Back in 2013, we saw the effect a fall in the price of gold can have on pawnbrokers such as H&T Group (HAT). It's still 29 per cent down on its 2013 high-water mark, but a floor has arguably been established around the $1,100/ounce mark. Anyway, the price of physical bullion outstrips the spot price significantly, as the latter is generally predicated on ETF contracts. So, companies like H&T generally have headroom over the official price to underpin their personal loan businesses.
The pawnbroking division saw gross profits level on the prior period at £28.4m, as competition and store closures offset the rise in the gold price there, though the value of the pledge book did increase. The retail division, meanwhile, grew revenues 3.4 per cent to £30.5m, with gross profit increasing 8.7 per cent to £11.2m. Inventory efficiencies were driven through the introduction of planograms - diagrams showing where products should be placed to increase customer purchases.
The personal loans segment delivered gross profit of £3.5m in 2016, up 46 per cent. Happily, an ongoing review of the high-cost short-term credit market by the Financial Conduct Authority is not expected to have a significant impact, as none of H&T's loans exceeded the interest cap.
Analysts at Numis forecast profit before tax of £10.8m, giving EPS of 23.9p in 2017 (from £9.7m and 20.9p in 2016).
H&T GROUP (HAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 274p | MARKET VALUE: | £101m | |
| TOUCH: | 268-274p | 12-MONTH HIGH: | 312p | LOW: 195p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 267p* | NET DEBT: | 6% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 130 | 17.0 | 35.9 | 11.85 |
| 2013 | 99.3 | 6.7 | 13.4 | 4.80 |
| 2014 | 87.7 | 5.5 | 11.8 | 4.80 |
| 2015 | 89.2 | 6.8 | 14.9 | 8.00 |
| 2016 | 94.2 | 9.7 | 20.9 | 9.20 |
| % change | +6 | +43 | +41 | +15 |
Ex-div: 4 May Payment: 2 Jun *Includes intangible assets of £18.2m, or 49p a share | ||||
