Daily Share Chat: Hallenstein Glassons Holdings

Clothing retailer Hallenstein Glassons Holdings is one company without any debt headaches amid the current credit crunch.

Not only is it debt-free, it has about $20 million in the bank.

Nevertheless, McDouall Stuart has a reasonably negative view of the stock with a "hold" recommendation and a valuation of just $1.97, despite saying it is "a conservative and well-managed apparel retailer" with "good store locations, capable buying team and a disciplined inventory management system."

Following the company reporting a 40.7% drop in net profit to $5.5 million for the six months ended February 1, McDouall Stuart is forecasting a $9.2 million full-year result, down 42% on the previous year, followed by an even weaker $8.3 million net profit for the year ending August 2010.

The company’s first-half sales were down 2.8% to $95.7 million and McDouall Stuart expects the slide will worsen to a 3.3% drop for the full year to $187.3 million.

The broking firm says Hallenstein’s strong dividend yield – it paid a fully-imputed 10 cents a share first-half dividend, although that was down from the 17 cents paid last year – should limit downside in the share price but that any upside will depend on an upturn in retailing generally in Australia and New Zealand.

     

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