomads & house brokers simply blow with the wind & are no better at foreseeing bumps along the road than you or I.
In fact they're probably worse, because as paid advisers they're prone to positive bias. And when events change, they just change their mind.
You're far better off going with your own research & gut instinct IMHO. And my instinct - fast-forwarding 12 months - is that today's price level will look like a pretty decent time to have bought in/added. I base that largely on fundamentals as well as the duration & scale of past H&T share price corrections.
Fast-forwarding 12 months - is that today's price level will look like a pretty decent time to have bought in/added.
You mean sold surely. There's an election coming up between now and next year. In fact you told everyone that you would be 'well out' by then when ramping on another bb.
The Truth, the Truth and nothing 'like' the truth.
Garbage
I'm not sure an election will have much effect on H&T's performance. The economy will still be in a mess, people will still be struggling with their finances. Ideal situation for Pawnbrokers to flourish.
Yes of course Hardboy, I get that, but a Labour government, and I can't see any other outcome personally, carries the additional threat of legislation that's likely to the detriment of this sort of business.
Obviously not going to happen overnight but it will change the colour of the landscape when risk factoring and valuating imho.
Election is likely to be a way off for now. Late Summer/Autumn ? Plenty of time still but worth bearing in mind.
GL
Hardboy - I'd be wary about engaging with TopCatz if I were you.
I can only guess from your reply roughly what he posted, as I have him on filter. But he & I have never seen eye to eye on another share, where he predicted great things, whilst the share price of the company in question (TEK) continued to plummet. And so far, it's regained only a small fraction of the losses compared to the price level he kept tipping it at.
Since then, he's tracked me down on various other boards, posting similar nonsense, which is why I eventually decided to filter him.
Given your reply, he seems to be suggesting a Labour government would do for H&T's prospects. If so, I'd simply respond with the following:
a) an election is probably still the best part of a year away
b) Assuming Labour gets in, don't you think they might have slightly bigger fish to fry in their first term, rather than going after pawnbrokers? Quite apart from anything else, they'd risk being accused of attacking a regulated industry that's serving a recognised consumer need & is generally highly regarded by the very people using its services (check out H&T's Trustpilot reviews). Such actions could easily lead to them being accused of inadvertently encouraging the re-emergence of more unregulated loan sharks.
Anyhow, up to you, but I personally wouldn't keep engaging with TopCatz. No doubt he'll respond to this post too, despite knowing I no longer read any of his comments (even though he seems to think I still waste time on them).
Nothing pompous in that diatribe
He says beware....so do I...... and don't forget the most golden of all the rules
DYOR & stay focused folks
Thank you both for your replies.
As always I will DMOR & draw my own conclusions.
What I do think, though for H&T is their results in a couple of weeks will likely trigger a big move - possibly greater than the results merit. Watching with interest.
Hardboy - you're welcome! Not sure whether you're anticipating a big move up or down?
Personally, I'd only be expecting a big move if there's further bad news (i.e. an extension of retail softness into January & February). They said January had got off to a strong start, so this seems a little unlikely. But December's downturn also came out of the blue (to them), so you never know.
Assuming everything's panning out as highlighted in 23rd January's RNS, I suspect any SP reaction would be fairly muted. But H&T's certainly been harder to call since November, so anything's possible.....
I'm personally betting that the bad news is out of the way now. Sellers who wanted out are out.
Also, The PE is c6 - was thinking that PE firms might sniff around at these prices. HAT is in a market dominant position,. After all PE = 6 means that in 6 years time, they have paid off their investment.
Additionally, I reckon that a few funds may buy more at these prices.
Scoobydoo321 - It's certainly on a VERY undemanding P/E for a company that's consistently profitable, with a progressive dividend policy - and a decent yield.
That said, market sentiment for this sector has definitely deteriorated in recent months (check out RFX too). So even at the current SP level, I guess things could get a bit worse before they get better. But I'm not too worried about holding at this level.
I had hoped to recoup my entire outlay this month, in return for selling 75% of the shares I bought in January at 319p (day of TU). But they've not hit my limit sell price yet. H&T's recent acquisition RNS did little to help! So it looks like I'll just have to be slightly more patient, consoling myself with a higher than anticipated dividend payout in the meantime.
I bought this because I think a recession is coming
I am beginning to wonder
Is my logic wrong
If retail sales fall, this falls too ?? That appears to be the case recently ??
We've already just experienced a recession. Whether or not this technically continues into Q1 2024 is largely irrelevant IMHO.
The UK economy's hardly going to grow at all this year, people will still be experiencing price pressures & pawnbrokers are likely to benefit overall from this (even if their retail sales remain soft).