HMY - Harmoney Corp Limited

[thegreatestben]

Not a lot of volume eh, has gone down far less than other holdings. Stock picks comp is telling me HMY doing just fine

[Rawz]

I have been following HMYs competitors christmas qrt announcements and on the back of them I have even higher conviction in HMY.

Will post some analysis once i have time to update, unless someone wants to beat me to it

HMY so cheap but boy oh boy the SP is in a rut. Not sure what more they need to report to get it moving. Patience required and lots of it in this environment.

[Rawz]

The efficient market theory is wrong!! The markets are irrational!!!

[winner69]

The efficient market theory is wrong!! The markets are irrational!!!

Behaving a bit like HUM.ASX …..the better it looks the ‘cheaper’ it becomes

[Muse]

not a single buyer on the asx depth!! why is this so unloved!

haha oh dear. NZX not much better - dropped 2.2% on only $522 of turnover.
Like watching paint dry. That's not a bad thing. You have to ask yourself how important short term SP is or what it really reflects. On one hand you have a $1.2bn marketcap company like briscoes with its SP going up and down a few percent off tiny volumes. Was that highpoint really what the company was worth? Do short term gyrations in a low liquidity stock really indicate anything other than what you might be able to get out at at a given point of time? If you are an investor, with conviction, ignore the daily movements with the exception if you believe it opens up buying opportunities or if you think you have lost the plot completely. I don't listen too much to what a few single share purchases are telling me.

If the company can continue to grow its book, maintain or grow its net interest margin, and scale against its fixed cost base - then earnings should start flowing this year and ramp up quickly in consecutive years. When you see a definable net profit figure, and growth, that will bring interest in investors, and a rerating. Sort of like what happened with Rakon. The company needs momentum in earnings and a small bit of time to do that and if all that is said about the company pans out you'll see the SP pop. The company needs to regain the markets interest and faith, and thats fair enough.

I have great interest in this company because I think it can achieve serious NPAT in 2-3 years time. I wouldn't be interested if that picture expended to 5-10 years. I look at companies like serko or pacific edge trading on far higher marketcaps with earnings far further out than harmoney. Harmoney is about as far afield early stage as I get.

[Rawz]

Behaving a bit like HUM.ASX …..the better it looks the ‘cheaper’ it becomes

HUM should buy HMY for 4x revenue. It would be the best thing they could ever do and might stop their slide

[Muse]

I was amazed they got the float off at the price they did. Great for raising money while preventing dilution at a high premoney valuation but guaranteeing a poor aftermarket. Never list a business too early. That said - for recent investors - I'd say the daily SP is a unique opportunity. I struggle to find any other NZX listed company where you can see a realistic pathway to trebling in value in 3 years. While not without risk and clearly in a down trend - having achieved NPAT breakeven its now time for earnings momentum to carry the day. Fortunately - that isn't years off - and should be reflected in earnings announcements this year and into the future.

[Muse]

Any thoughts on why HGH hasnt kept accumulating if the price is attractive?

Well they have - their initial investment was successful for them and they completed on market purchases of 1.7 million additional shares about half a year ago. That took them from 8.4% to 10.1%. They aren't a trading house however, and their core business of lending is capital intensive, so together with an already successful first investment and non core follow on, would raise some eyebrows if they kept plowing into it

[Rawz]

We just need to get to FY22 when they will have a $650m loan book and do ~$100m revenue (yes above guidance, i am expecting an upgrade next quarter). the transition away from p2p loan book will be 90% complete and the actual financials will look close to the pro-forma financials. Possibly a lot of investors on the sidelines not interested until this point.

[winner69]

Any thoughts on why HGH hasnt kept accumulating if the price is attractive?

I think the reason for buying some last year was just some financial engineering …..ie to manage how much they had to write down their holding ……affects the P&L if you get my gist.

In doing so they went over 10% which could be some strategic importance one day but I doubt that was the motivator.