HST - Hastie Group

Date: 27/2/2008
Author: Michael Smith
Source: The Australian Financial Review --- Page: 53

Australian building services group Hastie has acquired a similar company based in Great Britain for $A204m. Rotary is a provider of electrical, air conditioning and maintenance services in the UK, Ireland and the Middle East.Hastie CEO, David Harris, said the acquisition will provide the group with immediate scale in the British market and expand its operations in the Middle East. Hastie has reported a 45% increase in net profit to $A14.5m for the first half of 2007-08, and has forecast earnings per share growth of 50% for the full year

Re: HST - HASTIE GROUP LIMITED

Attached is the daily chart for HST. Up to Jan2008, HST had been pulling a rate of return of 100% pa.

Hi lucifudge

Probably still is .... just have to be short rather than long. This one offered via CFD ...

Dutchy3 said:

Hi lucifudge

Probably still is .... just have to be short rather than long. This one offered via CFD ...

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Hm this one appears tohave good numbers, but maybe a lot of risk to go with it

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 18.3 28.1 36.0 38.7
DPS 11.2 15.9 20.2 22.5

thx

MS

michael_selway said:

Hm this one appears tohave good numbers, but maybe a lot of risk to go with it

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 18.3 28.1 36.0 38.7
DPS 11.2 15.9 20.2 22.5

thx

MS

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2.44 with half and Hour to go .... will this collapse back down on the close of possibly put in a Peircing Line to cloud Fridays Big Black?

SHOULD I BELIEVE THIS RECOMMENDATION ?

Probably not but will he change his comments to buy when others start selling on reaction of his article :

SELL RECOMMENDATION

SCOTT MARSHALL
SHAW STOCKBROKING


Hastie Group (HST) HST is a leading supplier of mechanical and electrical building services and refrigeration systems in Australasia, the UK and the Middle East. HST is exposed to the non-residential construction cycle, a sector that tends to be late into an economic downswing and late out. Exposure to the non-residential construction cycle is adversely affecting investor sentiment.

I for one won't be believing it. The view is short term and limited in the extreme and completely overlooks the sound fundamentals of HST.

This is a very sound company to invest in for the long term IMO and I did just that. HST isn't a popularist or hyped up stock, but it has everything you would normally look for in a quality long term investment.

From the Shaw website, maybe they should read their own work:

17/03/2008 - Hastie expands commercial hydraulics business into Qld
Hastie Group Limited (HST) has acquired Beavis & Bartels and GTS Plumbing for $21.5 million. The company said the purchase would help it deliver the promised 50% increase in EPS growth in FY2008 as it expanded its commercial hydraulics business to Queensland.

26/02/2008 - Hastie books cool H1 profit, acquires Rotary
Hastie Group Limited (HST) announced a record first half profit increase of 45% over the previous corresponding period. The company announced separately it was expanding further into the UK, Ireland and the Middle East with the acquisition of building services company Rotary Limited for 94.8 million pounds ($202.13 million) in cash and shares.

28/08/2007 - Hastie Group announces 66% rise in FY profit
Hastie Group Limited (HST) has announced a 66% increase in profit after tax to a record $22.2 million for the year to 30 June 2007. The building services and refrigeration systems company said revenue increased 62% over last year’s result to $779 million, while earnings per share were 47% higher at 19.3c per share.

19/07/2007 - Arasor: A Fast Growing High Tech High Flyer With A Lack Of Hype
The technology sector on the Australian share market consists mostly of software sellers and developers a la MYOB (MYO) and Oakton (OKN) and service providers such as Melbourne IT (MLB) and Computershare (CPU). The difference between these companies and the likes of Texas Instruments and JDS Uniphase -also labeled technology companies- is arguably as large as with refrigeration company Hastie (HST) and shipbuilder Austal (ASB).

17/04/2007 - Hastie Group makes NZ acquisition
Hastie Group Limited (HST) today said it has acquired 60% of the contracting business and 100% of the service business of New Zealand’s Aquaheat Industries Limited. The air conditioning and refrigeration company said the agreement would enable it to increase its share of the contracting business to 100% within five years.

28/02/2007 - Hastie Group unveils 65% rise in 1H profits
Hastie Group Limited (HST) today announced a profit after tax of $10.1 million for the six months to 31 December 2006, a 65% increase in underlying earnings. The group said that revenue increased by 63% to $353.9 million, with the result demonstrating growth potential for Hastie's business model and the demand for services.

18/01/2007 - Hastie scores $52m Abu Dhabi deal
Hastie Group Limited (HST) announced it had won a contract in Abu Dhabi with an expected value of approximately $52 million. The contract will see Hastie install air conditioning in a 190,000 square metre shopping mall to be constructed immediately.

Extract from Compare Share as produced broker recommendation on HST

SCOTT MARSHALL
SHAW STOCKBROKING


SELL RECOMMENDATION

Hastie Group (HST)

HST is exposed to the non-residential construction sector. This industry has an accentuated cycle, albeit one that tends to be out of step with the broader economy. Hastie provides air conditioning and refrigeration solutions to the industrial and commercial sectors. The long time lines for non-residential companies tends to ensure they are late into the downswing and, equally, late coming out. If this downswing turns out to be deep and protracted, then this sector will be badly hurt, and HST with it.

Miner said:

Extract from Compare Share as produced broker recommendation on HST

SCOTT MARSHALL
SHAW STOCKBROKING


SELL RECOMMENDATION

Hastie Group (HST)

HST is exposed to the non-residential construction sector. This industry has an accentuated cycle, albeit one that tends to be out of step with the broader economy. Hastie provides air conditioning and refrigeration solutions to the industrial and commercial sectors. The long time lines for non-residential companies tends to ensure they are late into the downswing and, equally, late coming out. If this downswing turns out to be deep and protracted, then this sector will be badly hurt, and HST with it.

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How strange HST was SELL in Sept and in Oct Bell has said it as buy

THis is to repeat its recommendation. See attached

Disclaimer: i do not own HST and you may read this link too

https://www.bellpotter.com.au/ca25/Research/GetFile.aspx?id=2438af0d-ccc2-4e58-b717-65463c4d8b7b

Hastie will be admitted to the S&P/ASX All Australian 200 index at close of trade 19 Dec. In the good old days this would have boosted the price, but in this climate it doesn't help.

What's happening with Hastie? It's fallen over 10% in the last 2 days- way more than the index avg. Can't see any announcements though. Anyone have any ideas?

The share holders that participated in the SPP (1 for 4 deal) received their shares today (possibly yesterday, though I couldn't trade mine yesterday) @ a SP of $1.15, so the SP which was up to about $1.35 by the end of last week, has been eroded over the last couple of days in particular as people sell their existing shares, and hang onto their new cheaper ones.

ie, first you hold shares, buy another 5000 shares through SPP at $1.15, then sell some of your original holding at market for $1.35 and make a profit of 20c per share, and you haven't reduced your holding.

I predict it will gradually rise (assuming the market does) as the bulk of these SPP shares get sold off early, and then normality comes back.

dirkdiggler444 said:

The share holders that participated in the SPP (1 for 4 deal) received their shares today (possibly yesterday, though I couldn't trade mine yesterday) @ a SP of $1.15, so the SP which was up to about $1.35 by the end of last week, has been eroded over the last couple of days in particular as people sell their existing shares, and hang onto their new cheaper ones.

ie, first you hold shares, buy another 5000 shares through SPP at $1.15, then sell some of your original holding at market for $1.35 and make a profit of 20c per share, and you haven't reduced your holding.

I predict it will gradually rise (assuming the market does) as the bulk of these SPP shares get sold off early, and then normality comes back.

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Oops- I'd forgotten about the 1 for 4 deal. Makes a lot of sense now! Looking forward to a return to form soon. From what I can see HST still looks like good value in the longer term.

according to recent broker consensus estimates:

we have:

2 x strong buy

3 x moderate buy

4 x hold



CREDIT SUISSE - AUSTRALIA
FORESIGHT SECURITIES
E.L. & C. BAILLIEU STOCKBROKING LTD.
ABN AMRO
J.P.MORGAN
UBS
PATERSONS SECURITIES LIMITED
MACQUARIE RESEARCH
CITI





IMO Hastie was severely oversold and will bounce to more realistic levels. I'm not sure if we are going to see $4 a share anytime soon but levelling out in the $1.50 - $2 range is entirely reasonable.

Here is a 10 day chart for HST. Looking good methinks - strong buying - if the dow holds up should burst through $1.50

You were right on the money with this one, Imajica- hope you benefitted from your own opinion! Any thoughts as to where Hastie will go now? Do you think their full year report will look okay?

imajica said:

according to recent broker consensus estimates:

we have:

2 x strong buy

3 x moderate buy

4 x hold



CREDIT SUISSE - AUSTRALIA
FORESIGHT SECURITIES
E.L. & C. BAILLIEU STOCKBROKING LTD.
ABN AMRO
J.P.MORGAN
UBS
PATERSONS SECURITIES LIMITED
MACQUARIE RESEARCH
CITI





IMO Hastie was severely oversold and will bounce to more realistic levels. I'm not sure if we are going to see $4 a share anytime soon but levelling out in the $1.50 - $2 range is entirely reasonable.

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HST recently purchased Spectrum Fire at a basement price. A Fire Service company should sit well in their business once they stop Spectrum's money bleed.

Spectrum seem to have some top contracts that should be profitable under the right management.

Does anyone know why Hastie is so undervalued by the market at the moment and falling against market trends? They are trading at a current PE of about 6 and returning over 8% via a dividend. They have a full order book for the next year and even allowing for the downturn in construction that is still hitting their business they should still earn 10c to 16c a share which would give them a PE of about 6 to 9. They do not have excessive debt levels and their 30% exposure to foreign earnings would, one thinks, have seen the worst of its exchange rate effects. Revenues have been holding up fairly well though margins falling. The construction outlook is also improving next year. I suspect some short selling has put downward pressure on Hastie and created value. As well as there being an over reaction to profit warnings.

cookiemonster said:

Does anyone know why Hastie is so undervalued by the market at the moment and falling against market trends? They are trading at a current PE of about 6 and returning over 8% via a dividend. They have a full order book for the next year and even allowing for the downturn in construction that is still hitting their business they should still earn 10c to 16c a share which would give them a PE of about 6 to 9. They do not have excessive debt levels and their 30% exposure to foreign earnings would, one thinks, have seen the worst of its exchange rate effects. Revenues have been holding up fairly well though margins falling. The construction outlook is also improving next year. I suspect some short selling has put downward pressure on Hastie and created value. As well as there being an over reaction to profit warnings.

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Management is estimating EBIT ~$73m. HST has debt of $188m so interest bill is ~$15m at ~8%. With 30% tax, NPAT would be $40.5m, or ~17cps. This means a current PE ~5.8.

Management also estimate H1/H2 split to be 35/65. So assume H2 doesn't improve we get EBIT ~$51m, which means NPAT $25m, or 10.5cps. PE 9.4.

Most building sector stocks are at PE ~10... so I think the current sell off has priced in all the risk but not a lot of upside. May or may not be a bargain yet given the uncertainty.

Getting sold down a fair bit again today, down to 92 cents at one stage (represents a 5% drop today).

From memory I think the lowest SP in the stock's history was approx 95cents (during the GFC sell down).

I am keen to use this as my point to get back into the stock, but just not sure if it can drop any further?