H&T's core pawnbroking business performed well in the first six months of this year, increasing gross profits by 13 per cent to £22.8m, and this segment now accounts for three-quarters of group profits, up over 8 percentage points on this stage a year ago. However, overall profits were dragged lower partly because of weaker gold prices which trimmed gold purchasing profits by £2m to £5.5m, but also due to the costs associated with its ongoing expansion programme. Still, with the core business performing well, and the shares rated on only eight times earnings estimates, this looks like a buying opportunity to us.
The pawnbroking side delivered a 13.6 per cent rise in the size of the pledge book to a record £46.8m, driven by an expansion of the estate with 15 sites added in the first half to take the total to 175 sites, up from 146 at this stage last year. In addition, a further nine sites have been acquired or agreed provisionally in the second half. However, it usually takes two to three years to achieve profitability from a greenfield site, and H&T believes that the cost of the 37 sites opened in the last 18 months trimmed profits by £1.4m.
Analysts at Peel Hunt are forecasting full-year adjusted pre-tax profits of £17.6m and EPS of 36.1p (from £22.9m and 49.9p in 2011).
| H&T GROUP (HAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 292p | MARKET VALUE: | £107m | |
| TOUCH: | 291-292p | 12-MONTH HIGH: | 415p | LOW: 240p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 221p* | NET DEBT: | 42% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 55.6 | 10.3 | 21.2 | 3.75 |
| 2012 | 65.6 | 7.5 | 15.4 | 3.80 |
| % change | +18 | -27 | -28 | +1 |
Ex-div:12 Sep Payment:12 Oct *Includes intangible assets of £18.4m, or 50p a share | ||||
