sharetrader
Page 2 of 294 FirstFirst 1234561252102 ... LastLast
Results 16 to 30 of 4402
  1. #16
    Junior Member
    Join Date
    Oct 2008
    Posts
    3

    Cool My thoughts on HLG

    Okay guys HLG looks pretty good to me. They have already taken a 25% drop in profits and a major hit to the share price. Even so they have a dividend yield of at least 8% p.a. (given nothing really terrible happens to the economy) at their current level of profitability. I believe the price wont fall much further because then that yield gets EVEN better! Imagine the yield when the company returns to its normal profitability in years to come? Perhaps near 20% if bought now. Imagine the share price too. It has no long term debt either, another plus in terms of risk in this current environment. I'm not a trader, so I dont try and pick bottoms, just look for good deals.

    Okay now here is the REAL sweetener ... all speculation however ... my speculation too ... ever heard of PREMIER INVESTMENTS LIMITED??? Well they have recently bought Just Group (JayJays, Just Jeans, Portmans etc). They still have $300m cash left to invest in (my guess) retail! Consider now that HLG is worth $150m ... and therefore well within the price range. Consider also that HLG has no long term debt ... making it even more attractive a target. Its a similar company to the Just Group (synergies perhaps???) and HLG has had its share price halve over recent months. Sources say that Premier is actively monitoring a number of opportunities. Hmmmm, any thoughts folks? Anyone wanting to hire me as their analyst??? LOL.

    Also my DCF of HLG values the company at $2.40ish given a 25% drop in 2009 sales and a 11% drop in 2010 sales followed by 3 years of recovery at 5% growth with a terminal growth rate of 3% thereafter. Very conservative an approach (just incase things get that ugly). Okay now my disclaimer ... I dont do this kind of thing for a living, so do your own homework!!! I also have seen many sell recommendations on this stock .. not sure hold long they have been on for.

  2. #17
    Share Collector
    Join Date
    Mar 2005
    Location
    Porirua
    Posts
    3,866

    Default

    Hi Wilsta, nice first post!

    I haven't followed HLG closely for some time. They appear to have positioned themselves fairly defensively. However, it pays to err strongly on the side of caution with retail in times of economic slowdown. Retail is a high fixed cost business, so a small change in sales becomes a significant change in profits.

    The recent fall in profit was actually more attributable to increased fixed costs than reduced revenue (rents rated a mention, but it is likely that staff costs also increased with changes to minimum wage, holiday entitlements and kiwisaver). These pressures will not revert easily, although eventually the survivor companies may be able to price them in.

    At a variable cost level, HLG is also likely to be experiencing exchange rate pressure on imported stock which may erode gross margins.

    When you did your DCF, did you mean a fall in sales or a fall in profits of 25%/11%? I estimate that if sales dropped by 25%, they would make a loss of around $4m and a further 11% would have them on a loss of about $12m. However, these are fairly extreme falls in sales, so I am guessing you meant earnings. A 25% fall in 2009 earnings would probably be achieved by around a 10% fall in sales.

    In a significant slowdown, it can cost money for retailers to stay in business. Quite often this sets the floor for a new generation of retailer to emerge. While I think HLG is well managed and well positioned, it may be better to wait until you notice a significant number or empty shops at the mall or hear "shock" news of a big retail name or two going under.

  3. #18
    Member
    Join Date
    Mar 2002
    Location
    dunedin, , New Zealand.
    Posts
    272

    Default

    welcome wilsta, interesting thoughts you have.
    take care with the generalisations though.
    hlg's price hasn't really halved in recent months -- it was 480 in july last year, and has actually held up very well over the last few months, that is, since july this year.
    it was 240 at the end of june, having suffered a 3-month slide from 400 at the beginning of april.
    could it be said that the global turmoil of the last 3 months hasn't really affected it at all? cheers, scamper.

  4. #19
    Junior Member
    Join Date
    Oct 2008
    Posts
    3

    Default

    Ah yes I did mean sales, just never mentioned my other assumptions:
    - I expect a semi-significant staff layoff,
    - I also expect a reduction in other variable selling/other expenses e.g. advertising maybe?? but on an aggregate level. Whether they make a loss or profit in 2009/2010 doesnt have terribly much weight in my DCF. The terminal value is where its at. I probably should have assumed higher COGS and lower gross margin due to exchange rate pressures .. but did not. I think they use forward contracts on currency which may help cushion them a little. I should mention that I have bought HLG at $2.50 .. not really worried if it falls short term (actually I'm hoping it will to get more) but don't like to pick a bottom and felt I had to get in there sooner rather than later just so I have some.
    Last edited by Wilsta; 04-11-2008 at 11:05 PM.

  5. #20
    Share Collector
    Join Date
    Mar 2005
    Location
    Porirua
    Posts
    3,866

    Default

    Thanks Wilsta. I have used DCF's in investment for the last 10 years and continue to do so. In my experience, waiting 3+ years through low or negative earnings is not usually worthwhile. As a rough rule, the share price does not sustain a move against the direction of earnings change in the next 12 months.

    In the current market, I can find many companies trading at around half my DCF - this is very unusual. When I started using DCF, I used to buy at around 67% of valuation and sell at 95%. By the height of the boom, I was having to buy at around 95% and sell at 130% (although there were other factors I was giving more weight to by then).

  6. #21
    Junior Member
    Join Date
    Oct 2008
    Posts
    3

    Default

    I agree with you Lizard .. the DCF I mentioned is a worst case scenario ... I don't actually think it will get quite that bad for HLG .. maybe for other retailers / consumer discretionary ...

  7. #22
    Senior Member
    Join Date
    May 2000
    Location
    New Zealand.
    Posts
    1,321

    Default

    I'm disappointed that the Hallensteins store in Dunedin is having a 'buy get another one cheaper' sale on Hoodies.

    It can only encourage the undesirable types to stock up in their clothing of choice...
    Death will be reality, Life is just an illusion.

  8. #23
    Senior Member Toulouse - Luzern's Avatar
    Join Date
    Feb 2002
    Location
    Wellington, , .
    Posts
    904

    Smile Spike

    Hi
    HLG spikes $1.02...

  9. #24
    Advanced Member
    Join Date
    Feb 2000
    Location
    , , .
    Posts
    1,646

    Default

    Quote Originally Posted by Toulouse - Luzern View Post
    Hi
    HLG spikes $1.02...
    Someone obviously pushed the wrong button - I'm sure they meant to buy at 282, not 382. Broker should have queried.

  10. #25
    Member
    Join Date
    Oct 2003
    Location
    , Auckland , New Zealand.
    Posts
    390

    Default

    I think you're right, Colin. But Teletext was showing 382 for much of the day and never any explanation, correction or apology. You'd think someone would have queried it before posting.

  11. #26
    Advanced Member
    Join Date
    Jul 2004
    Location
    Bolivia.
    Posts
    1,980

    Default

    I would say Lawso that most people look at the internet prices these days.

    Teletext is pretty old skool!!

  12. #27
    Senior Member
    Join Date
    Dec 2001
    Location
    , , New Zealand.
    Posts
    813

    Wink

    Credit card sales show signs of movement upwards....
    Boppers beginning to buy again....
    Trendies getting backinto things .....
    Australia not doing so bad.....
    If the Ski Fields are anything to go by, then the
    younger generation are getting itchy and spending.
    HLG are onto it. & I am getting back in .
    Cheers BB

  13. #28
    Senior Member
    Join Date
    Dec 2001
    Location
    , , New Zealand.
    Posts
    813

    Thumbs up Hlg

    Nice rise to 340 cents
    then 10c drop Friday !!
    Good example of traders at work ?
    BB

  14. #29
    Veteran novice
    Join Date
    Jun 2007
    Location
    , , .
    Posts
    7,132

    Default

    Quote Originally Posted by Billy Boy View Post
    Nice rise to 340 cents
    then 10c drop Friday !!
    Good example of traders at work ?
    BB
    Or it could be just the thin January trade.

    Only 1,000 shares traded yesterday.

  15. #30
    Senior Member
    Join Date
    Dec 2001
    Location
    , , New Zealand.
    Posts
    813

    Default

    Quote Originally Posted by macduffy View Post
    Or it could be just the thin January trade.

    Only 1,000 shares traded yesterday.
    Yep, could be, but on a Friday ???
    Lets see next week.
    BB

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •