HLG - Hallenstein Glassons Holdings

winner (n) · Nov 19, 2022, 03:23 PM

Quote from: Basil on Nov 19, 2022, 02:46 PMWouldn't surprise me at all to see them get to a 1% share $A220m sales ~ $NZ240m this year compared to $NZ157m last year. I know 52% Glassons Au sales growth for the full year sounds ambitious but there were a LOT of lockdowns last year.

Glassons AU doubled their share last 4 years so expect them to double share again in say 3 years ... to 1.5%

That's about $400m of sales .... just from Glassons AU

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Basil · Nov 19, 2022, 04:05 PM

Very impressive market share gains to date and its very early days with only a tiny number of stores relative to the ~ 6 times bigger market in Australia. I really appreciate the effort you've put into this for us. Agreed the prospects for further growth are very exciting and yet you get all future growth for a no growth PE of about 8 and a gross yield of about 10%.
Is this the perfect retiree's share ? You get huge feeds twice a year but the size of the pie keeps growing really fast anyway.

Waltzing · Nov 20, 2022, 11:22 AM

Not again.... surely not ....hitting home runs....

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

come on winner where do you buy your pastels from....

are there emojis on these ancient tech stacks...

Basil · Nov 21, 2022, 10:36 AM

Got to thinking seeing as I have a few of these on board now I'd better do a proper forecast.
Remember sales YTD as announced are up more than 68%, (albeit augmented by a lockdowns in the first 8 weeks last period that did not repeat this period).
Here are my key assumptions.
1. Sales growth of 7% due to price increases in line with inflation.
2. Sales growth of 10% relative to last year due to the fact that there were extensive store closures for a considerable period of time last year on both sides of the Tasman.
3. Real growth in sales not related to price increases or Covid bounce-back 7%, (I have deliberately kept this very conservative notwithstanding extra stores from last year open for the full 12 month period, growth in online sales including into America and growth in stores this year).
Total sales for the year forecasted as 24% growth from $351m to $435.5m
4. Cost of sales and gross profit the same 57.5%, acknowledge currency differences but freight will be lower this year and they maintained gross margin really nicely last year with extremely elevated freight costs. Also I expect there will be less need for discounting this year due to sales growth depleting inventory more quickly but I will stick with a GP margin as per the last 2 years of 57.5% Gross profit forecasted at $250.8m
5. Selling expenses will grow in line with inflation 7% + 2 % extra for more stores this year, (no extra stores for Hallensteins or Glassons N.Z., assume 4 more stores for Glassons Au), $126.9m grows to $138.4m
6. Distribution expenses grow in line with increased sales, up 24%
7. Administration expenses grow at the inflation rate 7% + 4% extra, assume some extra staff required to handle admin related to the growth of the business.
8. Finance income jumps nicely this year (Interest earned on $35M in the bank as at balance date and growing during the year will be much higher than last year's interest income)
I'm going on the record forecasting $67m before tax or just on $48m after tax = 80.7 cps.
That sort of profit along with only paying our 2 x 24 cent divvies would allow them a lot of reserve from this year to really accelerate their store opening program with Glasson's Au and supercharge future years growth.

Let's see how we go.

Waltzing · Nov 21, 2022, 11:10 AM

"$67m before tax or just on $48m after tax = 80.7 cps."

wonder what that ould make the batting average now ...

show me the monry ....

https://www.youtube.com/watch?v=mBS0OWGUidc

Basil · Nov 21, 2022, 11:18 AM

Forward PE of just 6.84 based on Friday's closing price of $5.52 for a company with a proven history of strong growth in Australia and a huge runway of future growth there. Dirt cheap and a HUGE opportunity ! Those metrics are for a company that trades cum a 24 cent divvy in a few weeks.
Net that back after tax to a 16 cent divvy and treat that divvy as part repayment of the purchase prices gives a forward PE of 536 / 80.7 = 6.64.
That's absurd for a growth company and even cheap for a pure cyclical company which this one certainly is not.

winner (n) · Nov 21, 2022, 11:52 AM

A lot of thought into your $48m profit forecast so probably spot on .... though $50m would sound better

Thought you'd like this updated chart -- HLG profit by year this century

Your forecast just a continuation of the trend from 2016/2017 when Di did a brilliant job in sorting Glassons out in NZ and particularly so in Australia

Cool chart eh

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Basil · Nov 21, 2022, 12:00 PM

Cool chart Winner, thanks. Notice how for the first 16 years of this century through to 2016 HLG was just a cyclical no growth company meandering along with the ebbs and flows of the N.Z. economy and then Di laid the foundation for Glassons expansion into Australia and James Glasson has built very nicely indeed on the platform she created. The market is still ascribing a no growth cyclical PE to the strong growth company HLG is now. Opportunity knocks for anyone who can see it! Trades ex the 24 cent divvy on 8 December.

Waltzing · Nov 21, 2022, 01:53 PM

Winner - have you overlaid EPS....

just saying....

Imagine the only reason the share price always lags the yield is that its NZ listed stock and on the ASX its a little retailer ... those european immigrants really cleaned up shop.

https://www.youtube.com/watch?v=-0kcet4aPpQ

winner (n) · Nov 21, 2022, 02:42 PM

Got me crayons out and updated this for you waltz

Still priced on F22 earnings

The big column on the right July 23 is basils forecast

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Basil · Nov 21, 2022, 03:33 PM

Oh my goodness if I'm right those earnings would correspond with a $9 share price

winner (n) · Nov 21, 2022, 04:14 PM

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

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Basil · Nov 21, 2022, 04:32 PM

Very nice work Winner, thankyou. WOW...Apart from the initial Covid aberration in early 2020 gosh the share price correlation with earnings based on a PE of 12.5 over a very long period of time, (the vast majority of which was when HLG wasn't really growing earnings) is extraordinary! You could easily argue with average eps growth since FY17 the PE should now be higher !

Balance from the other forum might finally get his $10 and I certainly won't be complaining lol

winner (n) · Nov 21, 2022, 05:06 PM

Just imagine if some boutigue Australian fund manager noticed all this peacocking going on and worked out heck this HLG is real value and started buying big time

Grahger Capital did that a few years and took about 7% of the capital - bumped the share price up from 4 bucks odd to 7 bucks odd ....exciting times and some posters made a killing

Wasn't that exciting for some when they dumped them though

Waltzing · Nov 21, 2022, 05:30 PM

Brillant stuff and interesting relations and is 12.5 then the max the market likes to pay for this stock.

how many investors are savy enough to known that P/E is the number of years....

do the shaz know this? doubtful your average person knows whats what for ratios?

or is business stats a standard unit at school these days..

Only once before has the company ever out performed and never on the scale MR B is predicting. Not a maths person the probabilty would not be that high but then thats history not the future.