HILLS Limited (HIL)

[Huang Chung]

A quiet transformation is taking place at Hills.

Famous for the iconic Hills Hoist, Hills is now firmly a a technology focued company, after getting burned badly in recent years with their 'old world' businesses.

Hills is now led by the tech savvy Ted Pretty, formally of Telstra.

Some really interesting announcements over the last month suggest the transformation for old world to new world is complete, and growth is back on the agenda.

http://stocknessmonster.com/news-item?S=HIL&E=ASX&N=790800

http://stocknessmonster.com/news-item?S=HIL&E=ASX&N=791116

http://stocknessmonster.com/news-item?S=HIL&E=ASX&N=791251

http://stocknessmonster.com/news-item?S=HIL&E=ASX&N=791545

Looks like it could be an interesting ride, so grabbed a few in the low $1.80s during the week.

[steve fleming]

http://www.eurekareport.com.au/video/inside-line/hills-targets-healthcare?utm_source=exact&utm_medium=email&utm_content=724338&utm_campaign=Saturday&modapt=

Alan Kohler today with his interview of Ted Pretty on the transformation of HIL

[steve fleming]

This broker commentary provides a bit more flavour on the transformation:

Not only does today’s ACCC ruling confirm HIL’s divestment of its most troublesome assets, it also paves the way for: 1) another round of cost reductions; 2) a continuation of the buyback; and 3) potential acquisitions. We see various avenues to future EPS upgrades, also noting HIL’s leverage to a recovery in business conditions. We have made negligible changes to forecasts, with our blended (DCF/EV-EBIT) price target rising to A$2.15 on higher market multiples. We maintain our positive view, with HIL trading on only 10.6x FY14F EBIT (15% discount to market) despite a rare combination of cyclical leverage, cost out potential and acquisition capacity. Add maintained. The regulator delivers Having signalled the intention to further investigate concerns around the Fielders deal in December, the ACCC has announced that it will not oppose the HIL/BSL transaction. This now allows HIL to formally realise A$80m (cash) for assets which we forecast to have generated cA$1m in EBIT for the current year. We now expect HIL to be in a net cash position of cA$20m by end FY14. Opportunities aplenty We see a number of avenues for EPS upgrades. In the near term, we believe the Orrcon/Fielders deal opens up the opportunity for further cost reductions as HIL rationalises its corporate function. Beyond this, acquisitions are firmly on the agenda, where we estimate HIL has capacity of cA$150m. We have analysed a number of scenarios overleaf and, hypothetically, were HIL to execute a transaction of this size on an 8x EBIT multiple (similar to previous deals), this would result in 27% upside to our FY14F EPS (pro-forma) yet leave gearing at a reasonable 33% and EBIT interest cover a comfortable 7.4x. Impossible to ignore In what is a reasonably expensive small cap market, HIL trades on a very attractive 10.6x FY14F EBIT despite a host of tailwinds to the investment thesis. It remains relatively under-owned by the institutional community yet offers the rare combination of cyclical and company-specific growth drivers. Furthermore, we see the upcoming result as the next catalyst for the stock as management details the next phase of its cost reduction program (none of which is factored into our forecasts). We maintain our Add rating, continuing to view HIL as a standout in the current market.

[stoploss]

http://www.eurekareport.com.au/video/inside-line/hills-targets-healthcare?utm_source=exact&utm_medium=email&utm_content=724338&utm_campaign=Saturday&modapt=

Alan Kohler today with his interview of Ted Pretty on the transformation of HIL

Steve , do you think you get value from the Eureka report ? Is it worth spending the cash ?
Cheers S/L

[steve fleming]

Steve , do you think you get value from the Eureka report ? Is it worth spending the cash ?
Cheers S/L

Hi S/L
I think it is worthwhile, probably the best of the mainstream newsletters in terms of content and coverage they provide on small caps.
I think it helps that Alan Kohler is a big supporter of small/micro caps.
They have recently hired a new small-cap analyst who has provided interesting analysis/earnings estimates (broker quality) on the likes of EPD, AZV and MBE in recent weeks

[Huang Chung]

Share buyback suddenly stopped and the Chairman topped up with a few more shares bought on market.

Curious to know why they've stopped the buyback.

An acquisition in the pipeline maybe?

[Wolf]

Do you mean few weeks ago or is this recent? Can't seem to find any more news.
Sounds like Hills might have possibly been behind the Azure Healthcare take over offer? In which case it failed

[Huang Chung]

12 share buyback notices in March....but not one lodged since 27 March.

April was the month for Change of Director's Interest notices - five in all.

No ASX releases of any description so far in May.

Just wondering if something's brewing....

[NZSilver]

These guys seem to be the jack of all trades - specialising in multiple sectors; washing racks, satellite communications, nurse call devices, security cameras + more....

[Huang Chung]

These guys seem to be the jack of all trades - specialising in multiple sectors; washing racks, satellite communications, nurse call devices, security cameras + more....

Probably less so now that one to two years ago. Other than the light metals products, they are pretty much focused on electronics and technology, particularly related to healthcare, security and home.

Turn back the clock a bit and you'll see they used to have interests in metal roofing, steel pipe manufacture, ladders and even galvanizing.

[Huang Chung]

False alarm.

The buy-back has kicked in again, and the Chair has been buying as well.

[Wolf]

Pretty peculiar depth today. Bot trading??



Buyers

Buy Quantity

Prices



1
2,031
$1.675


1
2,031
$1.670


1
2,031
$1.665


1
2,031
$1.660


1
2,031
$1.655


1
2,031
$1.650


1
2,031
$1.645


1
2,031
$1.640


1
2,031
$1.635


1
2,031
$1.630


10
20,310






Prices

Sell Quantity

Sellers



$1.740
8,387
2


$1.745
2,507
2


$1.750
29,308
7


$1.755
8,852
3


$1.760
4,031
2


$1.765
2,031
1


$1.770
2,031
1


$1.775
2,031
2


$1.780
2,031
1


$1.785
2,031
1



63,240
22

[winner69]

Still making plenty of money. Good result

Might see a resurgence in the shareprice in coming months

[Daytr]

I met with these guys in Adelaide a few years back & I was very impressed by them. Seemed to be a very smart & vibrant company. Its amazing they have been able to compete with everything made in China these days.