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In what can only be regarded as pure speculation, a quick analysis of the recent Stock Exchange announcement by Network Data Holdings, parent company of Hipstar, shows that Hipstar have agreed extended borrowing facilities, albeit at improved borrowing rates through Bank of Scotland Corporate. Additionally the Head Office, Botleys Mansion has been remortgaged for a further 300,000 pounds taking its value to an assumed 5mil.

My concerns

1) The property market is not rising, in fact valuations are falling and the market has tightened considerably. Have Network Data managed to remortgage Botleys Mansion just in time and is this the last opportunity to remortgage for quite some time?

2) Improved credit facilities- a 3.5mil loan for 'working capital' and 1mil overdraft obviously give Network Data the firepower to get involved in takeovers within the HIP industry should they choose to do so. Other strings to their bow include mortgages, conveyancing but the main income is from surveying- since volumes are significantly down in 2008, you would have thought both divisions will be under some considerable strain right now.

3) HIPs- Have Hipstar really got the market penetration they need to grow and thrive? Although volumes are obviously of a sensitive nature, not many independent DEA/HIs are coming across agencies who have signed up with Hipstar, although that doesn't preclude this large wealthy player in the HIP market from accumulating a great deal of corporate, repossession and probate work that is often forgotten.

Watch that share price drop!



Yes it been a rough ride for those holding NDH shares in the last 12 months. Added to that is a considerable P/E ratio of 46 and surely this share is not to be added/held at the moment.

And the upside?

Well if Network Data don't use the additional borrowing stabilising the existing mortgage and conveyancing businesses, having already mothballed their plans to actually become a mortgage lender themselves earlier this year and letting 7 staff go, then maybe they can use the cashpile to acquire some lean and profitable HIP providers- the big question remains- are there any? With fee-cutting rife in the industry as people simply try and hang onto their jobs, the pressure will take its toll and more consolidation is surely overdue.

Labels: Hipstar Network Data Holdings HIP Home Information Pack acquisition