HLG - Hallenstein Glassons Holdings

[LoungeLizard]

It's very early days for Glasson's Au and they've only just hit critical mass there.  Sustained and very rewarding growth to come in the decades ahead.

True in itself, but the question in my mind is whether the market will be prepared to pay an even higher premium share price that HLG is now demanding. I don't think that's a given, even if HLG continues to do well.

[Basil]

PE expansion a real prospect in the years ahead in my view as Glassons Au and the growth there increasing dominate group sales.

As it currently stands Forbar reckon they currently trade on metrics slightly below their historical average, from memory average is 11.6 and currently on forward PE of 11.25.

Even if there's no PE expansion, eps CAGR over the last 5 years is 9% if they hit this year's 72 cps target and the gross yield is circa 9% so even if HLG continues to trade in line with its historical metrics which in my view are very attractive, one can expect a top yield and share price growth over time consistent with eps growth.  9% yield and 9% eps growth = 18% per annum expected average return over the next 5 years.  That's how I see it FWIW.

Regulars here will be well aware I think Glasson's Au can continue to grow strongly in the years ahead fueling attractive eps and dps growth.

[Pierre]

True in itself, but the question in my mind is whether the market will be prepared to pay an even higher premium share price that HLG is now demanding. I don't think that's a given, even if HLG continues to do well.

Forbar estimates for FY27 are EPS 82.4 and DPS 70.0 with 75% imputation (that's about 90 cps gross).
Hard to believe the SP won't follow that trajectory.

[LoungeLizard]

Forbar estimates for FY27 are EPS 82.4 and DPS 70.0 with 75% imputation (that's about 90 cps gross).
Hard to believe the SP won't follow that trajectory.

I guess Forbar is basing those figures on an assumed growth path that follows what has gone before, which is not always true in a volatile industry. But even if correct, are you saying that the market will pay $10 per share (let's say) for a fashion stock, regardless of the elevated risk as the SP goes higher? I wouldn't, but that's because I'm risk averse. I'm holding on for the usual surge before the divvy, but my inclination is to sell down/out at that point.

[Basil]

James Glasson has quadrupled sales in Glassons Au since he took over in 2017.  Keep in mind all the incredible retail challenges since Covid 5 years ago and the fact that we're currently at the bottom of the economic cycle when considering the significance of that.

Market penetration there is less than one fifth of the level here but if you can't see the opportunity for strong ongoing growth in the years ahead, by all means go ahead and sell.  I suppose after a 10:1 split they'd be cheap like WHS at $1 lol

[LoungeLizard]

James Glasson has quadrupled sales in Glassons Au since he took over in 2017.  Keep in mind all the incredible retail challenges since Covid 5 years ago and the fact that we're currently at the bottom of the economic cycle when considering the significance of that.

Market penetration there is less than one fifth of the level here but if you can't see the opportunity for strong ongoing growth in the years ahead, by all means go ahead and sell.  I suppose after a 10:1 split they'd be cheap like WHS at $1 lol

I do agree that HLG management have done a fantastic job and there's a potential long runway of growth in Australia. Balancing that is questions about whether each new store can replicate the earnings of the previous. Will the Aussie retail sector continue to grow? Will the NZ economy continue to weigh down the business? Will the projected Trump tariff regime slow China's growth and the OZ export industry? And will investors continue to see value in a "risky" stock that is demanding a premium price?

Analysts forecasts tend to be too narrowly focussed and investors need to look at the wider macroeconomic picture if they're going to buy heavily in HLG. And lets face it - for most people $80k is a hell of a lot of money just to get 10,000 HLG shares!
 

[Pierre]

James Glasson has quadrupled sales in Glassons Au since he took over in 2017.  Keep in mind all the incredible retail challenges since Covid 5 years ago and the fact that we're currently at the bottom of the economic cycle when considering the significance of that.

Market penetration there is less than one fifth of the level here but if you can't see the opportunity for strong ongoing growth in the years ahead, by all means go ahead and sell.  I suppose after a 10:1 split they'd be cheap like WHS at $1 lol

Exactly. There is a very long runway for growth for HLG in Australia especially for the highly successful Glassons brand both by opening new stores in locations not currently serviced plus expanding and/ or relocating existing outlets. They can also expand the modest Hallensteins footprint over there too.
If we were just looking for growth from the existing representation I would share LL's concerns, but there's an exciting future ahead so I'm hanging on for the ride. There will be both capital gain and dividend growth to enjoy.

[Basil]

but there's an exciting future ahead so I'm hanging on for the ride. There will be both capital gain and dividend growth to enjoy.

Indeed, a very exciting and rewarding future ahead.  People like me who are not far off retiring need to consider not just the dividend yield, but the excellent prospects for dividend growth in the years ahead.  Same thematic applies at Turners.

[LoungeLizard]

Exactly. There is a very long runway for growth for HLG in Australia especially for the highly successful Glassons brand both by opening new stores in locations not currently serviced plus expanding and/ or relocating existing outlets. They can also expand the modest Hallensteins footprint over there too.
If we were just looking for growth from the existing representation I would share LL's concerns, but there's an exciting future ahead so I'm hanging on for the ride. There will be both capital gain and dividend growth to enjoy.

Good luck to you both, you may well be right.
The only other thing I have to mention that concerns me about HLG is the very low liquidity. Good when things are on a roll , but can be catastrophic if the market turns. Something to bear in mind perhaps.
And on that, I have noticed some questionable trading in HLG - very small parcels being bought/sold at high/low prices. I know some traders are into that sort of thing and it's perfectly legal, but it can distort things somewhat.

[Pierre]

Indeed, a very exciting and rewarding future ahead.  People like me who are not far off retiring need to consider not just the dividend yield, but the excellent prospects for dividend growth in the years ahead.  Same thematic applies at Turners.

I'm already retired and share your enthusiasm for both HLG and TRA - they jointly account for 40% of my portfolio. They provide me with a very healthy dividend income which I'm confident will continue to grow well ahead of the inflation rate in the coming years.

[Waltzing]

its just well ....

https://www.youtube.com/watch?v=kHBCszPYHBU

in a time when most retail share have taken it hit it has done reverse...

maybe the lack of liquidity has been the driver as stated above its very light...

think mentioned before a share split for this one is on the cards along with listening in OZ... but who want to pay for two exchanges if you dont have to...

as it grows more AUSSIE dollars will want to invest and the kanga goes farther... puts more pressure on the SP..

picking the upswing in this one either share luck or great insightful thinking ... truly a once in a two decade occurrence.

[LoungeLizard]

its just well ....

https://www.youtube.com/watch?v=kHBCszPYHBU

in a time when most retail share have taken it hit it has done reverse...

maybe the lack of liquidity has been the driver as stated above its very light...

think mentioned before a share split for this one is on the cards along with listening in OZ... but who want to pay for two exchanges if you dont have to...

as it grows more AUSSIE dollars will want to invest and the kanga goes farther... puts more pressure on the SP..

picking the upswing in this one either share luck or great insightful thinking ... truly a once in a two decade occurrence.

Yes, with such low liquidity a few "players" can send the SP one way or the other with ease. Yesterday the VWAP was $8.11 but at the death it was pumped up to $8.29 by a very small trade. This morning it dumps back to $8.09 on low volume and now there's one buyer wanting to buy one share at $8.20. HLG are not the only stock that are prone to this sort of thing, the NZX is probably rife with it.

[BlackPeter]

OK, this is just for entertainment purposes ... stock valuations (no matter who provides them) are always just random numbers supported by models fed with random estimates which can't predict the future better than anybody else. Garbage in - garbage out.

I happened however to notice that Simply Wall Street is leaning itself recently very far out of the window:

https://simplywall.st/stocks/nz/retail/nzx-hlg/hallenstein-glasson-holdings-shares/valuation

$22,56 per share - now wouldn't this be amazing? Funny thing is - just a month or so ago they said $8.65 per share (and I thought that's for SWS a reasonable estimate). Just wondering what happened since then?

[winner (n)]

Just imagine if Glassons started using Tina in their marketing

[BlackPeter]

Just imagine if Glassons started using Tina in their marketing

Good point - and if they start selling MAGA (Make America Gay Again) hats on top of that, the opportunities would be limitless ;