HLG - Hallenstein Glassons Holdings

[LoungeLizard]

It's interesting to see the discussion around HLG centred around growth. It used to be a great dividend stock but at $10 or even $9, 55c isn't a great yield, so those buying in at these levels certainly must have a great belief that HLG can continue growing earnings and maintain margins well into the future. So far, to its credit, HLG have defied the odds, in what is normally seen as an unpredictable, risky sector. 

[Dolcile]

What do you mean not a good yield - what numbers are you working off LL ?

[Basil]

Average of 3 analysts are forecasting dividends as follows, I have grossed up for my own calculations of 50% imputation level, (see previous posts for my assumptions and calculations around this), and show the gross dividend and yield at $9.30

FY26 66 cps (gross 76.74 cps, gross yield 8.25%)  (Note a 20% jump in dividends from FY15 seems a lot but its supported by 17% forecast EPS growth)
FY27 75 cps (gross 87.21 cps, gross yield 9.38%)
FY28 82 cps (gross 95.34 cps, gross yield 10.25%)

There's a 9 year track record of very strong growth with Glassons Au supporting those growth forecasts.  In my opinion shareholders are being paid very handsomely indeed to enjoy strong growth in the years ahead and are buying on dirt cheap metrics (forward PE only 12) and with a price earnings to growth ratio (PEG) of only 0.7 you're getting future growth at an exceptionally cheap price.  Accordingly to Barramundi the average PEG of the ASX200 stocks is 3.3 !
https://www.marketscreener.com/quote/stock/HALLENSTEIN-GLASSON-HOLDI-6495564/finances/
 

[LoungeLizard]

What do you mean not a good yield - what numbers are you working off LL ?

The numbers I quoted. Total divvy this year was 55c. The SP has been over $10. Thats a straight forward calculation if you leave out the part-imputation.
A yield of less than 6% is less than say GNE and other more defensive stocks. As I said, a fashion retailer demanding $10 per share at a relatively low yield doesn't sit well with me. But by the sounds of things people are seeing HLG as a growth stock, extrapolating it's historical growth into the future as if that's a given. That doesn't square with me either, but I'll admit to being very risk adverse

[Basil]

Market is always forward looking LL so there's a fundamental flaw with your thinking there.  Leaving out part imputation is also a mistake as is comparing a growth stock like HLG to a pure defensive stock like GNE.   FYI I also hold some GNE.  We should do okay with GNE but its a yield stock and that's all its ever going to be.  Its also a quassi Government department with the Govt having a majority stake.  Good place to hide if you're super defensive.

[LoungeLizard]

Market is always forward looking LL so there's a fundamental flaw with your thinking there.  Leaving out part imputation is also a mistake as is comparing a growth stock like HLG to a pure defensive stock like GNE.   FYI I also hold some GNE.  We should do okay with GNE but its a yield stock and that's all its ever going to be.  Its also a quassi Government department with the Govt having a majority stake.

Not sure if my approach is flawed.
I certainly look ahead at industry and macroeconomic factors in making a decision to buy, as my main concern is to protect capital going forward, but for an inherently risky stock I need to be compensated for that risk immediately. ie I look at what the yield is currently. Hoping that dividends will increase in the future to compensate for the risk that is present now, is not the way I would do things.

Currently HLG is offering less than 6%. Thats far too low to buy at current levels, extrapolated earnings growth notwithstanding.

[Basil]

Each to their own way of thinking and doing things LL but please be aware that the gross historical yield showing on the invest direct website for FY25 is 7.06% at  a share price of $9.55 so maybe try not to skew the narrative to make it fit your pre-conceived viewpoint, or not, I don't really care as I'm not here to sell anyone the stock, just to share my observations to those who  are interested.  You can lead a horse to water but you can't make it drink.

[LoungeLizard]

Each to their own way of thinking and doing things LL but please be aware that the gross historical yield showing on the invest direct website for FY25 is 7.06% at  a share price of $9.55 so maybe try not to skew the narrative to make it fit your pre-conceived viewpoint, or not, I don't really care as I'm not here to sell anyone the stock, just to share my observations to those who  are interested.  You can lead a horse to water but you can't make it drink.

I'm obviously an outlier, but I'm not trying to skew anyones view here, Basil, so please don't insinuate that is the case. I think you would react badly, justifiably, if anyone accused you of ramping a stock, so perhaps you could be a bit more welcoming of an alternative view?
If I paid $10 this year for HLG and I got 55c total dividend then in my simple view, I have achieved a 5.5% yield (not taking the part imputation into consideration). I could care less what historically HLG offered and for a risky stock I wouldn't necessarily make the assumption that the future dividends would go up to mitigate the risk of holding the stock now.

[Basil]

I'm just stating the facts and average forecasted yields based off consensus of 3 analysts views and my own deep understanding of the company having been an investor for nearly a decade buying in 2016 at $2.70  Back in those days it was all hard graft as there was no analyst coverage and their was an absolute endless stream of naysayers bagging the stock, all who have been proven wrong, hence my confidence you ill also be proven to be wrong in due course.

You keep stating your opinion that its a risky stock, as though that's a fact.  Nothing could be further from the truth in my opinion.  What I see is a very similar level of resiliency to Turners who have also growth their EPS very strongly over the last 6 years in what has been inarguably, the toughest period of trading for retailers in decades but if you can't see that, then you will see what you want to see.  I'm not here to change your mind LL, you've obviously made your decision to sell some time ago at a much lower price.  Good luck getting better returns with other stocks..  You've expressed your opinion literally dozens of times, so please be a good chap and just let shareholders enjoy their day in the sun.  Mr Market has spoken about today's update and is very pleased indeed and so am I.

[LoungeLizard]

I'm just stating the facts and average forecasted yields based off consensus of 3 analysts views and my own deep understanding of the company having been an investor for nearly a decade buying in 2016 at $2.70  Back in those days it was all hard graft as there was no analyst coverage and their was an absolute endless stream of naysayers bagging the stock, all who have been proven wrong, hence my confidence you ill also be proven to be wrong in due course.

You keep stating your opinion that its a risky stock, as though that's a fact.  Nothing could be further from the truth in my opinion.  What I see is a very similar level of resiliency to Turners who have also growth their EPS very strongly over the last 6 years in what has been inarguably, the toughest period of trading for retailers in decades but if you can't see that, then you will see what you want to see.  I'm not here to change your mind LL, you've obviously made your decision to sell.  Good luck getting better returns with other stocks..  You've expressed your opinion literally dozens of times, so please be a good chap and just let shareholders enjoy their day in the sun.  Mr Market has spoken about today's update and is very pleased indeed and so am I.

Yeah, it is a pain when a person keeps on saying the same thing, as though it were gospel, day in and day out.

[winner (n)]

Yeah, it is a pain when a person keeps on saying the same things, as though it were gospel, day in and day out.

Bit unfair that comment LL

Isn't he in most cases responding to your posts which with all due respect are rather repetitive

[Pierre]

Yeah, it is a pain when a person keeps on saying the same thing, as though it were gospel, day in and day out.

We're all entitled to our opinions about the merits or otherwise of investment opportunities, but I think the market generally gives us a pretty good guide as to what's good and what's not.
HLG's SP 12 months ago was $6.76 and is $9.56 today - a gain of 41.4% (that's after going ex a 30.5cps dividend). Therefore, it seems fair to assume that more investors agree with  Basil's opinion than with Lounge Lizard's.
I made my decision a few years back and am very happy now to be counted among the top 39 shareholders in the company. LL's decision is not to be on the list at all.
I'm loving the capital gain and also looking forward to a big, fat juicy dividend arriving in the bank on Friday - and even bigger, fatter, juicier divvies in the years ahead. Hopefully, LL will be enjoying similar excellent returns from an alternative investment.

[LoungeLizard]

Bit unfair that comment LL

Isn't he in most cases responding to your posts which with all due respect are rather repetitive

I don't really want to go down this track, Winner - we are all entitled to state our views whether you or anyone else agrees with them or not. As for whether one voice dominates or is repetitive or not, that is all a matter of opinion and I suspect it has more to do whether that voice agrees with you or not.

FYI - I got exactly the same comments - from exactly the same people -  to basically shut-up when I gave a dissenting, risk-based view about HGH, shortly before the SP collapsed.

But in the interests of preserving the echo chamber, I'll stop now.

[Basil]

We're all entitled to our opinions about the merits or otherwise of investment opportunities, but I think the market generally gives us a pretty good guide as to what's good and what's not.
HLG's SP 12 months ago was $6.76 and is $9.56 today - a gain of 41.4% (that's after going ex a 30.5cps dividend). Therefore, it seems fair to assume that more investors agree with  Basil's opinion than with Lounge Lizard's.
I made my decision a few years back and am very happy now to be counted among the top 39 shareholders in the company. LL's decision is not to be on the list at all.
I'm loving the capital gain and also looking forward to a big, fat juicy dividend arriving in the bank on Friday - and even bigger, fatter, juicier divvies in the years ahead. Hopefully, LL will be enjoying similar excellent returns from an alternative investment.

Nice one Pierre. No wonder you can easily afford to travel so much.  Did you attend today ? Any insights from discussions to share ?

[Pierre]

Nice one Pierre. No wonder you can easily afford to travel so much.  Did you attend today ? Any insights from discussions to share ?

Yes, I attended the meeting and spoke to three of the directors at the morning tea. However, this was held prior to the meeting, so they couldn't reveal anything in advance of what was going to be announced or discussed at the meeting.

I had to leave for the airport as soon as the meeting concluded so didn't have an opportunity for any further discussion.

The main item that I think most investors were waiting for was the trading update for the first 4 months of FY26. Like most, I was pretty stunned when they revealed sales were almost 14% up on the pcp.

Obviously, the Australian Glassons activity is the key to the ongoing growth of the business, and the leadership and drive of James Glasson is fundamental to the results the company is achieving. I was impressed with his focus on continuous business improvement and extracting the maximum efficiency from everything they do, instead of just going on a tear to open additional stores. Expansion at a carefully managed and controlled pace seems to be his mantra, together with his desire to see the company survive for a second 100 years of trading!

We should also see improved results from the Hallensteins brand under James McLauchlan who has just completed his first year as CEO of that division.

Online sales continue to be an important contributor to the result and again accounted for 18% of total sales.

One of the directors I spoke with asked me why I had invested in the company. I said I was happy with growth in the SP, but now I am retired, my main purpose was income to fund my overseas travel. She replied that I should be away a lot more in future years!

It's great being a part owner of such a well managed, tightly controlled business that is focused on a great experience for its staff, customers and shareholders.

The market clearly liked today's news and I won't be at all surprised if there's a further lift in the SP on Thursday.