HLG - Hallenstein Glasson

[winner69]

Lot of sellers grouping up around this level and who would blame them aye.

There's an old saying - buy at top end of valuations and expect disappointing future returns

Seems to be true for HLG - when share price peaks (stretching valuations) future years returns have been disappointing

Peaked Mar13 and returns including dividends down down 36% in next 3 years

Peaked Aug18 and just ahead now after recent surge

Peaked Nov19 and just ahead after a year

Just as well this times different eh and the story is compelling as it was a year or so ago.

Capital preservation strategy been implemented --- keeping a real close eye on the squiggly lines on the chart and looking closely at any factors that could impact their performance

But hoping like anything the share price will get to $7.50 or even higher.

[couta1]

So you do not subscribe to the belief articulated here that fair value for HLG is always $2 more than the current market price then?

Haha you mean the movable goalpost theory. PS-Sellers starting to overpower buyers.

[nztx]

There's an old saying - buy at top end of valuations and expect disappointing future returns

Seems to be true for HLG - when share price peaks (stretching valuations) future years returns have been disappointing

Peaked Mar13 and returns including dividends down down 36% in next 3 years

Peaked Aug18 and just ahead now after recent surge

Peaked Nov19 and just ahead after a year

Just as well this times different eh and the story is compelling as it was a year or so ago.

Capital preservation strategy been implemented --- keeping a real close eye on the squiggly lines on the chart and looking closely at any factors that could impact their performance

But hoping like anything the share price will get to $7.50 or even higher.

In more normal years - Yes

but with our current economic factors meaning huge Excess Loot in the system & Low cost money
is fighting to see better returns - plus further vast amounts released from takeovers, Bonus Bonds
maturing TD's piling in etc etc, and no wealth capital gains tax

The whole market is up currently too, on reduced respectable candidates to throw it at

That scenario wont subside anytime soon while interest rates are miserably low for savings & deposits

Scale those into normalised scenario & HLG $7's/$8's wouldn't surprise & may stay around for some time
not subsiding while improving results prevail

Move into stocks which are reasonably solid / have good forward prospects / EPS & DPS has & is
occurring as far as I can see..

There are a hoard of new aware punters - such as Sharesies Retail investors in the market now too

[couta1]

In more normal years - Yes

but with our current economic factors meaning huge Excess Loot in the system & Low cost money
is fighting to see better returns - plus further vast amounts released from takeovers, Bonus Bonds
maturing TD's piling in etc etc, and no wealth capital gains tax

The whole market is up currently too, on reduced respectable candidates to throw it at

That scenario wont subside anytime soon while interest rates are miserably low for savings & deposits

Scale those into normalised scenario & HLG $7's/$8's wouldn't surprise & may stay around for some time
not subsiding while improving results prevail

Move into stocks which are reasonably solid / have good forward prospects / EPS & DPS has & is
occurring as far as I can see..

There are a hoard of new aware punters - such as Sharesies Retail investors in the market now too

Yield at any price leads to scorched earth capital eventually. PS-Shouldnt that read new unaware punters in the market now too?

[Cyclical]

PS-Shouldnt that read new unaware punters in the market now too?

For sure. And it remains to be seen how many would vanish at the first sign of a scorching. The flip side of that though is there is plenty of cash around to pluck up "bargains" as they present themselves. Investment property is likely to become unattractive in the next few months, if not just through reinstatement of LVR restrictions, or excessive valuations, then probably something else the government will come up with to dampen the flames...then there will be more money looking for reasonable yield. Yeah, unless there is a sizeable profit downgrade, or things turn to custard in Oz (I'm expecting the reverse tbh) for some reason, then I think this is one is safe to continue it's incline.

[Balance]

There's an old saying - buy at top end of valuations and expect disappointing future returns

Seems to be true for HLG - when share price peaks (stretching valuations) future years returns have been disappointing

Peaked Mar13 and returns including dividends down down 36% in next 3 years

Peaked Aug18 and just ahead now after recent surge

Peaked Nov19 and just ahead after a year

Just as well this times different eh and the story is compelling as it was a year or so ago.

Capital preservation strategy been implemented --- keeping a real close eye on the squiggly lines on the chart and looking closely at any factors that could impact their performance

But hoping like anything the share price will get to $7.50 or even higher.

Words of wisdom, W69.

Not sure whether the writeup below qualifies as worthy of note but it certainly paints a glowing picture of HLG :

https://www.stockopedia.com/articles...nzehlg-135528/

Excerpt :

By looking at a small number of important ratios you can get an idea about the competitive strength and profit power in a business.

Here's what they are and why they are important - and how Hallenstein Glasson Holdings stacks up against them:

High rates of Free Cash Flow - the measure of a thriving company.
- A high ratio of free cash flow to sales can be a very positive sign. For Hallenstein Glasson Holdings, the figure is an impressive 20.7%.

High Return on Capital Employed - the measure of a company growing efficiently and profitably.
- A 5-year average ROCE of more than 12 percent is a pointer to strong efficiency. For Hallenstein Glasson Holdings, the figure is an eye-catching 41.7%.

High Return on Equity (compared to peers) - the measure of a company making good profits from its assets.
- Hallenstein Glasson Holdings has a 5-year average ROE of 34.2%.

High Operating Margins (compared to peers) - the measure of a company with pricing power
- Hallenstein Glasson Holdings has a 5-year average operating margin of 11.8%.

[winner69]

Words of wisdom, W69.

Not sure whether the writeup below qualifies as worthy of note but it certainly paints a glowing picture of HLG :

https://www.stockopedia.com/articles...nzehlg-135528/

Excerpt :

By looking at a small number of important ratios you can get an idea about the competitive strength and profit power in a business.

Here's what they are and why they are important - and how Hallenstein Glasson Holdings stacks up against them:

High rates of Free Cash Flow - the measure of a thriving company.
- A high ratio of free cash flow to sales can be a very positive sign. For Hallenstein Glasson Holdings, the figure is an impressive 20.7%.

High Return on Capital Employed - the measure of a company growing efficiently and profitably.
- A 5-year average ROCE of more than 12 percent is a pointer to strong efficiency. For Hallenstein Glasson Holdings, the figure is an eye-catching 41.7%.

High Return on Equity (compared to peers) - the measure of a company making good profits from its assets.
- Hallenstein Glasson Holdings has a 5-year average ROE of 34.2%.

High Operating Margins (compared to peers) - the measure of a company with pricing power
- Hallenstein Glasson Holdings has a 5-year average operating margin of 11.8%.

Yes on most financial and operating metrics HLG is the envy of all retailers in NZ and probably globally.

Have a tried and true formula which generates that 30cents/40 cents dividend year in and year out

[Beagle]

Yield at any price leads to scorched earth capital eventually. PS-Shouldnt that read new unaware punters in the market now too?

With all due respect mate I think there's several things you're overlooking.
1. Metrics (forward PE and dividend yield) are all a function of the risk free 10 year Govt stock rate and that's dramatically lower than last time this was over $6. This adds just over $1 by my calculations.
2. $50m cash on the balance sheet is about $35m more than average and this adds about 60 cents to fair value compared to the past.
3. Their genuine growth compared to FY19 and this has the potential to add about another 10 cps in earnings (worth about $1.50 to the share price if this growth happens...time will tell).
4. Online sales growth (the holy grail of retail), has been incredibly strong and is sector leading compared to its N.Z. peers. This is currently not being priced into the shares and I won't attempt to ascribe a value to it but its no small thing.
5. This is "anything but" yield at any price, in fact its probably the top yielding share on the NZX
6. 24 cent divvy just around the corner so the theoretical ex divvy price is really only $6.23.

I know this post won't change your mind having just sold some but maybe consider keeping what you have left ?

For those that don't know what Peat was saying earlier today in post #5302 TINA is an acronym for There is no alternative (to shares), TRINA is an acronym for "There really is no alternative" (to shares) and TRINFA is an acronym for...well...use your imagination

Another fresh all time closing high today and I am very confident there will be many more to come.

Many thanks indeed for that link Balance. Awesome article

[Baa_Baa]

Yes on most financial and operating metrics HLG is the envy of all retailers in NZ and probably globally.

Have a tried and true formula which generates that 30cents/40 cents dividend year in and year out

That’s what keeps it interesting, like now when the SP is bashing against its historical high prices and selling (resistance) volume increasing.

Keeping a close eye on the chart to assess market sentiment is important right now, this might make 30-40 cents return, but it can lose way more than that in capital, virtually in a heart beat.

Heck it was $1.80 this year!!! So a great ride for any one since then, but fact is it’s at previous sentiment high and people calling for another 50-100 cents based purely on FA are imo optimistic.

That call alone, for SP appreciation, points to capital sensitivity (motivation for holding at a high price) like it’d be Great if the SP goes up but if it doesn’t I can reconcile my position with the earnings. Watch that sentiment get tested when the SP turns down again. Those sentiments run for the hills.

That’s ok but they’re also the ones who’ll be first at the exit if resistance prevails and a new sentiment down sets in. I do not see any long term committed investors here who can stomach the volatility in capital purely for earnings. Not one. I’m sure they exist, but not here talking us into believing the upside is inevitable and volatility will miraculously go away forever.

Momentum traders love a dividend while they’re holding, it’s cream on top of capital gains, but momentum is what takes them out as fast as it got them in. Regardless of the narrative surrounding their position, they’re very very good momentum traders, happy to take a bonus dividend feed or two along the way.

TA says... nah, it’s flashing in big bold letters CAUTION ⚠️ Stay alert.

[Balance]

That’s what keeps it interesting, like now when the SP is bashing against its historical high prices and selling (resistance) volume increasing.

Keeping a close eye on the chart to assess market sentiment is important right now, this might make 30-40 cents return, but it can lose way more than that in capital, virtually in a heart beat.

Heck it was $1.80 this year!!! So a great ride for any one since then, but fact is it’s at previous sentiment high and people calling for another 50-100 cents based purely on FA are imo optimistic.

That call alone, for SP appreciation, points to capital sensitivity (motivation for holding at a high price) like it’d be Great if the SP goes up but if it doesn’t I can reconcile my position with the earnings. Watch that sentiment get tested when the SP turns down again. Those sentiments run for the hills.

That’s ok but they’re also the ones who’ll be first at the exit if resistance prevails and a new sentiment down sets in. I do not see any long term committed investors here who can stomach the volatility in capital purely for earnings. Not one. I’m sure they exist, but not here talking us into believing the upside is inevitable and volatility will miraculously go away forever.

Momentum traders love a dividend while they’re holding, it’s cream on top of capital gains, but momentum is what takes them out as fast as it got them in. Regardless of the narrative surrounding their position, they’re very very good momentum traders, happy to take a bonus dividend feed or two along the way.

TA says... nah, it’s flashing in big bold letters CAUTION ⚠️ Stay alert.

I still have my Serko shares as an example if you want to test long term commitment.