ASX:HNG
Hancock & Gore Ltd
Investment Summary
The fund managers believe that Hancock & Gore Ltd (HNG) possesses strong potential for growth, primarily due to its main assets, the Mountcastle and Schoolblazer businesses, which operate in the school uniform sector in Australia and the UK. In their opinion, the combination of local market strengths and Schoolblazer’s advanced technology provides a competitive edge, facilitating significant market share gains. Despite a recent decline in share price to approximately $0.27, the proposal to acquire H&G High Conviction Limited (HCF) in an all-scrip transaction is seen as strategically beneficial. The acquisition will enable HNG to fund deferred consideration from the purchase of Schoolblazer, simplify its business structure for better shareholder value, and enhance its market capitalization, addressing liquidity constraints associated with a smaller entity. Overall, the fund managers are optimistic about HNG's future trajectory, highlighting the strong alignment among major shareholders and the potential for the business to operate more efficiently.
Commentary From The Managers
Naos Asset Management
31 Mar 2025
$0.27
- Naos Asset Management notes that HNG has put forward an all-scrip acquisition proposal for H&G High Conviction Limited (ASX: HCF).
- HNG is related to HCF as its manager and substantial shareholder.
- The acquisition is expected to complete during Q4 FY25.
- Acquiring HCF provides funding for Remaining Deferred Consideration related to the Schoolblazer Ltd. acquisition.
- The HCF assets, being liquid, add optionality to HNG's balance sheet for settling deferred considerations.
- Simplification of HNG's business is necessary for shareholders to realize full value; acquiring HCF is a step towards this.
- This move may pave the way for Global Uniforms Solutions to potentially operate as a standalone entity.
- HNG aims for a larger & more liquid listed entity by acquiring HCF, enhancing market capitalization and trading activity.
- Many top holders of HNG are directors, aligning their interests but potentially reducing share trading activity.
Naos Asset Management
30 Sept 2024
$0.32
- Naos Asset Management recognizes Hancock & Gore Ltd (HNG) as primarily consisting of two key businesses: Mountcastle and Schoolblazer, focused in the school uniform sector.
- Despite Australia's smaller population, the school uniform market is comparable in size to that of the UK.
- Schoolblazer leverages technology and systems that provide a competitive edge in the Australian market.
- The combined entity of Mountcastle and Schoolblazer is viewed as having significant potential to increase market share over time.
- Schoolblazer has shown consistent organic growth, which is remarkable for a quasi-retail business with less discretionary income dependency.
- With exposure to the large Australian market and continued market share gains in the UK, the potential for further growth in the combined business is substantial.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.