Daily ShareChat: Hellaby Holdings

Hellaby Holdings' operating earnings fell 43% in the 2009 financial year as the New Zealand economy went into recession, although the worst impact was in the first half, says McDouall Stuart.

Results in second half improved considerably when inventory was cleared at favourable margins after the fall in the Kiwi dollar.

Despite the high level of borrowings and low level of annual earnings, the company has secured the renewal of its banking facility until July 2011 and has confirmed the retention of the high 50% dividend payout ratio, the broker says.

"This suggests the bank's comfort with (the) earnings recovery plan in the year ahead, despite the absence of recovery in the company's sectors." Hellaby's subsidiaries are in the automotive, packaging and footwear retailing sectors and are essentially oriented to the domestic economy and have a high import content.

"For the current year, the company believes it will achieve improved earnings, based on realising the benefits of the operational improvements actioned over the last year," it says.

"While the economy will provide acquisition opportunities, given the high debt level, sale of assets is likely to be a prerequisite."

McDouall Stuart is forecasting net profit will rise from $5.2 million in the year just past to $9.5 million in the year ended June 2010 and to $12.1 million the following year.

BROKER CALL:  McDouall Stuart rate Hellaby Holdings (NZX: HBY ) as hold.

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.

Related News:

Hellaby buys Sydney-based Ryde Batteries for about A$12 mln to boost largest unit
Hellaby FY profit falls 5.8 percent , meets guidance; Contract helps lift sales
Hellaby shares fall 2.7 percent after halt for $40M placement lifted
Hellaby halts shares for $50M capital raising at 10 percent discount
Hellaby first-half profit falls 21 percent on weaker shoe sales, corporate costs
Hellaby finally finds acquisition in Contract Resources
Hellaby lifts FY profit 26 percent on equipment, automotive divisions
Former Frucor head Mark Cowsill named to Hellaby board
Hellaby Holdings
Hellaby lifts 1H net profit 42%