Another day passes, and we see continued optimism and confidence from our CEO Garrison Huang in HT8. His shareholding now at circa 30%. Another large purchase of shares on market. He must be smirking as he buys these shares off those which have lost patience or are cashing in their profits too early.
Lockdowns continue to drive consumers to e-commerce/online stores. With click & collect failing across the country, and with Australia Post and other Couriers massively under pressure to deliver online purchases within reasonable timeframes, consumers will be turning their attention to the larger online stores - such as Amazon & Ebay to deliver products quickly. When consumers visit these platforms, they will see Harris Technology, and will feel safe and comfortable buying from a trusted a highly rated and top ranked seller.
From my research it appears that Amazon & Ebay sales continue to perform very strongly. I recently read that e-commerce and online shopping trends are growing month on month and are projected to grow significantly.
On the topic of margins, with continued growth, the company will be able to negotiate more favourable terms with postage, increase profit margins with the marketplaces, and continue its diversification into new categories. In addition, with more unit sales, the company will receive more rebates from it's suppliers. For those which are not aware, HT8 can receive rebates and rewards from Samsung for example, if it sells a certain number of monitors for example. It can reduce it's postage fees with couriers as it pushes out more stock, and it can negotiate lower fees to e-commerce sites. With increased sales, the company collects data, and stays at a competitive advantage to know what products are in demand, and scale up it's inventory as needed.
Another thing to note is that as the company grows, it's balance sheet will too. And with it's balance sheet growing, the company will be able to leverage advantageously. For example, it will be able to purchase more stock, take advantage of special discounts, and also have higher credit limits.
Furthermore, with private label products, profit margins are significantly higher. They can be in the vicinity of 50% margins. And these products can be sold on international platforms also. A great story of success in this realm is Anker.
I think HT8 are running a very well thought out strategy.
1. Grow presence to be Number 1 seller on e-commerce platforms such as Amazon, Ebay, Kogan, Catch, etc 2. Increase product ranges and categories 3. Sell more stock, receive rebates, drive down postage, increase profit margins 4. Sell private label products (leveraging from the Number 1 spot)
Meanwhile, we have improved operational efficiency with relocation to 1 warehouse facility. Cost expenditure will be frugal, as evidenced with reduced rental payments, and CEO taking a minimal sub $90K salary, and very low or non existent marketing costs. MYD Mydeal for example, spent over $20m just in marketing alone last year.
All in all, we have a very compelling investment here in HT8.
- Revenues increasing rapidly - Very tight share register - CEO with lots of skin in the game - Online shopping trend growth and disruption - Top Seller status on Amazon & Ebay - Private Labelling to come - Frugal cost expenditure
Many more things to add here, but like has been said by those shareholders that have had conviction, this is a highly undervalued and hidden gem of a stock in my opinion.
Against it's peers, it is highly undervalued at PE ratio perspective. And generated almost as much profit as Kogan did last year.
The big question is, what will the company achieve in Quarter Revenue this quarter? I project circa $16m - $18m. Time will tell.
For now, accumulating where I can, and sensing that sentiment and the market is starting to realise that this growth story is real, backed by record revenues and a business which is scaling up.
Enjoy your evening all.
$tockfella
HT8 Price at posting:
13.5¢ Sentiment: Buy Disclosure: Held
