H&T set to continue growth trajectory

AIM-quoted pawnbroker H&T (LON: HAT) reported strong growth in profit and further progress is expected this year despite higher wage costs. The pledge book is growing and the acquisition of Marcroft boosts parts of the business with potential for growth.

The AIM-quoted company is benefitting from increasing pawnbroking demand and higher gold prices. The retail side has been tougher, but this is being refocused on lower price points that are more in keeping with customer demand. Pre-owned jewellery margins remain high, but new jewellery margins slumped.

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The pawnbroking book grew 28% to £128.9m. Group 2023 revenues were 27% ahead at £220.8m. Retail and other services were the only parts of the business making a lower profit contribution. Pre-tax profit was up from £19m to £26.4m. This enabled a rise in the dividend from 15p/share to 17p/share.

The recent Maxcroft acquisition increases exposure to self-employed and small business pawnbroking loans. The security is the same as for individuals. It also boosts the foreign currency business.

The new £85m debt facility means that H&T has all the cash it requires to expand the business, even after the £11.3m paid for Marcroft. A further 50 stores will be refreshed this year and up to 12 new branches could be opened.

The share price is 10.9% higher at 377p, which means that some of the downgrade-related losses from earlier in the year have been clawed back. The prospective multiple is seven and the forecast yield is 5.3%.

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