In my last article on HLG I said that I intended to review HLG after the effects of Coronavirus become clearer and there were less unknowns to factor into the share price. It’s been a long time coming, and it was certainly worthwhile. In short, I liked what I read and even bought myself a small parcel on the back of my research. Since I am writing up my research after making my purchase, this review will be extremely brief.
- HLG have a market capitalization of $432m.
- The last FY results released in August 2020 showed an NPAT of $27.7m, which is about the same as the previous year.
- Recent HY results show an increase of 28.6% giving an HY NPAT of $19.84m.
- Gross margin remains healthy at 56.5%.
The outlook seems positive for the company. Borders aren’t opening up yet, so conditions remain about the same for consumer spending. Even at last years FY results, HLG would be trading at a PE of 15.6 (not factoring cash in hand), but a 28% improvement (assuming the HY result improvements carry through to the FY results in the same magnitude), HLG is trading closer to a PE of 12 (again, excluding cash). A quick check on the finances seems fine, making HLG a bargain even if they were to have some bad years in their future.
As the dividend return suits my retirement portfolio plans and the fact that I won’t have any retail exposure after I sell only of my major unlisted holdings as per my retirement plan, I decided to treat myself to a small parcel of HLG. As it was purchased for a dividend portfolio, I’m not too fussy about the price I paid, because even if I was able to buy HLG cheaper (say 5% cheaper), I would have only missed out on 5% of a 6.7% (after tax) dividend, which is 0.3% less. This is insignificant when considering the long (or even medium) term growth on this stock.