H&T Group Plc (LON:HAT) has been started at a ‘buy’ recommendation by Shore Capital, which sees structural growth opportunities for the pawnbroker due to the withdrawal of competition in the short-term credit market.
Withdrawals of high-cost short-term credit (HCSTC) providers follows regulatory pressure and rising complaints against unsecured lenders, the broker said.
The secured and non-recourse-to-the-borrower nature of pawnbroking “potentially makes it lower risk in the eyes of the regulator and hence a more viable alternative, in our view,” Shore Cap analyst Gary Greenwood said in a note on Wednesday.
With a strong balance sheet, including a sizeable net cash position and undrawn debt facility, relatively new chief executive Chris Gillespie “has significant firepower to fund future growth, shareholder distributions and possible further acquisitions”.
The next scheduled update from H&T will be a first-half trading statement in July.