HLG - Hallenstein Glassons Holdings

[Waltzing]

Well does this mean the headline from the reserve bank that read like amatuar hour from Super Mairo who one cant imagine say to pasta lovers  "

"all you pasta lover's can only have one slice of 'Lasagne Bolognese and filled pasta like manicotti and ravioli" for XMAS!!!!

   ONE SLICE!!!!

favourite at xmas in italy in the north.

well with the dollar heading back up no reason what so evere other than national debt to GDP is still pretty low KIWIS can shop till they drop this xmas....

why are they engineering a recessions again?

well all those going to the xmas drinks, oysters and other delights can spend up large!!!

Bon Appétit!



 

[Basil]

basil .... since 2006 HLG average PE has been 12.5

So I charted actual share price v what it would be at a PE of 12.5 ..... never very away eh ...and shows the time to buy eh (as you have sussed out a few times already)

Note - the at 12.5 PE line is based on July year EPS applied to the full year (like July 20 EPS applied Jan20 to Dec 20) so a mix of past and forward looking if you get the gist

So 10 bucks not outrageous at EPS of 80 cents

You cannot view this attachment.

While we wait to enjoy that growth, and hopefully the resulting share price gains we're being paid a fabulous forecast 10.66%* gross yield.

* I had another look at the imputation credit account balance and they have enough in there at balance date $2.7m to impute the forthcoming 16 December dividend by 50% and seeing as they chose to not impute it I am hopeful they will have enough by March 2023 to fully impute the April 2023 dividend which I am estimating at 24 cps (24 / 0.72) = 33.33 cps gross.  I think this is sustainable going forward on average so we shoudl get 24 cps gross + 33.33 cps gross = 57.33 cps gross each year which should rise over the years ahead with growth but let's just stick with those figures for now.  57.33 / 562 gives a face value forecast gross yield of 10.2%

Looking forward if they can restore profitability in N.Z. operations to pre-pandemic level's there should be enough imputation credit to repeat this next year and fully impute April 2024's dividend.

For someone applying fresh capital to HLG this coming week, assuming the share price drops the full 24 cents when it goes ex dividend on 8 December, and they could buy for ($5.62 - 0.24) = $5.38 ex divvy they are looking at a gross forecast yield of 57.33 / 538 = 10.66% 

Disc: I have backed the truck up but I am left still wondering if I have enough?

[Basil]

I wish Snoopy would join this forum.  I'm planning on asking the question Snoopy is wondering about at the annual meeting.  They had $2.7m in their imputation credit account at balance date so why not partially impute (about 50%) the December dividend ?

[winner (n)]

Re this imputation stuff - hope a possible reason Snoopy gives isn't true 'Yet something has happened since balance date that would suggest profits in NZ for FY2023 over the full year are going to be much less than expected'

[Basil]

Snoopy needs to read the annual report.
Extract from page 9 CEO's report under the heading
Outlook.
We have seen trading improve in both New Zealand and Australia.

Extract from page 6 of same report referring to Glassons N.Z.
"There have been improvements as we have moved into the new financial year"

Referring to Hallensteins he said on page 6
We have seen growth from both New Zealand and Australia

Extract from Page 5 Chariman's report under the heading
Future Outlook
"The first 8 weeks of the new financial year have seen group sales improve by 68.49%"

Since warning about currency headwinds in the annual report the $Kiwi is up from 55.5 to 64 cents US, a 15% improvement.

[Waltzing]

Its a nail bitter for sure.....

comentary in the NZ H news paper suggest the reserve bank will get the recession wrong... but arnt they going to engineer this recession anyway?

it the farce in wellington spreading from building to building?

lets hope there is economy left after they kick the guts out of it.....

what are they drinking down there in the water.... oh we know they forgot to invest in the pipes and seas water has got into the drinking water....

salt on the brain?

https://www.deccanherald.com/science-and-environment/decoded-how-salt-affects-blood-flow-in-brain-cause-alzheimers-1050947.html

lets hope that ICA account has got something in it.....

sniff that ICA ....

[Basil]

Good morning folks,

Firstly, thank you for your hard work navigating through the challenges presented in recent times with Covid.  It can't of been easy to handle all the challenges so the whole team's efforts are really appreciated by shareholders.

You may be aware that shareholders sometimes discuss HLG on www.stocktalk.co.nz, (my user handle Basil) and www.sharetrader.co.nz.

I met up with quite a few of these forum participants yesterday for a few drinks and the question came up as to why there are no imputation credits with the forthcoming dividend ?

I'm a semi retired professional investor and accountant so I will understand any technical talk about movements in the imputation credit account (ICA) post balance date and get it that Australian tax paid is not credited to the ICA.

From my review of the financials the ICA had a balance of $2.7m as at balance date but there was taxation receivable of $572K showing in the balance sheet which would have reduced the ICA to just over $2.1m + any provisional tax paid since then.

Wondering why the forthcoming dividend wasn't partially imputed.

Second question.  Can shareholders assume given the December 2022 dividend is not imputed and its too late to change that, the April 2023 dividend be imputed as much as possible?

Keep up your good work which is really appreciated.

Thanks in advance for your time in answering these questions.

Kind regards
XXXXXXXXXX

Many thanks indeed to Stuart the CEO of HLG for his time explaining this to me. He explained that the figure shown above was a net group figure, an amalgam of N.Z. and Australian tax and that the N.Z. refund receivable was higher and therefore reduced the imputation account further.  From his response I am 100% confident they will impute future dividends as much as possible with shareholders best interests always at heart.

[Ferg]

Thanks for sharing Basil.  There is usually a logical reason.

[SuperMario]

I looked at the HLG investor centre and nzx announcements for dividends. I don't see any mention of having or not having a dividend reinvestment plan. Am I correct in assuming this means HLG does not have one? Cheers.

[Ferg]

I looked at the HLG investor centre and nzx announcements for dividends. I don't see any mention of having or not having a dividend reinvestment plan. Am I correct in assuming this means HLG does not have one? Cheers.

That is correct.  There is no dividend reinvestment plan at the moment.  You have to do it manually.

[Basil]

I think its really impressive they have grown Glassons Australia so strongly over the last 5 years with no capital raises, no debt whatsoever, no dividend reinvestment program and all the time paying out really strong dividends.  A lot to admire and respect with how they go about doing the business.
Disc: My #1 investment position.

[Waltzing]

Its going to be an historic call one way or the other.....

[Basil]

That is correct.  There is no dividend reinvestment plan at the moment.  You have to do it manually.

To the best of my knowledge there never has been one. I can't help wondering how many others will run their own dividend reinvestment scheme when its paid out on 16 December.  I'm really looking forward to the annual meeting update on 15 December.

[winner (n)]

NZ Card Spend for November out today from Stats NZ

Apparel sales for this November up 8.2% on last year. Annual sales to November up 10.2%

HLG year to date is August/November -  sales for the four months up 48% on last year .... yes 46%

Things rocking in apparel - even in NZ

With those sort of numbers prob need to increase my expectations for full year

Next weeks update will be exciting .... so good they might even do something unusual and come up with profit guidance

[Basil]

My key forecasts for FY23, Sales up 24% from $351m to $435m.
Gross profit margin unchanged at 57.5%
Gross profit up from $202m to $251m
Expenses up broadly in line with inflation at 7% + a bit more for extra stores in Australia and a bit more overhead for the growth in the group.
Net profit after tax up from $25.6m to $48m
eps up from 43 cps to 80 cps.

It's hard to say what year to date sales growth will be they update that next week because the previous announcement of 68% covered an 8 week period of hard lockdowns in parts of N.Z. in Australia in the previous corresponding period that didn't repeat this year and those lockdowns finished in early November last period, but all known things considered, somewhere about 35-40% sales growth for the first 4 months means we're on track for my annual forecast.
If it's less than this I will have to do a revised forecast, if its more I will leave my forecast as it is.

Disclaimer - All forecasts "at best" are an educated best guess assessment of all known factors and the actual result could vary materially for a wide range of potential reasons.