Your further thoughts on Helia Group (HLI) and Inghams (ING)

Hi Paul & proud Octogenarian,

Helia Group (HLI) – indeed a “high risk” play in our Income Portfolio hence the low 2.5% exposure, but a couple of important points:

• Firstly, it’s not just HLI that’s ignoring tariff concerns, the S&P 500 closed within 0.5% of its all-time high on Wednesday night, and the ASX200 less than 1% below its high point on Thursday when we answered this question; at this stage tariffs are old news except for specific situations such as copper and pharma.
• Our view on HLI is based on the release of capital for share buy-backs and special dividends as opposed to the company’s eventual loss of ~60% of its earnings. With around $1.7bn of capital on its balance sheet, of which we estimate, around ~$600mn could be returned to shareholders, buying the stock at $5, with a market cap. of $1.35bn isn’t too scary to us although we recognise it’s not an easy stock to value. To your point about analyst’s price targets being below the share price, as we’ve touched on a few times recently, there is a level of subjectivity around these, and in our experience, analysts can often get things very wrong. At this stage, the market is agreeing with us, with the stock up 12% since we bought it a week ago. At $5, it’s less compelling than it was in the mid $4’s.

Inghams – the 6.1% fully franked yield over the next 12-months is attractive but growth is tricky to foretell with this volatile poultry producer experiencing 20-40% swings on an almost annual basis over the last 5 to 6-years. We wouldn’t call it a value-trap but more of a news driven company who cannot fully control its earnings with external factors such as feed costs, increasing energy & labour costs, plus bird flu scares influencing the stock in ebbs and flows. However, we maintain a tick of approval with our vote being swayed by the recent insider buying.

• We like ING around $3.50 for yield and some capital gain, with consensus earnings estimates implying mid-single digit earnings growth over the coming 3 years.

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Inghams Group Ltd (ING)

LAST UPDATED 10/07/2025 13:55

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Inghams Group Ltd (ING)

LAST UPDATED 10/07/2025 13:55