The High Street pawnbroker and lender said its pledge book had increased 12% whilst loan numbers grew 95%.
Companies: H&T Group plc
High Street pawnbroker and lender H&T Group (LON: HAT) has issued a positive trading update today which outlines the Group's Q4 17 trading and full-year profit forecasts.
The Group saw its pawnbroking pledge book grow 11.6% to £46m in the 12 calendar months in 2017, benefitting from the jump in the price of gold during the year. An "increase in loans on quality watches" also boosted its numbers.
On top, the Company's personal loans business has soared, growing by 94.7% to £18.3m "as a result of the expansion in [its] longer term, lower interest rate loan product."
Management said it now expects to report:
"Full-year profit before tax to be above current market expectations."
Shares in HAT jumped 4% to 340p off the back of the update.
Smaller pawnbroking rival Ramsdens has seen its share price soar since its February 2017 IPO, more than doubling in the 11 months it's been listed after it too benefitted from strong gold prices, as well as currency tailwinds in its forex business.
John Nichols, Chief Executive of HAT said:
"We have improved retail through an expanded range of new jewellery and the development of both click-and-collect and online sales.
"The Group's performance over the past two years demonstrates the success of our strategy to access new customers and markets. Demand for our products remains strong and we look to the future with confidence."
Its share price in those two years has grown more than 75% from a January 2016 price of 192p.
Broker N+1 SInger commented in its note on the Group today...
"We expect a +5-10% increase to consensus earnings. We appreciate that H&T has counter-cyclical characteristics which provides an interesting portfolio exposure, but we do note correlation to gold price which has caused issues previously. Cash generation and a strong balance sheet underpin the dividend which could grow if the unsecured loan book gains scale. We await evidence of this but for the moment think H&T trades near fair value at c.11x PER.
Currently, HAT has a cash balance of £4.5m and Net Debt of £11m.