RE: Valuation29 Nov 2021 14:14
I have listened to the valuation argument and hear the overtures of satisfaction from all those detractors saying, I told you so. The share price is at all time lows, well done. However, I ask you to think about it more logically. Why has the company performed so badly? Sadly, this country has failed all heavy industry over the last 40 years. Successive governments have overseen a dismantling of manufacturing which has led to the loss of millions of good, honest jobs. The lack of government support coincided with two fatal blows to our industrial heritage. One was the EU enticing huge investment in companies which moved jobs away from the UK, the other being the currency manipulation (maintain weakness) by the Chinese. This weak currency allowed China to move 20million peasants a year from the wheat fields to meaningful industrial employ.
I have two reasons to support this company. Firstly, my heart tells me that by our political masters turned once thriving communities into abandoned, economic wastelands, where little or no alternative employment existed. By investing some of my own money into HW I am making a commitment to help improve the lives of those, not fortunate enough, to have opportunities that I had in the South East of England. Had our government, and Investment companies, supported companies trying to make a difference, H & W would not have had to sell themselves down the river with constant calls on hard pressed, private investors.
Secondly, my head tells me that the assets purchased with the proceeds of several cash calls, were from receivership. Hence, no big premium. Significant assets with huge potential and surrounded by a talented, if aging workforce. The point you make of useless without profitable contracts is valid. I look further afield for my reasoning than the end of my nose. I look at the biggest manufacturer of products aligned to H & W, China. For 30 years they have gobbled up capacity from industrialised countries and yes, you are right, they have a huge pricing advantage. I am of the opinion that things are about to change. For two reasons, currency and population. The Chinese Yuan is currently at a five year high vs $. I happen to think it will go a lot further. One reason for maintaining a low currency was the need to shift all those able-bodied workers. That is no longer the case. For some years now, working age Chinese numbers have been falling, as the population ages. The really big change could come this year, that is a real fall in total population. Some forecasters fear that births this year may not outstrip the usual 10m plus deaths. This is a huge deal for the now, unrestricted (how many children) Chinese. The focus need not be on production at any cost, even losses, but a more commercial, investor returns focus. The shrinking workforce will gain pricing traction for wages and a stronger currency will help curtail any inflationary uplift from enhance consumer appetite. Part 1
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