H&T Group PLC (AIM:HAT)’s house broker Shore Capital has responded positively to the pawnbroker’s preliminary results for 2022 which reported a 50.5% growth in the pledge book to finish the calendar year at £100.7mln with profit before tax of £19mln from £10mln in 2021
Noting strong numbers across all revenue lines, Shore Cap said “the outlook remains positive for the group’s pawnbroking and non-pawnbroking services”.
H&T’s “healthy” year-on-year dividend increase of 25% top 15p also got the thumbs up, with the house broker calling it a “progressive dividend policy with an at least two times cover target ratio”.
H&T’s balance sheet is “in good shape”, said the broker, despite a net cash surplus in 2021 flipping to net debt of £2.8mln in 2022.
Shore Cap noted that the net outflow primarily reflected new business strain due to strong growth in the pledge book, alongside increased retail inventories and the cash invested in the acquisition of Swiss Time Services.
Shore Cap’s fair value remains unchanged at 580p, equating to a 29% upside against the Monday closing price of 451p.
Three-year compound annual growth rate (CAGR) in earnings per share of 29%, with a dividend per share CAGR of 28%, is the latest guidance.
“H&T has been reinvigorated under the leadership of experienced chief executive Chris Gillespie, and we believe the group remains well positioned to capture further strong near-term growth opportunities presented to it in what is currently a favourable operating environment,” said Shore Cap.