Hardman & Co Research on H&T (initiation of coverage): Pawnbroking royalty, with strong, profitable growth

Hardman & Co initiation of coverage on H&T (HAT):

Pawnbroking royalty, with strong, profitable growth

Founded in 1897, H&T is the UK’s leading pawnbroker, with 269 stores, and it has gained a strong pawnbroking market share in recent years. While it is growing ancillary gold buying and forex products, its core is pawnbroking and related retail services. As other small-sum, short-term lenders have withdrawn, H&T’s well-capitalised, low-risk proposition has unique growth opportunities, with the pledge book up over 50% in 2022. The lessening of legitimate competition at a time of heightened demand means this increasingly dominant franchise is expected to fuel strong earnings growth, with our 2024E EPS 4.2x 2021 levels. A progressive dividend follows (2024E yield 4.9%).

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