HLG - Hallenstein Glasson

[banter]

Thanks. An optimistic reading of that says they're 'covered' for a year - ie currently using an NZD/USD rate of .72 ish.
So the pain is deferred for a year, and the company and customers have a chance to get used to higher prices.

The NZD/USD rate is recovering. I was thinking about selling but might hold off till the next meeting. The SP move could be pointing to some good news.

[bull....]

profit warning

[winner69]

profit warning

For a company renowned for its paucity of information this announcement is weird

Great sales are up 3% but margins are down but you can't read anything into that

And the announcement is flagged PRICE SENSITIVE

yes, bull..... , sounds like and probably is a profit warning ....but how bad?

Maybe they should have just shut up until they can be more 'concise'

[Beagle]

This is the second time they have seriously warned on margins, exchange rate and intense competition...make of that what you will but it would appear many investors ignored the first warning so perhaps the company felt compelled to issue another one ? When you go swimming ask yourself do you want to swim with the tide or against it ?

[winner69]

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.

May as well remind myself of what could happen. I have faith in my analysis.

Wonder what has driven the significant rise in the share price lately?

[Beagle]

It can't be anything other than yield hungry investors who look at HLG's track good record of divvy's and are hoping the company can work their way through the present challenges without materially affecting divvies.
I think they're playing a risky game of potential capital loss first and foremost and lower dividend yields secondly.
Disc: Don't hold and not looking for a cheaper entry. I think the currency stays lower for longer.

[winner69]

Hang in there the bidder at 326 - they will come down to you when they realise how bad that announcement potentially is

Even then after Xmas your 326 might not look like the cleverest buy

[Beagle]

Classic value trap. PE appears cheap and divvy yield very strong. Recent buyers were either hard of hearing or thinking even if it comes back a bit they're still a winner but what if it comes back a LOT ?

[Arbroath]

Roger/Winner,

Have to agree that it is hard to understand why they went to $3.80's recently other than yield chasers who don't do much home work. And clearly FY16 is going to be below FY15 by a margin - the issue is how much. If they don't have a reasonable Xmas/NY then my FY16 guestimate of $15m NPAT (down 15%) will be too optimistic. I'd note that in the past when the currency and margins have been lower they have controlled costs well - the past few years costs have crept up so that for me will be the biggest determinant - can they get costs down to mitigate the obvious margin pressure from the lower currency.
If they don't then you're pick of $10m earnings winner could be close to the mark - nothing is static but I'd also note their worst year the past decade I think was $12.8m NPAT in similar currency conditions with less buoyant sales back about 08 GFC time.

[Beagle]

Massive abyss..(.noun a deep, immeasurable space, gulf, or cavity; vast chasm. .) between buyers and sellers suggests great uncertainty created by the company's own price sensitive announcement. I think the fact that the company tagged the announcement as price sensitive is another clue to the extent of the effect they anticipate on current year profitability. Buyers now appear cautious but weren't the first time the company said it, its really quite bizarre ?