HLG - Hallenstein Glassons Holdings

[winner (n)]

Tut tut, naughty HLG - public censure

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HLG/415694/399621.pdf

[Waltzing]

Might as well delist in NZ and go ASX... NZX needed the money....

Winner()  how the new document reader works answered in the General news..

[Shareguy]

FB have started full coverage and have come up with $5.60 as TP. Underperform.

The market appears to be pricing a minimal decline in earnings and we believe risk return is skewed to the downside.

[winner (n)]

Update probably next week.

F23 will be pretty good

Looking ahead Sharon at ANZ said this today -

ANZ card spending data shows spending across the board losing momentum, with more discretionary items such as clothing under particular pressure.

[Waltzing]

See if IXXXXxxxxx moves to QU EEEEE eeeee... ran out of breath... opera singers carry the voice from the lower abdomen...

not practised... but that low hum is the fat lady warning up in wellington before the sept opening of the books?

could be a pretty demur summer then.....

That will hit Kangas as well if the property market in shangri la goes you know what ....

shaping up to be the perfect storm then..... horizon looks dark out in the gulf as those cruisers head back to port... bunkering going up in cost daily...

[Cod]

Return to October lows, maybe beyond.

You cannot view this attachment.

[Basil]

Have to reluctantly agree, a return to last year's support area in the low $5's is now looking more likely.  TA looks pretty discouraging.

[Waltzing]

what was the highest DIV percentage they have ever paid... more then 13?

what if the DIV isnt cut much but market sells off on global market trama...

what a nice buy it will be ... waiting... close some NZ stores would be a good idea? 

 

[winner (n)]

Numbers out ...much in line withbBasil's downgraded numbers

The Company advises that Group sales for the 12 months ended 1 August 2023 were $409.71 million, an increase of 16.7% on the prior year ($351.21 million). 

Group net profit after tax is expected to be within the range of $31.8 million to $32.3 million, an increase of approximately +25.2% on the prior year ($25.6 million).  The results of the prior corresponding period included multiple store closures across Australia and New Zealand due to lockdowns for much of the first three months of the prior year. 

The balance sheet for the Group remains strong and stock levels continue to be well controlled.


Suppose we now move on to guessing F24 numbers

[Waltzing]

Not before putting the numbers in to the Variance model we wont and we will see clearly where the Variances HIDE...

However today is a testing day for Carbon Fibre...

[ezek22]

$32 million in earnings for FY32. Still growing with minimum capital need. That put them on 11 pe. and they have more than one year of earnings in cash... Pretty fair valuation for a great company I think.

[Basil]

Numbers out ...much in line withbBasil's downgraded numbers

The Company advises that Group sales for the 12 months ended 1 August 2023 were $409.71 million, an increase of 16.7% on the prior year ($351.21 million). 

Group net profit after tax is expected to be within the range of $31.8 million to $32.3 million, an increase of approximately +25.2% on the prior year ($25.6 million).  The results of the prior corresponding period included multiple store closures across Australia and New Zealand due to lockdowns for much of the first three months of the prior year. 

The balance sheet for the Group remains strong and stock levels continue to be well controlled.


Suppose we now move on to guessing F24 numbers

Mid point of guidance is $32.05m giving an indication of eps being 53.7 cps, my revised estimate was 55 cps so a little lower than my estimate and a 1H / 2H split of 35 cps / 18.7 cps. 

In terms of the guessing games for FY24's outlook I offer up this insight.
Recent evidence of performance is almost always the best indicator for the future.
2H eps represent just 34.8% of HLG's FY23 profit.  The previous lowest contribution in 2H in the last 5 years was 40% so this does support the contention there has been a fundamental shift in consumer behavior as well as ever increasing cost pressures.

In terms of the outlook for yield, another thing that's become crystal clear in the last year as they emptied their imputation credit account, is they are very unlikely to offer full imputation credits with dividends again in the foreseeable future.  In fact, I would go further and suggest the best guide we currently have as to the imputation level is what we saw in the last year with only 5 cents of imputation credits attached to the 48 cents of dividends.

Preliminary thoughts.
Maybe recent earnings of 18.7 cps is where this settles in the current consumer downturn and if so, maybe that's a more normal 1H / 2H  55/45 split in FY24 so maybe they can earn 55/45 of that in 1H FY24 = maybe 23 cps in first half and 19 cps 2H for 42 cps earnings in FY24, about $25m net profit?

Looking at this from a dividend hounds perspective maybe they can pay 40 cps in FY24 or maybe not and with say 5 cps of imputation credits as per FY23 that's 45 cps gross / $5.90 = 7.63% gross yield. Is that okay in a trough year or not, is for others to decide for themselves.

Longer term, Glassons Au growth will shine again, of that I am very confident but the next 12 months could be quite challenging or maybe consumer sentiment picks up again earlier than next August, frankly its anyone's guess.   I do note TRA offer a much better yield and are weathering the current economic challenges a lot better than HLG.  Further, HLG's index inclusion event is behind them whereas TRA's is ahead of them.

Agree with you Ezek22 and as you point out, their balance sheet is very robust but nevertheless its always about the outlook and that looks fairly challenging to me at least for the next year.

[winner (n)]

Over the last few months Group sales were down 4%/5% on same period last year. Seems to be a common theme amongst rag traders.

We'll have to wait until the full report comes out to get an idea of its group wide or just specific to NZ or even worse if the Glassons OZ bubble has burst.

Interesting that this years profit of $32 is less than F21 profit if $33m even though sales are $60m higher. Just confirms that all those covid subsidies flowed straight through to the bottom line (and dividends)....they didn't really need that support because over the duration of covid sales weren't really affected. At least Aussie taxpayers fronted up with a fair bit of dosh

[winner (n)]

ABS Retail Data July sales reports Clothing, footwear and personal accessory retailing rose 2.0% ($56.7m) in July, in seasonally adjusted terms.

Love those seasonally adjusted numbers being positive — in actual $ July sales were down 1.6% (~$50m) on July last year

So HLG sales bit weak lately in line with market

[winner (n)]

Westpac saying NZD could depreciate 10% over the next year

That could hurt HLG margins.

One analyst pointed out that over time HLG gross margin has been tied to the USD ...but recently Glassons AU have caused that relationship to break down because it's a strong brand and as such more resilient to those headwinds

Go Glassons AU