HLG - Hallenstein Glasson

[winner69]

I have a model of the last 10 years earnings/margins/cots etc and my FY2016 "guestimate" if the NZD stays around US60-65c, and factoring that costs have been rising from the low 40s to high 40's as a percentage of gross sales the past 6-7 years, is that they should make NPAT of around $15m. If they do that then at $3.45 they are on a PE of 13-14. Hard to see too much upside at the moment but with a 100% pay out ratio and a solid long term track record worth holding IMO - would still yield 10% gross in that scenario next 12 months, and have yielded 12% gross over FY15 so the dividends keep de-risking your investment.

The key out take from the outlook part of the ill year announcement was The impact of a weaker New Zealand and Australian dollar is beginning to exert margin pressure and the ability to raise prices to compensate is limited.

This along with the 'intense competition' doesn't bode well.

An earlier post (#267) of mine showed the strong correlation between NZD and Gross Margin %. If the NZD/USD stays at 65/70 then margins could be impacted by $10m plus.

Arbroath - I reckon HLG earnings could possibly be as low as $10m this year, if things don't change.

As Percy says do your research and have faith in it and act accordingly. As such I staying out until things a bit clearer. Might even get some at $2.50 odd eh

[Beagle]

I agree with hunter. No suprises for me on forward outlook.

Do you still hold Roger?

See post #345 mate. With the huge move in the currency in recent months there's no point swimming against the tide...better off swimming with the tide, (investing in stocks that benefit from the lower $Kiwi) in a stock like SKL so that's what I'm doing. I might look to re-enter after a correction. I think all the risk to the SP is too the downside at present.

I agree with what my friend Winner69 has said above although I doubt it will head as low as $2.50 but you never know and the company has made in plain for all to see that the headwinds they're facing are quite strong so only time will tell.

[winner69]

Maybe not $2.50 but how about $2.75 then

NZD/USD averaged .76 in last HLG fiscal year .... if it stays at current levels implies ~15% increase in COS. Limited ability to pass on these increases they say. I think you made a good decision Roger

[winner69]

Heck over 370 - pretty amazing really but heck what do I know anyway

Margins must be fine then .... NZD has strengthened a bit anyway

Sales in NZ probably pretty good - economy purring along nicely

[In4a$]

I am gambling that price will build back close to $4 again prior to Dividend date of 25th Nov.
Hope so anyways, brought some at $3.30, will be selling if gets to $4

[Beagle]

Heck over 370 - pretty amazing really but heck what do I know anyway

Margins must be fine then .... NZD has strengthened a bit anyway

Sales in NZ probably pretty good - economy purring along nicely

Amazing really...didn't people read the outlook warning ? Suppose the circa 10% gain off the bottom when we got down to almost 62 cents U.S. gives some relief but we're al long way off last years average FX rate.
Yield hunters appear to be rampant.

[boofters]

Amazing really...didn't people read the outlook warning ? Suppose the circa 10% gain off the bottom when we got down to almost 62 cents U.S. gives some relief but we're al long way off last years average FX rate.
Yield hunters appear to be rampant.

Gotta be some inside knowledge at play here - or if someone can convince me this is a growth stock !! if punters are dealing as an income play then good luck to em'

baffled of balmoral

[TheHunter]

Only light volume sadly...

[banter]

Anyone know if HLG hedged against a fall in the NZD? How much, how long for?

[TheHunter]

"The group is exposed to foreign exchange risk arising from currency exposure predominantly with the US dollar with the purchase of inventory from overseas suppliers.
The Board has established a Treasury Risk Policy to manage the foreign exchange risk. The policy is reviewed on a regular
basis, and management report monthly to the Board to confirm policy is adhered to. All committed foreign currency
requirements are fully hedged, and approximately 23% (2014: 29%) of anticipated foreign currency requirements are hedged on
a rolling twelve month basis.
The Group uses forward exchange contracts with major retail banks only to hedge its foreign exchange risk arising from future
purchases. "

$ amounts are disclosed in the audited F/S, page 16.