Member Info for lordloadsoflolly

Lambo222 - make your mind up. First it’s end Feb for cash to run dry, now end Q1.

First, IMM’s on a downward financial death spiral. Now it’s on the cusp of something huge.

Anyone would think you’d added already with this sudden subtle (not) change of tone.

Hardboy - I’ve toyed with doing exactly the same on the additional shares I bought yesterday @ 319p.

I’m holding out for just a bit more price recovery though. And if it doesn’t come, at least June’s dividend payment will be that bit meatier!

Cm22 - from past experience, even when Cliff DOES speak, he rarely tells us anything we didn't already know.

His "TEK for Dummies" interviews tend to be very basic & largely directed at novice/new investors. Probably because he knows he's lost the room with existing ones.

The current business model here appears to be consistently selling off the family silver to pay for the next cunning investment plan. Then float said cunning investment, watch its share price fall dramatically post-IPO (without having reduced TEK's exposure to it when the going was good at its frothy flotation price), run out of money. Sell off more family silver. Rinse & repeat.

PS: before TopCatz counters with jibes about my H&T holding (which I won't see anyway, as he's filtered), I'd just like to point out I remain well up on my investment there, having added significantly yesterday at a price well below its current level. Unlike my TEK holding, which feels like death by a thousand cuts right now.

Though I generally think brokers blow with the wind, H&T's house broker makes some interesting points below. Well worth a read. My key takeaways are:

1) Growth over the next couple of years, whilst strong, will be slower than earlier forecasts. Largely due to softening retail sales (+ changes to mix) & increased costs - notably salaries. April 24's National Living Wage increase is likely to have a knock-on effect on higher paid staff too, to preserve the differential based on their experience & responsibilities. Of course, H&T may adjust their prices or negotiate even harder with their suppliers to offset some or all of this. But the former might have to be exercised with caution, assuming continued weakness in the economy.

2) Dividends will increase less rapidly. Hardman are "only" forecasting 16.75p FY 2023. This looks slightly low to me, given the 6.5p August 2023 dividend already paid. A final divi of 10.25p would only be marginally above last year's 10p. But management may well have guided them on this, so let's see when they declare it on 5th March.

3) Current share price valuationranging from 406p to 630p, with a weighted average of 503p. Despite the "science" used to back them up, I never pay too much attention to these, especially when issued by a paid-for house broker.

https://hardmanandco.com/wp-content/uploads/2024/01/240123-Hardman-HT-Group-HAT-Growing-pawnbroking-core-will-drive-other-services.pdf

Re: others posters’ concerns about the impact of a weakening premium watch market, this WASN’T the main reason for retail softness in Q4.

As the RNS explains:

“New jewellery items and coins have an average price point of £73, whilst pre-owned jewellery items and coins have a higher average price point of £199, at higher margins. There was a significant trend by customers towards the purchase of new items, which we believe was price related. New items represented 62% of sales by volume in the quarter (Q4 2022: 53%) and 33% of sales by value (Q4 2022: 25%). In particular, sales of new earrings and coins (which attract a lower margin) were buoyant.

Sales of watches both by volume and value, grew in the fourth quarter by 15% year on year, at an average price point of £1,600. Margins are beginning to recover from mid-2023 levels.”

In short, Q4 watch sales were well up (even in value terms), with margins “recovering”.

The issue was with jewellery - notably earrings - & coins, where customers switched from pricier, higher margin pre-owned items to cheaper, lower margin new stock.

As posted previously, prolonged weakness/volatility in the premium watch sector could reduce H&T’s pledge book valuation. But with watches only representing 15% of pledge book, 85% of all pledges being redeemed, pledge valuations now being adjusted to improve their yield & a 65% loan to pledge ratio, this isn’t going to have a hugely material impact IMHO.

Uh-oh - not one of “Master” Investor’s better tips then - short term at least?

And at odds with your own views, by the sound of it.

Think I’ll be sticking to my own research, adding when H&T feels undervalued to me on a medium term basis (as it did this morning).

Despite using limit orders, I've often been a bit sceptical about them for two main reasons:

1) They're easy to set & forget. So if market sentiment suddenly changes dramatically, you risk finding you've inadvertently bought or sold when you wouldn't have done if you'd been assessing things again now.

2) They usually get triggered quite close to your limit price (often some way off the peak fall/rise triggered by an unexpected turn of events)

However, I have to hand it to Halifax Share Dealing. I set a limit buy order for H&T last week with a maximum price of 375p. And it was triggered at 8.05am today at 319p. Google's daily share chart doesn't ever show the price dropping that low, so it must have been the initial knee-jerk reaction to this morning's RNS.

Anyhow, I'm very happy to have been able to add that low. Less happy with the drop in value of my existing H&T holding, but I still think it's a very sound business in the right place right now.

Whilst it may continue to have some negative impact, I don't fully share Uh-oh's concerns about the watch market. Loans secured on watches currently only represent 15% of the pledge book. And 85% of total pledges are redeemed anyway. So assuming loans against watches are redeemed at this same rate, you're talking potential price fluctuation exposure on 15% of 15% of the pledge book. And as londonder7 points out, they employ a 65% loan to value ratio. So I won't lose sleep over this. Though of course, a softening premium watch market - if sustained - could also hit their retail sales further.

Laughton - I agree. Except, had they forecast more conservatively, the share price would have been lower to start with.

That said, it was pretty obvious - well before Christmas - that few retailers were going to have a stellar end to 2023. So more caution might have avoided such an extreme market over-reaction - some of which is already starting to be clawed back.

Bazzaman - I wouldn't have thought Microsalt's IPO timing was in Cliff's hands.

TEK has a stake in Microsalt, but Microsalt has its own Directors who presumably are in charge of running their own business.

Well, that'll teach me to guess when the results would be out.

I expected them this morning, but it wasn't to be. Based on previous years, next most likely time is this Wednesday or the following Monday. If it isn't one of those, I'll eat my H&T!

Someone posting on BELL said "My trading platform sent me a message saying that the Takeover Extension Offer has been extended to 4th March 2024.

I've no idea if this is true. No-one else there has corroborated it and I'd be surprised if BELL wasn't obliged to RNS something like this.

The truth may be boring, but it's still the truth.

I note you haven't provided any compelling counter-argument.

Everyone knows reducing salt intake's good for you.

What's less clear is whether MicroSalt's IPO (if it ever happens) will be good for your wallet.

If Tek actually sells part of its stake shortly after IPO, then possibly.

If it hangs on (as it did with its other public holdings), then almost certainly not.

As for whether MicroSalt ever takes off, I sincerely hope so.

But my hunch is not. Given Tate & Lyle's failed launch of a VERY similar product years ago. And the many cheaper potassium-chloride -containing alternatives out there. Which get overwhelmingly positive online reviews for taste, despite some posters here claiming they're rubbish. Plus they cost a fraction of the price.

I agree MicroSalt has received orders from a couple of big industry players - and that's where the bulk of the market's likely to be. Question is, will they re-order, increasing their volumes? And will other players follow suit? I guess an equally important question is why did Tate & Lyle (with their comparatively huge resources & experience) end up ditching a very similar product?

Interesting how Ramsdens' share price reacted to their YE results.

On 12th Jan, RFX closed around 219p. Results came out on 15th Jan, initially leading to a 10% share price drop to 198p. Since then, it has recovered just over half, currently trading at around 210p.

Their results v. 2022/3 YE were good, but with possibly lower overall growth than H&T? We'll soon find out!

Ramsdens noted a slowdown in trading for the first quarter of their new trading year (Oct - Dec 23), with flat foreign exchange gross profits & currency purchases from returning holiday makers "still subdued". They also referenced flat revenues in their jewellery retail division.

RFX highlights:

TAILWINDS:

Continuing strong gold price

Customer demand for small sum short term loans remains high

Potentially strong forex growth in 2024

HEADWINDS:

£0.4m increase in energy costs from Feb 24 when their current fix ends

(unlike H&T which has locked in at a similar rate to its previous tariff until end 2025)

10% increase in Real Living Wage from May 2024

(will also impact H&T)

Slowing forex income growth during summer 2023

(last August, H&T said "Momentum is building into the peak summer months, supported by the launch of our 'Click and Collect' service in June. In addition, we have broadened the range of currencies held in stock at store level, and available for immediate purchase. Average transaction size remains below historic levels at £398 (H1'2022: £406) evidencing, we believe, careful holiday budgeting by our customers." So they MAY also have experienced a slowdown here, if Click and Collect didn't increase transaction volumes enough to offset any fall in average transaction values).

H&T's share price has softened again over the past few days. Perhaps as a result of the subdued market reaction to RFX's results. I presume H&T's results will be out on Monday 22nd January. Looks like they may need to beat RFX's growth significantly if the share price is to hold up. Regardless of how the market reacts next week, anything below 400p would still be a decent entry point in the long term, IMHO. Particularly given the decent, progressive yield.

Alwaysone - the share price might stabilise slightly. But until there's hard evidence the figures are actually improving, I see no reason why it'll build. It's already given back some of the early gains since this morning's RNS.

Gotrader - Lemos will definitely know her from their GF days as they overlapped. She joined in 2018 & Lemos left in 2022.

Pokerchips - Adastra's potential takeover talk is speculative nonsense in my view.

Not sure either how he can conclude: "The (share) price is slowly tracking north". Unless he's reading the charts upside down.

Adastra - you're certainly putting a lot of effort into talking up IMM all the time. Which can ring alarm bells.

In terms of an "interested bigger player", that argument gets trotted out all the time with Aim-listed companies. Mostly when their share price is beaten up. For good reason.

Don't you think it might just have happened by now if it was ever going to? Unless of course, someone's waiting in the wings, looking for the share price to sink even lower before pouncing. In which case, your other argument that "the underlying picture and assets are being totally overlooked" doesn't really stack up.

Lordmakealot - You ask what others think about your 100% from 3 start ups argument.

Here’s what I think - it’s utter nonsense. For starters, the holding spin-offs each have totally different market caps. And in the case of floated companies, they’re all valued a lot lower now than at IPO. Which is why TEK’s business model is broken. And why their share price is so low.

To answer your other question re: whether today’s RNS would drive TEK’s share price even lower. The answer for now is yes, though of course markets are also generally down today.

Any more questions?

And of course we all believe every word Tim utters.

Walp - agreed. The article MrA linked to suggests that in the UK, some of the big players will absorb any freight price increases for now at least. It specifically refers to M&S in this regard. But the Red Sea conflict will still have some impact, as Next & Tesco both pointed out. In Next's case, if only to prevent them reducing pricesc this spring.

The bigger worry is that things might escalate & broaden. It concerns me when the UK hooks up with the US to mount any military attack. Particularly when both nations are building up to elections, so want to be seen to "act tough".

History suggests this doesn't always end well. And regardless of them suggesting yesterday's strikes were a one-off attack, mounted in self-defense, I simply don't buy that. The last thing our global economy needs right now is another energy price shock. And yesterday's actions by the US & UK have slightly increased that risk IMHO.