HLG - Hallenstein Glassons Holdings

[Waltzing]

well RBA is out tomorrow with its policy statements and its hike or no hike...

This policy statement from the RBA is probably worth reading more than old posts....

Interesting comments on CNBC recently (Winners FAV Hate speech program)... outlining the amount of corporate re FINANCING in corporate bonds and the effect it may have on the future earning of the SP 500...

 Same goes for AUS in that the numbers may effect over all ASX 200 SP's going forward.

[Basil]

Glassons is a young cool and affordable brand and has a huge runway of growth ahead of it in Australia in the decades ahead.  James Glasson is doing a fabulous job of growing the brand in a well thought out, steady and conservative way.  Market penetration in terms of retail footprint is only one sixth in Australia of what it is here.  Headwinds from shipping costs will be abating.  It won't surprise me to see significant rationalization of the retail footprint in N.Z. in the years ahead by the new incoming CEO.  I note their average lease term is only 4 years.

FM has made the valid point that apparel sales as a group have been tracking well ahead of norm.
My contention is that affordable, young cool brands with genuine brand power garnered through astute marketing on social media platforms aimed at the younger demographic will hold up a lot better than apparel as a general class.  There have been studies which have suggested young people's mental health was more affected by lockdowns and other Covid measures than other demographic groups.  I think this fuels a sustained spend on peacocking activities for several years.  Research I have seen shows it takes as long as the trauma itself endures, (3 years of Covid) to get over it.

I don't pretend to think I have any special insights into FY24 or FY25 earnings, but I do think there were incredible headwinds in FY22 and its more likely than not that was trough year earnings at 43 cps.  If we go back close to that level of earnings in FY24 or FY25, (that's my base case and I suspect it will be better), HLG trades on about 14 times trough year earnings.  I think $6 is good value with Glassons proven growth in Australia and huge potential on that basis but I confess in the near term I have no idea whatsoever which way the share price will go.  Once we get a sales update for IH FY24 in December 2023, I might possibly make some estimate of FY24 earnings.

[Waltzing]

There is a change in weather patterns also right ...  https://oceanservice.noaa.gov/facts/ninonina.html

 .. more sun next year? and with this more tourism; more people going out and dam the wallet....

That summer wasnt long enough !!!

[Basil]

"Summer wasn't long enough".
Rain gauge that Metservice has in the Waitakere's to the west of us was reported at the weekend to have reached its highest reading in the first half of this year since records began for the same comparative period 120 years ago.  Right off the charts or words to that effect is what was said.  I gathered from that if records began several hundred years ago, the first half of 2023 would likely still be an all time record.

[Buzz]

At 22.5% off ATH and 12.5% off the recent spike on NZX50 inclusion, it looks like the market doesn't agree and that this would be a risky time  for capital sensitive investors to enter, or hold, except if they weren't capital sensitive and held purely for dividend returns, prepared for any eventuality with the SP movements.

[Basil]

Speaking of dividends I think one thing that's holding HLG back is that dividends are now only partially imputed.  Okay we got 48 cents in total in December and April but imputation credits of only 5 cps so there was a lot of tax to pay on that and the net dividend was quite a bit less than one recent year we got dividends of mid 40 cents for the year that were fully imputed.  I think at one point they might have got a bit ahead of their ski's with paying out imputation credits hence there were none with the December 2022 divvy.

Looking at Dec 2023 and April 2024's dividend it's too hard to make the call on what they might be and the extent of imputation credits if any but based on the last 2 divvies which inclusive of imputation credits were 53 cps at $6 HLG trades on a gross yield of 8.8%.  In trough year periods in the past they haven;t been afraid of paying out 100% of earnings which suggests to me Tim Glasson likes his dividends.

P.S. Gross yield is one thing but when investing for income consider how you think dividends will grow over the long run. 

[Waltzing]

There were some flat SP periods but that was before AUS expansion.  AUS GDP flat for next 3 or 4 years.

They wont be reducing the DIV unless they have to. History of paying out is HUGE.

May be  580 again and stays there flat..

here we go ...  CNBC chatter is a HIKE.. .25

https://www.rba.gov.au/

[Waltzing]

AUS on Rate HOLD!!! one more to come in August data dependent...  well see...

[winner (n)]

The new CEO is from Kathmandu?

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KMD/414400/398129.pdf

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HLG/414402/398128.pdf

He gets my tick PWC only hired the best and brightest.

[Crackity]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HLG/414402/398128.pdf

He gets my tick PWC only hired the best and brightest.

Especially their Ozzie tax team

[Basil]

Especially their Ozzie tax team

LOL, Yeah, I know one of the PWC N.Z. team partners and I dare not touch on that subject.  I think there's some backwash effect on their reputation here too.

[winner (n)]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HLG/414402/398128.pdf

He gets my tick PWC only hired the best and brightest.

But an accountant running a fashion house?

What next?

[winner (n)]

Interesting insight from month of June sales data in Retail Watch

NZ clothing sector sales down 2.4% on June last year

Interesting that in-store sales were up 1% but on-line sales were down 15%

On-line made up ~19% of total sales

Just interesting stuff .....HLG in NZ bound to be chugging along in +ve territory

[Basil]

But an accountant running a fashion house?
What next?

Let's be honest.  HLG's N.Z. operations need a disciplined numbers man to turn around their pretty woeful performance.  If James Glasson can make the big bucks in Australia with Glassons, the model here needs change.  I want to see improvement here and a much-improved level of imputation credits going forward.