Analyst Andrew Watson at brokerage N+1 Singer was previously forecasting pre-tax profits up 19 per cent to £8.1m on flat revenues of £89m in the 12 months to end-December 2016, but now expects to upgrade these estimates by around 10 per cent, implying a new EPS forecast of 18.7p, or 25 per cent higher than in 2015. A material upgrade to next year's numbers is firmly on the cards, too. That's because a sustained gold price around the current level of $1,300 per ounce (oz), coupled with ongoing sterling weakness, will have a positive effect on Mr Watson's previous 2017 pre-tax profit and EPS forecasts of £9m and 19p, respectively. I would also flag up that the company's personal unsecured loan book has surged by 30 per cent to £8.2m since the end of June, outpacing the 4 per cent growth in the pledge book to £40.5m, and highlighting the ongoing development of its other profitable lending activities.
For instance, a brokerage agreement with Cash Converters and its franchisees has introduced H&T's personal loan product into 150 Cash Converters stores, and online too. This new distribution channel can only underpin analysts' expectations of further upside to their 2017 earnings estimates. A new high-end operation on Old Bond Street, in London's Mayfair, to cater for a more affluent customer base looks a smart move, as does investment in a new underwriting system to support the company's online lending platform.