13.01.2025
This is another company that I have been following for years and years.
For a very long time I have been fascinated with the arithmetic and business model of ‘pawnbroking’ so much so that in the late 1980’s I owned over 15% of the Harvey & Thompson equity, but that is another story.
Last Thursday, 9th January, saw the UK’s largest pawnbroker and a leading retailer of high-quality new and pre-owned jewellery and watches, provide an update on its recent trading performance for its financial year to end-December 2024.
It reported that, in line with expectations, trading had been robust in the seasonally important fourth quarter.
CEO Chris Gillespie stated that:
"The Group delivered a robust performance in the seasonally important fourth quarter.
I cannot thank our people enough for their hard work and dedication to customer service in a period of further progress for the Group.
I look forward to updating the market fully when we report our preliminary results."
Those results will be published on Tuesday 18th March.
However, before that date I would expect the group’s shares, now around 349p, to have started to recover to trade around the 375p level of last November.
H&T provides a range of financial products tailored for a customer base which has limited access to or is excluded from the traditional banking sector, such products include Pawnbroking, Retail and Foreign Currency.
The group’s store estate of over 280 stores across the UK helps to provide customers with small-sum short-term non-recourse pawnbroking loans secured by pledged personal property, which consists primarily of gold, jewellery items and watches.
It also buys and sells new and pre-owned gold, jewellery items and watches along with providing foreign currency exchange, international money transfer, third-party cheque encashment and watch repair services to its customers.
Analyst Gary Greenwood at Shore Capital Markets will be updating his research note on the group following the mid-March results date.
He has estimates out for the year to end-December 2024 for £29.5m (£26.4m) of adjusted pre-tax profits, lifting earnings up to 51.0p (48.7p) and jacking its dividend per share up 1p to 18.0p.
For the year now underway he has £30.7m profits, 53.0p earnings and a 19.0p dividend per share as his estimates.
For the next year - £31.9m profits, 55.1p earnings and 20.0p in dividends per share.
At Canaccord Genuity Capital Markets, its analysts Portia Patel and Justin Bates have a Buy rating on the group’s shares, looking for 531p as their Price Objective.
They look for £29.0m profits for 2024, £32.2m for this year and £34.8m for next year, lifting earnings from 49.2p to 54.6p then 59.0p per share respectively.
Those broker estimates make the shares of the H&T Group, now at 349p, stand out to me as a cracking purchase, with its historic price-to-earnings ratio of only 6.9 times – which is far too low a valuation.
I predict that they are on the rise again, with that 375p being an easy early target and thereafter 400p and above.
(Profile 06.07.22 @ 332.50p set a Target Price of 400p*)
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