HLG - Hallenstein Glassons Holdings

[scullingsweden]

Fable 5 by Anthropic - HLG Report.

  https://claude.ai/public/artifacts/f00c8792-ed4d-475c-ac47-7a065c71c7b7

Hallenstein Glasson Holdings (NZX: HLG)
FY2026 Full-Year Preview and Forward Analysis
From the 1 February 2026 Interim Report to the 28 August 2026 Full-Year Trading Update

Prepared by: AI Fable 5 Mythos Date: 29 August 2026 Watermark: Fable 5 Mythos Reporting currency: NZD unless stated. Financial year ends on or about 1 August.

Source documents (project knowledge):

HLG Interim Report, six months ended 1 February 2026 (unaudited), authorised 27 March 2026.
HLG Trading Update for the full year ended 1 August 2026, released 28 August 2026 (preliminary, unaudited, pre-dividend declaration).

Supplementary sources: RBA Monetary Policy Decision, 11 August 2026 (Media Release 2026-19); NZX market data as at close 28 August 2026; HLG Modern Slavery Statement FY2023 and company sustainability disclosures;  Full audited results and dividend declaration are scheduled for 29 September 2026.

1. Executive Summary

HLG has guided to a FY2026 result that is a structural step-change rather than a cyclical bounce. The 28 August update confirms Group sales of $563.0M (+19.6%; +15.6% constant currency) and net profit before tax (NPBT) of $83.0M–$84.5M (+42.1% to +44.7%) against $58.4M in FY2025. The implied second half (H2) is the strongest half in the company's recent history in absolute NPBT terms and materially exceeds the Chairman's own March 2026 caution that H1 growth would be "much more difficult to replicate".

[Basil]

Some number crunching today for background research threw up some interesting facts based on analysis of the last 5 years.

1. Average split first half second half EPS is 57% v 43%. That's what makes this years split so truly remarkable at 47% v 53% and what really stunned me on Friday. Such a significant shift that's so different to historical patterns hints at some fundamental improvement in the business, for example, lower stock shrinkage with their RFID stock technology, better inventory management using that technology and / or lower discounting. (It certainly can't be explained by lower costs of doing business as we know shipping and distribution costs will be well up) so a shift of this magnitude against known headwinds is really quite remarkable and noteworthy. I'm looking forward to finding out more about this when we get the full report late next month.

2. The Average dividend payout ratio for the last 5 years has been 88.4%

3. The dividend split first half is quite interesting and they always seem to go quite conservative with the first half divvy. (2022 was a real outlier at 90%)
Average payout ratio first half is 71.7%...that compares to just 61.7% in the first half for FY26, (a real outlier on the low side) so they kept 10% more of the first half 47 CPS EPS this year, i.e. 4.7 CPS held back, probably to do with the very low level of imputation. This does suggest there could be positive Implications for the final dividend.

4. Second half divvy averages 111% of second half EPS ! (Wow, I found that fascinating). That's extremely unlikely to happen this year due to the very unusual situation of higher earnings in the second half but on EPS forecast at 99 CPS and an average payout ratio for the last 5 years of 88.4%, total dividends of 87.5 CPS for FY26 would not be out of alignment with previous history. 87.5 CPS less the unusually low payout of 29 CPS for the interim dividend suggests the final dividend payable in December could be as much as 58.5 CPS...surely not !!

I would hasten to add that my preference would be for them to hold more back this year to speed up Glassons store expansion in Australia.

So what final dividend would I lobby for if I was a Director ? I'd be suggesting 40 CPS, (up from 30.5 CPS last year) to Tim Glasson and let's speed up the store expansion. But Tim's getting on a bit in years and might just want to enjoy his share of all the extra cash, (see comment below about how cash per share has been building up in recent years), so more than 40 CPS is definitely on the cards.

Interestingly HLG, (as we all know has no debt), had $1.13 per share in cash at the interim reporting date FY26 up from 98 CPS in FY25, 77 CPS in FY24 and 54 CPS in FY23. That's a pretty impressive war chest they're building there.