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  • Writer's pictureMark Watson-Mitchell

Horse/Man, Pawnbrokers, Gold and RMI

Centaur Media (LON:CAU) – Up 38% In Two Weeks, Now With A Private Equity Bidder?

Yesterday must have pleased Richard Griffiths, especially when he noted the price rise in the shares of this group, following the news of a potential bid approach from Waterland Private Equity for the business intelligence and specialist consultancy.

On 27th March, when its shares were trading at 40.5p, I noted that Griffiths and his ORA Global had recently increased their stake in the quoted company to 4.40% of its equity, some 6.5m shares.

Upon news of the Waterland approach the Centaur shares put on a useful 40% to 56p in reaction, before closing at 51.50p.

Obviously, such an early approach can turn into a ‘damp squib’ with no offer ensuing, however I would suggest that holders should remain tight for the time being.

(Profile 03.03.21 @ 33p set a Target Price of 41p*)

H&T Group (LON:HAT) – My 500p Target Price Firmly In Place

At last, someone else seems to be ringing the bell.

The shares of my long-term favourite pawnbroking business have started to gradually recover in price.

After scouring a recent low-line level at just 356p, on Friday of last week, the shares have been edging higher again, before closing last night at a still undervalued 407.50p, some 17.50p up on the day.

Ahead of the early-May AGM Trading Update analyst Mark Thomas at Hardman & Co concluded that there is a growing customer demand from the cost-of-living crisis, with few alternative, regulated competitors.

He recently upped his valuation of the £180m capitalised group’s shares from 506p to 535p.

Over at Shore Capital Markets, its analyst Gary Greenwood continues to be impressed by the recent acquisition of the Maxcroft pawnbroking business, with its successful forex side.

For the current year he has estimates out for pre-tax profits to end December rising from £26.4m to £33.5m, generating even healthier earnings of 57.2p (48.7p), together with a dividend of 18.5p (17.0p) per share.

He computes that the group’s net asset value will rise to 442.1p (403.2p) per share, while he has a ‘fair value’ of 515p on the group’s shares.

At the time of the 2023 results being announced a month ago, CEO Chris Gillespie stated that: 

"The Group has made significant progress in 2023, delivering record profits and strong growth in a challenging environment for both businesses and individuals.

Pawnbroking is our core business and is attracting increasing numbers of new customers. 

Throughout the year, we saw record demand for our pawnbroking service and this has continued into 2024, with January being a new record month for lending.

Whilst retail trading conditions, particularly in the fourth quarter, were challenging given pressure on customers' disposable incomes, sales increased year on year by 8% to £48.6m.

Pleasingly, demand has remained robust in the early months of 2024. We believe the reasons for the strength of this demand include the growing attractiveness of buying pre-owned products, and the environmental and sustainability benefits this brings.

Throughout 2023 and in February 2024, we diversified and enhanced the Group's funding arrangements.

Total funding facilities available to H&T currently amount to £85m, with current headroom available of c.£30m.

This will support the future growth of the pledge book and investment in the store estate.

With continued investment in scale and capabilities, along with growing our business in the context of wider macro-economic factors, we believe that the Group has an opportunity for significant growth in the medium term."

As for the share price rise over the last few days – well I would suggest that the reaching of new Highs for the price of gold will have added both interest and confidence in the group.

I remain totally convinced that this group’s shares should be trading a great deal higher, with my current Target Price of 500p being an easy and, hopefully, early achievement.

(Profile 06.07.22 @ 332.5p set a Target Price of 400p*)

(Profile 30.01.23 @ 429p set a Target Price of 500p)

Gold Continues Its Strength - $2,500 Getting Closer

I still see the value of the precious yellow metal climbing higher.

As I stated in early February, when it was $2,059.60, I am confident of higher values.

At the start of this month, when on $2,280, I viewed that the near aspiration was at least $2,400.

Yesterday the futures touched $2,378 – so very close.

I now repeat from the latest missive from The World Gold Council:

“Gold is at an all-time-high and is getting attention.

But assets at such levels are challenging for investors who think they may have missed the boat.

However, our analysis suggests that gold is currently well supported by fundamentals, and the low participation from US investors in particular augurs well for the rally to continue, in contrast to what we saw in 2011.

Alongside gold’s records, we’ve also seen all-time highs in the prices of many other assets including global equities.

Gold’s share of assets is low not only from the unrelenting push higher in the prices of other assets but the large issuance of financial securities.

Gold’s physical supply constraints means that its price has to do the heavy lifting to maintain a sensible share of assets.

We’ve not yet seen this materialise, which is encouraging.”

I have absolutely no doubt that Gold is destined to climb higher in value – certainly not for selling.

Which is, of course, great news for traders in gold valued jewellery and pieces, like H&T Group.

Epwin Group (LON:EPWN) – A Near-Term Bargain For New Investors

The leading manufacturer of energy efficient and low maintenance building products yesterday reported its results for the year to end December 2023.

The company showed slightly lower sales at £345.4m (£355.8m), but with higher adjusted pre-tax profits of £18.0m (£16.9m), generating adjusted earnings of 9.71p (8.95p), double covering its 4.80p (4.45p) dividend per share.

Apparently, the group’s margins returned last year to pre-Pandemic levels.

The company, which has significant market shares, supplies the Repair, Maintenance and Improvement, new build and social housing sectors.

CEO Jon Bednall stated that:

"The Group has, once again, delivered financial performance at, or ahead of, market consensus expectations, with 2023 results significantly ahead of a strong 2022 comparative.

Our diversified portfolio of energy efficient and low maintenance building products leaves us well positioned when end markets recover and to benefit from longer-term structural drivers of demand.

We remain confident in the Group's future prospects, despite the short-term macroeconomic headwinds and expect to make further progress in 2024."

Analyst Andy Hanson at Zeus Capital has 2024 estimates out for £345.7m sales, £19.8m profits, 10.4p earnings and a 5.1p per share dividend.

For 2025 and 2026 he sees continued sales and profits growth.

The AGM, on Tuesday 21st May, should have a positive Trading Update being issued – which could well see slightly higher market guidance of current year numbers.

The £122m capitalised group’s shares, which hit a one-year High yesterday at 85.70p, before closing at 84.50p, are trading on a very attractive rating of just 8.1 times price-to-earnings, while also yielding a prospective 6.0%.

My 94p Target Price stays firmly in place, offering new investors a near-term bargain.

(Profile 22.08.19 @ 73.5p set a Target Price of 100p*)

(Profile 10.02.23 @ 75p set a Target Price of 94p)


(Asterisks * denote that Target Prices have been achieved since Profile publication)

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