H&T Group – UK’s Largest Pawnbrokers Report Record Loans Out – A Sign Of The Times?

With some 280 stores across the country, it is surely a sign of the times when the UK’s largest pawnbroking group reports, in its AGM Trading Update issued today, that it has seen yet another record month for the demand for its pledge loans.

That makes records being broken for three out of the first four months of this year.

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What Is A Pledge

Pledged loans are a kind of secured loan that requires the borrower to pledge assets as collateral to secure funding.

A Pawnbroking Loan or otherwise known as a Pledge, is a short-term loan, secured against items of Gold, Silver, Platinum Jewellery or Quality Watches, with the amount of the loan being dependant on the items provided as security.

Management Comment

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Group CEO Chris Gillespie stated that:

“It is pleasing to be able to report a solid start to the year, with robust demand across the Group’s product offering.

Profit Progression Continues

Brokers Shore Capital Markets are very positive about the group’s shares, with their analyst Gary Greenwood estimating that the current year to end December will see adjusted pre-tax profits rising from £26.4m to £33.5m, lifting earnings to 57.2p (48.7p) and its dividends to 18.5p (17.0p) per share.

For next year he sees £36.7m profits, worth 62.7p in earnings and triple covering a 20.0p per share of dividend.

My View

The group’s shares, which were up to 502p last October, are currently trading at around 419p, up 20p in reaction to the record lending news.

At that level they trade on 7.5 times price-to-earnings and offering a yield of 4.3% – making the shares a very attractive investment at the current levels, with a run back up to new Highs being an early expectation.

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