H&T Group PLC (AIM:HAT) has strong recovery potential and the most recent interim results should bode well for the remainder of the year, according to a City broker.
The pawnbroker reported a positive trading momentum in the latest months, with retail sales continuing to outperform.
READ: H&T Group whacks up the divi as pledge levels continue to recover
“We believe the group is well-positioned to benefit from a post-pandemic pick-up in demand while also noting that quite a lot of capacity has recently exited the non-standard lending industry,” analysts at Shore Capital said.
ShoreCap currently forecasts £7.9mln profit before tax for the full year though it is eyeing an upgrade to around £10mln.
“We believe 2021 earnings are likely to represent a cyclical low point and we see strong recovery potential from here,” the broker said.
“Perhaps of greater note, the shares are trading at a slight (around 4%) discount to their tangible net asset value of £114.4mln as reported at 30 June 2021, despite this being backed by conservatively-valued assets.”
“Our fair value was 345p ahead of these results and we would expect this to increase to at least 355p after accounting for near-term forecast upgrades and roll-forward,” analysts concluded.
Shares jumped 6% to 290.5p on Monday at noon.