Daily ShareChat: Hellaby Holdings

Hellaby Holdings's trading conditions remain volatile and difficult, particularly in the equipment and retailing divisions, but it is well-positioned to participate in any economic recovery, says Forsyth Barr analyst John Cairns.

"We like the defensive qualities of the automotive parts business, supported by an aging car fleet requiring maintenance for roadworthy certification," Cairns says.

"The key growth strategy (for the automotive division) is bolt-on acquisitions and broadening the distribution product range including truck parts," he says.

The automotive division delivered 97.3% of earnings before interest and tax (EBIT) in the year ended June 2009, up from 54.3% in 2008, reflecting the recession's impact on the other divisions.

The industrial business has scaled back head office functions and made branches more accountable for financial performance and a key focus is to expand the servicing and parts operations.

The packaging division remains firmly focused on supply chain management. "Over the last two years, Elldex has made considerable progress in diversifying away from retail plastic packaging into packaging for the primary export sector."

Conditions for the company's N0.1 and Hannah's shoe stores should stabilise with the improvement in consumer confidence, Cairns says.

He is expecting EBIT will rise to $22.3 million for the year ending June 2010 from $18.2 million the previous year.

BROKER CALL:  Forsyth Barr rate Hellaby Holdings as accumulate.

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