HTL hudson timber products limited

htl- green alert to 40c

  1. 258 Posts.
    Just spotted Hudson Timber in the last couple of days- code htl. It used to be Hudson Timber & Hardware Ltd and was trading at a much higher level before it was suspended and restructured. The lod company was making great losses with a big debt burden. From my analysis all the businesses are actually very profitable, just that overall the hardware part of business is not quite in synergy with the other businesses and with the dent burden the business was never going to make any profit.

    Htl has now been reborned and came back on only last week with new share issues at 15c which I think is well undervalued. This looks like Unitaract when it came back on and also Quantum which have doubled and more since coming back on. I will give reasons whty I think htl has similar potential. In fact htl has the more traditional ad less speculative business than the other two. The shre issue was done by Ord Minnett and so well supported by reputable underwriter. The issue was well subscribed.

    The cash injection has rid of the debt burden and so it has a clean balance sheet. All capital expenditure s have been spent and written ie all the losses cleared for the new year, from now on all sales contribute directly to bottom line with just normal recurring costs.

    The new company is without the hardware side of the business which was sold to the management. There are now 3 businesses, all profitable in htl ie Aust Hardboard, producer of high density fibreboard, Hudson Frame and Truss, producer of timeber roof trusses, wall frames and floor systems, and Aust I Beams producer of timeber I Beams. Other than the the last business the first two are either the only producer in Aust or the biggest, ie not a lot of competition.

    The restructuring is what I am looking at - all clean and it is expected that the company will make substantila growth in the coming year. Its pe on resuning trade at issue price was 4.4, and if I could assume that this sort of busioness is worth 10 to 15 times earnings, with substantial earnings improvement to come, current price looks low. It has net asset backing of 21c, anothe good indicator.

    It will alos pay a dividend at 9% at issue price of 15c. How amny companiies at 25c price pays a dividend, fully franked. Number of shares is not bad at about 90million.

    Htl is unique I believe and a green alert to 40c due to:

    - a good business profitable with dividends payment
    - a clean balance sheet and now well capitalised
    - clear business strategies with good potential to grow
    - looks undervalue as people are still not aware of the company and its potential
    - support from institutions
    - good cashflows, pe low at the moment

    Research yourself and see if you agree.

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