HLG - Hallenstein Glasson

[Beagle]

It is interesting that HLG are trading on 9-9.5x earnings and a 12% gross yield right now. It's like the market still doesn't believe they can keep delivering so if they do deliver a FY result of around $29-30m then I'd expect they head towards $6.00 towards the end of the year...

^^^^^^ Agreed but I am simply in this for the regular tasty dividend feeds ! Anything else is a bonus.

[JeremyALD]

It is interesting that HLG are trading on 9-9.5x earnings and a 12% gross yield right now. It's like the market still doesn't believe they can keep delivering so if they do deliver a FY result of around $29-30m then I'd expect they head towards $6.00 towards the end of the year...

I think it's more about whether they can repeat this year. We know they are going to have a good second half.

If you look back at Hallensteins long history they have struggled to put multiple good years together. Often they have a couple of good years, then a bad year. NPAT results have often fluctuated about 30% year on year.

This year has been so good I think the market is unsure whether if it can be repeated. Is this a step up, or just another one of those really good years? Time will tell, but in a highly competitive environment it will be interesting to see if they can continue to grow next financial year. I struggle to see how they can do much better than this in NZ but AU remains a definite opportunity which until now has delivered very poor performance.

[Filthy]

I think it's more about whether they can repeat this year. We know they are going to have a good second half.

If you look back at Hallensteins long history they have struggled to put multiple good years together. Often they have a couple of good years, then a bad year. NPAT results have often fluctuated about 30% year on year.

This year has been so good I think the market is unsure whether if it can be repeated. Is this a step up, or just another one of those really good years? Time will tell, but in a highly competitive environment it will be interesting to see if they can continue to grow next financial year. I struggle to see how they can do much better than this in NZ but AU remains a definite opportunity which until now has delivered very poor performance.

Yes, I think there was a reference to pink & purple flamingo shorts a few pages ago? Unfortunately fashion can be fickle.
Some styles might be in vogue this year… but next year, everyone might like green ones.
Very hard to stay ahead of the game every year and it can all turn on a dime.

my two cents worth -

+/ves
Impressive reaction to international brands that started to creep into NZ i.e. Top Shop / H+M etc
Strong growth in online sales (I’m enjoying spinning the wheel, the 30% off emails etc)
Proud history, well-known brand, appeal to wide age demographic, strong accounts
Network in ‘small-town’ NZ hard to replicate by bigger brands.
Good modern feel to their stores, i.e. DJ in Lambton Quay, electronic display in Queensgate
Current ‘growth’ in AU / Glass looking good
Easy to keep track of progress (can walk into stores, see merchandise, judge how busy they are, talk to staff etc)

-/ves
Still an obscene amount of risk from other international online channels i.e. ASOS/Boohoo/Amazon (despite tax changes)
Saturated clothing market - highly competitive, erratic industry & consumer driven
Discretionary spending category which can be hard-hit in a downturn (question mark over how defensive it is?)
Current ‘growth’ also scary (think MHJ in the USA)

Summary
last couple of years have been great (sad that I may have missed the boat on this one)
A mature, cyclical divi stock, rather than the ‘growth story’ some are trying to sell it as.
Those who got in early will be doing very well (well done guys&gals)
Others will have to be wary, as they might be buying near the top of ‘the cycle’ i.e. July 2006, May 2013….
Currently too far away from the next divi to consider for me, but may dip my toes back in the water later in the year ‘at the right price’

[Beagle]

Good luck getting it much cheaper than the current price. I think your are really overstating the overseas / online risk, (the vast majority of people want to try the clothes on for fit, feel, fabric and fashion look before buying) and I thin k you're understating the growth potential of Glassons in Australia.
Happy holder and very happy with how management are running this company.
Worth noting that Timothy Glasson owns just over 20% of this company so management are highly motivated.

[James108]

I think you are really understating competition from boohoo/asos as well as Zara if they continue to expand. Anecdotally it seems like the majority of females in their 20's are using these websites and usership is growing. Also it seems strange to discount several years of poor performance in Australia following one year of good performance.

However am a holder, I feel like they have a strong brand in NZ and there is large potential from Aus (although wouldn't count on it). I also like that they return most of the cash to shareholders. Your reminder of Timothy Glasson shareholding is also comforting.

[winner69]

So just how 'cyclical' is HLG ...judge for yourself. Profits and shareprice below

Good thing is they generally do very well for 2 years in a row ....so shareorice might reach $6

Don't know why punters say HLG have bad years. Year after year they make solid returns (ROE etc etc) ....but just some years they do less well (which is not bad)

[iceman]

Thanks for the good chart winner. As you say, they haven' t really had a bad year for awhile and looking at the chart they look like a very good, safe divie payer with their clean balance sheet.

[Beagle]

I think you are really understating competition from boohoo/asos as well as Zara if they continue to expand. Anecdotally it seems like the majority of females in their 20's are using these websites and usership is growing. Also it seems strange to discount several years of poor performance in Australia following one year of good performance.

However am a holder, I feel like they have a strong brand in NZ and there is large potential from Aus (although wouldn't count on it). I also like that they return most of the cash to shareholders. Your reminder of Timothy Glasson shareholding is also comforting.

I'm not pretending to know all the latest websites that others might claim the young ones are using but I believe HLG has a great brand and footprint in N.Z. and Aust and as mentioned above I still believe a significant majority of customers want to try clothes on before buying them. We've been hearing from the naysayers for quite a while now that ABC or XYZ would hurt HLG and the exact opposite has been the case. In terms of their digital offer I think they are really hitting their straps. In terms of their success in Australia now I think its clear the new Euro format stores are really resonating with the intended target market. Results speak for themselves and like you I am pleased they return almost all profits to shareholders, (very, very few companies do). Their consistent high fully imputed dividends offer very strong appeal for people looking to raise the average dividend yield of their portfolio.

Winner, good chart mate, if they hit 50 cps this year that suggests $6 is possible. As Iceman says, HLG has a nice clean balance sheet. Also they have no debt, very strong cash flow (30 cps this most recent half year), superb industry leading stock turn and no intangible assets like a LOT of other companies do to inflate their statement of financial position.

Very attractive financials and the annual reports are very attractive too

[Filthy]

I think you are really understating competition from boohoo/asos as well as Zara if they continue to expand. Anecdotally it seems like the majority of females in their 20's are using these websites and usership is growing. Also it seems strange to discount several years of poor performance in Australia following one year of good performance.

However am a holder, I feel like they have a strong brand in NZ and there is large potential from Aus (although wouldn't count on it). I also like that they return most of the cash to shareholders. Your reminder of Timothy Glasson shareholding is also comforting.

yep, well put.

appreciate it is not always easy for holders to contain their excitement sometimes, but punters would be wise to always look at both sides of an investment case with a clear open mind, with some level of objectivity eh...

those buying in at '$6' (if/when it gets there) might find the following few year(s) of this 'cyclical' stock might be those 'years that they do less well' which could see their investment halve (and having to wait for the next ramp up to exit).

the dividend yield is very appealing (as roger rightly points out) and I reference my positive comments in 2193, noting I am not 'bagging' this as a stock at all

[couta1]

I'm holding a lot of them at average buy price of $3.48, plus I've had too large divvies since buying. Happy just to hold and see where it heads to, SP's always drift lower during periods of no news and boredom. PS-Had an even bigger holding to obtain the divvy last November but one must always think of the low liquidity factor when in this situation.