Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi MM, In your 27.08.24 update, you stated in relation to HLO that "Net profit after tax increased to $30.7 million, up 60.2% year-on-year, however, this looks light on, and we need to understand why." Since then, HLO's share price has retraced to $1.90. Did MM look further into the NPAT question and does MM remain long and bullish on HLO or have any concerns? What does MM think about the current price as an initial entry point? Thanks, Darren
Hi Darren,
Yes, the short answer is higher costs. When revenue increases like it has in HLO (+40% for the period), we want to be seeing profit margins increase more than they did but that wasn’t the case hence the NPAT miss vs consensus. A lack of specific numerical guidance is also an issue, it speaks to some uncertainty around this year’s earnings, hence at this stage we are sticking with HLO but not increasing our small 3% position in the MM Emerging Companies Portfolio.
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