HLG - Hallenstein Glasson

[nextbigthing]

H & M would be a credible threat. They sell great stuff and being a worldwide company, they'd have pretty good purchasing power. They have a slightly more upmarket impression but for similar prices to HLG.

[Jaa]

Roger you remind me of the investment manager in Peter Lynch's book "One up on Wall Street" always looking at the numbers and a company's historical performance rather than asking the actual shoppers where they want to shop. Read that article I posted, fast fashion retailers are killing off companies just like HLG where they open.

H & M, Uniqlo and Forever 21 already have flagship stores in Australia competing with HLG's 30 Glassons stores. In March, I visited H & M in the old GPO in Melbourne. Stunning location, packed with customers and stylish clothes with shorts from $AUD5. How can you compete with that?

HLG have a bit of time, good management and capital available so maybe they can reinvent themselves or partner with one of the big boys like Barkers did with Top Shop but don't just assume it will happen!

[Beagle]

Next you'll be telling me Jetstar and China Eastern airlines are going to kill off Air N.Z. LOL.

[Biscuit]

stylish clothes with shorts from $AUD5. How can you compete with that?

Apparently one of the reasons Forever21 customers keep going back, is because the clothes only last two or three washes.

http://www.newyorker.com/business/cu...ing-forever-21

[Snoopy]

Payout ratio (5yr average): (70.5 +87.0)/ 150.1 = 105% (Not sustainable?)

Average Annual payout (5yr average): 31.5cps

If we consider a yield of 6.5% over today's business cycle being 'fair', then my valuation for HLG is:

31.5/ 0.065 = $4.85

Well my furry beagle friend - You'd struggle to find a more clean and tidy balance sheet than HLG's one. No B.S. intangible assets or goodwill, no debt other than trade creditors, moderate stock level's and excellent stock turn.
You've answered you own question as to why people invest in this stock...for the excellent dividend feed. When my much loved Beagle, now departed sensed a good feed, she was in with all the enthusiasm of a hungry dog with tail wagging and little pot belly filling up...she could smell a good feed from 100 yards off...so what's wrong with your nose mate You needn't apply for a job at the airport as a beagle hound out there if you can't see the feeding that goes on here..if you can't smell it, I put fair value in bigger font for you so maybe you can see it

I can't say my bare HLG valuation is not compelling. But look back a line and you will see the dividends amount to 105% of earnings over the period. If you reduce the payout over five years to $1.50 (the actual earnings) then eps is 30c.

30 / 0.065 = $4.62

Granted that still looks attractive compared to the $3.50 market price. But our dollar is falling harder than expected. And I have observed that HLG tends to sell at 'price points'. So a $20 T shirt will still be a $20 T shirt, independent of what the actual supply cost was. How long before our consumer is reeducated to buy their T shirts for summer at the $25 price point? And how much profit will HLG lose before this happens?

Meanwhile on the Skellerup thread I am predicting very similar returns to what is available buying HLG, by buying SKL at $1.30. However NZ manufacturers should be getting a tailwind from the lower dollar. And the economies of the new factory, due to be completed in Christchurch within twelve months, should add to the tailwinds.

Buffett said you don't have to swing at every pitch. Good luck with your HLG batting Roger. I think you will do well. But I am hoping I will do slightly better swinging on the Skellerup pitch.

SNOOPY

[Beagle]

I can't say my bare HLG valuation is not compelling. But look back a line and you will see the dividends amount to 105% of earnings over the period. If you reduce

I guess if you have a rock solid clean and tidy balance sheet with no debt you can pay out just over 100% of earnings because there's some depreciation in there or they've extracted more efficiencies from improved stock turn and lower inventory level's. Very rare set of financials I've ever reviewed that are cleaner / tidier and more easily understood than this company.

[winner69]

I guess if you have a rock solid clean and tidy balance sheet with no debt you can pay out just over 100% of earnings because there's some depreciation in there or they've extracted more efficiencies from improved stock turn and lower inventory level's. Very rare set of financials I've ever reviewed that are cleaner / tidier and more easily understood than this company.

Operating cash flows generally are way in excess of NPAT

They have paid the dividends and invested in the stores (sometimes upto $10m a year) from cash flows ....no need for a bank loan or anything

[Beagle]

Apparently one of the reasons Forever21 customers keep going back, is because the clothes only last two or three washes.

http://www.newyorker.com/business/cu...ing-forever-21

One of the many good things about having a wise old mother that's still alive is even when she's not around I can still readily recall some of her favourite wise sayings, two of which readily spring to mind:-
"you get what you pay for"
"the bitter taste of poor quality lingers long after the thrill of a bargain"

Operating cash flows generally are way in excess of NPAT

They have paid the dividends and invested in the stores (sometimes upto $10m a year) from cash flows ....no need for a bank loan or anything

You're on too it mate.

Snoopy mate. Poor old Skellerup should have had this tailwind and that tailwind for a very long time now and yet their performance over the long run hasn't been that inspiring has it !! Quality of management top notch ?...but because you have a good beagle's nose I will have another look.

[mikeybycrikey]

I can't say my bare HLG valuation is not compelling. But look back a line and you will see the dividends amount to 105% of earnings over the period. If you reduce the payout over five years to $1.50 (the actual earnings) then eps is 30c.

The 105% dividend payout has only come about because their profits took a hit last year, and they reduced the dividend by less than the dip in profit. Payout was greater than profit but that won't be a long term issue, assuming profits are back up this year.

[tim23]

Jaa don't think they need to reinvent at all doing just fine as is!