HLG - Hallenstein Glasson

[Beagle]

One thing we have learnt recently is that the effects of lock downs are likely short term only (May even be net positive). Therefore the impact on share price should really be no more than one years earnings, say 30 cps. If it was worth $7.30, should be worth $7.00 now. Not saying it was worth $7.30 before but I think the reaction to Australian lockdowns is about right as is.

If you zero out a years profit in a DCF model your intrinsic value should max drop by 10%

These lockdowns wont zero out HLG profit..

Be interesting to see where SP goes. Could get some cheap HLG shares as the rolling lockdowns drag on and some nerves set into the SP

Don't disagree with that on a stand alone analysis guys but the imprudence of expanding Glassons Australia retail footprint for the foreseeable future (until this pandemic really is in the rear view mirror) now seems crystal clear and means Glassons growth there is likely to slow, compared to how it would have otherwise been, which also affects the DCF as well. The Australian growth was arguably the key attraction with HLG, certainly as far as I am concerned, its most attractive feature, (aside from the dividend yield).
Only time will tell how this plays out...

[Ferg]

Hey Beagle

Interesting thoughts. If Australian retail is suffering some short term pain (or is about to) and one takes a very long forward view as one should with HLG, is this not a good time to get into retail property and/or leases assuming the yields and rents are lower than average, or are about to be? Assuming the price is right of course.....

Just a thought
Ferg

[Beagle]

Hey mate,

Always enjoy reading your thoughts. The old saying of its always darkest before dawn springs readily to mind but I don't think the early birds are going to start tweeting anytime really soon.

[dreamcatcher]

The most recent target from the Australian government is in its Operation Covid Shield document, which suggests vaccinating 80% of the population aged 16 and over should be possible by December extended from previous estimate October, Recent news items suggests huge numbers which saw another daily record set with 270,000 doses administered.

if HLG had plans for expansion in Australian probably still happening as December not far away.

https://www.theguardian.com/australi...ew-cases-today

[James108]

Don't disagree with that on a stand alone analysis guys but the imprudence of expanding Glassons Australia retail footprint for the foreseeable future (until this pandemic really is in the rear view mirror) now seems crystal clear and means Glassons growth there is likely to slow, compared to how it would have otherwise been, which also affects the DCF as well. The Australian growth was arguably the key attraction with HLG, certainly as far as I am concerned, its most attractive feature, (aside from the dividend yield).
Only time will tell how this plays out...

That is where we disagree. I think store roll out will be set back maybe 6 months, and afterwards will continue to be relatively glacial, which is fine by me. Have been happy with the slow and steady store roll out in Aus.

[Getty]

Story in Todays NZ Herald,

Ezibuy tumbles to big financial loss.

If they are struggling with just 5 retail stores, but the rest of business long established on line, which other fashion/ retailers are doing it hard?

[LaserEyeKiwi]

That is where we disagree. I think store roll out will be set back maybe 6 months, and afterwards will continue to be relatively glacial, which is fine by me. Have been happy with the slow and steady store roll out in Aus.

it’s an interesting debate: should retail expansion be paused due to what is undoubtedly a short term event? regardless of the end result of covid, retail will fully reopen again relatively soon, and it’s likely that domestic consumer spending remains elevated as overseas travel budgets are redirected to other domestic discretionary spend.

Good management would keep its eye focused on long term goals, while making prudent short term decisions towards that goal. I would argue that one of those short term decisions should be seeking some opportunistic long term leasing opportunities in good locations at significantly reduced rates (if those deals are offered).

[850man]

Story in Todays NZ Herald,

Ezibuy tumbles to big financial loss.

If they are struggling with just 5 retail stores, but the rest of business long established on line, which other fashion/ retailers are doing it hard?

The article states "The most recent accounts posted to the New Zealand Companies Office show Ezibuy recorded a $28.9 million loss for the year to June 2020 with revenue falling to $129.3m from the previous year's $152.7m. The company, whose head office is still based in Palmerston North, booked a $10.5m loss in 2019. In its audit report EY noted a material uncertainty casting doubt on the group's ability to continue as a going concern. This related to Ezibuy's total liabilities exceeding its total assets by $13.4m. The accounts show total liabilities increased from $48.4m to $67.13m in 2020."

Mounting losses since 2019 at least plus an increase in liabilities. Seems factors other than Covid are the root cause here

[BlackPeter]

it’s an interesting debate: should retail expansion be paused due to what is undoubtedly a short term event? regardless of the end result of covid, retail will fully reopen again relatively soon, and it’s likely that domestic consumer spending remains elevated as overseas travel budgets are redirected to other domestic discretionary spend.

Good management would keep its eye focused on long term goals, while making prudent short term decisions towards that goal. I would argue that one of those short term decisions should be seeking some opportunistic long term leasing opportunities in good locations at significantly reduced rates (if those deals are offered).

Are you sure it is "undoubtedly" a short term event? I do have my doubts, if I may. Covid won't go away for a long time and I don't see anybody who would be able to predict with any accuracy how this game will play out.

Uncertainty, though is not a good base for making investments ...

[Balance]

Are you sure it is "undoubtedly" a short term event? I do have my doubts, if I may. Covid won't go away for a long time and I don't see anybody who would be able to predict with any accuracy how this game will play out.

Uncertainty, though is not a good base for making investments ...

On the contrary!

Uncertainty is the best time for seasoned and experienced investors to make investments.