HST - Hastie Group

[skc]

Great to hear from you guys out there.
Yes I did buy to hold LT. I liked the actual business and the stock was recommended strongly, originally at higher prices, by a couple of what I consider to be reputable newsletters. My own analysis about 12 months ago, was compatible.
So, I did average down as suggested - but was about to pull the pin primarily due to gut instincts, when the trading halt was called.
Hastie management has been clever at talking the company and prospects up and at the same time presenting the financial information in a manner possibly hiding the inevitable truth. While I might be naieve, I don't see that as being ethical, or complying with due governance.
We are all to believe it seems that the plight of the business is purely due to external factors? I do know that many share-holders theatened to pull the bin and dump the stock in anger as trading recommenced - and apparently must have.
Does HST still have a business or not???
Cheers.

There are so much contradictions in this post. You don't trust the management - you think they are un-ethical, yet you bought more?

The true situation is that HST has breached banking convenents. They have a 4 month life line. If they can't refinance the debt or raise equity, they are going belly up.

Take a look at the share price chat of NMS and PGA and see what happened when companies need to raise capital when their lives depended on it. It doesn't matter if they have a business or not.

This is hardly a time to be brave and double up imo. And like country lad said, if they turn things around, there will be plenty of time to buy before the share price races ahead.

 

[poppytom]

Thanks for the update SKC.

I might have confused you in that I bought more shares while I thought management was sound, I averaged down and believed in the information being presented. I do that with any stock.
However, I was later about to sell the bulk of my HST shares and got caught out with the trading halt - which turned out to be painful.
That is when I had some doubts about the information being presented by management - and of course still do. Hope they can trade out but won't be buying any more unless picture is much brighter.

Cheers

 

[skc]

Thanks for the update SKC.

I might have confused you in that I bought more shares while I thought management was sound, I averaged down and believed in the information being presented. I do that with any stock.
However, I was later about to sell the bulk of my HST shares and got caught out with the trading halt - which turned out to be painful.
That is when I had some doubts about the information being presented by management - and of course still do. Hope they can trade out but won't be buying any more unless picture is much brighter.

Cheers

I see I did think you bought after trading resumed...Good luck with the position.

 

[So_Cynical]

There are so much contradictions in this post. You don't trust the management - you think they are un-ethical, yet you bought more?

The true situation is that HST has breached banking convenents. They have a 4 month life line. If they can't refinance the debt or raise equity, they are going belly up.

Take a look at the share price chat of NMS and PGA and see what happened when companies need to raise capital when their lives depended on it. It doesn't matter if they have a business or not.

This is hardly a time to be brave and double up imo. And like country lad said, if they turn things around, there will be plenty of time to buy before the share price races ahead.

Your a pretty good judge of these things...so i would be interested to see your thoughts on just how much the SP would pop if they were able to refinance on good terms?

You would have to agree that the pop would be significant if the ann read well....a gutsy average down now may well turn a 60 or 70% loss into a significantly more palatable 30 or 40% loss after the ann?

Do nothing and the situation cant be improved apon, do something and there's significant potential....2 edged sword of course.

 

[poppytom]

Thanks SKC.

Good day in the market today - and apart from HST did well . Hope you guys did well too. You can't win them all, but maybe HST will recover in the LT - maybe.

Wishing you a Happy Easter break.

 

[skc]

Your a pretty good judge of these things...so i would be interested to see your thoughts on just how much the SP would pop if they were able to refinance on good terms?

You would have to agree that the pop would be significant if the ann read well....a gutsy average down now may well turn a 60 or 70% loss into a significantly more palatable 30 or 40% loss after the ann?

Do nothing and the situation cant be improved apon, do something and there's significant potential....2 edged sword of course.

If the market is really generous and price them as a going concern, 6x EBIT for enterprise value would be a starting point (since they are still highly leveraged). This year's EBIT of $50m was impacted by a lot of things that hopefully won't be repeated, so let's say they trunaround somewhat and achieve $60-70m EBIT. This brings EV to $360 to $420m, less debt ~$300m. So $60 to $120m of equity over 240m shares = 25 to 50c. It's big range but that's what happens when the company is teetering on bankruptcy - the equity value swings widely on small change in assumptions.

If they raise capital say $200m @ 20c a pop that's 1B new shares. The market might say OK, we can do 8x EBIT and this bring enterprise value to $480 to $560m. Debt is down to $100m, so equity value = $380 to $460m. But spread that over 1.24B shares and you get 31 to 37c.

If in 3 years they recover their EBIT to $120m, then 60-70c (in the post cap raising scenario) is possible. Or if they somehow don't need the cap raising, then all the way back up to $1 is possible as if nothing happened. But that's like saying a patient who's yet to recover from a heart attack may run and win the New York marathron one day... not impoosible but you wouldn't bet too big on it.

If they are to survive the cap raising route is the most likely. 20c raising price is probably generous given where they are trading. I certainly wouldn't double down if I was a holder - you can throw more money in during the cap raising when that comes.

 

[So_Cynical]

If they are to survive the cap raising route is the most likely. 20c raising price is probably generous given where they are trading. I certainly wouldn't double down if I was a holder - you can throw more money in during the cap raising when that comes.

Its reasonably likely they will trade lower than the issue price anyway, after the record date or after the issue date, thinking about it a little they have to make sure there's a big take up of the offer so it will have to be discounted...if i was a holder i wouldn't be doubling down either, but i would get a few extra to bring my average price down a little...this has always worked for me before.

 

[Country Lad]

Your a pretty good judge of these things...so i would be interested to see your thoughts on just how much the SP would pop if they were able to refinance on good terms?

You would have to agree that the pop would be significant if the ann read well....a gutsy average down now may well turn a 60 or 70% loss into a significantly more palatable 30 or 40% loss after the ann?

There is nothing to suggest that HST will improve if they refinance, and if they have a capital raising, the SP should simply reduce with the dilution.

The market has spoken, HST is justifiably seen as a dud and it will be a turnaround in the way the business is managed that will improve the SP, not the fact they are borrowing more money.

Keep in mind that the price has been falling for at least a year. The market has been assessing the performance and has marked it down. The same way that the market has been assessing one of its peers and martking it up.

The fact that HST has been falling for a year and NFK, which is in exactly the same market, has been continually marked up over the same period should have told the HST shareholders something. Share prices do not normally continually fall for no reason - the market was telling us something, and the people who sold were the ones listening.

Cheers
CL

 

[So_Cynical]

There is nothing to suggest that HST will improve if they refinance, and if they have a capital raising, the SP should simply reduce with the dilution.

The market has spoken, HST is justifiably seen as a dud and it will be a turnaround in the way the business is managed that will improve the SP, not the fact they are borrowing more money.

Keep in mind that the price has been falling for at least a year. The market has been assessing the performance and has marked it down. The same way that the market has been assessing one of its peers and martking it up.

The fact that HST has been falling for a year and NFK, which is in exactly the same market, has been continually marked up over the same period should have told the HST shareholders something. Share prices do not normally continually fall for no reason - the market was telling us something, and the people who sold were the ones listening.

Cheers
CL

You wouldn't be a trend follower by any chance...would you.

Personally i don't take to seriously what the market is telling the share holders, im much more interested in what the market is telling me, i have been very successful buying stocks with a declining SP...and im reasonable confident there's money to be made in HST however ill leave it to the more risk tolerant than i.

GL with the trend following.

 

[Country Lad]

You wouldn't be a trend follower by any chance...would you.

Nope, not at all, just pay a lot of attention to the market action.

Cheers
CL

 

[hangseng]

So disappointing to see this happen.

I was once a supporter and holder in my SMSF for the divs and potential CG. I sold Sept last year at a small CG to place all funds into PEN. I had fears over the rising debt levels, despite the excellent work in hand. I did not think this would happen though.

However if I have learnt nothing else it has been to protect my capital at all costs.

I only once held on to a stock that just kept going down and once even bought a another stock (a falling knife) believing the market had oversold the stock. Best thing I finally did on the former was to let it go, take the hit (a big one) and place what I had left into ST trades to build back up. That was a different stock to HST (at least they have a glimmer of hope), the one I had was a dog (CVI) with lying management HST is not that IMO.

My falling knife trade resulted in a loss. Good luck to anyone buying HST now, a brave move that may pay off handsomely if you are right.

I am just not sure in the current financial climate financiers are going to show much mercy. HST will have to prove up or I believe they will be cut off at the knees. If the US and world markets do what some are predicting HST will fall (if not fail completely).

Risk level is simply way to high with HST now IMO.

If they actually manage to turn the company around it may come out the other side a much stronger business. Then and only then would I look at HST again...Until then I only watch with interest from a distance unexposed.

 

[poppytom]

I watched my holding fall from an average of about $1.10 to .18 this morning. I had got out around .25 overall, so that is my loss and may have to try and make up with some ST trades.
HST may have some LT hope, but not in my book if management chooses to believe that all of their woes are due to external factors. Being new at this, what is IMO - it's probably fairly obvious.
Cheers all.
https://www.aussiestockforums.com/forums/images/icons/icon8.gif
Angry

 

[poppytom]

I think I might have got it - (IMO) - in my opinion ??

I was looking for some technical term if so - and not the obvious.


Cheers

 

[sptrawler]

A lot of us in the same boat, they shouldn't have bought Rotar at the top of the market, but U.S and U.K companies are experts at "rope a dope".
Given the problems with debt a lot hinges on very astute tendering, if they stuff up a tender just to get the job they are in the $..............t

 

[poppytom]

Volumes are up and the price is slowly climbing, against market trends. I assume that somebody knows something or is it just speculators out there hoping for a major windfall if the company recovers? I can see nothing of any note put out by the company recently, nor have I read anything else. Even if there is a turn-around I suspect it will be a long slow haul back up - maybe I am wrong.
Has anybody got a clue on the above?
Cheers.

 

[kingkev]

Big falls today. Is it worth getting in at these lows or this going to continue south. Restructuring of their debt I thought would have seen the sp move the other way

any thoughts

 

[TheAbyss]

Big falls today. Is it worth getting in at these lows or this going to continue south. Restructuring of their debt I thought would have seen the sp move the other way

any thoughts

Yesterdays announcement has the answer to your question imo.

Major dilution at a heavily discounted SP will be the result of yesterdays market release so holders/traders bailing out before an announcement regarding a SPP and its assoiated dilution at a heavy discount.

Excerpt from yesterdays announcement below.

The restructured facilities, which mature in FY2013 FY2014, are conditional upon, among other things, Hastie Group paying down a material amount of bank debt from the proceeds of an equity recapitalisation.

 

[kingkev]

SP dillution appears likely but I think that's a short term thing. With Frigrite having problems there is a possibilty that many of their contracts will be picked up by Hastings.

I think it is rather undervalued and 15 or 16c looks like a good buy for a longish term hold

 

[Mayfair]

I am holding onto my HST shares. (Not advice. Do Your Own Research)

My position: Initially bought in around $0.19, my cost basis is now around 0.18, I am goingLong,.


Firstly: The company has massive support from the big banks. CBA, in May became a major shareholder and re-increased their position. CBA now have approximately 6.9% of HST which they purchased at market for $0.25 avg price approx with a hefty allocation of the shares allotted to colonial first state and a decent chunk going to Realindex.
Secondly: The equity raising details have been announced and is going forward with Lazard as cornerstone investor with insurance by UBS AG as well as Macquarie.
Also: Lazard are appointing a board member, and the input of Lazard combined with UBS AG and Macquarie advice should not be underestimated in the future profit margins of HST.

I'm: Holding with a view to accepting entitlement and increasing position. Simple Longcenomics

 

[octain]

Hi guys,
I have put a bit of time in researching this stock rather then post it all here, I have made a blog entry for it. Would be interested in your opinions relating to my thoughts. Blog can be read at https://www.aussiestockforums.com/forums/entry.php?b=887