HLG - Hallenstein Glasson

[Beagle]

Late in giving us a forecast and trading update for the first half. Probably choosing their words for the narrative very carefully this weekend and we'll get that update tomorrow morning. Very good operators HLG but headwinds from Australian drought, then bushfires, now this new virus and possible supply chain issues as well as currency a bit softer and to cap it all off a huge increase in the minimum wage just around the corner on 1 April 2020, certainly makes life challenging for them.

Disc: I have reduced but still have a modest holding.

[winner69]

Late in giving us a forecast and trading update for the first half. Probably choosing their words for the narrative very carefully this weekend and we'll get that update tomorrow morning. Very good operators HLG but headwinds from Australian drought, then bushfires, now this new virus and possible supply chain issues as well as currency a bit softer and to cap it all off a huge increase in the minimum wage just around the corner on 1 April 2020, certainly makes life challenging for them.

Disc: I have reduced but still have a modest holding.

..

Jeez ......more headwinds than Synlait ....but probably not as many as AIR

PANIC tomorrow or whenever and BP will be proved right ...it is a cyclical after all.

Fy19 worried me in that Glassons AU didn't increase profit even though things were in their favour ....this year headwinds ...hmmm

[Beagle]

No panic mate. Just a very good company with excellent management, with no debt and class leading stock turn detailing how they are going to deal with challenges.
I would think the vast majority of their stock procurement is from Bangladesh so supply chain issues will be quite modest. Australian drought and bushfire situation has considerably improved in very recent times, however the long term prognosis could be considered to be diminished. https://www.msn.com/en-nz/news/world...cid=spartanntp Climate change to make Australia summers a season full or dread ?
Interestingly for climate change deniers, not just the drought in Australia, today the Auckland region had its 41st day of drought conditions, the longest ever on record.
I doubt HLG will have any difficulty selling out this summers stock !

That said, Synlait and AIR's problems are in a completely different league, in my opinion.

[winner69]

Hey beagle ...no announcement from HLG as usual that their ‘balance sheet remains strong’

What’s up

[trader_jackson]

https://www.nzx.com/announcements/348525

Not great... profit going backwards and future uncertain

[freddagg]

https://www.nzx.com/announcements/348525

Not great... profit going backwards and future uncertain

The only companies with a certain future are in liquidation

[BlackPeter]

https://www.nzx.com/announcements/348525

Not great... profit going backwards and future uncertain

Jeez - at the December update revenue increase was still +7.1% and now after Christmas they are delivering only +5.6%. NPAT (unaudited so far) dropping by 3.1% compared to last year.


Sounds like Christmas was not so hot after all ... told you it is a cyclical company ;

[jonu]

The only companies with a certain future are in liquidation

Classic!

[winner69]

Phew, I was getting worried but now relieved I know that “The balance sheet for the Group remains strong”

[Beagle]

Adjusting for IFRS16 on leasing, profit is unchanged on turnover up 5.7%, (up 6.7%) as at the trading update at the annual meeting in December 2019.
I think in the context of the weaker currency and unprecedented drought and bushfires in Australia the sales and profit result is more than satisfactory.
Balance sheet remains strong as usual.

Residual concerns.

1. Supply chain issues. Its a shame the company did not provide more colour around this as the market will speculate as to the seriousness or otherwise of that issue.
2. Will people shop as much if the virus spreads, (acknowledge they have an excellent online platform but a lot of people like to try clothes on before they buy them)
3. Significant increase in minimum wage in N.Z. with effect from 1 April 2020.

Thoughts:-
The market as a whole, (and certainly not just limited to the NZX) appears almost unfazed by the virus). Rightly or wrongly in the context of how the markets themselves are reacting, (or more correctly not reacting), then the share price seems fair and reasonable. On the other hand if this virus gets out of control its clear the company will be affected, but then so too will many other companies on the NZX that haven't adjusted downwards to reflect this actual or perceived new risk.

For me, I am pleased I have been proactive and taken some money off the table. Its remains a very well managed company that's trading well in challenging conditions.