I like this share.
First buy it 5 year ago and buy more sometimes and not sell any.
Friend says well run and to keep in draw.
I held, and sold since 2017. Have to say its been a bit of a love / hate relationship. Hence the sales. But I have bought back in. For me it is a shame they are investing so much capital in social justice ambitions. But I have to put ethical investing aside while I enjoy the dividends.
Theres an old saying and I can't remember how it goes. Something about having deposits in a bank or shares in a bank. I chose the latter
"Better to own a bank than having money in the bank"
Quote from: lorraina on Jun 24, 2022, 04:41 PM"Better to own a bank than having money in the bank"
Thats the one!
Has it bottomed ?
On CNBC this morning some of the leading banks are trading on single digit PE's e.g. Bank of America on 8.
Some of the regionals on as little as 5.
The case was made after the recent successful stress test that while during the GFC bank stocks were trashed and at times in other recessions as well, their capital ratio's are now a lot more robust than previously and they may represent a good proxy and good beta for a recovery in the US. For context the US financials are down 31% year to date.
Where are we with HGH ?
1. Its clear we're still in a confirmed downtrend.
2. Forward PE based on average analyst earnings for FY23 is 11.2 https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS-47041144/financials/
3. I am expecting 13.5 - 14.0 cps fully imputed dividends next year = 9.8% - 10.2% gross yield, lets call it 10%
The growth in their reverse home loan book has been exceptional
I think they will take a decent sized hit from this recession in their business finance book but will that be more than covered by previous Covid provisioning ?...its too early to tell. What's the impact of the write-down in Harmoney this year ?
The metrics are attractive but not profoundly compelling in the context of a well established Bear market. I have seen them on a forward PE of 9 before which indicates they could, (and I emphasize this is only one possibility of a range of possible outcomes) go as low as $1.53 in a bad recession.
Perhaps most pertinent is the fact some Australian Banks are already on considerably more compelling FY23 metrics e.g. ANZ on 9.8, BOQ 9.5
I remain cautious. Don't buy in a downtrend (KW)
going to be interesting how deep this recession is going to be..........good time to keep plenty of cash just in case some overdue opportunities arise
Yep, cash is king.
I'm with Beagle on this one - keep your powder dry until the uptrend is confirmed. Yes, you might miss out on early gains but better that than trying to pick the bottom which, in these very unpredictable times, is a mugs game.
Maybe the uptrend in HGH is starting to emerge? Early days but up8c today.
Quote from: LoungeLizard on Jun 27, 2022, 02:12 PMMaybe the uptrend in HGH is starting to emerge? Early days but up8c today.
Maybe down tomorrow, market is like that.
I think this is good company and price still OK to buy but not pay more than $2.05.
Quote from: LoungeLizard on Jun 25, 2022, 06:32 PMYep, cash is king.
I'm with Beagle on this one - keep your powder dry until the uptrend is confirmed. Yes, you might miss out on early gains but better that than trying to pick the bottom which, in these very unpredictable times, is a mugs game.
No fool proof strategy around. Buy too early and you are catching knives and wait for a confirmed bottom (whatever your personal favorite indicator might be) - and you are either ways late or you have a good chance it was just a false flag and the bottom is not yet in. Uncertainty is just one of these inevitable things of life.
Obviously - picking the exact bottom has a similar likelyhood to winning a million in the lottery. Pure luck and not repeatable.
What worked for me in previous bears is to wait until companies look like compelling value (and yes, many do now) and then start buying over an extended time frame (say spend 10% of the free cash per month).
I must however admit - I did this during the last Covid peak, picked up some real bargains early in the game (like e.g. MFT in the thirties), but ended up with too much cash when the best part of the recovery was already over.
Hard to predict in advance how fast the recovery will be - sigh.
For what's it worth here's the link to that report on NZ banks the media mentions when sort of saying banks make excessively high records profits.
Report sort of meaningful re Heartland but remember that they aren't really a bank but really a finance company.
Yes it shows Heartlands high NIM (relative to others) that punters rave about ..... but this is offset by a significantly higher debt provisioning ratio ....reflection of lending.
https://assets.kpmg/content/dam/kpmg/nz/pdf/2022/06/fips-quarterly-march-2022.pdf
https://www.google.com/url?client=internal-element-cse&cx=006730714154542492986:oh6vl0ybuqy&q=https://www.stuff.co.nz/life-style/homed/retirement/128310127/the-number-one-reason-over65s-take-out-reverse-mortgages&sa=U&ved=2ahUKEwiMxrjBue_4AhWH3nMBHezWD_AQFnoECAkQAg&usg=AOvVaw3kK_Ag7TPIgcOE7N7ruEzo
Interesting article thanks. While the growth in house prices exceeds the interest rate, equity is preserved before taking into account inflation. As house prices fall, I would expect demand for reverse equity loans to reduce - but that may not be the case per that article. I suppose the appeal is avoiding demands on weekly cash flow and the preference is putting the debt "on tick".
The salient point of the article to me as a HGH shareholder, was the fact the demand for RELs remains strong while house prices fall.
"It was traditionally thought that a combination of falling house prices and rising interest rates would see a downturn in demand for reverse mortgages, but rising living costs, and the increasing debts of people in retirement, meant that was not happening, Ford says."
I think Heartland is good company and picks right specials to offer.
Will have not so good years but long term is bright.
I note Jarden Cash account are always ahead of Heartland Call account to put up the interest rates, Jarden now 2.25% and Heartland still 1.9%.
Good news for us HGH shareholders...
"Better to own the bank,than having money in the bank,"
Sentiment changing? and portfolio reweighting today at close............either way good news.
So ANZ acquire Suncorp Bank at 1.3 times NTA
Jeez - same multiple applied to Heartland would mean $1.52
Just as well Heartland Group isn't just a bank
PS. Think basil mentioned the other day that on P/NTA basis HGH was richly valued relative to OZ peers
I guess at the end of the day a dairy cow is valued based on how much milk it produces is it not? HGH must be a different breed of cattle 8) . That acquisition is not quite as attractive as the one our dear Jeff got his hands on is it? Relying solely on expected synergies to deliver any sort of accretion sounds like a pretty uncomfortable business case to me.
Price to NTA is expensive but the NIM is nearly double mainstream banks so I maintain PE relativity to its peer group is still the most pertinent comparative measure. Last time I looked HGH were not especially cheap but not expensive either, forward PE in the late 11's.
TA - Still in a confirmed downtrend though and I can't help wondering if Covid provisioning is sufficient for the coming recession ? I see they are having to get far more competitive with their term deposit rates (1 year 4.0%) than they were 6 months back so forward NIM may not be as good as it has been historically.
As Winner has mentioned, the result is a foregone conclusion and will be within guidance range and definitely be "massaged" through provisioning measures. Forward guidance will be the most interesting part of the result next month. My hint to help your head in good shape is you can read the presentation with the annual result announcement which is designed for investment professionals and avoid all the politically correct nonsense of the annual report altogether.
A lot is made of Heartland NIM being nearly double mainstream banks
Sounds really cool but does it mean very much at the end of the day - it's really only a result of the relative difference in the type of lending they each do
And a 'high' NIM doesn't seem to generate excessive ROE's
Good story and if punters think it's good Jeff will keep hammering that message home ... he's a master of spin as well as a master of profit management
I am with Jeff,I too like high NIMs.
HGH,TRA,GEN.[and hopefully HMY].
Quote from: lorraina on Jul 18, 2022, 02:35 PMI am with Jeff,I too like high NIMs.
HGH,TRA,GEN.[and hopefully HMY].
And the master of spin says very little about how much higher Heartlands impairment expense is relative to the others ... why spin bad stuff eh
At the end of the day NIM is just one metric that contributes to earnings and I believe earnings metrics relativity are the best yardstick.
In that regard I can't help noticing that ANZ are the cheapest of the Aussie banks and prior to the Suncorp deal announced today are on just 9.7 times average broker forecast FY23 earnings and 8.9 x FY24. Earnings growth is also good at 6 and 9.4% respectively for the next 2 years. Yield is also very good at 7% forecast. If we could claim their franking credits that would gross us 10% but alas we can't, (pity).
Price to book is only 1.1 times. TA - In a confirmed downtrend. I suppose somewhere in today's presentation they will say the acquisition of Suncorp is eps accretive but I take such claims with a grain of salt so will stick with the above forecasted metrics that already look very attractive.
Despite the lack of imputation credits, I might take a modest stake once they break out of their downtrend because they do look dirt cheap.
Suppose Winner might even say they are a proper bank. 😃
https://www.scoop.co.nz/stories/BU2207/S00259/heartland-bank-wins-canstars-savings-bank-of-the-year-award-for-the-fifth-year-running.htm
Breaking up through the 100 day moving average. That wasn't quite how I envisaged this would play out.
Time for a chart
HGH.jpg
Wonder if the harmoney results and some of the us bank results pushing it along a bit.
Yeah I was wondering about that too. Maybe the fact there's a 7-8 cent fully imputed dividend coming in a couple of months is a factor too.
Got a bit too far ahead of itself , back to reality end of day. A slow gradual climb better. This market Crazy !
Crazy alright you'd be bit gutted if you got in this morning at 2.15. ;D
Quote from: Minimoke on Jul 20, 2022, 01:07 PMTime for a chart
HGH.jpg
NZRegCo showing once again how useless they are. They are thinking of writing a speeding ticket (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/395684/375058.pdf) but all HGH is doing is coming off a recent low.
Gee - they are keeping themselves in jobs if they are writing to firms who have a 10% move
And they are concerned about SP moving to $2.17 when it closed yesterday at $2.08.
Sooner we join the ASX the better
Quote from: Minimoke on Jul 21, 2022, 09:44 AMNZRegCo showing once again how useless they are. They are thinking of writing a speeding ticket (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/395684/375058.pdf) but all HGH is doing is coming off a recent low.
Gee - they are keeping themselves in jobs if they are writing to firms who have a 10% move
And they are concerned about SP moving to $2.17 when it closed yesterday at $2.08.
Sooner we join the ASX the better
Problem with the ASX is its riddled with shorters and large serial manipulators and their regulators turn a blind eye.
https://www.interest.co.nz/business/116979/review-things-you-need-know-you-sign-monday-many-retail-rate-changes-mostly-minor
Heartland raises the interest rate on reverse mortgages to 7.50%
Quote from: Basil on Aug 01, 2022, 05:55 PMHeartland raises the interest rate on reverse mortgages to 7.50%
That is an extremely good deal for HGH, I am very excited to see how reverse mortgage growth has been since the last update. As an aside, HGH dividends were restricted by the regulators for a while, do we reckon we will see a catch up dividend paid? I was imagining they might have spent that money on the recent acquisition. From the announcement on the acquisition: "Heartland's intention is to fund the total acquisition cost in the
short term through new debt facilities provided by a major Australasian financial institution."
Wondering to myself what they mean by that, are they going to cut the dividend? Capital raise? Hope the reinvestment program is popular?
The strong growth in the reverse mortgage book is something I really like. Its high margin and very low risk and will drive decent earnings growth going forward. In my opinion there's probably no catch up dividend payment but expect a modest increase on last years 7.0 cps final divvy. All will be revealed later this month sometime.
I agree the reverse mortgage business has a high return for not a lot of risk. Will be interesting to see if they write down the Harmoney Investment. From memory they were on the books at $2 bucks.
Its all about the forward guidance. Looking forward to them reporting that on 23 August and declaration of that juicy final dividend. Disc: Accumulating.
Expecting guidance to be within $100-110 million. Depends what happens with the HMY write-down but I think they will be a bit more conservative to give ample wiggle room. Think there is a lot of value here especially with the home lending and reverse mortgages doing well, much less risky compared to motor loans. Plus it is hard to beat fully imputed dividends, does my head in getting anything less.
http://www.voxy.co.nz/national/5/405641
made the radio media too...
https://news.yahoo.com/australias-nab-third-quarter-cash-223005944.html
Ausi banking going steady 8)
Quote from: arekaywhy on Aug 09, 2022, 10:22 AMhttp://www.voxy.co.nz/national/5/405641
made the radio media too...
Sure did, I heard a lot of talk about it on the radio while out and about driving around today.
Interesting yield stock. Quick back of the envelope for FY23 yield. At yesterday's close of $2.06, deduct the FY22 final due to be declared shortly of an estimated 7.5 cps fully imputed gives a net purchase price for FY23 and beyond income of $1.985. 14.0 cps next year fully imputed = 19.44 cps gross / $1.985 = gross forecasted FY23 yield of 9.8%.
I think its worth bearing in mind that HGH has not only a good track record of dividend payments but a good track record of growing them over time, (albeit temporarily interrupted by Reserve Bank restrictions which expired on 1 July 2022). In my opinion that 9.8% gross forecasted yield is likely to steadily grow in the years ahead as they continue the strong growth of their low risk high margin reverse equity book.
Disc: My rating is BBB - Basil busy buying ;D
Basil - as they say better owning a bank than lending to them
On the proper Dogs of the NZX methodology Heartland GNE definitely qualify to be in top 5
I like solid companies @ good value that pay big fat dividends. Real "show me the money" type stocks. Lot of bark for your buck.
Happy to leave the unprofitable no dividend tech stocks that promise much but currently deliver nothing to others.
Speaking of barking, bought a few more Heartland today to put my money where my mouth is 😃
I think the result is a foregone conclusion, will be within guidance range.
Be interesting to see how they account for fair value on their (dis?)harmoney stake.
Much more interesting will be the outlook for FY23.
My hint, read the presentation which always has all the relevant stuff in good old fashioned Queen's English and skip the annual report with its almost endless pandering to ESG matters and significant quantities of Te Reo altogether.
Mmmmm.... result in line with guidance..... giving with one hand (divvy) while taking with the other (Cap raise). $200 Mill in 'new' shares.....EPS being tested??
Heartland announces record FY2022 profit, and equity raising to retire bridge debt and fund growth ambitions for existing business
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce a net profit after tax (NPAT) of $95.1 million for the financial year ended 30 June 2022 (FY2022), an increase of $8.1 million (9.3%) compared with the financial year ended 30 June 2021 (FY2021). On an underlying basis, FY2022 NPAT was $96.1 million, an increase of $8.2 million (9.3%) compared with the FY2021 underlying NPAT.
Heartland is also pleased to announce a $200 million equity raise comprising a $130 million fully underwritten placement and a $70 million non-underwritten share purchase plan to shareholders in New Zealand and Australia, with the ability for Heartland to accept oversubscriptions at its discretion. Proceeds will be used to repay a A$158 million acquisition finance facility outstanding in relation to the recent acquisition of StockCo Holdings 2 Pty Ltd and StockCo Australia Management Pty Limited (together, StockCo Australia), and to provide additional growth capital for Heartland's existing businesses in Australia and New Zealand.
Highlights for FY2022
‒ NPAT of $95.1 million, up 9.3% ($8.1 million). Underlying NPAT of $96.1 million, up 9.3% ($8.2 million) on FY2021 underlying NPAT.
‒ One-off items had a $0.9 million net impact on NPAT.
‒ Gross finance receivables (Receivables) of $6.2 billion, up 15.3% ($765.9 million).
‒ Return on equity (ROE) of 12.1%, up 21 basis points (bps). Underlying ROE of 12.6%, up 59 bps.
‒ Net interest margin (NIM) of 4.16%, down 19 bps.
‒ Net interest income (NII) of $250.1 million, up 7.1%.
https://www.nzx.com/announcements/397408
If Stockco is expected to contribute 10-12 million of NPAT in 2023, lets call it 11 million, doesn't that imply ex StockCo guidance of 98-103 million? Not very impressive... Don't see how this equity raise will be accretive at least for the next year or two.
If 2022 NPAT of 96.1 underlying had 1.4 contribution from stock co, that is 94.7 mill ex stockco, for ex stock co underlying eps of 0.1597
If $200 million shares are issued at 1.80 (best case dilution scenario):
At low end of guidance of $103 million, EPS 2023 will be 0.1548, a decrease of ~3%
At top end of guidance of $114 million, EPS 2023 will be 0.1619, an increase of 1.377%
Either way, it appears 2023 EPS growth will be garbage based on this guidance. We best hope they put the new capital to work quickly so that 2024+ EPS shows some benefit.
Well said Plata....... perhaps HGH relying on more acquisitions??? (which usually means more future cap raises?)
Stock Co's contribution to NPAT in a world of climate change is no certainty IMO.
GLH.
I suppose on the bright side the raising price of $1.80 is reasonably attractive for a 2023 EPS of 0.1548+, kind of like buying at a forward PE of ~11.6.
That $16.7 million gain in relation to derivatives saved the day eh
Hid the embarrassment of the big writedown in the Harmoney stake
Then again when Harmoney comes right that can be used to hide some future sins
Jarden came out with an extensive note earlier this month predicting no eps growth in FY23 given economic headwinds so it is what it is and I agree that eps is likely to be flat for FY23. PE in the mid 11's and long term growth from reverse equity book sees me putting my hand up for a sizeable allocation in the placement @ $1.80 Final divvy was underwhelming but understandable in the circumstances.
eps growth in FY22 at 8.1% was very satisfactory considering what a tough last 12 months we've all endured.
From memory Jarden's price target was $2.36 going into this result.
My FY23 and beyond dividend assumptions need to be pulled back.
Another thing to consider is how are they going to manage growth in the loan book while also increasing capital ratio from the current ~13% to the future minimum of 16%. The book growth seems to be increasingly dominated by longer term type loans (ie more reverse mortgage, more home loans, less motor loans, less personal loans) which will complicate things further.
Yes, they need to manage that carefully considering most of the growth in the deposit book is in short term notice saver accounts. There's the dividend reinvestment plan of course and they could easily tweak the discount level to make that more attractive. They're raising fresh capital here at a ~ 12% discount to recent VWAP so why not increase the DRIP discount to 4 or even 5% ?
Have not had a chance to go through all this.
Have the directors stated they will be taking thier allocation?
Sorry mate I have been flat out. Only had time to skim through results of this and SUM so far.
From today's presentation;
On current footings, Heartland Bank would
require $24 million additional capital to meet the
14% Tier 1 ratio requirement, and a further $93
million to meet the 16% total capital
requirement. Heartland Bank currently has no
hybrid capital (additional tier 1 or tier 2) on
issue.
• Heartland Bank's current capital position and
organic growth in capital is expected to be
sufficient to meet future minimum requirements.
Quote from: Shareguy on Aug 23, 2022, 11:39 AMHave not had a chance to go through all this.
Have the directors stated they will be taking thier allocation?
I think only Tomlinson has committed to the raising, via Harrogate Trust maintaining at least a 9.8% stake.
The disadvantage to only having a share dealing account with ASB is that you rarely get a chance to participate in things such as this afternoons offer. Fortunately I do have a broker account too but I'm sure lots of those investing via ASB don't.
At the risk of sounding stupid, why is there such speed on the placement today?
Why have to review offer, make decision, and have available cash sitting around all on the same day? Also both the placement and SPP seem unfair to any shareholder who doesn't have cash sitting around to get the (bargain) discounted shares and stop some dilution of their holding.
Quote from: Raven on Aug 23, 2022, 02:59 PMAt the risk of sounding stupid, why is there such speed on the placement today?
Why have to review offer, make decision, and have available cash sitting around all on the same day? Also both the placement and SPP seem unfair to any shareholder who doesn't have cash sitting around to get the (bargain) discounted shares and stop some dilution of their holding.
The SPP isn't today so you have time to get some funds and participate in this.
Quote from: Raven on Aug 23, 2022, 02:59 PMAt the risk of sounding stupid, why is there such speed on the placement today?
Why have to review offer, make decision, and have available cash sitting around all on the same day? Also both the placement and SPP seem unfair to any shareholder who doesn't have cash sitting around to get the (bargain) discounted shares and stop some dilution of their holding.
Raven - the big end of town plays the game different from the minions
Quote from: Stoploss on Aug 23, 2022, 03:12 PMThe SPP isn't today so you have time to get some funds and participate in this.
Sure, but the placement is all today.
Quote from: Raven on Aug 23, 2022, 03:30 PMSure, but the placement is all today.
I agree the timing and the speed of this cap raise is v unusual.
I reckon some people have got day jobs. ;D
Not sure about this SPP. Unless you've got a wad of cash lying around to participate then it will dilute the value of your holdings, reduce EPS and therefore put pressure on Heartland to maintain the current yield. I expect the SP will take a big hit once trading commences - maybe even eventually setting at around the $1.80 offer price.
The discount offered is about 13% - similar to the 15% discount when NZX did it's SPP in Feb. That didn't turn out well for investors. The SP went from about $1.73 to $1.40 (the level of discount) and hasn't recovered since. These sort of placements tend to work out well only for the Insto's who can mop up huge holdings at the reduced rate. A bond issue would have been much fairer all round.
Yes, nothing about this seems particularly fair to all shareholders.
I am pretty confident it will go under $1.95 within the next 30 days, not so sure it will reach $1.80 though so hedging my bets. Regardless, not very pleased with this...
Size of the discount and speed of the placement surprised me a bit. Fortunately the wily old hound has learned to always keep a few bones buried away for occasions such as this so I put my hand up for a few in the placement.
I'm looking long term here. Sure, short term during tougher economic times there's no great shakes with eps growth but they have a superb track record of same over the years and over the medium to long term going forward I am sure my additional capital invested will reap me rewards.
Better off going in here than into some old boat that leaks and is a deep and endless money pitt. (needed to get that off my chest after a proposed acquisition I have been working on for weeks hit the rocks today).
Trading at about the same level as it was a year ago. A bit of a divi in that time (no improvement this year)and now a major dilution at a heavy discount in obscene haste with absolute disregard to small holder. I smell something rotten. So wont be throwing any more money at it.
I still think that this move wrong foots so many smaller investors like myself. It has given me pause for thought and made me re-evaluate HGH. Previously HGH was attractive both for it's growing yield and for the steady growth in it's SP. Both of those are going to take a hit. The SP will go backwards and stay there for some time and there's a risk that divvy growth will stall or even go backwards. All this at a time of 7% inflation. They should be putting any expansionist ideas on hold, and certainly not be using shareholders to fund those ideas. Issue some long term corporate bonds and let insto's fund it that way. Ma and Pa shareholders getting caught in the crossfire yet again.
Hmmm, rambling some high level numbers.
Currently:
- market cap $1.25 billion
- 592,903,820 shares
After the raise if using $1.8 share price:
- 592,903,820 shares + 200,000,000/1.8 = 704014931 shares
- 704014931 * 1.8 = market cap of $1.26 billion ... interesting how it roughly equals current market cap
After the raise if adding $200mil to market cap:
- 704014931 shares
- 1.45 billion / 704014931 = $2.07 share price ... interesting how it roughly equals the ex-dividend adjusted price they use in their equation
Am I playing around with coincidental equations and seeing something in nothing? Is the $1.80 price actually at a discount?
The increase in shares issued is 18.74% and the estimated increase in NPAT is roughly 14.6%-19.87%
So EPS is likely to decrease for the year by a few %.
Let's say you have 1000 shares at $2.12, currently $2120, bring them down to $2.07 so you're down $50. Let's say you get allocated 18.74% of your holdings so 187 new shares at $1.80 and if you bring them up to $2.07 you gain about $50. So from that perspective you're even, yeah?
So looking at the big picture, $1.80 is actually at a premium of a few % due to the impact on existing shareholders because of EPS decreasing?
Thoughts? Or am I talking rubbish?
Have been busy today so was unable to spend anytime on this when broker rang. Decided to apply for a modest amount to avoid dilution. Going through all the info there is certainly a few concerns.
Seems to me a great strategy for flushing small holders off the register
To be fair about this there has not been, much / any ? mention on here today of the share purchase plan for small shareholders with the right to apply for up to $50,000 of shares at the lower of the placement price, $1.80 or a 2.5% discount to VWAP. HGH might also allow oversubscriptions in this regard.
It seems some people want to blame HGH for their own choice to be fully invested and their own choice not to retain any cash reserves for special opportunities. Is it Heartland's fault the choices people make for themselves about their own portfolio allocations ?
Sorry...I don't see any basis for the bleating.
Any holder with a large stake can not stave off dilution with the SPP alone and must use the placement, and would arguably be underutilising their capital if they had sufficient funds sitting on call. I bet the institutions got advanced notice of this, I don't think the same can be said for many other stakeholders. A complete and utter joke. Just reeks of selling out to get some institutions onboard. All this corporate bulls*** they talk about ESG and climate change yet they can't consider the interests of one of their most critical stakeholders, the regular joe blogs public who owns ~70% of the company!
Quote from: Basil on Aug 23, 2022, 09:51 PMTo be fair about this there has not been, much / any ? mention on here today of the share purchase plan for small shareholders with the right to apply for up to $50,000 of shares at the lower of the placement price, $1.80 or a 2.5% discount to VWAP. HGH might also allow oversubscriptions in this regard.
It seems some people want to blame HGH for their own choice to be fully invested and their own choice not to retain any cash reserves for special opportunities. Is it Heartland's fault the choices people make for themselves about their own portfolio allocations ?
Sorry...I don't see any basis for the bleating.
Assuming it is fully subscribed with spread across all/most shareholders. You don't think they'll limit it to 18.74% of your current holdings? For example like Pacific Edge did. Note, I haven't looked into other examples to see what is
normal in these scenarios.
Quote from: SuperMario on Aug 23, 2022, 11:34 PMAssuming it is fully subscribed with spread across all/most shareholders. You don't think they'll limit it to 18.74% of your current holdings? For example like Pacific Edge did. Note, I haven't looked into other examples to see what is normal in these scenarios.
[/quote
Pacific Edge scaled that to limit losses to shareholders ..
Jeff has always had huge aspirations to be a real fintech ...and probably realised NZ was too small a place to really make it.
So this Advance thing in Australia is going to be the platform to make his dreams come true....a real fintech
A few years time Heartland changers it's name to Advance and essentially becomes an Aussie company with a branch in NZ
Heartland doesn't resonates with Aussies ...but Advance does eh .....and heaps more positive than Heartland.
Advance Jeff fair has a nice ring to it
SP geting a pounding as predicted. Maybe it will recover but this poorly thought out and rushed placement has decoupled HGH from it's image of looking after the smaller investor. I wouldn't be surprised if the SP remains in the doldrums for sometime and this event will mark the end of HGH as a hight yield stock. Bad day for HGH investors,
Interesting the views on here. How do you see this? An opportunity not to be missed? Or a kick in the butt for shareholders?
Quote from: LoungeLizard on Aug 24, 2022, 10:11 AMSP geting a pounding as predicted. Maybe it will recover but this poorly thought out and rushed placement has decoupled HGH from it's image of looking after the smaller investor. I wouldn't be surprised if the SP remains in the doldrums for sometime and this event will mark the end of HGH as a hight yield stock. Bad day for HGH investors,
Agree....Yes, ouch time. SP down 11% in early trading. Hard to say where it will end today, but I suspect over time it will go below the offer price..... (unless HGH have a cunning plan up their sleeves.) GLH
Playa.... I don't hold but with flat EPS predicted for FY23, I would be in no hurry to buy. Wait for good news.... or a change in trend. JMHO. DYOR.
Quote from: Playa on Aug 24, 2022, 10:19 AMInteresting the views on here. How do you see this? An opportunity not to be missed? Or a kick in the butt for shareholders?
I guess it depends how far the SP drops.
At the moment I only see a badly managed SPP with little consideration for retail shareholders. Clearly a missed opportunity for board and management!
Overall - the process to increase their Australian business clearly increases their risk profile, but we knew that earlier.
This highly rushed SPP makes you wonder which priority retail shareholders have for the board ... and looking into the past, normally I see little reason to stick around for a long time with companies which don't care about retail shareholders, but sometimes these compnies could be still useful for some trading. Not really a lost opportunity for investors if you don't buy more.
On the other hand - share holder stampedes tend to create opportunities for traders ... i.e. if the SP drops below $1.80, there well might be some short term trading opportunity.
Overall - for me lost HGH clearly its gloss, but hey - as the old Romans used to say "pecunia non olet" ..
Happy to pick up some shares at $1.50 if the opportunity arises :) ;
If you're a trader there's probably an opportunity here, but even traders need to be careful in choosing their entry point.
As for long term investors I feel this is a watershed moment for HGH as it pivots towards Australia and emphasises Institutional Investors. They didn't make any secret about how uninterested they were in the smaller investor by setting such a tight deadline. Many would have been scrambling to take up the share offer. I decided not to get involved - I only have a small holding - and I don't like how shareholders are almost railroaded in having to invest more in a company that clearly doesn't have their interests at heart, just to stop their portfolios from being diluted.
For me the shone has come off HGH - if the SP bounces back I'll sell up and move on.
Decide a few months ago wife and I were sitting on too much cash.
Doubled wife's GNE holding,and added to my STU holding.
Still too much cash,so HGH placement came at just the right time for us.
I Always find it is a good discipline adding to my core holdings.
With Chris Flood leaving the bank to join Jeff Greenslade looking for opportunities in Australia,
they are certainly not wasting time,with Stock co and now Advance Bank in the pipe line,the future looks pretty exciting.Good board and management with large holdings gives an added level to my confidence.
Quote from: lorraina on Aug 24, 2022, 12:18 PMDecide a few months ago wife and I were sitting on too much cash.
Doubled wife's GNE holding,and added to my STU holding.
Still too much cash,so HGH placement came at just the right time for us.
I Always find it is a good discipline adding to my core holdings.
With Chris Flood leaving the bank to join Jeff Greenslade looking for opportunities in Australia,
they are certainly not wasting time,with Stock co and now Advance Bank in the pipe line,the future looks pretty exciting.Good board and management with large holdings gives an added level to my confidence.
Yep, if you like companies that fleece the smaller NZ investor so they can use their money to invest in Australia then HGH is the company for you :(
Quote from: Playa on Aug 24, 2022, 10:19 AMInteresting the views on here. How do you see this? An opportunity not to be missed? Or a kick in the butt for shareholders?
I think it is a good thing for heartland as a company and will facilitate continued growth.
I also think the offer price is attractive, but apparently none of the executive other than Tomlinson have committed in writing to partaking so maybe I'm wrong.
I also think we will probably see the share price get pretty close to 1.80 at some point in the next few months.
This company is/WAS something like 70% owned by the public and their behaviour with this raise suggests they are acting in the best interests of the other 30%. There needs to be a really good reason for the surprise rapid raising, yet I am not so sure a good one exists.
$1.88. What will it be when HGH go ex-dividend tomorrow?
Quote from: Plata on Aug 24, 2022, 03:27 PMI think it is a good thing for heartland as a company and will facilitate continued growth.
I also think the offer price is attractive, but apparently none of the executive other than Tomlinson have committed in writing to partaking so maybe I'm wrong.
I also think we will probably see the share price get pretty close to 1.80 at some point in the next few months.
This company is/WAS something like 70% owned by the public and their behaviour with this raise suggests they are acting in the best interests of the other 30%. There needs to be a really good reason for the surprise rapid raising, yet I am not so sure a good one exists.
It feels like a kick in the sac to me. I jettisoned a whack of HGH from my portfolio to go into Harmoney, where I was clearly seeing an excellent entry point with them that no one else was at that point... or since. Now I'm holding red ink with Harmoney and my excellent peak Covid buy of HGH has had the gloss removed too. These blitzkrieg raises are expected in the penny stocks of oil and gas, they're equally not acceptable from a finance stock.
Quote from: Hectorplains on Aug 24, 2022, 09:49 PMIt feels like a kick in the sac to me. I jettisoned a whack of HGH from my portfolio to go into Harmoney, where I was clearly seeing an excellent entry point with them that no one else was at that point... or since. Now I'm holding red ink with Harmoney and my excellent peak Covid buy of HGH has had the gloss removed too. These blitzkrieg raises are expected in the penny stocks of oil and gas, they're equally not acceptable from a finance stock.
I'd rather a fully prorata rights issue, but just worth recalling EBOS' last equity raise was similar to this (placement plus retail offer). Their 2019 raising I think was even just a pure placement. Not that it justifies it - EBOS got raked over the coals for it. I think EBOS's ECM advisers were Macquarie and UBS whereas here it is Jarden, so doesnt appear to be a one broker thing.
Having a lower of placement price or discount to vwap is at least a handy feature. I secured some extra shares and will look to pick up some more. You'd be gutted if you had picked up a load recently before today, thinking it was going to pop on some result or chasing the divy.
Looking at Heartlands profit by segment I was surprised / shocked how pathetic the profit growth in Australia (mainly reverse mortgages) was.
Australia (segment) up 4.4% - Group up 15.65 - Australia under performing by a large margin ,,,hmmm
Surprise because there's so much hype about reverse mortgage growth in Australia - NZ doing OK with these but not in Australia
Maybe Australian management was beefed up as rescue mission
Here's NPBT growth by segment (F22vF21)
Motor ..........+12.8%
Rev Mortgages...+39.5%
Personal........+23.5%
Business........+5.0%
Rural...........-12.3%
Stock Co AU ....nm
Australia.......+4.4%
Other..........-1.2%
PBT............+15.6%
My theory is that New Zealanders, being relatively financially illiterate, have bet everything on selling houses to each other. As a result, most of us have nothing other than a house on some grass.
This is a good market to extract that wealth from those who have highly priced assets, but no cash.
Perhaps our cousins on the West Island have a more diverse wealth portfolio?
1.86 and falling. That's a 14% haircut for shareholders since the SPP was announced. It will take 12 months or more for the SP to recover - IF all goes well. IF their expansionist plans in OZ does not go well, you could easily see the SP remain in the doldrums for years, particularly now that any growth in dividend payout has been put on hold.
Can't help but think HGH have got got ahead of themselves fuelled by Management hubris.
They've got a good track record with growing eps over many years now. I'm happy to trust them going forward so I took a decent sized extra stake in the placement yesterday.
Quote from: winner (n) on Aug 25, 2022, 08:38 AMLooking at Heartlands profit by segment I was surprised / shocked how pathetic the profit growth in Australia (mainly reverse mortgages) was.
Australia (segment) up 4.4% - Group up 15.65 - Australia under performing by a large margin ,,,hmmm
Surprise because there's so much hype about reverse mortgage growth in Australia - NZ doing OK with these but not in Australia
The problem with reverse mortgages in Australia is that you are competing against the Government Home Equity Access Scheme at a much lower rate of interest (currently 3.95%). This is why the big banks exited the reverse mortgage market in 2018.
https://www.dss.gov.au/our-responsibilities/seniors/benefits-payments/pension-loans-scheme
Its probably going to get harder to compete there, as the Govt has just enabled lump sum payments under the Scheme.
"From 1 July 2022, subject to passage of legislation, participants in the Scheme will be able to bring forward a portion of their fortnightly loan payments as a lump sum advance."
From HGH's latest presentation commenting on their REL growth in Aussie.;page 22.
Growth was driven by the relaxation of COVID-19 lockdowns, growing
acceptance of reverse mortgages, promotion by the Australian Federal
Government of its Home Equity Access Scheme, and advertising
campaigns.
Quote from: Basil on Aug 25, 2022, 11:14 AMThey've got a good track record with growing eps over many years now. I'm happy to trust them going forward so I took a decent sized extra stake in the placement yesterday.
HGH have said themselves that dividends will be flat in 2023 - assuming that their foray into the Aussie market goes. If it doesn't and costs go up, revenues remain flat together with all those extra shares issued, I can even see dividends reducing. Shareholder value has already taken a beating and if you look at HGH over the last five years, the returns have been negligible taken into account the declining SP. I think the Board has over-reached on this one. Time will tell, but I would not want to double down and raise my stake at this juncture. Stocks like Genesis offer a better yield and arguably offer a more stable SP.
A good number of us invested in HGH at well under 60 cps. Sorry to those who did not.
As well as now receiving a dividend yield of over 18% on invested capital ,we have enjoyed seeing the share price triple.
No doubt in my mind HGH will continue to perform in the foreseeable future.
As the wife and I have been sitting on too much capital, we have both added to our HGH holdings via the placement.
Also added to the wife's GNE holding not long ago.
If anyone's interested in the scaling ratio in the placement I applied to invest an extra $200,000 through Jarden and received 57,778 shares worth $104,000.40. 52% of the value I applied for.
Quote from: Basil on Aug 25, 2022, 04:24 PMIf anyone's interested in the scaling ratio in the placement I applied to invest an extra $200,000 through Jarden and received 57,778 shares worth $104,000.40. 52% of the value I applied for.
This is a bit of a personal/revealing question Basil, given the info you've already provided, so feel free to not answer. What percentage of your total holdings is that? I wonder if they scale based on holdings amount rather than application amount?
I got 58.333333% as a non holder.
Quote from: SuperMario on Aug 25, 2022, 09:11 PMThis is a bit of a personal/revealing question Basil, given the info you've already provided, so feel free to not answer. What percentage of your total holdings is that? I wonder if they scale based on holdings amount rather than application amount?
Its clear various brokers scaled according to their available stock irrespective of one's current holding.
Interesting ratios. An acquaintance received around 33% of his application. His holding is quite small as far as I am aware.
Quote from: Basil on Aug 26, 2022, 12:05 PMIts clear various brokers scaled according to their available stock irrespective of one's current holding.
Very interesting.
Yikes, the USA FED might bring some rain on this parade come Monday. Maybe the SPP will be allocated below $1.80 after all!
Somebody pulling out all the stops to try to halt the drop below $1.80 !
Quote from: kiwi2007 on Aug 29, 2022, 01:30 PMSomebody pulling out all the stops to try to halt the drop below $1.80 !
Not me. I've taken my $0.055 divi and sold out at $1.83 today. Simply unimpressed with this capital raise. 1 year chart is showing a downtrend. Time to cut my losses
Yep, HGH firmly in a downtrend. The market has woken up to the folly of the cap raise - at least for shareholders. Having expansionist ideas at a time of a worldwide economic downturn that is only going to get worse is madness. I fully expect yield growth to go backwards as cost go up and the SP will stay in the doldrums for years. I don't see much support below $1.80 - this could get messy.
If $1.75 holds I think it'll be OK myself.
Quite a bit of negative sentiment re Heartland at the moment.
This 200 million capital raise is not for some risky speculative investment but mostly to pay the $154-165 million bill for its Australian stock financing purchase, the rest I assume will largely be used to fund its development into an Australian bank.
I am somewhat unimpressed by the expected 10-12 million profit expected from this large investment into stock finance but if one liked the company a month ago I see no reason not to like it now.
I will not be selling my current holding and therefore view future 11cent dividends on the $1.80 raise to be an adequate investment. I believe this dividend is sustainable so will be applying for at least enough for my holdings not to be diluted.
If there was no pending possible recession it would be an easy decision for me.
Quote from: Bob50 on Aug 29, 2022, 11:21 PMQuite a bit of negative sentiment re Heartland at the moment.
This 200 million capital raise is not for some risky speculative investment but mostly to pay the $154-165 million bill for its Australian stock financing purchase, the rest I assume will largely be used to fund its development into an Australian bank.
I am somewhat unimpressed by the expected 10-12 million profit expected from this large investment into stock finance but if one liked the company a month ago I see no reason not to like it now.
I will not be selling my current holding and therefore view future 11cent dividends on the $1.80 raise to be an adequate investment. I believe this dividend is sustainable so will be applying for at least enough for my holdings not to be diluted.
If there was no pending possible recession it would be an easy decision for me.
Yes quite a bit of negative reaction on various forums but not too much in the press (I was expecting a very unimpressed Jenny Ruth to slay Heartland on its choice of capital raising but hasn't yet transpired)
There are some negatives for sure. Going from giving the impression StockCo was going to be debt funded and thus EPS accretive to fully equity funded was a bit of a downer. And the final dividend was below expectation (and DRP turned off), but in the context of HGH wanting to raise capital to fund StockCo and have a spare few coins not surprising. HGH probably mindful of not wanting to pay a large dividend only to have a larger capital raise, but not wanting to pay a misery yield which would put punters off. Difficult balance. Keeping the DRP would have helped (I think the DRP has netted on an annual basis about $20m) but the lawyers probably fretted about what price to set it to (my answer would have been the SPP price, lower of $1.80 or 2.5% discount to 5 day VWAP on issue), and wanting to look like they were providing capital to fund their entitlements.
I suppose you could say HGH was being prudent in equity funding StockCo and not funding it with corporate debt, given possible headwinds.
Many are concerned about the acquisition of Avenue Bank Ltd in AU, which has a restricted ADI license, with the transaction presumably conditional on it receiving its full license prior to settlement, and probably require another capital raising (or hopefully corporate debt financing, but probably a placement). I suppose that is fair enough - investors invest on the basis of a risk/return profile, and a deepening presence in Australia can challenge that. People question if HGH is off to recreate HGH v2 in Australia, playing in SME loans etc. It's probably more to do with diversifying & optimizing funding sources through securing retail deposits. I assume/hope its doing that to support its core business of reverse mortgages and now stockco, rather than a willy nilly expansion plan.
HGH see it as the fastest, most outcome orientated decision to getting access to that, rather than getting their own license or buying a more established bank. Avenue is a start up, and currently backed by Sherman Ma (Liberty Financial), who isn't everyone's cup of tea. That could be off putting when people dig into it, but I think Jeff reckons he is up to the task. It's probably best not to buy an established bank which would be larger and have a better book and financial profile, but start ups are unencumbered by legacy IT issues, and we all know HGH fancies itself as an undiscovered fintec.
Struggle to see how they won't be buying anything much more than a license, and won't be EPS accretive, although on proforma synergy access to retail deposits won't look as bad. But only $55m.
I'm participating in the capital raise to fend dilution and will look to average cost in should the price fall over the next 12-18m, which is a possibility. But I think HGH have done a good job at carving out their own niche in the wider market, with a few cash cows like vehicle financing and reverse mortgages with its very positive long term demographic trends, etc. I see enough dividend yield there to keep me content with my existing shareholding, and some positive buying opportunities over the next 18 months if the market becomes more pessimistic.
Quote from: Fiordland Moose on Aug 30, 2022, 12:24 AMand DRP turned off
In practical sense, does it matter that the DRP was turned off for this dividend? Can the same result not be achieved by using the dividend payment as your cash for the SPP? Or is there a difference I'm missing? (other than extra effort by shareholders)
Quote from: SuperMario on Aug 30, 2022, 02:16 AMIn practical sense, does it matter that the DRP was turned off for this dividend? Can the same result not be achieved by using the dividend payment as your cash for the SPP? Or is there a difference I'm missing? (other than extra effort by shareholders)
Aye shareholders can do it themselves, I think I am just a fan of DRPs. Having the DRP turned on could have reduced the size of the required capital raise, in theory, and the dilution to those unable to get their prorata
One of the highlights of the results announcement was this bit - Five year total shareholder return (TSR) of 66.9%, (19 August 2017 – 19 August 2022) compared with the NZX50 Index TSR of 56.7% in the same period.
And a nice chart to give punters the warm fuzzies (did have different dates but who cares)
Share price down 16% since then
Suppose that would make the chart look a bit different .... and they might not have included it
00000hgh.JPG
Quote from: winner (n) on Aug 30, 2022, 12:44 PMOne of the highlights of the results announcement was this bit - Five year total shareholder return (TSR) of 66.9%, (19 August 2017 – 19 August 2022) compared with the NZX50 Index TSR of 56.7% in the same period.
And a nice chart to give punters the warm fuzzies (did have different dates but who cares)
Share price down 16% since then
Yep, if they had included the recent drop in SP then we are looking at parity with NZX50. Which begs the question - given the macroeconomic headwinds plus the risk inherent in HGH's expansion in Australia - is HGH really worth the gamble? Probably not in my view, at least not at current prices. I am still picking for the SP to go lower still. Might be worth a flutter then.
Suppose that would make the chart look a bit different .... and they might not have included it
00000hgh.JPG
Yep, if the recent drop had been included then we are looking at parity with NZX50 over the last 5 years. Which begs the question - given the macroeconomic headwinds and the increased risk in HGH's expansion into Australia - is it really worth the gamble. I would say not, at current prices. SP could/will still go lower and then maybe it might be worth the risk, otherwise I'm giving them a miss.
Over many years I have observed Heartland including the days when it traded under the old ticker code generally trade within a forward PE range of 11-17.5.
At $1.80 its on a forward PE of just on 11.5, right towards the bottom end of the normal range which probably seems about right considering the readily apparent economic headwinds but I note they retain an $8m overlay for same.
I note a gross yield based on 11 cps fully imputed of ~ 8.5% @ $1.80.
Very rarely they trade outside the range above and its back the truck up time or sell outside the top end as the case may be.
I think the angst and doom and gloom is probably more than a little overdone. Hold and adding more under the share purchase plan.
After PEB I'm going to give participation a miss but I'm going to stick with current holding.
I'll consider adding if price falls.
Agree with you basil in that HGH is near the bottom band of its valuation range
My preferred measure is Price/Book value and allowing for the cap raise and recent share price action that has fallen quite dramatically ....and near to the bottom of a multi year range
So I reckon HGH is pretty 'cheap' at the moment too
Things will settle down in a couple of weeks time and we'll be wondering what all the fuss was about.
0000hghpb.JPG
I could not help myself.Applied for just a few in HGH's SPP.
So easy.
Perhaps Hobson Wealth are right.:?.
Price catalyst
• 12 - month price target: NZ$ 2.25 based on a DDM methodology.
• Catalyst : Avenue Bank outcome, asset growth/quality progression
In case we overlook the obvious - Heartland (or our man Jeff) always does what he says he will do
Doubt if any have a guidance record like shown below
So in a years time we will be lauding NPAT of $114.1m or around about $114m
0000hghgui.JPG
Walking along the beach earlier today it dawned on me that a lot of what has been said about Heartland in the last week (generally negative) has been very much what was being said in 2018 when they went through that corporate restructure and became Heartland Group ... and listed on ASX
Lot of negativity back then .... too messy, not good concentrating more on Aussie etc etc ..... and the share price did weaken through 2018
But at the end of the day these things didn't seem to hold them back eh
In a few months time we'll be saying what was all the fuss about
Quote from: winner (n) on Aug 30, 2022, 04:41 PMIn case we overlook the obvious - Heartland (or our man Jeff) always does what he says he will do
Doubt if any have a guidance record like shown below
So in a years time we will be lauding NPAT of $114.1m or around about $114m
0000hghgui.JPG
WOW, that's unprecedented to the best of my knowledge on the NZX. I guess the slightly cynical bean counter in me would perhaps observe that its obvious they have the luxury of smoothing loan provisioning, both specific and general each year but nonetheless leaving that aside, objectively that's a profoundly impressive track record of doing what they say they will do.
I'm applying for the maximum extra $50K in the SPP.
"In a few months time we'll be saying what was all the fuss about" I couldn't agree more.
The HGH cheerleaders may of course be right and be laughing all the way to the bank in 12 months time. But there is a little too much backward looking going on - things turned out well before so why won't they turn out well now seems to be the thinking. Well, recessionary economics for one thing. People borrow less for houses and cars etc during tough times. Those that do borrow can get themselves into trouble quicker with inflation/ rising interest rates. Default risk is higher.
Mitigating that is HGH's reverse mortgage niche and the fact that banks tend to do better in periods of rising interest rates. But banks are not the steady growth stocks that people think - look at the major banks, they've taken a beating in recent times. Banking stock is cyclical - and I think they are going to be in trough for the next few years. Will HGH be the exception. Time will tell.
I think it is marvelous all those new sher funds propping up the company........makes my term deposit with them at 4.2% a lot safer
Heartland Bank their reverse equity rate by another +25 bps to 7.75% today
That's good
Really busy week so haven't really had a chance to drill deep down into recent announcements.
What have HGH said about the $150m bond maturity on 21 September ?
Is that the real reason for the capital raise ?
On 23 August 2022, Heartland Group Holdings Limited (Heartland) announced an equity raise of approximately NZ$200 million to repay an A$158 million acquisition finance facility outstanding in relation to the recent acquisition of StockCo Australia and to provide additional growth capital for Heartland's existing businesses both in Australia and New Zealand.
No mention of the bonds.
Had a look at some numbers in their reports mainly to see impact of StockCo on F22 but more importantly on F23
Presentation says StockCo contributed $1.4m to F22 NPAT and is forecast to contribute A$10m to A$12m in F23 (lets say NZ$12m)
First observation: Backing StockCo out of F22 normalised NPAT of $96.1m means 'base' business grew at 7.7% over F21 (makes the reported 9.3% reported growth not that flash)
Second observation: F23 NPAT guidance is $109m to $114m and as above lets assume StockCo is going to contribute $12m. This implies that the 'base' business (ie excluding StockCo) NPAT is forecast to grow by 2% to 8% in F23. Not that impressive ,,,,, and a lot lower than most were touting before the results came out
Seems things getting tough for Heartland .... underlying earnings growth stalled and flattening out
No wonder share price down last week .... I don't think you can put it all down to the capital raise.
Well the director disclosures are out, Jeff really putting his money where his mouth is with a whopping 50k purchase... clearly not inclined to avoid dilution is he ::)
What is 'Skin In The Game'. Skin in the game is a phrase made popular by renowned investor Warren Buffett referring to a situation in which high-ranking insiders use their own money to buy stock in the company they are running.
I tossed and turned over this at considerable length, was certain to participate in the SPP, then decided not too and then what the heck, why not...and in the end decided to throw them another 50 kg bone.
At the end of the day while I am a little disappointed with this years dividend and a flat near term eps outlook I think in the long run the reverse equity loan book is a "very low risk goldmine" and even if they only pay 11 cps fully imputed next year that's still 8.5% gross. Beagles are by their nature impatient dogs when it comes to seeing bigger feeds arrive in their food bowl but I think one can afford to be patient waiting for more growth when getting 8.5% gross yield.
A bit late but my thoughts on latest result.
NPAT of $96.3m within guidance of $93 to $96m
NIM of 4.16 percent. Lower than 4.35 percent in FY21. Lower NIM due to book quality changes from motor vehicles and residential mortgages after cccfa changes.
Strong growth in reverse mortgages. I see this business as a gold mine. Interest rates increasing is going to be beneficial.
Harmony shares written down by A$12.7m
An increase in non performing loans to 1.81 percent from 1.58 percent YE21
Good cost control with underlying costs to income ratio of 42.5 percent from 44.8 percent pcp.
Dividend less than expected but still healthy and makes sense when having CR.
Flat growth with EPS forecasted at $.163 FY23 (taking into account CR)
Purchase of Stockco seems like a good fit to me when you consider how well their rural side went (up 17 percent)
If the Aust bank acquisition goes ahead will give access to retail deposits and should increase NIM.
I have been in this since it was spun out of PGC. It's been a great share for me and I expect it to continue.
The large holding that the CEO and some of the directors have also gives me confidence. Disappointing that Jeff only took a small amount in the latest disclosure and won't be maintaining his holding. But how may ceos in NZ have such a big holding anyway.
I think $1.80 will seem like a good price in the months to come. Just need markets in general to improve.
yes agree shareguy - cost control was excellent in all respects. both as a proportion of revenue, book, or just the absolute change year on year. page21 of the finstats really illustrates it...one would be hard pressed to find a company who held its costs as well in the face of inflationary pressures
Thanks shareguy, great post.
Dairy prices up, Winner reckons that's usually good for HGH share price.
https://www.nzherald.co.nz/business/global-dairy-prices-rebound-from-prolonged-winter-slump/X4A6XXBA4L3GPP3BZDHYJRHGAQ/
who is taking up the special term deposit rates recently offered by Heartland
The 6 month term deposit shareholders special at 4.00% is 400 bps higher than the carded rate and is definitely market leading and a special offer.
I think they are "taking the proverbial" saying the 12 month deal at 4.30% is a special deal for shareholders only as all that does is align them with the 12 month deal on offer with SBS Bank (same credit rating) that any member of the public can get.
In answer to your question, I'm not presently in the market to put anything significant on term deposit.
Mr Kensington from KPMG says banks have done very well lately but a bit glum about the future ...he says "Unless inflation gets under control, and unless interest rates come down, I think we're going to have a very difficult quarter to the end of the year, and we'll have a very difficult first quarter (of 2023),"
From KPMG's latest report on NZ banks
https://assets.kpmg/content/dam/kpmg/nz/pdf/2022/09/fips-june-2022-quarterly.pdf
Thanks winner. I see the $1.80 price has been tested. Buyers appear to be thin on the ground today, although it could be market-wide malaise rather than anything specific to HGH. Now it is below the recent issue price of $1.80 it has triggered a watch for me. What does the TA say?
Quote from: Ferg on Sep 21, 2022, 09:28 PMThanks winner. I see the $1.80 price has been tested. ... Now it is below the recent issue price of $1.80 it has triggered a watch for me. What does the TA say?
IMHO TA is not favourable for HGH, it's currently in (100/200 day MA) 'Death Cross' territory and may well consolidate in the $1.70's while any adverse noise could see it sink to $1.50.
GLH.
The market is seeing something ,neither I nor Craigs,Forbar,Jardens , Hobson Wealth, directors/management,have missed.?
https://www.bignewsnetwork.com/news/272784137/us-fed-again-raises-key-interest-rates-in-fight-against-inflation
Lots of experts on CNBC think Powell is going to seriously oversteer the ship and send the US into a deep and prolonged recession. How this affects the rest of the world economies and what happens next with Putin in Ukraine are I believe two of the biggest blocks in the current wall of worry for the markets in general and how the risk of a possible deep and lasting recession affects financials' and loan loss provisioning in particular is the specific worry for banks.
Crikey, down to $1.75 today with 'sell side' depth vastly outnumbering buyers.
Maybe the market sees some truth in the claim by a Jarden analyst Grant Lowe re the need of a further cap rise if HGH is to purchase Avenue Bank??
GLH.
An interesting commentary here:
https://www.sharetrader.co.nz/showthread.php?8425-HGH-Heartland-Group-Holdings&p=976194&viewfull=1#post976194
Disappointing to see it close below the capital raise price but in the context of the market in general being in a funk it's probably no great surprise.
I think the next couple of months could be quite challenging for the market. Federal Reserve seems hell bent on crushing inflation irrespective of how it affects the markets, the economy or anything else. Global recession coming ?
Been a busy month for Heartland
Got the begging bowl out and collected $199m in cash ... after Jarden and other 'organisers' take their cut let's say they got $190m
Gave $32m back to shareholders by way of divie
Gave $150m back to bondholders when HBL010 matured the other day
So $8m left of the $190m ... boost the petty cash ......or maybe put aside for the next round of exec bonuses lol
End result one could say the Heartland Balance Sheet is now 'healthier'
The wonders of high finance and 'money go rounds'
I sense another Bond issue coming up - probably be a Green Bond to give everybody the warm fuzzies - and priced to make it attractive for the likes of Basil
Well after all said and done money is their business.
They know it well.
I reckon the issuance of so called green bonds is nothing but "Greenwashing"
Agree that after repayment of the bonds that they were so quiet about you could hear crickets they will be looking to do a bond issue but have probably been holding off with interest rates where they are.
Westpac had to pay 6.19% the other day for a debt issue and long bonds have moved north since then...Hmmm...I also can see them tapping the market again but if they're holding off for lower interest rates, good luck with that strategy !
interesting times mr beagle, big squeeze on bank margins as they try to dig themselves out of the property bubble they helped create.
My woodland friend reminds me don't fight the FED and central governments have signaled the tightening process will continue until inflation is under control and this requires unemployment to rise........scary balance to get right and central bankers don't have a good history of getting things right
The equation is quite simple......assets prices ballooned on the back of cheap money......now money is getting more expensive a very meaningful correction is under way
Sitting back relaxing with plenty of cash best position to be in right now
After yesterdays day of blood letting down to $1.70 !! hopefully Heartland & the rest should get some respite from Bear attack's today.
Or is this another example of a capital raise gone wrong ,not the best of times to buy a bank and maybe the worst of times .
At least it cannot go much lower for sure :'(
Not sure, after looking at the 5 year chart, why you think it can't go any lower? Been down to $1.00 not long ago. $1.50 doesn't seem out of the question to way things are going.
Quote from: kiwi2007 on Sep 28, 2022, 10:34 AMNot sure, after looking at the 5 year chart, why you think it can't go any lower? Been down to $1.00 not long ago. $1.50 doesn't seem out of the question to way things are going.
I am sure it can & has today I was just being facetious.
And waiting for the $1.35 :-\
Quote from: snapiti on Sep 27, 2022, 06:52 PMinteresting times mr beagle, big squeeze on bank margins as they try to dig themselves out of the property bubble they helped create.
My woodland friend reminds me don't fight the FED and central governments have signaled the tightening process will continue until inflation is under control and this requires unemployment to rise........scary balance to get right and central bankers don't have a good history of getting things right
The equation is quite simple......assets prices ballooned on the back of cheap money......now money is getting more expensive a very meaningful correction is under way
Sitting back relaxing with plenty of cash best position to be in right now
Interesting times in the market for sure. Sharemarkets seem to be at a mercy of bond markets and rising interest rates.
No need to worry about the future of Heartland ...all under control.....we are guided by Te kapehu whetu (the star compass) ... we know our way to success
From the Annual Report out today -
see image - you can't copy and paste from AR
00000hgh.JPG
I "can't wait" to read all the Te Reo parts of the annual report and hear about all their ESG goals and cultural initiatives.
Maybe they will aim to be zero carbon as well 😉
Quote from: winner (n) on Sep 28, 2022, 05:13 PMNo need to worry about the future of Heartland ...all under control.....we are guided by Te kapehu whetu (the star compass) ... we know our way to success
From the Annual Report out today -
see image - you can't copy and paste from AR
00000hgh.JPG I'm so very pleased I sold out when I did. I'd sooner they were guided by sound financial principles.
Quote from: kiwi2007 on Sep 28, 2022, 10:34 AMNot sure, after looking at the 5 year chart, why you think it can't go any lower? Been down to $1.00 not long ago. $1.50 doesn't seem out of the question to way things are going.
Into the $1.60's..... getting close to your $1.50. GLH.
Heartland a bit peeved at how RBNZ works out capital requirements on reverse mortgages
Heartland unhappy with RBNZ rules on reverse mortgages
https://businessdesk.co.nz/article/finance/heartland-unhappy-with-rbnz-rules-on-reverse-mortgages
might be paywalled
All Oz bank stocks (except ANZ) were down last month. Contrary to what some think I don't think the cap raise is the main reason For HGH share price decline - mainly just following the market
Ona Price/Book basis HGH still one of the higher valued stocks relative to OZ banks ... and above the average if you exclude CBA
Price/Book multiples below:
ANZ 1.00
WBC 1.04
NAB 1.51
BEN 0.64
BOQ 0.66
CBA 2.07
HGH 1.15
Average OZ exc CBA 0.97
Thought this was interesting
https://www.reuters.com/breakingviews/recession-could-be-us-banks-guilty-pleasure-2022-08-23/
Interesting. On a price to NTA basis relative to Aussie banks, as much as it pains me to say this, it appears $1.40 is possible, (also supported by the forward metrics relatively to BOQ)
More likely in my opinion is the bottom is somewhere in the $150's....but who can really say what is likely or possible in this Bear market ? Predicting future share price movements at this point feels like little better than guesswork...but my gut feel is we're maybe 50-60% way through this crap....hope I am right because the mauling I am getting is painful enough already.
I agree Basil. Predicting future share movements at this point is anyones guess. Also agree with winner that HGH following the market. Interestingly in a recent discussion with a broker they were suggesting I reduced my position and perhaps put some of the funds into ANZ. After careful thought decided will leave as is. The company's future prospects remain solid. Has strong proven management. Insiders have plenty of skin in the game. There is a lot to like.
Agreed Shareguy, a lot to like, not the least of which is full imputation credits with the dividends from HGH, unlike any of the other banks.
Possibly worth noting that if they can pay a minimum of 11 cps in dividends going forward that's 11/0.72 = 15.28 cps gross so if HGH goes down to ~ $1.53 that's a 10% forecast gross yield.
$1.53 has (in 2022), always been my deep value marker for HGH. If it gets there it's going to be hard to resist buying more for the 10% prospective return which should increase somewhat in the years ahead, although possibly at a somewhat slower rate of dividend growth than what I was earlier anticipating. Good to have some high yielding shares in one's portfolio, really helps out with the costs of running expensive fuel hungry toys eh ;)
[ Good to have some high yielding shares in one's portfolio, really helps out with the costs of running expensive fuel hungry toys eh ;)
Indeed. Good point re fully imputed.
10 year HGH chart
Some might say its share price since 2017 has tarded in the 150/200 range with the odd spurt outside this range
I see the share price in a steady up trend (10 years plus) with the occasional bursts of 'irrational selling' and exuberant buying.
The slope of the dotted line is the equivalent to 12% pa .... and for traders there has been a couple of very big swings from low to highs .... and there's a few on this thread how have sold close to those 2017 and 2021 highs and bought at the 2020 lows
Might see share price over 2 bucks early next year?
0000hgh.JPG
Interesting chart, thanks for posting Winner. If you took out the huge plunge of early 2020 with the commencement of Covid, this is the most oversold it's been.
Not sure if the 12% growth will be supported going forward though because we basically now have metrics alignment with the average of the Australian banks and I am pretty sure 12% medium term eps growth is not sustainable.
Can't rule out $2 at some stage next year but I suspect we'll first need to see inflation coming under control and central banks pivoting their strategy.
I'm just going to "play possum stuck in the headlights" for a while with this one and hope I don;t get run over lol
The big leg up to $3.00 may take a year to two...lol.
for those interested
https://www.sharetrader.co.nz/showthread.php?8425-HGH-Heartland-Group-Holdings&p=977538&viewfull=1#post977538
Quote from: Fiordland Moose on Oct 03, 2022, 01:51 AMfor those interested
https://www.sharetrader.co.nz/showthread.php?8425-HGH-Heartland-Group-Holdings&p=977538&viewfull=1#post977538
Excellent post FM
Fiordland Moose's post is spot on IMO.
The recent HGH cap raise was a hasty ill thought-out reaction to HGH finding the Stock Co purchase was not going to be as EPS accretive as they hoped.
To quote FM
"So what changed? Well, after the StockCo acquisition was announced the market was conditioned to expect it wound be funded by debt and thus EPS accretive. The actual result was the company would wholly fund it with equity, and in fact raise more capital than required for the purchase price alone to pad out growth capital reserves to grow it (and/or address some near term bond maturities). It's also my view that, in the absence of a competitive market or ignoring StockCos growth potential, HGH may have paid too much for it, which is proving to be dilutive in the short term. "
One hopes this was a rare 'one-off' error by HGH management...... but one wonders what will happen if there is more bad news in the months ahead? GLH.
Much the same was "said" when HGH paid "far too much" for the Reverse Equity Loans business.
It is the same "said" that every under bidder says at every auction sale.
HGH ended up owning The REL business and now own StockCo.
HGH approach buying each business saves them years of development time.Seem to remember they said buying the REL saved them 10 years.
ROE in the short term is affected.
However long term is "strong growth".
Guidance confirmed but subject to more and more caveats.
https://announcements.nzx.com/detail/400432
I wish Jeff would take his foot off the throttle of the endless ESG initiatives and ease back on the fintech stuff, especially in Australia and just let the business grow organically. Jewel in the crown is the low risk reverse home loan lending which is growing very nicely.
In a quieter moment in this bear market I sometimes wonder if these high priced executives aren't trying to be a little bit too clever for their own or shareholders good. I am sure others will have a different view and that's fine but to me in these difficult times, boring and predictable low risk steady growth seems like the most attractive growth of all.
Quote from: Basil on Oct 13, 2022, 09:58 AMGuidance confirmed but subject to more and more caveats.
https://announcements.nzx.com/detail/400432
I wish Jeff would take his foot off the throttle of the endless ESG initiatives and ease back on the fintech stuff, especially in Australia and just let the business grow organically. Jewel in the crown is the low risk reverse home loan lending which is growing very nicely.
In a quieter moment in this bear market I sometimes wonder if these high priced executives aren't trying to be a little bit too clever for their own or shareholders good. I am sure others will have a different view and that's fine but to me in these difficult times, boring and predictable low risk steady growth seems like the most attractive growth of all.
I've said as much myself, but perhaps more critically. The pivot to Australia and the investment required, may be good on paper, but I question the timing - the brink of a world recession with most Western economies struggling with stagflation. It smacks of hubris to me, to see this as a time to move away from the steady-as-she-goes growth and to roll the dice on expansion. Many a Kiwi company have come a cropper in mistiming or rushing into overseas markets, only to come home with their tail between their legs.
HGH have a good reputation in delivering solid growth and an attractive yield in the last ten years or so. Management have got a lot of credit in the bank with shareholders. That reputation is going to be tested - hopefully not to destruction - in the next couple of years.
Sorely tested I would say. This year we have no growth in eps, (while other Australasian banks are doing quite well) and that now comes with caveats. Final divvy was disappointing and the outlook for their capital hungry acquisition based growth means I've had to pull back on future years dividend expectations.
I was hoping for 13.5 - 14.0 cps fully imputed in FY23 and she's a long way back from there to my revised target of 11 cps. Can't wait for them to print their entire annual report in Te Reo with no English translation...imagine how good that will make them look ! Jeff will want a pay rise for that stunning ESG accomplishment ;)
HGH to acquire Challenger bank and scraps plans to buy Avenue Bank.......... bit of a flip flop!?
https://www.nzx.com/announcements/400869
Strategic rationale
Heartland's strategic objective for expansion in Australia requires the establishment or acquisition of an ADI. Becoming a bank through an ADI in Australia would make possible a number of benefits:
• access to a deep and efficient pool of funding to support ongoing growth;
• potential uplift in margin, to the extent that retail funding rates are less than wholesale rates; and
• providing a platform to extend Heartland's best or only strategy into Australia.
The aim is to create a digital bank which, once Heartland assets are transferred to it, will be profitable. This, together with Heartland's best or only strategy, provides the opportunity for a differentiated proposition.
On 23 August 2022, Heartland announced it had entered into a non-binding memorandum of understanding with Avenue Hold Limited (Avenue Hold) for the potential acquisition of Avenue Hold and Avenue Bank Limited (Avenue Bank), a restricted ADI. Following that announcement, Heartland continued due diligence and negotiation of binding transaction documentation with Avenue Hold.
Since then, market conditions have changed. Heartland also became aware of Challenger Bank as an alternative opportunity. Heartland Board's assessment is that Challenger Bank is a stronger acquisition opportunity for Heartland's execution of its strategic objective for growth in Australia as it offers a full ADI licence. Challenger Bank has also recently undertaken a programme of significant investment to build out its digital capability, which fits with Heartland's digitalisation strategy.
Heartland has accordingly advised Avenue Hold that it will no longer be exploring the potential acquisition opportunity previously disclosed, and has discontinued due diligence and negotiations. Heartland made an initial subscription for A$5 million of capital (circa 11%) in Avenue Hold. No decision has been made on the future of this shareholding. For accounting purposes, this investment is classified as fair value through other comprehensive income, with any change in value not impacting Heartland's net profit after tax.
Great move by HGH.
What's another $5m down another digital rat hole between friends ?
Its all going to pale into insignificance in the long run with the growth they get in Australia, (he tells himself hopefully)
Bit like marlin fishing with a few extra zero's. Costs about $5,000 a day for a really good charter boat and crew and no guarantees you catch a big marlin.
What's the bet Jeff likes marlin fishing especially when others are paying the charter costs ?
Heartland seem to recognise that "market conditions have changed" but still want to pursue expansion into Aus.
They seem determined to burn cash no matter what, in order to pursue that strategy rather than question whether the time is right for that strategy at all. Personally I think the wiser option would be to recognise that the market and world economy in general, is just too unstable to pursue a wider growth strategy just yet. Keep your powder dry until the time is right, but hey ho, Jeff knows better.
" A$89 million of retail lending, A$17 million of corporate lending and A$228 million of deposits. "
That would indicate about 100m sitting around not being loaned out?
Looks like a cynical way to get some more capital to cover for the cash burning in the reverse mortgage segment, push the next raise out by a few months.
Quote from: LoungeLizard on Oct 20, 2022, 01:19 PMHeartland seem to recognise that "market conditions have changed" but still want to pursue expansion into Aus.
They seem determined to burn cash no matter what, in order to pursue that strategy rather than question whether the time is right for that strategy at all. Personally I think the wiser option would be to recognise that the market and world economy in general, is just too unstable to pursue a wider growth strategy just yet. Keep your powder dry until the time is right, but hey ho, Jeff knows better.
I guess this is the thing with speculations. If the economy calms down, everybody will applaud them for their wise foresight to buy now (when times are bad and stuff is cheap). If however things don't calm down, then, well, yes - people will be less complimentary.
Difficult to predict, but yes - there have been times when I was less worried about my investment into Heartland ...
Quote from: BlackPeter on Oct 20, 2022, 04:13 PMI guess this is the thing with speculations. If the economy calms down, everybody will applaud them for their wise foresight to buy now (when times are bad and stuff is cheap). If however things don't calm down, then, well, yes - people will be less complimentary.
Difficult to predict, but yes - there have been times when I was less worried about my investment into Heartland ...
I am pretty sure that's a sentiment many of us share.
Off topic but I can't help myself comparing the way Heartland go about expanding in Australia with another H in my portfolio, HLG. One Glassons retail shop at a time only after a comprehensive evaluation of various site opportunities available and their lease terms and careful measurement of pedestrian count. Sorry, there are no prizes for guessing which approach I prefer, (also reflected in the amount of capital I have allocated to each opportunity).
One supposes that if he gets it right there might be a bigger bonus for taking the "hare" approach than the tortoise one.
(Bad dog, surely Jeff wouldn't risk our money Willy Nilly just to collect a bigger bonus....I must try and stop being such a cynical old mutt)
Directors and management will not only be looking after your's and my money, BUT THEIR OWN as well.
RELs are now well established in Aussie, and Stockco is a business HGH understand ,and which has very strong growth prospects.
Challenger Bank acquisition will lower funding costs.
Quote from: lorraina on Oct 20, 2022, 05:39 PMDirectors and management will not only be looking after your's and my money, BUT THEIR OWN as well.
RELs are now well established in Aussie, and Stockco is a business HGH understand ,and which has very strong growth prospects.
Challenger Bank acquisition will lower funding costs.
Fair enough mate.
Aussie banks creaming it
Hope market responds favourably - might flow over to HGH share price
Market eyes 'purple patch' for banks, tipping $28b in profits
https://www.smh.com.au/business/bank...21-p5brss.html
Got my printed copy of the annual report this afternoon.
Front cover, Inside front cover and first page dedicated to a lesson about the Pacific people's star compass...oh my goodness. What a waste of paper. Hope the rest of the annual report improves from that appalling start.
Here's a free heads up to Geoff the Chariman and Jeff the CEO. These days guys, we have a thing called a GPS system which is far more accurate down to less than 1 metre variation. I use it whenever I am boating during the day and you know what, you can't see the stars during the day anyway. Radar systems are good at night too, way better than the stars. Please get with the program !
I am really starting to wonder about these guys almost obsession with all things Te Reo, cultural diversity and inclusion and all other things ESG. I'll take some anti nausea tablets, have a big sick bowl on standby and see if I can stomach reading the rest of the report at some stage.
Thing is if they're not obsessing about all things cultural and ESG it seems its all things digital and transformational. Other banks going nicely and Heartland being treated harshly by the market. Obviously, I'm not the only one that's not especially enthusiastic about their current approach.
I really wonder if management and the board are not under duress by one of their biggest Iwi customers to do things the Iwi way or they lose the business?
It would be nice to actually put them under some pressure with some pointed questions at the annual meeting and see them squirm, but alas that pleasure has been taken away from me as well, unlike almost all other companies who are happy to have physical meetings. Hmmm 🤢
Just let the current business's grow organically for goodness sake... and far less cultural and ESG B.S. please.
Fantastic analysis ... cant wait for the rest !!!!
dont forget your free men....
1689 bill of rights..
1990 bill of rights..
must be after some big iwi accounts.
Go On become Men International .....
warning its R16...
https://www.youtube.com/watch?v=pat2c33sbog
Top 11 shareholders.
https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/6937955/shareholdings?backurl=H4sIAAAAAAAAAEWNsQ7CMAxE%2FyZLh8LAaCEWGOiARH%2FAik0bKY1D7IL696SiiO3d052uzTiwtl6mjClUUsbix%2BMTxgoWMVEzFJlzM0qkkAZtopHjZMGWfsmscOq6Ld8NbdbLWv%2FqkLyUfC4ywca9gEOiwqr%2F9SauvLylEDi1eg07F8MUDPYHp48qaV2%2BMHmmGyaOYGVmNwkx%2FPwHkpXW684AAAA%3D
Had a coffee with a mate the other day who brought along one of his mates who is a high finance guru of sorts.
I asked if they thought if there was a pecking order in investing but that lead to a conversation about the pecking order theory in finance and Heartland and their recent capital raise
Apparently that theory is all about how companies prioritize their sources of financing.
The pecking order is to use retained earnings first and then when those run out go the debt way and when its not prudent to issue more debt then go the new equity way. All to do with risk and cost of capital etc. Of course nothing is simple in high finance.
But an interesting comment he made was that raising capital was often forced upon companies and wasn't always their preferred path and such action was sometimes seen by outsiders as a bit of warning sign of stress. Not say anything specific re Heartland
Chats over coffee can be interesting and sometimes learn something new
From AGM
5. Conclusion
To conclude, I can confirm that we remain on track to deliver FY2023 net profit after tax within the guidance range of $109 to $114 million, excluding any impacts of fair value changes on equity investments held and excluding the impact of the de-designation of derivatives.
No eps growth forecast this year and we have to watch and listen to the major Australian banks posting huge numbers and strong growth....such "fun"
For some light relief yesterday I thought I might be brave enough to skim the annual report, carefully skirting the huge free Te Reo lessons sprinkled liberally within the report and dodging the almost endless ESG and sustainability nonsense I arrived at page 68 therein and noted with some satisfaction that the total shareholder return for the last 5 years of 55.1% had beaten the NZX50 at 49%, fabulous but oh dear, my joy was very short lived when I realised this was to 30 June 2022 when the HGH share price was $2.10.
Hmmm....I jumped to the end and can see there is 156 pages of stuff to digest and much of it is politically correct nonsense. Life is too short, and I had no free Air New Zealand sick bags left at that point. Surely the other report would give me some relief and it certainly did. Speaking of page 68, the other annual report that arrived last week (HLG) contains just 68 pages of information and is sprinkled liberally with good eye candy and all of it in good old-fashioned English. Talk about a case of chalk and cheese digesting those annual reports!
I watched the meeting waiting for your pointed questions.
Did you water them down,or not bother asking them.?
Having nearly doubled our holdings in HGH I am counting down the days to Feb's interim divie..
126 to go...loll
Sadly, every time I have asked very difficult questions at online meetings in the past with other companies they are simply ignored.
Don't you think they're being a little over cautious only having an online meeting ? Maybe they didn't want any pointed questions about their strategy?
The other thing that occured to me skimming the annual report is although we all love to talk about the low risk reverse home loan lending for old folks, nobody really wants to talk about the higher risk ~ $1.4 Billion dollars of motor vehicle loans very much. Can't help myself wondering if their loan default provisioning will be enough in what is shaping up as a pretty serious cost of living crisis for a lot of people ?
Talk about once in a decade financial challenges in the annual return addresses seems like fair commentary to me. Interesting times we live in that's for sure! Shares about fair value at the current level I reckon. Go back 5 months and I confess I was hoping for 13.4 - 14.0 cps in dividends in FY23. My expectations have had to be seriously recalibrated as it seems to me HGH will be capital hungry for many years to come. I think 11 cps in FY23 although I see the average analyst is forecasting 12 cps and 13 cps in FY24. https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS-47041144/financials/
HGH's Marac's motor vehicle lending has been strong for over 20 years.
[most probably more like 50 years.]
Most people need a car to get to work.No car,no work,no work no dough,no dough no life..
No fun travelling on public transport with all the very latest Covid variants floating around in the air, no doubt about that!
I would think people have never been more motivated to keep their car than at present! For that reason, I think Turners will come through this okay too but there are risks and some people are really hurting, and I think it's safe to say there will be more repossessions than normal during this cost-of-living crisis.
This is probably why Basil don't bother with questions at the ASM.
BusinessDesk review -
Sure, there were some questions, but they had to be submitted in writing and Ricketts read them out in a monotone drone before answering each one in the same unvarying rumble.
And no doubt some, like mine, got filtered out
To Heartland ASM are a necessary evil ....they must dread havingbto hold them ...even virtual ones. Maybe 'retail' shareholders becoming a necessary evil as well
Alas, the physical annual meetings where wine and over beverages flowed freely and tasty nibbles were in abundance are but a distant memory now...wherein you could ask any question you liked.
If you want info at an agm best to approach the chairman, ceo or cfo, either just before the meeting starts, or after the meeting when they are looking to be seen talking to shareholders.
They do not like answering questions raised during the meeting.They see all questions as negative.
Last May I went to Dunedin for Silver Fern Farms agm. Had two very important questions to ask the chairman.
Both questions answered fully 5 minutes before the meeting started.Mission accomplished.
Never ask questions by email.Always phone.Reason being people talk more freely.
Quote from: Basil on Nov 12, 2022, 09:50 AMAlas, the physical annual meetings where wine and over beverages flowed freely and tasty nibbles were in abundance are but a distant memory now...wherein you could ask any question you liked.
Best question ever was one a few years ago 'Mr Chairman, look at yourself and the rest of the Board - all rather white and getting on a bit. Is that good?' ....might have even used the words fuddy duddys lol.
Poor old Geoffrey looked a bit astounded and muttered and stuttered through a non-reply
Pleasingly things have changed a bit since
Group / Bank Board now a few fuddy duddys but now a couple of younger males and a three women in the mix .... but ethnicity seems to be missing in the mix (shouldn't judge fromjust looking at the photos though)
Glas Ellie Comerford still hanging in there. No doubt she has 'influenced' a lot of that diversity change at Heartland. She's a good soul that Ellie
Interesting part of Annual Report --- more work needed I think
0000hgh.JPG
Quote from: lorraina on Nov 10, 2022, 06:04 PMHGH's Marac's motor vehicle lending has been strong for over 20 years.
[most probably more like 50 years.]
Most people need a car to get to work.No car,no work,no work no dough,no dough no life..
Went off the rails when they went into property loans eh
Wrote so much off (one story said over $100m) about the time of the GFC the risk officer was so stressed he had a breakdown and they had to search for him when his car with plates MARAC3 was found abandoned. found him after a few days
Aparaently Jeff drove the car with the MARAC1 plates .... he was the boss of course
Think it was Brian Jolliffe and the board.
I remember speaking to former [pgc] Chairman Sir Miles Warren,when HGH was being formed.
"It took us years to understand motor vehicle lending,yet the board went head long into property developement lending without understanding it."
My statement about Marac motor vechicle lending remains correct.ie No issues for 20 to 50 years.
We shouldn't overlook that 'Motor' is the segment that generates the highest profit
FY22 PBT for Motor was $67.8m out of Group PBT of $137.0m
And over the last 2 years Motor profit growth not far short of that seen by NZ Revere Mortgages and ahead of Aust Reverse Mortgages
Important part of the overall business
From CEO this year's agm.
We anticipate some stress on our Motor loans, recalling however, that
during the GFC, Motor loans arrears and losses increased, but were absorbable. And it is
pleasing to see Motor growth is returning to levels pre- changes to the New Zealand Credit
Contracts and Consumer Finance Act 2003 and the Credit Contracts and Consumer Finance
Regulations 2004 (CCCFA), introduced on 1 December 2021
And from page 7 HGH's annual report;
"A shift in the Motor book towards higher quality loans."
Quote from: winner (n) on Nov 13, 2022, 01:23 PMWe shouldn't overlook that 'Motor' is the segment that generates the highest profit
FY22 PBT for Motor was $67.8m out of Group PBT of $137.0m
And over the last 2 years Motor profit growth not far short of that seen by NZ Revere Mortgages and ahead of Aust Reverse Mortgages
Important part of the overall business
Thanks for drilling down into that mate. A very pertinent point !
Interesting noting HGH are up 7 cents ,..4% today.to close at $1.84.
Currently $1.87.
Change of auditors for HGH......quietly slipped into Friday's news just before Christmas.
Interesting.....
https://www.nzx.com/announcements/404196
Interesting indeed if KPMG genuinely resigned. That would be unusual. What is not unusual is regular rotation into another of the large audit firms - can't have the auditors being too familiar with the client.
It's par for course that when an auditor is unsuccessful in retaining an audit client after a tender that the announcement reads that it was a resignation. Sometimes there are non disparagement clauses, or joint approval rights around announcements. Helps firms save face. That said, you never know when a 'resignation' is an actual resignation.
By way of example, NZX/ASX listed Smartpay 'accepted' KPMG's resignation as auditor last month. I've 'accepted' a few auditor resignations during my professional career, but shown the door would have been a more realistic description.
Quote from: Basil on Dec 16, 2022, 10:26 AM........Interestingly Harbour Asset Management came out yesterday, ...and said "Extremely poor affordability, however, suggests downside risks to house prices. House price-to-income ratios and mortgage repayment costs, for example, require a further 30% decline in house prices to return to long-term averages (all else equal[/i])". ANZ N.Z's biggest lender are stress testing mortgage applicants at 8.6% and hardly anyone is qualifying because the numbers simply don't work for where interest rates and house prices currently sit. I think the severe lack of affordability is going to really undermine any prospect of any early recovery in house prices.
Maybe Balance is right and we're looking at several years of house price declines ? This real estate malaise could very easily extend into right through 2023 and well into 2024.....
The same risk factors mentioned above on the OCA thread could also effect HGH??
Gearing and leverage are great on the way up..... but not so great on the way down etc?? What's the risk of declining property values/leverage etc for HGH?
Bit of chatter in the other place about the possibility of yet another capital raise as soon as possibly first half 2023 for HGH to fund their Australian growth ambitions. Surely not ? To the best of my knowledge two capital raises in less than 12 months is something I cannot recall ever happening on the NZX before ?
Anyone want to opine on that ?
Left Field. There's some risk around their ~ $2 billion in reverse mortgage lending for sure but their LVR's and the way its set up are pretty conservative in my opinion. I have HGH on a foerward PE of 11.5 and on a gross yield of 8.3% based on 11 cps in annual dividends for FY23.
That feels about the right and fair price to me for this stage of the economic cycle and risks around that going into 2023.
Disc I halved my position in HGH this year and reinvested the proceeds in HLG.
Should HGH find another great investment in Aussie they will want more capital.
If it adds up shareholders will gladly put up more capital.
Otherwise they have the funds in hand for their current requirements.
Nearly doubling my investment this year,means I look forward with bated breath to March's divie.About 87 days.?
The Jarden Group is certainly showing confidence in Heartland with yesterday's announcement that they are now a substantial shareholder with 5.007% shareholding. I think this puts them at number 3 on the register 8)
They may have bought Basil's.?
Quote from: lorraina on Dec 20, 2022, 03:46 PMThey may have bought Basil's.?
LOL I don't mind if they did.
I did a peer group metrics comparison on the weekend.
2023 Forward PE's - average analyst forecast from Market Screener
BEN 10.9
BOQ 9.2
WBC 10.7
ANZ 9.8
NAB 12.3
Average of peer group 10.6
HGH 11.6
No growth is eps forecasted in FY23 for HGH whereas many of their peer group have reasonable forecasted earnings growth this year.
Heading into a probable recession next year I think the current price level of HGH is full and fair.
Gross yield of 8.3% suggests they are a reasonable hold for income as part of a well-diversified income portfolio.
Personally as a NZ shareholder,I prefer a comparison using gross dividends. Fully imputed HGH dividends are generally better value for me than taxable dividends from Australian Companies.
5% term deposit for 5 months.... are they short of cash
Most probably greater than expected demand by borrowers.
Quote from: mcdongle on Dec 22, 2022, 09:41 AM5% term deposit for 5 months.... are they short of cash
I also got that special offer including the 5.50% offer for 10 months.
I got to thinking along similar lines to you.
Well i am old and cynical... According to the Mrs
Bank Deposit rates;
It is each bank's treasury dept to [try] match deposits with lending,whether it is 1 month ,3 months ,6 months,1 year and further out.
That is why their rates vary.
Example:
Should they look to have too many deposits in 6 months time they will lower the rate they pay.
Conversely if their lending looks too high in 6 months they will increase the amount.they will pay..
Very seldom will you see all bank's paying the same for say 18 months term,or in factfor any one term.
Quote from: lorraina on Dec 23, 2022, 10:49 AMBank Deposit rates;
It is each bank's treasury dept to [try] match deposits with lending,whether it is 1 month ,3 months ,6 months,1 year and further out.
That is why their rates vary.
Example:
Should they look to have too many deposits in 6 months time they will lower the rate they pay.
Conversely if their lending looks too high in 6 months they will increase the amount.they will pay..
Very seldom will you see all bank's paying the same for say 18 months term,or in fact for any one term.
This is why you will read and hear someone saying they changed from bank A to bank B for a higher interest rate.
Lenders with high a NIM, such as GEN,HGH,HMY and TRA can well afford to pay a higher interest rate for their funding.
Its not new cash though, Its a special offer for account holders instead of paying me 3% they offered me 5% for the same money
Interesting, Heartland seems to be competing quite hard on the home loan rates. 3 year fixed for around 5.8% vs most other competitors in the 6.8% area. Not a very big margin there, they are offering savers 5+% on their term deposits... maybe most customers keep their live savings on call :o
Well not aving (french) DIC Snop here one wonders what the banks are going to do for 2023 and 24..
ANZ moving up today...
Recent articles in AUS have highlighted the cost of corporate roll over debt and the percentage of that effecting the EPS of ASX 200 companies...
Its the big question going forward and lets hope its not to big...
wonder if Winner has numbers on this...
51 days to go before the divie hits my bank on 17th March.
Result out on 23rd Feb.Ex div 2 nd March.
Am expecting 5.5cps,but will be happy with 5 cps.
Quote from: lorraina on Jan 25, 2023, 10:49 AM51 days to go before the divie hits my bank on 17th March.
Result out on 23rd Feb.Ex div 2 nd March.
Am expecting 5.5cps,but will be happy with 5 cps.
A nice wee deposit if you bought in September. Not so if you bought in January last year.
( I think we always need to measure divies against SP performance)
I look at my HGH holding as a sort of Cash Management Account.
When I have made a decent profit on the sale of a share, I often recycle the funds into HGH shares.
Then when I need funds for another investment I sell some HGH shares.
Has worked a treat for years.
"Always better to own the bank than have money in the bank".
Recast the FY22 accounts for this company going back just two years. The numbers in the recast cash flow statement are very different from the published figures.
You can read it here:
Recast Accounts HGH FY22 (https://recastinvestor.substack.com/p/basic-analysis-heartland-group-holdings)
Quote from: Recaster on Jan 28, 2023, 04:37 AMRecast the FY22 accounts for this company going back just two years. The numbers in the recast cash flow statement are very different from the published figures.
You can read it here:
Recast Accounts HGH FY22 (https://recastinvestor.substack.com/p/basic-analysis-heartland-group-holdings)
Thanks Recaster, your analysis helps explain the recent hurried cap raise and the issues relating to their growing reverse mortgage book.
Basil mentioned he not that happy with Heartland 'culture' and reduced his holding
My adoration of Jeff and his team is waning ....the halo is losing its shine ...fast ......and Heartland doesn't seem to be the Heartland it once was
Be a bad day if we ever had to say 'Heartland didn't do what they said they would do' ....might not be far off
The 'halo effect' in business is an interesting concept. Might pull out my copy of "The Halo Effect: . . . and the Eight Other Business Delusions That Deceive Managers" and sit out in the sun (fogs lifting) and give it another read.
Reverse mortgages on the rise.
https://www.oneroof.co.nz/news/42996?utm_source=nzherald&utm_medium=nzhapp
Hope what Forbar say in media is wrong -
Similarly, Heartland Group may surprise some investors with a weaker report due to higher operating costs and deteriorating economic conditions.
Quote from: winner (n) on Feb 10, 2023, 08:55 AMHope what Forbar say in media is wrong -
Similarly, Heartland Group may surprise some investors with a weaker report due to higher operating costs and deteriorating economic conditions.
Website greets you in Te Reo now. "Impressive" https://www.heartland.co.nz/
Can't help wondering how much Iwi have invested to be able to influence the culture so much or is this just management pandering to all things ESG and culture?
Maybe they need a name change to "Mano Whenua Pēke" Heartland Bank in Te Reo...I'm sure that would "impress" investors.
I have term deposits with Heartland but because they no longer have a physical bank in Hamilton,as they become due i change them to ASB who have a presence.
Have had shares in Heartland since they began as i was a shareholder in CBS.Reasonably happy with the sp but if it reaches $2.40 or thereabouts again i'll be out.
Quote from: Basil on Feb 10, 2023, 10:55 AMWebsite greets you in Te Reo now. "Impressive" https://www.heartland.co.nz/
Can't help wondering how much Iwi have invested to be able to influence the culture so much or is this just management pandering to all things ESG and culture?
Maybe they need a name change to "Mano Whenua Pēke" Heartland Bank in Te Reo...I'm sure that would "impress" investors.
I'm not sure who is more woke. Heartland or ANZ. I don't hold either as I reckon they have stayed to far from core business for shareholders.
Quote from: Basil on Feb 10, 2023, 10:55 AMWebsite greets you in Te Reo now. "Impressive" https://www.heartland.co.nz/
Can't help wondering how much Iwi have invested to be able to influence the culture so much or is this just management pandering to all things ESG and culture?
Maybe they need a name change to "Mano Whenua Pēke" Heartland Bank in Te Reo...I'm sure that would "impress" investors.
You might be getting a tad precious there, Basil. It's four words in Te Reo (unless you're seeing something that I'm not?)
"Nau mai, haere mai" is not exactly esoteric either as a Kiwi welcome. It's banged out everywhere, nearly as well known now as, "Kia ora." It fits Heartland's narrative of New Zealand ownership and their long history on these shores. Every other word on the page is in English - maybe a couple of hundred of them. 4 to 200 - that's hardly over the odds is it?
ANZ with suncorp might finally start to go somewhere.
We tend to forget that this little number was actually a big hit with everyone...
https://www.youtube.com/watch?v=DQLUygS0IAQ
In Terms of brevity the letters NZ just cant be beaten. Its just economical...A country that is now known like the US, the UK or AUS. Cant see NZ and english going away.
for language you cant beat french... it just sounds better...
https://www.telegraph.co.uk/columnists/2023/02/11/what-french-really-think-le-wokisme/
and WOKE is outlawed..
Back to banking. Its WBC that is the DOG these days.
In fact you could probably short WBC . HGH compared to wbc is positively breaking new ground.
2024 is now looking like a hard landing year... or by then will the world have forgotten and something else will have come along to life all boats.
China wises up and opening up economy as FORD for example opens new EV factory in China.
https://www.cnbc.com/2023/02/13/ford-ev-battery-plant-china-catl.html
capitalism waits for no country...it never sleeps.
Crikey do we see more signs of inept management??? No it's OK, just blame the cyclone.
https://www.nzx.com/announcements/407002
Further downward pressure of the SP today. GLH.
A Banker Lends You His Umbrella When It's Sunny and Wants It Back When It Rains
I guess all HGH's staff are out of the office getting the Umbrella's back.......lol
SP at $1.77 - back to the SPP price of six months ago. I said at the time of the cap raise that the SP will be in the doldrums for the next couple of years, and I don't see that changing. I hope for holders sake that the divvy is going to increase to offset the SP decline, but I have my doubts. It is possible even that the HY divvy will drop to 5c or maybe even 4.5%.
I heard an instance of a person who lost EVERYTHING (flood waters over the roof) and the boss asked if they could come to work the next day...make of that what you want. Some people have been seriously impacted by this cyclone. Whilst I doubt it would be all the people pulling together the financials and making the loan provision assessments, the lenders might want to re-assess some of the risk provisions in light of the cyclone. Either way, it is not unreasonable given the circumstances.
Quote from: Left Field on Feb 20, 2023, 02:48 PMCrikey do we see more signs of inept management??? No it's OK, just blame the cyclone.
https://www.nzx.com/announcements/407002
Quote from: Ferg on Feb 20, 2023, 09:49 PMI heard an instance of a person who lost EVERYTHING (flood waters over the roof) and the boss asked if they could come to work the next day...make of that what you want. Some people have been seriously impacted by this cyclone. Whilst I doubt it would be all the people pulling together the financials and making the loan provision assessments, the lenders might want to re-assess some of the risk provisions in light of the cyclone. Either way, it is not unreasonable given the circumstances.
Might be slowed further by all that translating into the pesky Reo. Kāore he raru!
Wondering about the impact of the recent weather events on loan losses going forward?
Thinking mainly about business loans here and rural loans. Most vehicles will be insured so their ~ vast $1.3 billion of vehicle loans should be okay but what about business loans to those companies devastated by the cyclone and earlier flood events? From memory they had about $600m of business loans and about the same amount loaned to the rural sector, mainly livestock loans. It seems quite plausible to me that with much of the North Island smashed by unprecedented weather some of those loans are going to have to be written off as some business's collapse.
Just generally speaking, as previously alluded too, I am not really all that convinced either by their everything digital expansion into Australia. I think they should have simply focused on organic growth as they had great organic growth going already.
I suppose slow and steady growth doesn't pay such big bonuses to management though.
Organic growth in Australia.
Well RELs growth is organic.
Stockco.Well really it is a "core" business for HGH.
Quote from: Basil on Feb 21, 2023, 09:40 AMWondering about the impact of the recent weather events on loan losses going forward?
Thinking mainly about business loans here and rural loans. Most vehicles will be insured so their ~ vast $1.3 billion of vehicle loans should be okay but what about business loans to those companies devastated by the cyclone and earlier flood events? From memory they had about $600m of business loans and about the same amount loaned to the rural sector, mainly livestock loans. It seems quite plausible to me that with much of the North Island smashed by unprecedented weather some of those loans are going to have to be written off as some business's collapse.
.....
No worries there Basil
Jeff didn't need his Covid overlay he was keeping in reserve só he released it to profit ........and then created a $8m Economic Overlay provision .....so as to not inflating F22 profit (proactive provisioning)
If need be he can use that .....my Dad always said put something aside for a rainy day, Jeff's dad must have told him that as well.
So guidance remains the same as already announced with the edition of impact of derivatives.
NPAT for FY2023
Heartland expects NPAT for FY2023 to be in the range of $109 million to $114 million, excluding any impacts of fair value changes on equity investments held and the impact of the de-designation of derivatives.
HGH – STOP PRESS – Heartland Bank interim result just out and initial take from Wade Gardiner;
1H23 in line with CIPe and no material differences to expectations for the underlying ratios as expected HGH reported good growth across the core Reverse Mortgage books, with declines in Personal and Business where they have actively been attempting to reduce exposure. Motor Vehicles provided some surprise with 11% growth in the book at a time when we expected MV sales/loans could decline. Interim dividend was lower than expected at 5.5c (5.5c pcp, CIPe 5.8c). Retaining our final estimate of 6.5c takes the total for the year to 12.0c, equating to a cash yield at the current price of 6.8% (Aust sector average 6.0% with a lower payout average than HGH). Impairments were marginally ahead of our expectations, but encouragingly it appears HGH has yet to see any real evidence of a slow-down and the $8m economic overlay provision remains in place. Guidance for FY23 has been maintained at NPAT of $109-114m (CIPe $112.1m). Guidance implies $54.3-59.3m in 2H, although the outlook commentary was for a 'similar' result in 2H which suggests a FY result towards the bottom end of the guidance range. Currently trading on 10.6x PE vs Aust sector average of around 11.6x (Aust majors 12.4x / Minors 10.0x).
Profit before Tax up $4.4m on pcp
StockCo profit before tax was $8.8m (v nothing last year)
So rest of business profit before tax was down $4.4m on last year
Go StockCo - you saved the day
Shareguy postd this bit from Craigs - HGH Currently trading on 10.6x PE vs Aust sector average of around 11.6x (Aust majors 12.4x / Minors 10.0x).
Love how Craig's gurus think all things should be 'equal'
However couldn't call HGH a 'major' so a PE of 10.6x makes it slightly expensive in their eyes if 'minors' are on 10.0
Happy holder
AUS banks totally wood shed'd.....
How come HGH has settled down to the "new Normal" and "Getting on with business"....
https://www.youtube.com/watch?v=sNfpPKoTHZs
US based banking sector sell off could impact AUS Banks but they could just become bargains .... except WBC...probably shorted to Heck and back.
Jarden's Grant Lowe is a good guy and must be a guru analyst -- BusinessDesk reports he was more upbeat with a $2.27 target, up from $2.09, and an "overweight" recommendation.
Like it
Quote from: winner (n) on Feb 28, 2023, 11:52 AMShareguy postd this bit from Craigs - HGH Currently trading on 10.6x PE vs Aust sector average of around 11.6x (Aust majors 12.4x / Minors 10.0x).
Love how Craig's gurus think all things should be 'equal'
However couldn't call HGH a 'major' so a PE of 10.6x makes it slightly expensive in their eyes if 'minors' are on 10.0
Bit unusual to trade at a premium to its peer group. Result much as expected with the write-down on Harmoney a disappointing example of their all-things digital strategy going wrong.
Heartland having to pay 6.0% for one year term deposits now shows their funding costs are certainly on the up and up. I thought the reduction in NIM was quite material, (certainly something we have never seen before), and expect to see this reduce further as more expensive funding costs eat into the margin on fixed rate motor vehicle lending.
I'm also expecting a significant number of business failures as a result of the recent extreme weather events resulting in widespread damage across the country.
Finally on the business strategy front, I struggle to understand what is the point of borrowing with term deposits at 6.0% for one year and lending on home loans at 6.14% for 1 year or 5.99% for 2 years? What's that going to do to their net interest margin going forward?
Quote from: Basil on Mar 04, 2023, 11:10 AMI struggle to understand what is the point of borrowing with term deposits at 6.0% for one year and lending on home loans at 6.14% for 1 year or 5.99% for 2 years?
Does seem a bit pointless. Although, I do wonder... looking at some of the numbers the banks have been releasing of late indicates many people are keeping significant amounts of money on call at miniscule interest rates. Maybe the reason for these mortgage rates is to suck in borrowers, and profit from the sizeable percentage that chose not to refix etc and end up paying 8% or whatever it is these days after 1 or two years. I bet that % is pretty big, be it due to apathy, inconvenience, lack of understanding or fear. Are those mortgage deals for new customers only or everyone?
HGH seems 'reasonably' priced at the moment on a P/B basis
0000hghpb.JPG
Media full of stories about how the greedy, nasty, mean and horrible banks are making huge profits while households are suffering and we urgently must have an enquiry into it and sort the buggers out
Stuff headline was By the numbers: Here's why some people think banks are making too much money and story goes on -
Banks continue to make record profits while households experience enormous increases in their mortgage rates.
Bank ethics are also being questioned, after it was revealed banks were offering secretive home loan deals at rates far below those offered to their loyal customers.
So why are so many people so angry? and then they show a chart headed 'The rise and rise of bank profits'
Although the anger is probably aimed at the big banks it seems that Heartland with their 'rise and rise of profits' could be just as greedy and nasty and horrible
Cool chart though
0000hghpr.JPG
Ricketts has passed away
Was pretty dedicated to Heartland .....even had to put up with being called a 'an old grey haired fuddy duddy' by a shareholder at a ASM
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/408202/390539.pdf
Quote from: LoungeLizard on Feb 20, 2023, 03:39 PMSP at $1.77 - back to the SPP price of six months ago. I said at the time of the cap raise that the SP will be in the doldrums for the next couple of years, and I don't see that changing.[/b] I hope for holders sake that the divvy is going to increase to offset the SP decline, but I have my doubts. It is possible even that the HY divvy will drop to 5c or maybe even 4.5%.
________________________________________________________________________________________________
Quote from: winner (n) on Mar 03, 2023, 10:05 AMJarden's Grant Lowe is a good guy and must be a guru analyst -- BusinessDesk reports he was more upbeat with a $2.27 target, up from $2.09, and an "overweight" recommendation.
Like it
I can't see $2.27 or very close to that, not with the way the economy is. I think our resident Lizard has called it correctly.
Quote from: winner (n) on Mar 03, 2023, 10:05 AMJarden's Grant Lowe is a good guy and must be a guru analyst -- BusinessDesk reports he was more upbeat with a $2.27 target, up from $2.09, and an "overweight" recommendation.
Like it
Ironically investors might have been better off avoiding the cap raise and taken a 6% 12 month term deposit with Heartland ;D
Now that's a thought...lol
Risk is accessed on numbers...if your whole system is single dimensional and overloaded it wont matter how good your analyst are..
whole system mean your economic reporting system from small business right the way to reserve banks.
Hard to figure "the real reason" for HGH weakness.
Is it;
a] American Bank Failure,
b] Robobank lowers NZ milk price forecast.
c] Geoff Ricketts death.
Quote from: lorraina on Mar 13, 2023, 03:55 PMHard to figure "the real reason" for HGH weakness.
Is it;
a] American Bank Failure,
b] Robobank lowers NZ milk price forecast.
c] Geoff Ricketts death.
As Waltzing alluded too there's company and industry data/risk and then there's the whole macroeconomic picture. There's a few bad news stories specific to HGH and the banking industry that are lining up, on top of the economic headwinds that NZ and global economy are facing.
Banks aren't the steady-growth stocks that some people think they are - they are cyclical. HGH took an unnecessary risk expanding at the worst possible point of the down cycle. It will be some time - a couple of years - before shareholders see the SP getting back to where it was before the cap raise ($2.16) and the divvy will be under immense pressure in that time, as costs mount. I'm no longer a holder - happy to sit this one out. Others may be coming to that conclusion?
LZ nailed it...
https://www.stuff.co.nz/business/131458989/all-five-major-banks-now-forecasting-economy-shrank-in-december-quarter
down turn cant last forever and really makes you think maybe trading global events is very very profitable...
buffet says he never sells but that is not true... probably only applies to a group of staples and certain stocks they got at bargain prices.
and lets be clear Dick Bove today lambasted the reserve bank model of QE...
https://edition.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html
Quote from: LoungeLizard on Mar 13, 2023, 04:44 PMBanks aren't the steady-growth stocks that some people think they are - they are cyclical. HGH took an unnecessary risk expanding at the worst possible point of the down cycle. It will be some time - a couple of years - before shareholders see the SP getting back to where it was before the cap raise ($2.16) and the divvy will be under immense pressure in that time, as costs mount. I'm no longer a holder - happy to sit this one out. Others may be coming to that conclusion?
Exactly....
IMO the damage is already done. Barring drops in EPS, or higher than expected inflation/interest rates going forward, I don't see much potential for further falls. I think it is pretty fair value where it is now and would be surprised to see this head below 1.5 any time soon. But in saying that, maybe silicon valley bank was pretty fair value 2 weeks ago :o
Banks trading at high single digit PE's is not uncommon heading into a recession.
BOQ and ANZ already are and WBC is only on 10.0.
Its not all that difficult to make a case for 9 times eps of about 15.5 cps = $1.40 but more likely it will just flop around in a sideways direction for the foreseeable future.
HGH has lost 28% of its SP since the cap raise (and lost nearly 5% today) and yet the stalwarts on the other other site are still saying what a great buy it is. Have they seen the economic forecasts? Read the news? Looked at the charts? Crazy stuff. This is not a time to be buying just about anything, but especially not banks. In times like these I go with advice from the great philosopher, K.Rogers: "You've got to know when to hold 'em, know when to fold 'em."
Quote from: LoungeLizard on Mar 16, 2023, 02:26 PMHGH has lost 28% of its SP since the cap raise (and lost nearly 5% today) and yet the stalwarts on the other other site are still saying what a great buy it is. Have they seen the economic forecasts? Read the news? Looked at the charts? Crazy stuff. This is not a time to be buying just about anything, but especially not banks. In times like these I go with advice from the great philosopher, K.Rogers: "You've got to know when to hold 'em, know when to fold 'em."
They all seem pretty happy with their HGH investment so good luck to them i say. I don't hold any but have a good lot on TD with them.
Quote from: Breezy on Mar 16, 2023, 03:15 PMThey all seem pretty happy with their HGH investment so good luck to them i say. I don't hold any but have a good lot on TD with them.
Well, I agree - good luck. Luck isn't a strategy though and I get the feeling that some don't want to admit which way the wind is blowing and are doubling down. When has doubling down against the all the data ever really worked? The old adage that it's better to own the bank than have money in it, doesn't hold true here. A 6% term deposit at HGH is better than investing in them right now.
Short term you are right.
Long term I am happy to continue to hold.
I have used my HGH a bit differently from most.
When I have made a good profit on a share I recycle some of the funds to add to my HGH holding.
When I want to buy something I often sell a few HGH to pay for it.
Sort of a cash management account, that has worked well for me for a good number of years.
Expect it will continue to work well for me in the future too.
Remember that the stock market is a manic depressive."
For any consumer of daily financial news, this will ring true. Equity markets swing wildly from day to day on the smallest of news, rally, and crash on sentiment, and celebrate or vilify the most inane data points. It's important not to get caught up in the madness. Instead, stick to your homework.
Always stay rational.
So the spare cash I have I have decided not to place at 6% with HGH.
Rather I have bought more shares at $1.62 today,because I am looking for nearly 24% total return,ie 4 times what I would get at 6%.
I expect HGH will pay a 7% yield and the share price will appreciate by 17% [or more].
Quote from: lorraina on Mar 16, 2023, 05:49 PMShort term you are right.
Long term I am happy to continue to hold.
I have used my HGH a bit differently from most.
When I have made a good profit on a share I recycle some of the funds to add to my HGH holding.
When I want to buy something I often sell a few HGH to pay for it.
Sort of a cash management account, that has worked well for me for a good number of years.
Expect it will continue to work well for me in the future too.
That seems like an eminently sensible strategy Lorraina and if it works for you, who am I to say otherwise. More power to you.
But I suppose my position is this.
I am not a trader and I agree that over time,
provided you have backed the right horse, any losses sustained in bear markets will be recouped in the next bull run. But I do think that even those with a long term focus, can mitigate or even avoid those losses, by being pro-active and by either exiting their positions or selling down before everything hits the fan. That's not to say to get panicky at the first blip in the market (the old buy high and sell low trap) but I believe we are at a moment where even ordinarily defensive stocks like HGH are not safe havens.
No-one has a crystal ball, and I could well be completely wrong about the resiliency of the markets to absorb the coming macro-economic shocks. But my gut feeling is that a lot of stocks will take a further 20% haircut from where they are now, in fairly short order.
I suppose it's all to do with one's risk appetite. The risk of being too passive at times like these is too high for me, especially when you can get 6% risk free. Is the risk of losing 20% of your capital in the next 6 months worth the extra 2% in dividends? And are you comfortable having to wait perhaps two years for the SP to get back to the sort of level that you could have sold at a by taking a more cautious approach?
We are living in interesting times that's for sure. I've sold down nearly 50% of my portfolio and may sell down further depending on the coming news from the US, which will as usual, have a big effect here.
Good luck to all!
I think we all must do what suits us.
I believe NZ ltd has a bright future.Both leading political parties seem to be middle of the road.
Consecutive Ministers of Finance have been "safe pair of hands".Cullen,English,Joyce and Robertson.
Good businesses have good years and bad years.Good businesses in NZ have a lot to look forward to.
I look for good businesses.Buy a few shares,and if they do what they said they would do, I buy more.
If the reasons that I bought in change, or the company does not do as they say they will do ,I usually sell.
If it is taking longer to achieve what they said they would do I usually give them more time.
HGH set themselves a course when they were formed.Get a banking licence for cheaper funds and look for profitable areas to grow.Still on course.
I think the business is still the same business it was when their share price was over $2.
I do not think any of "the news" on Swiss or USA Banks will make one iota of difference to HGH's growth path.
In 3 or 5 months time we will look back at it and say,,been there when dairying was looking sick,been there when car loans looked sick,been there when some USA and Swiss banks were sick,and should have bought more when HGH's share price was down..
Quote from: lorraina on Mar 17, 2023, 02:09 PMI think we all must do what suits us.
I believe NZ ltd has a bright future.Both leading political parties seem to be middle of the road.
Consecutive Ministers of Finance have been "safe pair of hands".Cullen,English,Joyce and Robertson.
Good businesses have good years and bad years.Good businesses in NZ have a lot to look forward to.
I look for good businesses.Buy a few shares,and if they do what they said they would do, I buy more.
If the reasons that I bought in change, or the company does not do as they say they will do ,I usually sell.
If it is taking longer to achieve what they said they would do I usually give them more time.
HGH set themselves a course when they were formed.Get a banking licence for cheaper funds and look for profitable areas to grow.Still on course.
I think the business is still the same business it was when their share price was over $2.
I do not think any of "the news" on Swiss or USA Banks will make one iota of difference to HGH's growth path.
In 3 or 5 months time we will look back at it and say,,been there when dairying was looking sick,been there when car loans looked sick,been there when some USA and Swiss banks were sick,and should have bought more when HGH's share price was down..
I would disagree that HGH is the same bank as it was when the SP was $2. I don't think it is.
It pivoted away from NZ and left small shareholders scrambling to try and make sense of a rushed cap raise which pretty much forced them to buy into the OZ expansion plans, whether they agreed with it or not. That was the moment when I sold out of HGH completely (at $1.80) as I couldn't see the logic of expanding at a time of an oncoming recession. I also believe the dividend will be under pressure as a result of increased costs. So for me, that was the moment when HGH went from a steady, organically growing organisation to one that was prepared to roll the dice in favour of institutional investors and against the interests of the smaller investor, who has greater exposure to the risk of the expansion going wrong.
As I said, the SP is now firmly 25% or more down on where it was before the cap raise was mooted. The market didn't like it then and the odds of this turning out well, have lengthened since. We'll resume this in 3 to 5 months time then ;)
Perhaps you are being proven right.
Yet I believe the expansion into Aussie is the right course of action. They already have strong foundations in Australia.
Stockco will perform well.RELs will continue to grow, and Challenge Bank will reduce funding costs.
Makes good sense to me,as they are not doing anything that they have not done successfully before..
Perhaps it is in fact the right time.?
Quote from: LoungeLizard on Mar 17, 2023, 04:15 PMI would disagree that HGH is the same bank as it was when the SP was $2. I don't think it is.
It pivoted away from NZ and left small shareholders scrambling to try and make sense of a rushed cap raise which pretty much forced them to buy into the OZ expansion plans, whether they agreed with it or not. That was the moment when I sold out of HGH completely (at $1.80) as I couldn't see the logic of expanding at a time of an oncoming recession. I also believe the dividend will be under pressure as a result of increased costs. So for me, that was the moment when HGH went from a steady, organically growing organisation to one that was prepared to roll the dice in favour of institutional investors and against the interests of the smaller investor, who has greater exposure to the risk of the expansion going wrong.
As I said, the SP is now firmly 25% or more down on where it was before the cap raise was mooted. The market didn't like it then and the odds of this turning out well, have lengthened since. We'll resume this in 3 to 5 months time then ;)
The market hasn't liked much of anything for some time now, take a handful of good stocks on the NZX and calculate what % they are down from their highs of a year or so ago and you will find many are down near 25% or more. You couldn't say that because those stocks are down X% that its all going to go badly for them, the market only gets it right sometimes, the rest of the time it oscillates between exuberance and despair.
Quote from: LoungeLizard on Mar 16, 2023, 02:26 PMHGH has lost 28% of its SP since the cap raise (and lost nearly 5% today) and yet the stalwarts on the other other site are still saying what a great buy it is. Have they seen the economic forecasts? Read the news? Looked at the charts? Crazy stuff. This is not a time to be buying just about anything, but especially not banks. In times like these I go with advice from the great philosopher, K.Rogers: "You've got to know when to hold 'em, know when to fold 'em."
The funny thing is - solid companies (like HGH) are a much better investment when their shares are cheap (as now). Just can't get my head around why some people praise shares when they are dear and trash them when they are cheap. I like to buy good companies at a discount.
What to do what do to, does one ignore the ongoing banking crisis and buy some cheap HGH? Can the FED outprint a bank run?
From Milford today;
All of this is to point out that the banking system as a whole is much more robust than a decade ago. Depositors should be much more confident that their money is safe in banks and the risk of another GFC is extremely low. In many respects, the SVB collapse has illustrated that the regulations and process to protect depositors have worked. All depositors in the failed banks were given access to their deposits on the Monday following the Friday collapse. But whilst depositors have not lost a cent, shareholders have borne the loss of their investment, illustrating that investments in banks still carries risks.
*It's worth noting that if the depositors didn't require their money bank and simply left them in the bank, the bank's assets would have appreciated in value over time and the bank would have likely remained profitable. This was not an issue of profitability but one of risk of liquidity, i.e. deposit flight.
Quote from: BlackPeter on Mar 17, 2023, 04:41 PMThe funny thing is - solid companies (like HGH) are a much better investment when their shares are cheap (as now). Just can't get my head around why some people praise shares when they are dear and trash them when they are cheap. I like to buy good companies at a discount.
It's not the cheapness I am trashing, it's the direction and timing of HGH's expansion. The SP decline is a combination of bad market reaction to the cap raise, and a bad market generally.
I totally get buying at discount, but NOT on a downtrend. The fundamentals may well be fine, but when macroeconomic forces align, as I believe they are doing now, even a fundamentally solid stock will be trashed.
It is always difficult, dare say, next to impossible, to predict when the index as whole is in for a tough time, but my punt is that this is one of those times. Some, like yourself will ride it out, and even buy more, but for me this is too risky - I'd rather cash up and wait for the upswing. I think I might be waiting for some time..
Quote from: Breezy on Mar 17, 2023, 04:37 PMThe market hasn't liked much of anything for some time now, take a handful of good stocks on the NZX and calculate what % they are down from their highs of a year or so ago and you will find many are down near 25% or more. You couldn't say that because those stocks are down X% that its all going to go badly for them, the market only gets it right sometimes, the rest of the time it oscillates between exuberance and despair.
Your right - the index as whole is taking a bit of a beating. Which is why I cashed up 50% of my portfolio a little while ago. HGH I got out of completely because of the general market conditions and issues specific to banking and HGH itself.
I think equities as a whole are going to have a bit of a rough ride, particularly if the gap between stocks and bond yields in the US continues to narrow. And you know what they say - when Wall Street sneezes, the rest of the world gets a cold. The FED has got one hell of a juggling act to perform and I don't rate its chances of not dropping a few balls!
LoungeLizard everything you've said makes sense to me and completely understand why you've moved on. A corporate action was made that wasn't in your investment thesis, you've got conviction in your macro beliefs and risk profile, and took requisite action. Good on ya.
I'm a long time holder and its been a remunerative journey. I've wanted for my shareholding to be larger now for several years but until recently have not actioned as I thought the price had become overdone. I ran the DRP for many years, turned it off for the last couple, and recently turned it back on. I purchased again in the aftermath of the covid crash, then supported the capital raising as I personally see merit in what they are doing in Australia even if I had misgivings over the price paid for StockCo. Obviously lower than todays price but in the fullness of time I think that discrete purchase has the potential to be a fine long term investment.
I also purchased yesterday at $1.56. I admit I spent an hour re-reading the latest disclosure statement and refreshing myself with the financial characteristics of both HGH's liquidity and its obligations. I may have even searched the PDF for "Credit Suisse" and "SVB" a few times. When the SP was hot I always wished for a significant correction as a big part of my investment rational is what they are doing in reverse mortgages and looking to carve out new differentiated niches where they can either be #1 or #2 and earn above industry returns, and I wanted more exposure, but not at those prices. That's was easy to think then, but it didn't stop my finger from shaking a bit as it hovered the buy button while I was plagued with self doubt yesterday.
It was a modest follow-on and probably closed the gap to where I want to be by a third as I am still mindful of sentiment and environment, and I dont mind how long it takes to close or if ever. I am highly mindful of the macro risks and think I have a good understanding of its financial trajectory inclusive of those likely risks. If a full fledged global financial crisis that was able to impact little old heartland, which doesn't have an investment bank or dabble in exotic products, maintains unconcentrated sticky retail deposits and committed wholesale funding on the depositer side, and good levels of cash, liquid investments and committed undrawn facilities on the liquidity side, we all have a lot of problems and this incremental purchase probably isn't going to hurt much from that perspective. I'll admit though I was wishing for the correction to be from a good old fashioned traditional recession (which is still to come) than an offshore banking crisis lol
I don't mind holding investments through the cycle (assuming they continue to execute on my investment thesis for them) as what I do try to do is make my more cyclical investments on the bottom half of their respective cycles. I don't go out of my way to pick the bottom but I do start to DCA when I feel like its starting to get to the bottom half, and leaving some for as it turns the corner.
What I am more intolerant of is tax risk & consequently quite conservative. The vast majority of my capital is in private capital which has appreciated significantly, and there is no way I'd place the weight of my capital at risk of being characterised as on revenue account just so I could trade my way around in listed equities. I've got a tax accountant at KPMG and tax lawyer at Chapman Tripp (who I pay more regard to than my accountant given the IRD will pursue you based on established precedents and points of law), and based on the advice I've gotten I just wouldn't take the risk that many probably do take in the listed market on a regular basis w/o consequence. Sometimes if you want to be a duck you have to quack like one. Very occasionally I may do a bonafide trade and if I do I'll pay tax.
The private capital experience shaped my perspective and approach to listed equities. The former is illiquid, requires extensive due diligence and analysis, long term, and as business is rarely linear means getting your entry points right, particularly for cyclicals. The majority of those cyclical investments were made in difficult macro environments rather than the frothy years. Used that approach over the last 20 years in listed equities and its no surprise my best investments have also been my long term investments. I do try to sell where I've cocked up or got my thesis wrong and likewise try my best not to fall into the buy high sell low trap. I'm also much more comfortable making an investment into a business I'm already a shareholder in and know well, and more cynical and demanding of returns when making an investment into a new business.
I like the old Kenneth Fisher proverb: "Buy straw hats in the winter, when nobody wants them, and sell them in the summer when everybody needs them."
https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/XVUCdjryAwsBdC1DAeCDJQ/gcWFQ8t41G4Fh892KuHc5Afw
That all makes perfect sense to me FM, and your strategy has obviously been a successful one over the years. It's good that no-one (mostly) tries to think that their way of "investing" is right or wrong. All we can do is find the right way for us as individuals. I don't get sleepless nights from being very risk averse - I may miss some of the highs but I have avoided the bad lows. Both strategies have the same goal - preserve/increase our capital for the long-term. That for me doesn't mean staying with a particular company through the dips and troughs. If you can predict a trough coming - and that's a big if - then why not avoid it and come in later on?
But sincerest good luck to all those sticking and buying more of HGH - you may well turn out to be right and I will be more than happy to put my hand up and say "I got that one wrong" if in 12 months time HGH are back over $2. If the current economic maelstrom subsides and the TA starts to look good I will cash up my 6% term deposit at Heartland and buy back in again. But not at more than the $1.80 that I sold at!!
These unsecured subordinated notes Heartland looking at offering to 'investors'
Hope they not like those Credit Suisse AT1 bonds which have turned out to be useless as Swiss regulators effectively wiped out those bondholders (with as media says UBS paying bondholders with thin air)
But then Heartland not going to need a big bailout
LOL was wondering when you'd chime in w/ that.
But indeed it makes the offer harder. I had been wondering if they'd delay the issue (they have 5 years) or if it would cause it to be more expensive if pressed ahead.
Quote from: LoungeLizard on Mar 18, 2023, 02:59 PMThat all makes perfect sense to me FM, and your strategy has obviously been a successful one over the years. It's good that no-one (mostly) tries to think that their way of "investing" is right or wrong. All we can do is find the right way for us as individuals. I don't get sleepless nights from being very risk averse - I may miss some of the highs but I have avoided the bad lows. Both strategies have the same goal - preserve/increase our capital for the long-term. That for me doesn't mean staying with a particular company through the dips and troughs. If you can predict a trough coming - and that's a big if - then why not avoid it and come in later on?
But sincerest good luck to all those sticking and buying more of HGH - you may well turn out to be right and I will be more than happy to put my hand up and say "I got that one wrong" if in 12 months time HGH are back over $2. If the current economic maelstrom subsides and the TA starts to look good I will cash up my 6% term deposit at Heartland and buy back in again. But not at more than the $1.80 that I sold at!!
Well said and good on you for being proactive about managing your risk.
Possibly worth noting that HGH mentioned in last years annual report that over the last 5 years they'd beaten the NZX50 by ~ 10% in total shareholder returns. That was as at 12 August 2022 when the share price was north of $2.10. Hmmm, looks like they have well and truly underperformed is you use the current share price of $1.58. Evidence that buy and hold doesn't really work very well with cyclical banking stocks or not?, you folks judge for yourselves.
Is this really cheap at nearly 10 times FY23 earnings in the midst of a international banking crisis that may not be over ?
What about the impact on net interest margin going forward on smaller banks having to pay a lot more for their funds? https://www.smh.com.au/business/banking-and-finance/aussie-bank-funding-costs-tipped-to-rise-on-global-turmoil-20230320-p5ctkz.html
Noticed the other day working on a clients books their HSBC bank shares are on a forward PE of only 5.5
Doubtless many other major banks overseas are also on dirt cheap metrics at this point.
Interesting times in the banking industry. Lending money unsecured to small banks at 6% is not without some risk. In the current environment some people might like to refresh their understanding of the Reserve Bank's powers "open bank resolution"
https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/open-bank-resolution
1 Year Kiwi bonds at 4.25% are as close to risk free as it gets.
Interesting, if you'd bought $10,000 HGH on 1 Nov 2018, when it happened to be $1.57, around todays price, and held, then total return would have been* a realised $4000 or 7.97% p.a. (% compounded) with virtually no unrealised capital gains, or 8.72% p.a. (% simple) with 1.31% capital gains and the rest dividends.
*Sharesight 'share checker' function.
Interesting piece in ft.com about bank stocks in the context of banks make excessive profits but made the point that globally they generally aren't that great for shareholders .....like under performing indices
Like ASX Banks group 10 year return is 5.4% pa v ASX200 7.56% pa
One comment was banking stocks are risky for shareholders (as it should).
US Bank index down heavily again overnight, (more than 5%). Don't think this confidence crisis is anywhere near done and dusted.
I guess the proposed bond issue is on hold in the circumstances...probably very little appetite from investors at this point in time.
Quote from: Basil on Mar 23, 2023, 01:29 PMUS Bank index down heavily again overnight, (more than 5%). Don't think this confidence crisis is anywhere near done and dusted.
I guess the proposed bond issue is on hold in the circumstances...probably very little appetite from investors at this point in time.
Agreed - it's only getting started in the US and it's hard to know what's really going on over there and whether we are only seeing the tip of the iceberg.
The FED is committed to getting inflation under control and has flagged further rates to yesterdays 25 basis points. That's the ninth in a row. There will be more casualties to come I feel. As I've said, the coming (or is it already here?) recession and on-going stagflation is going to hit all businesses to some degree, but fear is particularly strong in the banking sector and HGH is not immune to contagion. Big selling volume in the last few days and support below $1.48 is not strong. Strong hands required from here on in!
Quote from: Basil on Mar 23, 2023, 01:29 PMUS Bank index down heavily again overnight, (more than 5%). Don't think this confidence crisis is anywhere near done and dusted.
I guess the proposed bond issue is on hold in the circumstances...probably very little appetite from investors at this point in time.
On the other place they talked about this guy who would be barking like mad if the HGH share price got close to 140 ...and then talked about 125
Getting there eh
Maybe that guy I quoted yesterday who pointed out that banks aren't a good investment (under perform market indices) is right
LoungeLizard - I'm sure you meant to say HGH instead of HLG (which has no debt). HGH already having to pay market leading interest rates right across the board to attract funds, (which hasn't always been the case in recent times)...funding costs rising rapidly and NIM must be under increasing pressure.
Normally this trades in a range of 9-18 times forward earnings wherein 9 is usually a buy and the latter a sell (assuming one has a goal of beating the NZX50 index, isn't that what we're all trying to do otherwise we'd just buy a low fee index tracking ETF). On the face of it then, 9 times about 15.5 cps = $1.40 is attractive but with what's going on overseas I'm more than happy to keep my powder dry and wait for a new confirmed uptrend because it's impossible to predict where the bottom of this cycle ends.
We're already in a deep and worsening recession in my opinion. Talking to a range of clients and getting feedback from the coal face its almost certain the economy has contracted this quarter which added to last quarters 0.6% GDP contraction = exactly that, a recession.
Quote from: Basil on Mar 23, 2023, 04:33 PMSure you meant to say HGH instead of HLG (which has no debt). HGH already having to pay market leading interest rates right across the board to attract funds, (which hasn't always been the case in recent times)...funding costs rising rapidly.
Normally this trades in a range of 9-18 times forward earnings wherein 9 is usually a buy and the latter a sell (assuming one has a goal of beating the NZX50 index, isn't that what we're all trying to do otherwise we'd just buy a low fee index tracking ETF). On the face of it then, 9 times about 15.5 cps = $1.40 is attractive but with what's going on overseas I'm more than happy to keep my powder dry and wait for a new confirmed uptrend because it's impossible to predict where the bottom of this cycle ends.
We're already in a deep and worsening recession in my opinion. Talking to a range of clients and getting feedback from the coal face its almost certain the economy has contracted this quarter which added to last quarters 0.6% GDP contraction = exactly that, a recession.
Quite right, HGH is what I meant ! :o
Quote from: LoungeLizard on Mar 23, 2023, 04:37 PMQuite right, HGH is what I meant ! :o
That's okay mate I have been thinking a lot about who is going to replace PPH in the NZX50 index so had them on my mind too.
Just as well Hgh has put $8m aside to cover losses from this recession .....might need it I reckon
HGH has enough liquidity to cope with around 50% of on call deposits being withdrawn from what I can see. Seems pretty strong. Interesting the hammering this has gotten. I think they will really struggle to grow for the foreseeable future now that everyone thinks small banks are ticking timebombs, might be hard to get money at good prices...
Dear shareholder,
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) was pleased to recently announce a net profit after tax (NPAT) of $48.7 million for the six-month period ended 31 December 2022 (1H2023), an increase of $1.1 million (2.4%) compared with the six-month period ended 31 December 2021 (1H2022). On an underlying* basis, 1H2023 NPAT was $54.7 million, an increase of $7.6 million (16.2%) compared with the 1H2022 underlying NPAT.
Heartland also declared a 5.5 cent per share interim dividend, paid on 22 March 2023.
To say thank you for your continued support and loyalty as a Heartland shareholder, we would like to provide you with a special Term Deposit offer with Heartland's New Zealand banking subsidiary, Heartland Bank Limited
(Heartland Bank). In 2022, Heartland Bank was proud to receive Canstar's Savings Bank of the Year for the fifth year in a row.
Find out more about Heartland Bank.
Your Term Deposit offer:
5 months at 5.50% p.a. with interest paid three monthly
10 months at 6.00% p.a. with interest paid three monthly
This offer is available from 22 March to 5 April 2023 and is exclusive to Heartland shareholders.
If you would prefer greater flexibility, you may wish to consider Heartland Bank's award-winning savings products:
Direct Call - 3.60%p.a.
32 Day Notice Saver - 4.75%p.a.
90 Day Notice Saver - 5.00%p.a.
For any questions, call the Heartland Bank team on 0800 85 20 20 or email invest@heartland.co.nz .
Thank you again for your support as a Heartland shareholder.
Kind regards,
Jeff Greenslade
Chief Executive Officer
Heartland Group Holdings Limited
Fascinating thing about Credit Suisse was that capital ratios and levels of liquidity were within what the EU banking system regs. TCS was no outlier
And the ratios don't look that much different from Heartlands
Conclusion - depositors do not care about such technicalities in a bank run. They pull
money out because they are afraid.
I remember I was working a business that owned two Lotto outlets at Northlands Mall when Countrywide had a bank branch there.
Did a special deal with us,not charging a cash handling fee,as we saved them "the costs" of not having to carry a lot of cash.
I think the lotto money we were paying in would have seen them survive a bank run.
People want the bank to have "their cash" on hand,and pay interest on it.
Makes you wonder how they think a bank makes a profit.
Quote from: winner (n) on Mar 24, 2023, 01:58 PMFascinating thing about Credit Suisse was that capital ratios and levels of liquidity were within what the EU banking system regs. TCS was no outlier
And the ratios don't look that much different from Heartlands
Conclusion - depositors do not care about such technicalities in a bank run. They pull
money out because they are afraid.
I'm pretty sure Credit Suisse's depositors had some pretty good company specific issues to worry about, including ongoing multi billion dollar quarterly losses announced with the newly discovered material financial and system weaknesses, uniquely & emotionally unaware comments made by its cornerstone shareholder at the same time, a super risk prone investment bank dabbling in exotic products that nearly blew the bank up 2 years ago when archegos collapsed (CS had $20bn of exposure to archegos investments representing 50% of its equity cushions, and ultimately took a $5bn hit) and the now bankrupt Greensill capital, constant turnover in senior mgmt and unrelenting scandal (including new CEO's hiring private investigators to follow ex CEOs), and on, and on, and on.
Transferred everything out of my Heartland Direct call account today. I'm sure everything's bang to rights but I got caught up in the Icelandic bank mess years ago and learnt that there's a time to chase a few points extra on yields and there's a time not to.
Quote from: kiwi2007 on Mar 24, 2023, 09:34 PMTransferred everything out of my Heartland Direct call account today. I'm sure everything's bang to rights but I got caught up in the Icelandic bank mess years ago and learnt that there's a time to chase a few points extra on yields and there's a time not to.
I have done the same..
Quote from: kiwi2007 on Mar 24, 2023, 09:34 PMTransferred everything out of my Heartland Direct call account today. I'm sure everything's bang to rights but I got caught up in the Icelandic bank mess years ago and learnt that there's a time to chase a few points extra on yields and there's a time not to.
... or, closer to home and for those of us with many more trips around the sun, the PSIS in '79.
This seems a little irrational and reactive to me. I can understand that one might wish to re-visit their current banking arrangements, and spread their eggs across multiple baskets, but withdrawing
everything seems a little over the top to me. I'm assuming you are both invested in the company, not simply banking with them? If that is the case, surely pulling everything out of the bank you are invested in, is more than a little counter productive?
Quote from: kiwi2007 on Mar 24, 2023, 09:34 PMTransferred everything out of my Heartland Direct call account today. I'm sure everything's bang to rights but I got caught up in the Icelandic bank mess years ago and learnt that there's a time to chase a few points extra on yields and there's a time not to.
Quote from: mcdongle on Mar 25, 2023, 10:45 AMI have done the same..
Is this how run on the banks start?
They say social media speeds such things up
Quote from: Untamed on Mar 25, 2023, 11:04 AMThis seems a little irrational and reactive to me. I can understand that one might wish to re-visit their current banking arrangements, and spread their eggs across multiple baskets, but withdrawing everything seems a little over the top to me. I'm assuming you are both invested in the company, not simply banking with them? If that is the case, surely pulling everything out of the bank you are invested in, is a little counter productive?
Irrational and reactive - that's pretty much the recipe for a bank run. And so much easier in the age of social media (https://www.cnbc.com/2023/03/17/financial-psychology-and-bank-runs.html) still it won't happen here, eh? (https://www.stuff.co.nz/business/opinion-analysis/300837774/credit-suisse-is-an-anomaly-why-new-zealand-and-australia-are-safe-from-bank-run-contagion)
Quote from: kiwi2007 on Mar 24, 2023, 09:34 PMTransferred everything out of my Heartland Direct call account today. I'm sure everything's bang to rights but I got caught up in the Icelandic bank mess years ago and learnt that there's a time to chase a few points extra on yields and there's a time not to.
Quote from: mcdongle on Mar 25, 2023, 10:45 AMI have done the same..
Jeff's marketing has vorked! Have a look at the serial number of the bank accounts you two dummkopfs have just emptied. They start with 03, right? Now look at the principal bank that has accounts beginning with that number.
https://en.wikipedia.org/wiki/New_Zealand_bank_account_number
All you have done is take money from a Vestpac account. If Heartland were unable to meet their commitments for some reason, your money is in effect held in trust by Vestpac. Heartland is not a bank! They don't operate their own banking licence in New Zealand.
RB
I don't believe this is anything more than an arrangement for Westpac to process Heartland transactions. Rabobank also uses Westpac for processing. Westpac is simply contracted to provide a processing service. At least that's the way I read everything I have just googled on the subject.
I am sure someone will correct me if I'm wrong.
Quote from: Red Baron on Mar 25, 2023, 01:09 PMJeff's marketing has vorked! Have a look at the serial number of the bank accounts you two dummkopfs have just emptied. They start with 03, right? Now look at the principal bank that has accounts beginning with that number.
https://en.wikipedia.org/wiki/New_Zealand_bank_account_number
All you have done is take money from a Vestpac account. If Hear6land were unable to meet their commitments for some reason, your money is in effect held in trust by Vestpac. Heartland is not a bank! They don't operate their own banking licence in New Zealand.
RB
Our Greg Tomlinson will be happy today ......his horse Aris Aris won its 4th race and looks to have a great future.
Owners eye will see Heartland OK
Quote from: Red Baron on Mar 25, 2023, 01:09 PMHeartland is not a bank! They don't operate their own banking licence in New Zealand.
RB
Yeah, nah you're wrong. They're a bank. The clue is in the name "Heartland
Bank Limited." They've been a New Zealand registered bank since 2012.
Part of an article on Craigs website.
Our regulatory environment is robust, the banks have all been required to hold
more capital in recent years, while the liquidity and funding backdrop has
improved since the GFC days.
Even if this isn't a repeat of 2008, I doubt that SVB and Credit Suisse will be the last
casualties of the sharp tightening in monetary policy.
Whenever interest rates rise as rapidly as they have in the past 12 months, sooner or
later someone, somewhere finds themselves into trouble.
In the mid-1990s it was the Mexican crisis, in the early 2000s it was the bursting of
the dot-com bubble, and in 2007 it was the US housing market.
This time around it's been a few crypto operators and some banks that have taken
on too much risk.
So far, that is.
Quote from: Hectorplains on Mar 25, 2023, 03:03 PMYeah, nah you're wrong. They're a bank. The clue is in the name "Heartland Bank Limited." They've been a New Zealand registered bank since 2012.
There is an old German proverb, that roughly translates as follows:
"If it looks like a duck, and quacks like a duck, there is a very good chance that what you have is - a duck."
Let's apply this 'duck test' to Heartland bank.
---------------
Bank teller bursts, by the external security guard (the one that isn't there) and goes straight up to the front desk at Heartland. He is holding a gun in one hand and a swag bag for the loot in another.
Robber to Teller: "Give me all your cash and stick it in here."
Teller to Robber: "We don't have any cash, it is all down the road at Westpac."
Robber to Teller: "All right then, keep your hands in the air and tell them at Westpac to be ready, I am coming - no funny business."
Robber leaves Heartland Bank where he is immediately set upon by a policeman.
Policeman to Robber: "You are nicked for bank robbery."
Robber to Policeman: "But, but I didn't take anything!" (shows police officer empty swag bag)
Policeman to Robber: "Oh yeah, you are free to go. I have another call to attend to anyway. Threat of a bank robbery at Westpac down the road....."
Does that 'Heartland office scene' sound like it was set in a 'bank' to you? Heartland can register as a bank and call themselves a bank. But I would argue that if it doesn't perform the functions of a bank, like managing their own accounts, it fails the duck test.
The fact is that if Heartland bordered up their doors tomorrow and refused to engage with you as a an account holder vhat vould you do? The answer vould be go down the road and access your Vestpac/Heartland account as per usual.
RB
Would a long line of Heartland depositors lining up outside Westpac branches to withdraw their funds,cause a run on Westpac?
I can just see TV reporting; huge crowds lining up to withdraw their funds from Westpac.
And could a bank robber get off -on a technicality- on a charge of robbing a Vestpac bank, by claiming he vas actually robbing Heartland Bank? So many technicalities to be thought through!
RB
You are just being ridiculous now.
In an effort to protect my sanity, I have emailed Heartland to request clarification.
"Assumptions are made and most assumptions are wrong." – Albert EinsteinQuote from: Red Baron on Mar 25, 2023, 07:21 PMAnd could a bank robber get off -on a technicality- on a charge of robbing a Vestpac bank, by claiming he vas actually robbing Heartland Bank? So many technicalities to be thought through!
RB
Quote from: kiwi2007 on Mar 24, 2023, 09:34 PMTransferred everything out of my Heartland Direct call account today. I'm sure everything's bang to rights but I got caught up in the Icelandic bank mess years ago and learnt that there's a time to chase a few points extra on yields and there's a time not to.
LOL - and put it all under your matrass?
Are you one of these bots programmed to create havoc? Otherwise - sounds pretty stupid behaviour to me.
By all means - diversify - and that's not just related to HGH. However - panicking is never a sensible reaction ...
Quote from: Untamed on Mar 25, 2023, 11:04 AMThis seems a little irrational and reactive to me. I can understand that one might wish to re-visit their current banking arrangements, and spread their eggs across multiple baskets, but withdrawing everything seems a little over the top to me. I'm assuming you are both invested in the company, not simply banking with them? If that is the case, surely pulling everything out of the bank you are invested in, is more than a little counter productive?
You assumed wrong...
Also i think people getting all wound up over what i do with my own money is strange..
My apologies for assuming you were a holder. I don't think it was an unreasonable assumption to make though, that most people posting in an HGH thread, are probably holders.
I wasn't getting "wound up"about about what you do with your money, but as a holder of HGH,
and a banking customer, I think I am fairly justified in being a little concerned that people appear to be panicking about a possible bank collapse. There is currently zero reason to believe Heartland Bank is likely to fail. I was merely expressing my opinion that making a decision out of a sense of panic, without any facts to support it, is probably not the best move.
Quote from: mcdongle on Mar 26, 2023, 11:17 AMYou assumed wrong...
Also i think people getting all wound up over what i do with my own money is strange..
Quote from: Untamed on Mar 26, 2023, 11:46 AMI am fairly justified in being a little concerned that people appear to be panicking about a possible bank collapse. There is currently zero reason to believe Heartland Bank is likely to fail. I was merely expressing my opinion that making a decision out of a sense of panic, without any facts to support it, is probably not the best move.
Most bank runs don't need facts just panic.
Generally there are two kinds of problems for a bank. The most important or the most dangerous one is a solvency problem, where you've made loans, and you have other assets that get marked down in value dramatically, and you wipe out your equity, you are bankrupt.
The other kind of problem there is when you need liquidity to fulfill the obligations that you have to your depositors, and then that's a liquidity problem. Bad liquidity problems are in effect solvency problems as well.
A dangerous call to make that none of these issues could apply to Heartland
And I don't hold or bank with them
I did not say none of these issues could apply to Heartland. I said - "there is currently zero reason to believe Heartland Bank is likely to fail."
When I typed that, I assumed it was clear that I meant
anytime soon rather than
never, given the context of this discussion.
I stand by that statement until such time as there
is reason to believe otherwise.
Quote from: Crackity on Mar 26, 2023, 12:38 PMMost bank runs don't need facts just panic.
Generally there are two kinds of problems for a bank. The most important or the most dangerous one is a solvency problem, where you've made loans, and you have other assets that get marked down in value dramatically, and you wipe out your equity, you are bankrupt.
The other kind of problem there is when you need liquidity to fulfill the obligations that you have to your depositors, and then that's a liquidity problem. Bad liquidity problems are in effect solvency problems as well.
A dangerous call to make that none of these issues could apply to Heartland
And I don't hold or bank with them
Quote from: Untamed on Mar 26, 2023, 12:45 PMI did not say none of these issues could apply to Heartland. I said - "there is currently zero reason to believe Heartland Bank is likely to fail."
When I typed that, I assumed it was clear that I meant anytime soon rather than never, given the context of this discussion.
I stand by that statement until such time as there is reason to believe otherwise.
Last published accounts to 31 Dec 2022
Statement of Financial position
Cash - 385 million
Borrowings from Depositors ( Note 9 ) - 4.07 Billion of which 800.3 million are on demand ( Note 15 - titled Liquidity Risk )
I have no reason to suspect Heartland are likely to fail any time soon either but it is within the bounds of possibility....
Quote from: Crackity on Mar 26, 2023, 01:07 PMLast published accounts to 31 Dec 2022
Statement of Financial position
Cash - 385 million
Borrowings from Depositors ( Note 9 ) - 4.07 Billion of which 800.3 million are on demand ( Note 15 - titled Liquidity Risk )
I have no reason to suspect Heartland are likely to fail any time soon either but it is within the bounds of possibility....
All things are possible to those that believe it but equally highly unlikely.
Just to reply to a few points:
I lost 45,000 GBPounds in the Icelandic bank crash (albeit temporarily, as UK holders were eventually bailed out by the UK government) which makes me rather cautious, especially as NZ seems to be dragging its feet on deposit guarantees. Whether they'd bail depositors out in full if a bank did fail here seems unlikely.
No, I'm not a current shareholder. I sold several months ago.
I transferred out only my Direct Call account. I still have a couple of term deposits with Heartland. In truth I was very much overcommitted with them.
Yes, some will go under a 'mattress'. Most though is to be spread amongst my BNZ, KiwiBank and ASB accounts. Banks with an A in their credit rating.
Thanks for clarifying. That makes a lot more sense to me, than my assumption (I'm making too many of those today) that you mean't "everything." I am actually on the same page as I am aware that my eggs are pretty much all in one basket, so I will probably be juggling things around tomorrow to better diversify across the three banks I bank with. Not because I believe for one moment that Heartland is about to fold, but simply because it spreads my risk a little better. I think sometimes we are focussed on doing that with our share holdings, but forget to do it with our banking.
Quote from: kiwi2007 on Mar 26, 2023, 01:49 PMJust to reply to a few points:
I lost 45,000 GBPounds in the Icelandic bank crash (albeit temporarily, as UK holders were eventually bailed out by the UK government) which makes me rather cautious, especially as NZ seems to be dragging its feet on deposit guarantees. Whether they'd bail depositors out in full if a bank did fail here seems unlikely.
No, I'm not a current shareholder. I sold several months ago.
I transferred out only my Direct Call account. I still have a couple of term deposits with Heartland. In truth I was very much overcommitted with them.
Yes, some will go under a 'mattress'. Most though is to be spread amongst my BNZ, KiwiBank and ASB accounts. Banks with an A in their credit rating.
Quote from: Untamed on Mar 26, 2023, 01:59 PMThanks for clarifying. That makes a lot more sense to me, than my assumption (I'm making too many of those today) that you mean't "everything." I am actually on the same page as I am aware that my eggs are pretty much all in one basket, so I will probably be juggling things around tomorrow to better diversify across the three banks I bank with. Not because I believe for one moment that Heartland is about to fold, but simply because it spreads my risk a little better. I think sometimes we are focussed on doing that with our share holdings, but forget to do it with our banking.
I prefer to support kiwi business so only have money in Kiwibank/Heartland and SBS which has been around since 1869.
I use whichever bank(s) will meet my needs and serve me best. I am the customer and they are providing me with a service. If a bank can't meet my needs, I'll switch to one that does. It matters not one iota whether they are Kiwi owned or not. In this day and age, and especially in current times, I have zero guilt about that.
Quote from: Breezy on Mar 26, 2023, 02:09 PMI prefer to support kiwi business so only have money in Kiwibank/Heartland and SBS which has been around since 1869.
Bit of a worry when seemingly intelligent people on here and that other place are talking run on the banks (smaller ones?)o
Maybe what they say about social media spreading news so much faster than in the past does trigger these actions
Quote from: Crackity on Mar 26, 2023, 01:07 PMLast published accounts to 31 Dec 2022
Statement of Financial position
Cash - 385 million
Borrowings from Depositors ( Note 9 ) - 4.07 Billion of which 800.3 million are on demand ( Note 15 - titled Liquidity Risk )
I have no reason to suspect Heartland are likely to fail any time soon either but it is within the bounds of possibility....
It is clearly not within the bounds of possibility based on the data you provided (i.e. comparing short term cash with short term liabilities).
Have a look at the design of our banking system and the role of the reserve bank.
Quote from: BlackPeter on Mar 26, 2023, 05:15 PMIt is clearly not within the bounds of possibility based on the data you provided (i.e. comparing short term cash with short term liabilities).
Have a look at the design of our banking system and the role of the reserve bank.
It absolutely within the bounds of possibility if you look at the last set of financial statements BP
You don't have to agree - I don't mind
Page 32 Heartland presentation 28/02/2023
Heartland Group
Heartland increased borrowings by $158.3 million (2.6%) to $6,329.1 million.
New Zealand
• Heartland Bank increased borrowings by $249.7 million (5.7%) to $4,596.3 million.
‒ Deposits grew $480.5 million (13.4%) to $4,077.7 million, driven by competitive pricing on
targeted products, including Heartland's Notice Saver offerings which both received Canstar
New Zealand recognition in the half.2
‒ In Q1 of FY2023, Heartland Bank experienced the highest growth rate in retail deposits of all
main and domestic banks in NZ.1
‒ Other borrowings decreased by $230.8 million (30.8%), largely due to the maturity of $150
million retail bond, as well as the amount drawn down in Heartland Bank's committed auto
warehouse facility decreasing by $76.6 million.
• Total liquidity strengthened, increasing by $146.9 million (23.4%) to $774.8 million.
• Heartland Bank holds liquidity well in excess of regulatory minimums and maintains strong
regulatory liquidity ratios.
Thanks Percy.
Hard to see how they couldn't cope with a depositor panic.
Do you think their loan book is robust?
Yes their book is robust,motor vehicle lending,Rural stock lending,Reverse Equity loans,business ,first mortgages.
Over the past couple of years Heartland have let their net interest margin reduce [slightly],as the quality of their loan book improves.
From their 28-02-2023 announcement
‒ Impairment expense as a percentage of average Receivables decreased from 0.33% in 1H2022 to 0.29% in 1H2023, benefitting from an improved book quality.
ps.Motor vehicle lending.I find it interesting to note both Heartland and Turners, have greatly improved the quality of their motor lending books.Both do very well in this sector.
pps.Here is a link to HGH's 28-02-2023 presentation.
It is informative.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/407457/389620.pdf
Excellent review of the NZ banking system:
https://www.nzherald.co.nz/business/cooking-the-books-podcast-why-higher-interest-rates-are-causing-banks-to-collapse/BA5UGFJLVVACTLLS6OSKAOI4Y4/
Quote from: Untamed on Mar 26, 2023, 11:46 AMMy apologies for assuming you were a holder. I don't think it was an unreasonable assumption to make though, that most people posting in an HGH thread, are probably holders.
I wasn't getting "wound up"about about what you do with your money, but as a holder of HGH, and a banking customer, I think I am fairly justified in being a little concerned that people appear to be panicking about a possible bank collapse. There is currently zero reason to believe Heartland Bank is likely to fail. I was merely expressing my opinion that making a decision out of a sense of panic, without any facts to support it, is probably not the best move.
Thanks.... But i wasnt panicking i moved some of it to a higher rate of interest and also bought a new car....
No desire from me to comment or opine on this other than to post information from RBNZ on credit ratings which outline the chances of a bank at various credit rating level's being unable to make a timely payment i.e. default.
https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/bank-credit-ratings
People might like to review the different credit ratings of the banks they are considering dealing with.
Also worth mentioning that the RBNZ does have very wide powers under the open banking resolution to give stability to the banking system when required.
More info here https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/open-bank-resolution
DYOR.
Disc - Not currently a shareholder of HGH and no material funds in a bank account with them.
Quote from: Crackity on Mar 26, 2023, 05:27 PMIt absolutely within the bounds of possibility if you look at the last set of financial statements BP
You don't have to agree - I don't mind
You still forgot the role of the reserve bank ... you need to add their balance sheet when assessing the "Possibility of default" of any bank. As long as the bank has sufficient long term assets / securities on their balance sheet the reserve bank will happily help them out to cover any short term shortfalls at the official cash rate. Actually - this is the role of the reserve bank.
As well - Reserve banks can't run out of cash - they print it.
Have a think and maybe some reading about it before you respond. I am just concerned to see posters whose contribution I normally value starting inadvertently (I assume) to add to the huge pile of misinformation on the internet.
Quote from: BlackPeter on Mar 27, 2023, 11:30 AMYou still forgot the role of the reserve bank ... you need to add their balance sheet when assessing the "Possibility of default" of any bank. As long as the bank has sufficient long term assets / securities on their balance sheet the reserve bank will happily help them out to cover any short term shortfalls at the official cash rate. Actually - this is the role of the reserve bank.
As well - Reserve banks can't run out of cash - they print it.
Have a think and maybe some reading about it before you respond. I am just concerned to see posters whose contribution I normally value starting inadvertently (I assume) to add to the huge pile of misinformation on the internet.
Sure
Thanks for that
I'm obviously missing something in how bank panics start and how banks work and how second tier banks work.
The commentary tonight on CNBC this bank loan book problem is going to be here for a few years or more.
Looks like some heavy reading through the winter to brush up on relationship between the T and bank deposits. Right now the T is above the deposit rate.
Citizen on the other hand just went sky high.
With internet banking apps being in your phone money moves a lot faster than in 2008.
SP handles might be reacting to that?
Sp here bottomed at 90 in the year of the Virus and this thing just went down again..
From an article by Brian Easton
Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian.
Currently your best choice is to be cautious about your return – the higher return, the greater the risk – and to choose financial institutions which are well supervised and regulated by the Reserve Bank of New Zealand.
PS.Wife and I hold shares in GEN and HGH,both of which are as above.
Quote from: percy;997481From an article by Brian Easton
Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian.
"Currently your best choice is to be cautious about your return – the higher return, the greater the risk – and to choose financial institutions which are well supervised and regulated by the Reserve Bank of New Zealand."
PS.Wife and I hold shares in GEN and HGH,both of which are as above.
Good old Brian eh
But both you and Brian are echos of Richard Long who influenced many with his " Hanover, a New Zealand business with the size and strength to withstand any conditions."
Big difference between Brian and Richard,one knows finance the other proved he did not.
If you do not know the difference ,pity you .
I think the point is that a lot of people trusted Richard Long's endorsement right up to the point he was proven wrong. (Predicting the future is a very inexact science and it makes fools of all of us from time to time including so called expert financial commentators and every economist out there).
Perhaps more interestingly and more current is that according to CNBC the American regional bank index (an index of all listed regional banks above a certain market capitalization), is currently on a forward PE of just 7. Index is down about a third in recent weeks. According to anecdotal reports the rate of withdrawals and switching to larger banks and / or treasuries or money market funds is slowing.
Quote from: lorraina on Mar 28, 2023, 09:57 AMBig difference between Brian and Richard,one knows finance the other proved he did not.
If you do not know the difference ,pity you .
Brian is a great guy and very good at what he does. I have had a few pleasant discussions with him over the years.
But he is a scholar who researches, writes, works and teaches in economic, social statistics, public policy and New Zealand Studies. (His biography)
In spite of the high esteem I hold him in he is one who I'd go to for financial/investing advice ............ rate you percy ahead of him in this respect :)
Richard Long was a good news reader. Full stop.
Quote from: lorraina on Mar 28, 2023, 11:53 AMRichard Long was a good news reader. Full stop.
And dont forget what Brian and percy say 'these days you need to choose financial institutions which are well supervised and regulated by the Reserve Bank of New Zealand."
And I think most Americans ,who bank with regional banks, would wish their banks complied with The Reserve BanK of NZ's rules,supervision, and regulations.
Quote from: lorraina on Mar 28, 2023, 12:24 PMAnd I think most Americans ,who bank with regional banks, would wish their banks complied with The Reserve BanK of NZ's rules,supervision, and regulations.
Agreed. High probability everything will be fine with HGH, that's what a BBB credit rating suggests.
29 chances our of 30 in the next 5 years there won't be a default requiring some form of RBNZ intervention or support. Completely understand that a lot of people will be quite comfortable with those odds and accept a higher return on their HGH accounts as reward for doing so.
Theoretically the big 4 which have better credit ratings are safer, with up to only a one in 150 chance of a default event in the next 5 years for an A rated bank, but frankly I don't believe that because I think they all have massive off balance sheet derivatives books and who really knows what could potentially go wrong with the world's financial system in the next 5 years?
Kiwibonds Govt guaranteed at 4.25% are not a bad place for those who are really risk averse, Mrs hound often seems to worry about financial things a lot so she has some of her money she inherited recently in there and feels safe and good on her.
Possible Impact on Net Interest Margin is something to think about though.A few months back what was on offer in terms of term deposit interest rates between HGH and the bigger banks, there really wasn't much in it. Now HGH paying 50 bps more than the major banks for (for example), one year term deposits. Pretty sure there will be a material effect on net interest margin going forward which in my opinion is something to think about when forecasting future eps....that and the state of the economy....
NIM contracted during the course of the half and an underlying since it is at 4.02% and 3.97% in a reported sense, which is down just under 30 basis points. Now that's been caused by a range of factors, the mix of the book, particularly the growth we've seen in Reverse Mortgages has contributed to that, which is a positive. We've also seen the shift in the risk of the motor book, which has also resulted in a decline in lending yields, which has contributed.
But also, in an environment of rising interest rates, we did not take the opportunity to increase our margin. We were very prone to pass on the benefits of increased rates to our depositors; less so to our borrowers, we gave them time to adjust. And in the case of Reverse Mortgages in both countries, in some cases, we didn't pass on those increases at all.
Quote from: lorraina on Mar 28, 2023, 01:22 PMNIM contracted during the course of the half and an underlying since it is at 4.02% and 3.97% in a reported sense, which is down just under 30 basis points. Now that's been caused by a range of factors, the mix of the book, particularly the growth we've seen in Reverse Mortgages has contributed to that, which is a positive. We've also seen the shift in the risk of the motor book, which has also resulted in a decline in lending yields, which has contributed.
But also, in an environment of rising interest rates, we did not take the opportunity to increase our margin. We were very prone to pass on the benefits of increased rates to our depositors; less so to our borrowers, we gave them time to adjust. And in the case of Reverse Mortgages in both countries, in some cases, we didn't pass on those increases at all.
Your management team seems to be doing very well Percy and making good decisions - is your job a a full time role?
Turning out that way...lol.
Independent economist Bagrie (whose actually worked for a bank once) says -
Bagrie said "everything's a possibility" but a GFC wasn't a reality in the current economic environment.
"Let's keep Chicken Little in the coup - the sky's a long way away from falling," he told AM host Ryan Bridge
Also added that the current failures are to a large extent due to 'mismanagement' ....can't say that about our Jeff can we.
https://www.newshub.co.nz/home/money/2023/03/economist-cameron-bagrie-reveals-what-it-would-take-for-another-global-financial-crisis-amid-banking-turmoil.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+29+March+2023
Thanks for posting.
He makes good sense.
NZ.s 50 top Bosses richer than ever following big pay rises
CEO Pay 2022 Table
================
https://www.neighbourly.co.nz/public/auckland/mount-albert/message/69117733
No 10 .Jeffrey Greenslade Heartland Group Holdings $3,065,103
don't know how accurate this is but none of these using the Foodbanks !!
And just in case you were wondering that's Roughly $59,000 per week Jeffs earning . Bound to be higher this year.
Quote from: winner (n) on Mar 29, 2023, 08:05 AMIndependent economist Bagrie (whose actually worked for a bank once) says -
Bagrie said "everything's a possibility" but a GFC wasn't a reality in the current economic environment.
"Let's keep Chicken Little in the coup - the sky's a long way away from falling," he told AM host Ryan Bridge
Also added that the current failures are to a large extent due to 'mismanagement' ....can't say that about our Jeff can we.
https://www.newshub.co.nz/home/money/2023/03/economist-cameron-bagrie-reveals-what-it-would-take-for-another-global-financial-crisis-amid-banking-turmoil.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+29+March+2023
Find the consensus among economists. The outcome will be the opposite.
Quote from: Capt_Hook on Mar 29, 2023, 05:58 PMNo 10 .Jeffrey Greenslade Heartland Group Holdings $3,065,103
Seems a lot for a company that's making ~ $100m per annum and not forecasting any eps growth this year, (real inflation adjusted eps falling 7%) and maybe none next year too with their costs of funding heading relentlessly north.
QuoteWe are pleased to inform you that the interest rates on some of our savings products have increased on 29 March 2023.
Business Call account - 3.60% to 4.10% p.a.
Direct Call account - 3.60% to 4.10% p.a.
90 Day Notice Saver - 5.00% to 5.15% p.a.
It seems to me many of their accounts/ term deposits are now paying market leading interest rates by a pretty sizeable margin, often half a percent.
The new normal for smaller banks trying to attract funds going forward?
Firstly, cost of funds increased during the period after being -- with the cash rate being at record lows in both countries for a long period of time. We saw a rapid and sharp increase. Heartland intentionally delayed passing the full impact of these increases on to some customers and in the case of Reverse Mortgages in New Zealand and Australia did not pass on the full increases. With deposits, Heartland was quick to pass on the benefits of the rising cash rate. It is believed while this did not maximize our potential NIM, it was a socially responsible and more sustainable approach, and this has positioned Heartland to fund future receivables growth.
Companies that put ESG matters ahead of shareholder returns worry me. When a company becomes "Certified B Corp" where planet and people are put on exactly the same level as shareholders its a run for the hills moment because its a slippery slope from there ...
Got another email this morning from Heartland with exactly the same message as yesterday's one, which I quoted in my last post. With every other interest rate change I have only ever got one email...just putting that on the record, make of that what you will.
Quote from: Basil on Mar 30, 2023, 10:51 AMCompanies that put ESG matters ahead of shareholder returns worry me. When a company becomes "Certified B Corp" where planet and people are put on exactly the same level as shareholders its a run for the hills moment because its a slippery slope from there ...
I agree, they are effectively saying "we are no longer interested in anything to do with merit, efficiency, or logic. We are interested in the feels"
It's the feels that loses you money
Well guys you better get used to it,as that is the way the world and companies are moving.
Pretty sure the guys at Turners, (my preferred finance exposure), aren't going to be spending vast sums of money and time cow-towing to the endless woke ESG compliance nonsense anytime soon.
It's only a matter of time.
Quote from: Basil on Mar 30, 2023, 11:35 AMPretty sure the guys at Turners, (my preferred finance exposure), aren't going to be spending vast sums of money and time cow-towing to the endless ESG compliance nonsense anytime soon.
Quote from: Basil on Mar 30, 2023, 11:35 AMPretty sure the guys at Turners, (my preferred finance exposure), aren't going to be spending vast sums of money and time cow-towing to the endless woke ESG compliance nonsense anytime soon.
May pay to check with Tina.?
Turners' sustainability strategy is underpinned by two key
pillars:
■ Enhancing the well-being of our staff and the
communities in which we operate.
■ Supporting and accelerating the transition of the New
Zealand light vehicle fleet to a cleaner, lower emission
future.
We have a number of initiatives already in place which you
can read about on the following pages.
Turners is at the start of its sustainability reporting journey
and we are working towards increased transparency and
measuring of our footprint.
■ Formalised Turners'
sustainability committee
■ Appointed sustainability
champions in each
business
■ Identified key
sustainability pillars
■ Initiatives undertaken
to support Turners' long
term sustainability pillars
■ Confirm approach
to Climate Related
Disclosures and develop
reporting framework
■ Identify climate related
risks and opportunities for
Turners
■ Define Scope 1 and 2
measures
■ Commence measuring
Scope 1 emissions
■ Implement external
assurance process
■ Establish KPIs for
emissions and other
material issues
■ Increase disclosure and
reporting
■ Commence measuring
Scope 2 emissions
■ Integrate management of
climate related risks and
opportunities into risk
framework
■ Continue to develop
disclosure and reporting
Lots of ESG plus bloated CEO remuneration often not a good combo .....and often leads to flat eps growth at best and dishing shareholder returns
In F22 Greenslade got paid 23.17 times what the average employee got paid ....seems rather obscene .....and at odds with inclusivity and fairness.
But Greenslade probably deserves every penny (or more) of his pay.
lorraina - This is all I say about that https://www.nzonscreen.com/title/bugger-toyota-hilux-commercial-1999
Quote from: Basil on Mar 30, 2023, 12:55 PMlorraina - This is all I say about that https://www.nzonscreen.com/title/bugger-toyota-hilux-commercial-1999
https://www.youtube.com/watch?v=OAn40128fy8
Quote from: lorraina on Mar 30, 2023, 01:05 PMhttps://www.youtube.com/watch?v=OAn40128fy8
Haha so true, my 84 yr old neighbour has been driving her 1986 Corolla around for ever with the oil light on (Sometimes she asks me to check it and i dump a few litres in for her) She also revs the guts out of it from cold including during winter.
"Heartland may have to revert to a more costly rights issue, looking to raise the capital that it needs to fund its Australian purchase and growth plans.
Clearly the NZ market shares my expectation.
Unaccountably Heartland's share price has fallen by more than 10 percent, in recent days.
I infer from this that the institutions expect Heartland to announce soon a discounted rights issue. It is always an institutional response to sell off before any announcement, forcing the issuer to accept an even lower share price as a result of the sell-off. Having sold off early, the institutions then buy back more cheaply into the rights issues, pocketing a tidy gain. There is nothing illegal about this game unless knowledge is held by a participant in the game."
Cut and paste from Chris Lee
Looking at the charts I see it bounced nicely (again) off the 20 RSI on the 23rd (150c) - done similar a few times this last year. Short term traders friend?
Aye Kiwi2007 I read that article. I think Chris Lee has co-mingled with what Heartland Bank (NZ) were looking to do with the T2 subnote issue, and what may be required if HGH/Heartland Australia press ahead with the Challenger acquisition.
From the v little detail released on the proposed but not yet released (and very likely postponed) tier 2 subordinated note issue, is that the issuer was Heartland Bank - the NZ deposit taking bank regulated by the RBNZ - & issued to support meeting the RBNZ's new regulated core and total capital ratios which are required by 1 July 2028. I don't think it had anything to do with the proposed Australian acquisition. It's not surprising in the aftermath of Credit Suisse's demise and the associated write off of its AD1 notes that Heartland has paused this raise - not withstanding Credit Suisse's t2 subnotes went completely unscathed and retained full value during its merger with UBS. If they pressed ahead now, at what cost would they have to bare? Best to wait, in my view.
But the t2 note wasn't in support of the Challenger acquisition. There are still multiple approvals required, and that initiative, if it transpires (who knows in this environment), is a completely different initiative and separate to the t2 subnote issue. There is the modest initial outlay to acquire challenger assuming approvals are granted. But MGMT's gameplan is to transition the Heartland's Australian's subsidiary away from being completely wholesale funded into meaningfully funded by deposits after gaining its ADI (which is why they are buying Challenger). That has capital requirements in itself - if you raise deposits, you have to set aside more capital than you would if you were wholesale funded. Hence, it's been clear to much pretty everyone for a long time that if Heartland were to acquire Challenger some sort of rights issue would be required to fully position Heartland Australia into a full fledged deposit taking bank. Who knows the timeline associated with it but if I were mgmt I'd probably prefer to just raise it all and get it over with notwithstanding all the flack they'd get for it.
We all know how that will go down with retail punters.
But why would I reserve capital for that eventuality if the SP bottomed out upon news of another capital raising?
First - StockCo's funding is lazy and sloppy and not rated, but Heartland Australia already is, so step 1) may be a refi of that in the near term at better margin. But in the medium term, accessing deposits to then retire wholesale funding and fund the Australian division with deposits has the potential to create a step change in Australian NIM. Macquarie estimate the move to having *some* retail funding could reduce Aussie RM funding costs by 100bps and 200bps for stockco. Forbar reckon aggregate Aussie NIM could conservatively expand by 75-100bps which would add in excess of $10m to NPAT pa.
So I can see why MGMT are looking at it and pursuing it. The market environment has obviously gotten harder in the last month and sentiment more risk adverse (which I am alive to in my own decision making process). It also may prove to be too difficult in the current environment and they just shelve it for the time being.
But at the end of the day the T2 subnote issue and the OZ acquisition are two very different and distinct initiatives.
FY23 PE's straight off Market Screener so based on average analyst forecast.
BOQ 9.1
ANZ 9.5
HGH 9.8
WBC 10.3
Chris Lee speculating that Heartland will do another discounted rights issue in the near future ....that debt issue probably off agenda at the moment
https://www.chrislee.co.nz/taking-stock
I remain of the view that the most likely fallout from the overseas banking issues is the effect on the net interest margin (NIM) Heartland earns.
QuoteAs a way for us to say thanks for being a valued Heartland customer, we're offering you a special term deposit offer. To make it even easier for you to make the most of your savings, you can either apply through the Heartland Mobile App or using the links below.
Your exclusive term deposit offer
If you apply for a Term Deposit by 28 April 2023, we're rewarding you with access to special rates on our 7-month and 11-month Term Deposits.
This today from Heartland with an 11 month term deposit offering 6.10% well above the big Aussie 4.
Interesting article https://www.newshub.co.nz/home/money/2023/04/report-reveals-aotearoa-behind-the-curve-on-banking-industry-changes.html
HGH do a lot of lending to SME's and defaults also look set to rise.
https://www.rnz.co.nz/news/business/487253/small-businesses-owners-face-dipping-into-personal-funds-to-stay-afloat
The only way they are maintaining a FY23 forecast that amounts to zero eps growth is by treating some material things as extraordinary items below the line.
Maybe with the obvious headwinds in the economy, costs of funding impacting NIM and likely rise in delinquent loans they'll also struggle to get any eps growth in FY24 ? On the other hand, if they can do it, maybe maintaining eps in a very slow economy isn't a bad result?
Make of this what you will but I have never had so many emails from them in such a short space of time offering increased interest rates on call accounts and term deposits.
Car sales were strong in March. There were 11,626 new cars registered in the month plus another 9,681 used imports.
But the strength was in the new vehicles. New car sales rose +4% from the same month a year ago to be only -2% below the all-time record high in September 2021.
I would guess Heartland's Marac are getting more than their share of financing these new cars.
So looks as though Heartland's funds will be earning straight away.
Good NIM in motor vehicle lending too.
Quote from: winner (n) on Apr 03, 2023, 02:24 PMChris Lee speculating that Heartland will do another discounted rights issue in the near future ....that debt issue probably off agenda at the moment
https://www.chrislee.co.nz/taking-stock
Yes, difficult to know what is going on behind the scenes at Heartland, and banks are masters of the dark art of financial misdirection. The SP has responded well in the last few days so obviously some feel this is a good time to buy, and they may well be right. The TA doesn't indicate as such, but market sentiment does seem to to have softened. Still in watch and wait mode.
Share price had a nice climb in the lead up to the cap raise last August
Even got a speeding ticket ....but noth to disclose they said ha ha
Just saying
The share prices of ANZ,HGH and WBC on NZX appear to be moving in unison currently.
Heartland proceeding with its proposed unsecured subordinated bond offer, indicative terms sheet here
https://www.heartland.co.nz/Uploads/Pohutakawa/Heartland%20Bank%20Limited%20-%20Indicative%20Terms%20Sheet%20(Lodgement).pdf
Credit rating of these bonds is BB+, (Below investment grade and sometimes referred too as junk bonds)
Not guaranteed by Heartland Group. The margin above the swap rate will be set by a bookbuild on or about 21 April.
What does Tier 2 capital mean if things get really gnarly for HGH ? Are you ostensibly taking an equity risk for a fixed income return and if so what's the point?
As signalled in their 28th February announcement;
https://www.nzx.com/announcements/407458
Quote from: Basil on Apr 11, 2023, 02:49 PMHeartland proceeding with its proposed unsecured subordinated bond offer, indicative terms sheet here
https://www.heartland.co.nz/Uploads/Pohutakawa/Heartland%20Bank%20Limited%20-%20Indicative%20Terms%20Sheet%20(Lodgement).pdf
Credit rating of these bonds is BB+, (Below investment grade and sometimes referred too as junk bonds)
Not guaranteed by Heartland Group. The margin above the swap rate will be set by a bookbuild on or about 21 April.
What does Tier 2 capital mean if things get really gnarly for HGH ? Are you ostensibly taking an equity risk for a fixed income return and if so what's the point?
Not for you Basil
In first part of that document
If you do not fully understand how they work or the risks associated with them, you should not invest in them
Quote from: winner (n) on Apr 11, 2023, 03:42 PMNot for you Basil
In first part of that document If you do not fully understand how they work or the risks associated with them, you should not invest in them
Agreed. At least with ARV bonds, from my read of the debt issue documents, they rank equally with bank debt under a master trust agreement so you know exactly where you stand. Pretty sure I could wrap my brain around them if I wanted too but I don't.
Even if they have to pay 7%pa for this new debt it's still cheaper than the cost of equity
With Heartland going the junk bonds way makes you wonder if Jeff has got bored after all these years and started gambling .....like playing high risk games (in a foreign country)
Think Jeff's personal rating needs to downgraded
Why the angst with HGH issuing sub-ordinated bonds? It is standard practice with banks when they need additional 'capital' to issue them as long as there are investors prepared to take them.
Don't need the 'public' to buy them ........all gone through the big boys and brokers ........who'll keep their 'clients' happy by offering them some.
At least another $125m in the coffers
Jeff's rating needs upgrading.
Indicative pricing for the bond issue
https://announcements.nzx.com/detail/410004
At the mid point of the indicated margin range and based on the 5 year swap rate on Friday HGH will be paying 7.57% on these bonds.
Gosh, they must be VERY keen to get the money in the door to pay that much. That, and investors perceive this as quite a risky investment.
With them now paying 6% on 1 year term deposits and this much on corporate bonds, there's surely going to be a significant effect on the net interest margin going forward as they have about $1.3 billion of motor vehicle loans previously written at much lower prevailing fixed interest rates than what those loans would be priced at today.
Quote from: Basil on Apr 17, 2023, 10:26 AMIndicative pricing for the bond issue
https://announcements.nzx.com/detail/410004
At the mid point of the indicated margin range and based on the 5 year swap rate on Friday HGH will be paying 7.57% on these bonds.
Gosh, they must be VERY keen to get the money in the door to pay that much. That, and investors perceive this as quite a risky investment.
With them now paying 6% on 1 year term deposits and this much on corporate bonds, there's surely going to be a significant effect on the net interest margin going forward as they have about $1.3 billion of motor vehicle loans previously written at much lower prevailing fixed interest rates than what those loans would be priced at today.
Don't forget - these are their junk bonds (BB+) ... so I guess paying an interest rate hardly above inflation is not really expensive.
Did they say what they want to use this money for? I assumed (potentially wrong) it is for their Equity release mortgages - and in that case there still should be some margin left for them. I see they currently charge a variable interest rate of 9.5% for their reverse mortgages. A nearly 2% difference between what they pay and what they charge their customers (hey, that's a 20% margin) does not look bad - and don't forget either that Heartland gets a much better security (a mortgage with huge headroom for property prices to fall) then the poor bastards buying Heartlands junk bonds ...
I'd say its a good time to own Heartland shares :) ;
https://www.ft.com/content/abf6b2ff-6abe-416e-8479-d89216cc5f09
"....Average yields on double-B rated US bonds — the top rung of the non-investment-grade ladder, comprising half the overall junk bond market — have fallen to 6.8 per cent from a peak of 7.5 per cent in mid-March, trading close to levels seen in early February.
By contrast, borrowers with weaker ratings have remained under pressure. An index of triple-C and lower bonds tracked by Ice Data Services currently yields 15.3 per cent — down slightly from a high of 15.6 per cent on March 20, but still well above levels from two months ago...."
Perhaps Heartland are being a touch overgenerous towards potential bond investors?
Quote from: BlackPeter on Apr 17, 2023, 12:34 PMDon't forget - these are their junk bonds (BB+) ... so I guess paying an interest rate hardly above inflation is not really expensive.
Did they say what they want to use this money for? I assumed (potentially wrong) it is for their Equity release mortgages - and in that case there still should be some margin left for them. I see they currently charge a variable interest rate of 9.5% for their reverse mortgages. A nearly 2% difference between what they pay and what they charge their customers (hey, that's a 20% margin) does not look bad - and don't forget either that Heartland gets a much better security (a mortgage with huge headroom for property prices to fall) then the poor bastards buying Heartlands junk bonds ...
I'd say its a good time to own Heartland shares :) ;
Interest rate set at 7.51% and they took all the oversubscriptions so yes a 2% margin at this point in time, (against a historic NIM until very recently north of 4%). Thing is floating rates are probably close to a peak so when they start coming down again, hopefully in 2024, Heartland is stuck paying 7.51% for several more years so this bond issue with not help with challenges going forward around maintaining decent margins.
Reducing NIM for American regional banks is getting a lot of airtime on CNBC at present due to the higher deposit rates regionals are having to pay to attract funds. (We're seeing that here with Heartland too)
More talk about how reduced levels of funding will reduce regional's ability to grow their loan book too.
Interesting times (headwinds), for Heartland going forward and I note they have already well and truly underperformed the NZX50 over the last 5 years.
The
Quote from: Basil on Apr 22, 2023, 11:03 AMInterest rate set at 7.51% and they took all the oversubscriptions so yes a 2% margin at this point in time, (against a historic NIM until very recently north of 4%). Thing is floating rates are probably close to a peak so when they start coming down again, hopefully in 2024, Heartland is stuck paying 7.51% for several more years so this bond issue with not help with challenges going forward around maintaining decent margins.
Reducing NIM for American regional banks is getting a lot of airtime on CNBC at present due to the higher deposit rates regionals are having to pay to attract funds. (We're seeing that here with Heartland too)
More talk about how reduced levels of funding will reduce regional's ability to grow their loan book too.
Interesting times (headwinds), for Heartland going forward and I note they have already well and truly underperformed the NZX50 over the last 5 years.
They haven't underperformed the NZX50C.
I doubt their NIM will drop the way they are raising there reverse mortgage interest rate -now 9.5%
Maybe a sign of things to come...
https://www.interest.co.nz/banking/121082/half-year-profit-drops-westpac-nz-bank-warns-worsening-economic-outlook
DIV is heading up though as they cut expenses and its an AUS company which means no matter how badly they are run the AUS GDP over the next 10 years lifts even the leaky boats.....
go the Kangas... ANZ back up to 80 and this leaky boat back to 70....
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WBC/411046/393891.pdf
dazzle them with graphs....
UDC latest result is a indication that HGH will also have increased impairments.....UDC profit down 14% yoy
Quote from: snapiti on May 17, 2023, 06:35 PMUDC latest result is a indication that HGH will also have increased impairments.....UDC profit down 14% yoy
But HGH is a bank - UDC is only a finance company
still apples......one being a cranny smith the other a braeburn, both facing a stormy future.
IMO HGH will have higher impairments happening right now and in the foreseeable future....do you not agree Crackity
I can see $1.35 coming
Quote from: snapiti on May 17, 2023, 07:44 PMstill apples......one being a cranny smith the other a braeburn, both facing a stormy future.
IMO HGH will have higher impairments happening right now and in the foreseeable future....do you not agree Crackity
I can see $1.35 coming
Jeez mate - I suggested it was possible they could go broke and had my head bitten off - so no - everything is as sweet as a pot pourri in the bathroom
Back to reading my copy of Black Swan - it's all good 8)
If you're currently part of the "Disillusioned with Sharesies" brigade - as I am, just ignore the fact that this is a Sharesies podcast - the guy doing the interview is actually from Business Desk.
Quite an interesting podcast - different angle than what we are used to as shareholders, but I found it very helpful, and learned a thing or two I wasn't aware of before.
https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9
Jeff is a good speaker.
Quote from: Untamed on Jun 01, 2023, 05:56 PMIf you're currently part of the "Disillusioned with Sharesies" brigade - as I am, just ignore the fact that this is a Sharesies podcast - the guy doing the interview is actually from Business Desk.
Quite an interesting podcast - different angle than what we are used to as shareholders, but I found it very helpful, and learned a thing or two I wasn't aware of before.
https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9
Jeff is a good speaker.
As already indicated - thanks for the link.
Stock is up a bit today. Must be your link. ;)
As a term deposit holder with HGH I have to say there service is dreadful. Been trying for a month now to call them and have left several call back requests which have not been returned.
Message them via the website or app. Depending on the day of the week and time of day I have messaged, I have usually had a response within 24 hours. If you are wanting to amend your term deposit instructions, I think you can do that yourself - but don't take my word for that.
Quote from: snapiti on Jun 19, 2023, 01:05 PMAs a term deposit holder with HGH I have to say there service is dreadful. Been trying for a month now to call them and have left several call back requests which have not been returned.
Quote from: snapiti on Jun 19, 2023, 01:05 PMAs a term deposit holder with HGH I have to say there service is dreadful. Been trying for a month now to call them and have left several call back requests which have not been returned.
That's simply not good enough. I will not accept that everything including communications must be digital.
You should be able to call your bank during business hours. If you can't then they are not a business that I want to do business with in the future. Appreciate your feedback about it Snapper. Keep us in the loop with how you get on.
I've been using heartland for term deposits for quite a few years now.
The few times I've needed to contact them by phone it's been relatively quick and easy.
I'm not a shareholder but if I was I would want to know why every time my interest is compounding or a term deposit is expiring they always send a letter by post. With the cost of post going thru the roof I'm not sure why the digital bank doesn't just email this information?
Would be helping save the planet and keeping more $ for the shareholders
Is there some legal requirement for the use of post? Anyone know?
Quote from: Basil on Jun 19, 2023, 02:18 PMThat's simply not good enough. I will not accept that everything including communications must be digital.
You should be able to call your bank during business hours. If you can't then they are not a business that I want to do business with in the future. Appreciate your feedback about it Snapper. Keep us in the loop with how you get on.
I can tell you I have sat on the phone for hours in the last month waiting on hold.
I can also say I have left 4 phone request in the last month for a call back and had none.
Today @ 10 am I left a query on Heartlands digital login message system to call me.....I shall post when I get a reply.....none as yet.
Maybe they doing the Te Whata Ora thing and ethnicity matters when you get a call back
https://www.stuff.co.nz/business/132425865/rising-threat-of-bad-loans-pushes-bank-profits-down-for-first-time-in-almost-two-years
Bank profits coming off the boil, combined profit down 13% last quarter with bad debt loan provisioning increasing. Just as well banks can mitigate the effects of thsi with increased net interest margins, but there were two banks that didn't and HGH was one of them. Hmmm...could be some interesting implications for FY24 profitability...
Surely you have a reply by now Snapper ?
as a test I logged into my heartland account then sent a secure message via there link to inquire about opening a PIE term investment, I also left a phone call back message, it took 3 days to get am email reply and still have not received a call back....just not good enough
Great seeing HGH moving back up.Currently their share price has gone through both the 90 day and 180 day moving averages.RSI is also strong.
Their result is due on 24th August.
Wonder if they will pay a 5.5 cps or a 6 cents fully imputed divie.?
Adjusted NPAT within guidance as expected and F24 guidance is for a little more
Seems Jeff is trying to bamboozle us with accounting jiggery pokery
The footnotes are about as long as the body of the report
Whatever we have to keep trusting Jeff eh
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/417247/401666.pdf
Market seems pleased with the outlook considering how weak the economy is.
FY24 say 120m = 16.9 cps, (which is right in line with average forward estimates here) https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Forward PE 10.3 at $1.74. If they can pay 12 cps fully imputed the gross yield is 9.6%.
No way that Jeff fiddles with the provisions and what charges are taken above and below the line to get the results he wants is there Winner ;)
Those forward metrics look okay to me but I find it really difficult to get excited about increasing my exposure to the dreadfully weak N.Z. economy at present.
Hey Basil ....you called it a year ago ...you said EPS would decline in F23
And that's happened .....even the Underlying EPS is down on last year
Think you meant FY23 Winner, thanks. Your observations about if the economy and for example if Dairy is weak it's not good for HGH are also to the fore here. The tide still feels like its going out for the N.Z. economy eh. That said I suppose I need to have a look at how HGH's forward metrics compares to the Aussie banks I follow and go through the motions so here we go.
FY24 forward PE based on average analyst view off market screener
HGH 10.3
NAB 12.5
WBC 11.0
ANZ 11.0
BEN 11.1
BOQ 10.9
HGH a bit cheaper than the others which probably is about right as it reflects the extremely weak N.Z. economy.
Quote from: Basil on Aug 29, 2023, 12:47 PMThink you meant FY23 Winner, thanks. Your observations about if the economy and for example if Dairy is weak it's not good for HGH are also to the fore here. The tide still feels like its going out for the N.Z. economy eh. That said I suppose I need to have a look at how HGH's forward metrics compares to the Aussie banks I follow and go through the motions so here we go.
FY24 forward PE based on average analyst view off market screener
HGH 10.3
NAB 12.5
WBC 11.0
ANZ 11.0
BEN 11.1
BOQ 10.9
HGH a bit cheaper than the others which probably is about right as it reflects the extremely weak N.Z. economy.
And the 'discount' for being on NZX
;underlying profit up 14m
Stock Co up 22m before tax ...say 15m after tax
Jeez, just as well we had Stock Co .....rest of business didn't grow
Well done Stock Co
Got to hand it to Jeff that he doesn't lack ambition.
Ambitious enough to state he wants to double profit within 5 years.
Slow start with eps growth forecast in FY24 to only grow ~ 6% so he's talking about a CAGR of a fraction over 17% for the following 4 years. Gosh, talk about setting yourself a big task!
Final DPS of 6.0c. Happy with that. No update yet on the potential acquisition of Challenger Bank. Guidance for FY24 is Underlying NPAT of $116-122m, which if it can be achieved, would appear to be a good result in a challenging environment. Great result from Stock co.
I agree there is further risk to the downside given the negative sentiment in NZ and in particular the pressures our farmers are facing.
Certainly agree the NZ economy not boosting my confidence at the moment.
Bank jitters still prevail in the North American an markets. Maybe not quite a fair comparison but jitters easily cross borders.
HGL has room to fall a bit more I think in this market.
From Craigs.
We have have upgraded our rating from Neutral to Overweight. HGH is
trading at a higher than average discount to the ANZ sector average PE.
While we still have some concerns around the macro environment we think
this is largely already in the price and HGH's receivables book has shown
good resilience so far to tough economic conditions.
It's that 'macro environment' concerns theta problematic.
I was reading up/ listening to discussions on the Canadian banks over the past few days (don't have the kinks with me now but most likely BNN Bloomberg) and although they don't have the same issues or concerns as the USA banks, being highly regulated like here and Aus, there are headwinds in the sector.
The main Canadian banks share prices have steadily been tracking down the last year or two like the USA counterparts.
Economic factors produce similar factors that can hamper share price growth in Aus/ NZ banks.
Then again it is also quite cyclical.
Probably a bit more downside before it goes up again.
Quote from: lorraina on Aug 30, 2023, 12:20 PMFrom Craigs.
We have have upgraded our rating from Neutral to Overweight. HGH is
trading at a higher than average discount to the ANZ sector average PE.
While we still have some concerns around the macro environment we think
this is largely already in the price and HGH's receivables book has shown
good resilience so far to tough economic conditions.
Love how Craig's and Forbar seem to resort to comparing PE rations to ANZ 'peers' to assess under / over pricing
Seems lazy to me .....pity the world doesn't 'price' everything 'correctly'
Quote from: lorraina on Aug 30, 2023, 12:20 PMFrom Craigs.
We have have upgraded our rating from Neutral to Overweight. HGH is
trading at a higher than average discount to the ANZ sector average PE.
While we still have some concerns around the macro environment we think
this is largely already in the price and HGH's receivables book has shown
good resilience so far to tough economic conditions.
Kudos where its due, any company trading on a forward PE of only 10 and forecasting eps growth of 6% in this dreadful economy deserves respect.
Not only the discount to its peer group but over the years based on my observations HGH's PE trading range is 9.5 - 17.5 and with a gross yield of ~ 9.5% one is being paid handsomely to wait for better economic times and PE expansion to eventuate. I took another look and decided to invest some of my previous profits in HGH back into the company from whence they came. Very good growth in reverse home loans on both sides of the Tasman impressed.
I'm still banking on a dip mid Sept to end Oct -ish. Not because of anything fundamentally wrong with HGH (looking good now) but rather the impact of possible weaker market direction in the US.
Pun absolutely intended..... ;D
A chart of HGH Price/Book ratio over the years
Currently it's at 1.2 which seems about right.
We might even get another period of exuberance and see the multiple go back close to 2 ......share price about 3 bucks then. ........and I can see some selling then and and waiting for another feed in the dish when share price reverts to normal levels.
I note WBC is just over 1 and the smaller Aussie banks are less than 1
FC564AD2-D6A2-460B-A70C-8032ACC3AB3E.jpeg
Yeap price to NTA seems about right. Share price has spent enough time in "purgatory" is how I see it. One other reason for me buying back in is I think on a look through this recession basis we are very close to the bottom of the traditional fear to exuberance range metrics range of 9.5 PE to 17.5. Much better to be buying at the bottom of this range and selling at the top than a simply buy and hold strategy in my opinion.
That said it could be many years before another bout of over enthusiastic exuberance so it's good to see a good post on the other channel by FM noting average broker forecasts for dividend growth FY24 12 cps, FY25 13 cps FY26 14 cps, all fully imputed. Pretty sure it won't play out so smoothly as that, but I think the prospects of modest dividend growth over the long haul are very good. Classic GARP stock with increasing earnings and divvy feeds. Not many good value GARP stocks to choose from so i had to jump back in even if it was probably my most reluctant buy this year lol
Updated my HGH database
This is interesting
- Last 10 years profits have totalled $697m
- Dividends paid have totalled $488m .....payout 70%
- New capital raised has totalled $353m and the DRIP has bought in $106m
- Therefore total new capital has been $459m
Some might say (cynically) that HGH raise capital to pay the dividends
But I suppose that's how high finance works
Book Value / Shareholder Equity is a measure of a company's worth. In simple terms Book Value generally increases by retained profits (profits less dividends) plus changes in capital
Chart below is Heartland's Book Value per share over the years.
Hasn't Jeff done a good job in consistently growing the company by doing what he said he would do.
As noted HGH Book Value has grown by 4.5% pa over the last 10 years. Might seem a bit low but this is mainly due to the high dividend payment
What does mean for the HGH share price? If Price/Book ratio remained constant the share price would increase at 4.5% a year ...not that much and that's why over time the HGH hasn't really boomed (outside of extreme highs and lows a bit steady as she goes)
Of course total return to shareholders includes divies ...meaning TSR over time is going to be that 4.5%pa plus divies .....which have been quite healthy eh
No doubt Jeff will keep on doing what he says he will do .....and that should see the worth / Book Value of compa my steadily growing why decent divies get paid .....but every now he have to get the begging bowl out and ask for some more cash.
DAEF5407-A6BA-4FBE-A1D9-D016E5B327BE.jpeg
Craigs say
Price Target $1.93 (prev $1.96). Rating upgraded to Overweight
Risks
Key upside/downside risks include: 1) macro environment including interest rate changes and business/consumer sentiment, 2) material house price movement, and 3) earnings delivery.
Our Price Target remains based on the average of a fwd PE of 12.0x ($2.14), a target P/BV of 1.1x ($1.67) based on HGH's average forward ROE relative to post-tax Ke, and a target dividend yield of 6.0% ($1.97) reflecting the long-term ANZ sector average. The small reduction in our Price Target reflects recent increases in interest rates/Ke. Our revised Price Target implies a forward PE of 10.8x and a cash dividend yield of 6.3% (8.8% gross yield).
Another excellent Jenny Ruth article. (https://justthebusinessjennyruth.substack.com/p/the-biggest-banking-scandal-that?utm_source=post-email-title&publication_id=1827355&post_id=137682613&utm_campaign=email-post-title&isFreemail=true&r=22u92o&utm_medium=email) She clearly explains the disadvantage Heartland faces vs the 'Big 4' Aust. banks.
Heartland Bank raises interest rate on reverse mortgages to 9.98% ! Crickey they'd be doing okay at that rate !
https://www.interest.co.nz/economy/124752/review-things-you-need-know-you-sign-friday-reverse-mortgage-rate-almost-touches-10
Got to thinking over the weekend with the great election result which companies might benefit?
I think many will but as the economy goes, so goes Heartland so I think HGH should do well from here over the next 3 years. I note the average broker rating is outperform and the average price target is $2.01.
Average eps forecast is 17 cps, (forward PE 10.2 and dividends 13 cps ~ 10% gross yield. I think fully imputed dividends of 12 cps are more likely but that's still 9.6% Gross at $1.74. https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
Those are excellent metrics trading very close to the bottom of the usual PE range of (9.5 - 18) for HGH.
HGH share price down to 166 ....do we blame surging bonds ...or something sinister come out
What were the DRP shares issued at?
Quote from: winner (n) on Oct 20, 2023, 04:21 PMHGH share price down to 166 ....do we blame surging bonds ...or something sinister come out
What were the DRP shares issued at?
Come on ... people are always so proud to save money using the DRP, how can you do that to them and spoil their sense of achievement?
From a personal point of view ...
I found that buying (any) shares at DRP prices is more often bad for me than good. Don't do the DRP thing anymore and decide for myself if and when to use the dividends.
At least this means that I have to blame only myself if it doesn't work out :) ;
Basil buying has spooked the market....lol
Except for the inconvenient truth, that I haven't been buying and hold only a modest < 4% portfolio allocation.
Looking at the depth on the buy side there does seem to be almost a complete lack of support.
Quote from: Basil on Oct 16, 2023, 09:36 AMGot to thinking over the weekend with the great election result which companies might benefit?
I think many will but as the economy goes, so goes Heartland so I think HGH should do well from here over the next 3 years. I note the average broker rating is outperform and the average price target is $2.01.
Average eps forecast is 17 cps, (forward PE 10.2 and dividends 13 cps ~ 10% gross yield. I think fully imputed dividends of 12 cps are more likely but that's still 9.6% Gross at $1.74. https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
Those are excellent metrics trading very close to the bottom of the usual PE range of (9.5 - 18) for HGH.
After reading your post I thought you would be buying.\
Wrong again..lol
Been to busy buying Turners shares, HGH might be next lol
I've been off HGH ever since they expanded operations / pivoted to Aussie. At these levels - a one year low - I'm thinking it may be a good time to get back in, although I still have doubts about their ability to hold dividends and about the whole macro banking environment. Very tempted though...
Chart looks like a very ugly duckling. Lot of technical damage being done here :(
Down 9.5% from $1.68 last Tuesday to $1.52 in just 5 trading days ! :o WTF ?
I kind of thought when I exited that the SP would be in the doldrums for some time, but I didn't think it would drop off this badly. A lot of selling pressure and I don't see much support either. Hard to pick the bottom at any time but it can't go much further. Can it?
Got into the low $1.30's, around this time of year, a few years back on recession fears. I backed up the truck then. Been a bit of eps growth since then but on the other hand the 10 year treasury rate is a lot higher now than it was back then, so those two factors probably come close to balancing each other out.
Low $1.30's, you would think that's some sort of floor, surely ? Strange market though, not much support for stocks at this point..
We're about 10,700 on the NZX50...I expect a test of the 10,000 level in due course. Wars / geopolitical factors and the highest global 10 year Treasury rates since the GFC are weighing very, very heavy on the market. I don't expect any relief on those issues in the near term.
At today's share price I feel lucky I sold a few to pay for a "few extra" 2CC early this month.
I guess I may be able to buy them back a little cheaper when I get the 2CC divie in December.?..lol
Whose going to or joining in the hui this week
Jeez, Challenger Bank Directors going to be well paid eh
And nice the Chair of the newly formed Sustainability Committee is to get $20,000 of the huge increase in Directors Fees
I've voted NO against Directors Fees and NO to re-elect our Greg .......good guy but done his stint and Board needs less old white guys no matter how smart they are.
Crikey you would vote against Warren and Charlie...lol
Our Gregg is still using his brain.He has attracted the incredible CEO Simon Limmer to his Indevin business.
Quote from: lorraina on Nov 06, 2023, 09:07 AMCrikey you would vote against Warren and Charlie...lol
Our Gregg is still using his brain.He has attracted the incredible CEO Simon Limmer to his Indevin business.
Needs to get grumpy with other Oceania directors and management
I would expect he is..
However with his history he most probably knows the business and sector better than us mugs.
Would also expect he has more patience too.
Westpac NZ report full year that NIM up 11 basis points but impairments came in at $135m (pcp a benefit)
Suppose Jeff will confirm F24 guidance at the hui this week
Anybody going to or tuning in to the hui tomorrow?
I will be tuning in.
Yea, I will be there. What about you Winner?
Read the presentations, (except the Te Reo parts). Nothing new in there.
Hope the sausage rolls are hot for those who put in the effort to attend.
Has anyone posted a question online?
I'm watching online....Does Greg always speak like this or is there some sort of issue? Is he stumbling due to having difficulty reading? Or is he reading it for the first time? Or maybe there is an issue with the streaming. It's hard to work and listen to this at the same time...
Quote from: Ferg on Nov 09, 2023, 02:28 PMI'm watching online....Does Greg always speak like this or is there some sort of issue? Is he stumbling due to having difficulty reading? Or is he reading it for the first time? Or maybe there is an issue with the streaming. It's hard to work and listen to this at the same time...
better businessman than speaker, no doubt.
ASM presentation
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/421386/406823.pdf
Claiming 40% of Aus reverse mortgage market
Targeting AU Bank registration (via Challenger Bank acquisition) to be complete late 2023 or early 2024..... much depending on this it seems.
Quote from: Ferg on Nov 09, 2023, 02:28 PMI'm watching online....Does Greg always speak like this or is there some sort of issue? Is he stumbling due to having difficulty reading? Or is he reading it for the first time? Or maybe there is an issue with the streaming. It's hard to work and listen to this at the same time...
Quite a few voted against his reelection, even more against the whopping increase in directors fees.
Can't help wondering from the tone of speeches if the current level of dividend is safe in regard to the investment required for expansion in Australia.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/421394/406844.pdf
Lot of virtuous ESG signaling in the Chairs address http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/421386/406825.pdf (see sustainability section) including some really questionable policies around ESG based lending criteria, for example, phasing out lending on diesel passenger cars. Then Jeff bemoans softer conditions in motor vehicle finance in the first quarter. Talk about scoring an "own goal"
I do believe a lot of the ESG nonsense going on in companies today is just box ticking for the sake of being seen to be environmentally friendly, but it comes at a real cost to the business. That cost goes like this for the example provided. I am sure Turners Oxford Finance will be more than happy to accommodate the lending needs of those wanting to buy diesel cars.
Nearly 10% NO vote is unheard of for the re-election of such a high profile well respected Director
Obviously not just me who sent the message change is needed at Board level.
2024 forecast looks good. Concern re adequate funding of Aust bank. Will it be another stockco with a CR.
Quote from: Basil on Nov 09, 2023, 05:07 PMphasing out lending on diesel passenger cars. Then Jeff bemoans softer conditions in motor vehicle finance in the first quarter. Talk about scoring an "own goal"
I saw this too and thought it was a bit weird. How would they know or not if the diesel truck was to be used for solving climate change? Or for some other purpose that benefitted mankind? It shows the naivete of such a simplistic approach and that business will be picked up by someone focusing on making money. It's not HGH's job to save the world.....
Other forms of lending now being run through their B.S. ESG criteria maceration process too and now the board are being paid a total of $2.4 million, (up 50%) to come up with this wonderful sanctimonious virtue signaling. Just "brilliant"
Challenger Bank requires a seperate independent board to meet Australian banking regulations. The increase in director fees will also cover this cost increase.
Regarding Greg's speaking style. I think he has a slight stuttering impediment which he handles very well and should be respected for having the courage to speak publicly.
Quote from: SCOTTY on Nov 09, 2023, 09:37 PMChallenger Bank requires a seperate independent board to meet Australian banking regulations. The increase in director fees will also cover this cost increase.
Regarding Greg's speaking style. I think he has a slight stuttering impediment which he handles very well and should be respected for having the courage to speak publicly.
Thanks Scotty, well put. Greg certainly performs well when its off the cuff and unscripted, I just get the sense he isn't a natural reading scripted comments. Regardless, his business & investment track record puts all of us to shame.
The incremental fees attributable to Challenger / getting an ADI only will be made if the acquisition is successful - if not, those itemised fee increases won't happen.
Re the ESG stuff - its not my cup of tea and grates on me too. I must zoned out the bit of not lending to diesel cars - not pleased about that and will express that to mgmt and the board. But, I rationalise most of the ESG stuff as a cost of maintaining heartland's social license. RM's are a good financial product but not without some historical controversy. Obviously its a specialist product and HGH does a fine job in lending responsibly, but there is probably an additional cost associated in being seen to be a good corporate citizen to assist with its profile. Or maybe its "heartfelt" - good question & dunno.
Quote from: winner (n) on Nov 09, 2023, 06:24 PMNearly 10% NO vote is unheard of for the re-election of such a high profile well respected Director
Obviously not just me who sent the message change is needed at Board level.
Just like a pilot in ze Luftwaffe, a director's role at Heartland eez a lifetime appointment. The only deeference being duration. Ze average lifetime over Vorld Var Vone of ze pilot being considerably zhorter.
I leezened to Tomlinson's re-election rant. Vanted to hear vhat he had to offer vor ze vuture, but heard an historical treatise of fantasy and eemagination. Zome rubbish about zupporting ze company via capital raisings (vouldn't all good zhareholders do that) and owning 10% of eet? But then I checked out the largest zhareholder, Harrowagte Trust, and vound out that eendeed - this eez Tomlinson - and vhat he vas telling us vas true!
Zo I have new respect for Tomlinson, and a new theory on the Tomlinson vote. Tomlinson voted heez 9.67% stake
against heez own re-election as a test of vider support amongst the zhareholder base. The vact that, despite this, he achieved a 90% vote 'in vavour' in the ze final count, zhows almost universal approval among other zhareholders! The vinal count, a brilliant landzlide acclimation for Tomlinson's re-election.
RB
I think Greg Tomlinson is a breath of fresh air.
We shareholders are very lucky to have him as both a major shareholder and Chairman.
HGH's strategy has been clearly signalled,is on track, and concentrating on core products ,Reverse Mortgages,Motor vehicle finance and stock finance, the future both here and Australia looks exciting.
Bring on The Challenger Banking Licence.
Seems Heartland given up on the word 'fintech'
Is 'fintech' out of vogue in the investing world these days ........ or doesn't it translate into Te Reo Maori
Quote from: winner (n) on Nov 11, 2023, 07:59 AMSeems Heartland given up on the word 'fintech'
Is 'fintech' out of vogue in the investing world these days ........ or doesn't it translate into Te Reo Maori
Pleased to see "fintech" fade from HGH's lexicon. Seemed like a BS VC word to try and sell ventures with no discernible way of generating a profit from their business model.
Quote from: SCOTTY on Nov 09, 2023, 09:37 PMRegarding Greg's speaking style. I think he has a slight stuttering impediment which he handles very well and should be respected for having the courage to speak publicly.
Winston Churchill too had a speech impediment and look what he did...erased half of London, eh RB.
Quote from: lorraina on Nov 10, 2023, 11:42 AMI think Greg Tomlinson is a breath of fresh air.
We shareholders are very lucky to have him as both a major shareholder and Chairman.
HGH's strategy has been clearly signalled,is on track, and concentrating on core products ,Reverse Mortgages,Motor vehicle finance and stock finance, the future both here and Australia looks exciting.
Bring on The Challenger Banking Licence.
When do we get news on that? I bought in the last CR, I am starting to think it is a good time to buy based on divs alone.
When ever Reserve Bank of Australia [and RBNZ] agree to grant them a licence.
All HGH can do is work with the regulators,which they are doing.
Could be next week or next year,or maybe even further away.
This is an odd ball ie a NZ Bank wanting to operate in Australia.Usually the other way round.
Therefore as a first,I expect the RBA will not hurry to grant it.
However with HGH so big in the Australian Reverse mortgage market I would think RBA would like their parent HGH to be a registered Australian Bank.
They'll need capital to grow the Challenger bank if / when the regulators approve it.
HGH may do a capital raise so that's maybe what's overhanging the SP at present and / or they may need to do a dividend reset like GNE have done. Maybe dividend hounds don't trust average broker dividend forecasts for the next 3 years of 12, 13 and 14 cents ?, (I know I don't).
Maybe with the economy so weak investors think delinquent loans are going to skyrocket or maybe investors think at the bottom of the cycle, like it has before this should trade on a forward PE of only 9, (9 x 16 cps forecast for FY24 = $1.44.
Whatever the reason(s), HGH SP is well and truly in the dog box for now. How long will it stay there you are probably wondering. I wish I had some insight to share, I don't so it's a question of how long is a piece of string?
I wonder if there is an announcement of banking license approval whether that's the catalyst for a share price recovery or maybe that has little effect until there's a lot more clarity around actually seeing the eps benefits and or about how they are going to fund the growth and what changes to their dividend policy if any.
The market has always disliked uncertainty, we know that for a fact so I guess clearing up the uncertainty must help to some degree.
Quote from: Basil on Dec 03, 2023, 01:14 PMThey'll need capital to grow the Challenger bank if / when the regulators approve it.
HGH may do a capital raise so that's maybe what's overhanging the SP at present and / or they may need to do a dividend reset like GNE have done. Maybe dividend hounds don't trust average broker dividend forecasts for the next 3 years of 12, 13 and 14 cents ?, (I know I don't).
Maybe with the economy so weak investors think delinquent loans are going to skyrocket or maybe investors think at the bottom of the cycle, like it has before this should trade on a forward PE of only 9, (9 x 16 cps forecast for FY24 = $1.44.
Whatever the reason(s), HGH SP is well and truly in the dog box for now. How long will it stay there you are probably wondering. I wish I had some insight to share, I don't so it's a question of how long is a piece of string?
I wonder if there is an announcement of banking license approval whether that's the catalyst for a share price recovery or maybe that has little effect until there's a lot more clarity around actually seeing the eps benefits and or about how they are going to fund the growth and what changes to their dividend policy if any.
The market has always disliked uncertainty, we know that for a fact so I guess clearing up the uncertainty must help to some degree.
Jeff would be in dog box if he cut dividend .......and did another decent capital raise
Probably about fairly priced at the moment ...or not a real bargain ........high divie payout % is a drag on share price over time ...but then a punter can't have it all ways
They will need to do a capital raise to set Heartland /Challenger Bank Australia on the right course.
Whether before or after the RBA have granted them a licence.?
I expect RBNZ will have some say input too.
Agreed and that's possibly what's overhanging the share price now but also the prospect of dividends not growing for several years or, ouch, even a dividend reset. That said, in the medium term once this new Challanger bank is established and growing nicely, I like the prospects for dividend growth.
New capital .....another $200m like a while ago? Or more? Maybe less?
Some punters might get a bit tired/wary of filling the begging bowl again
Jeff will need to have a very good story .... Not forgetting to include the magic phrase eps accretive
Lower cost of funds,more opportunities driven by RELs,StockCo, and in future vehicle lending.
All areas HGH have expertise.
We must remember why HGH was formed in the first place,and obtained a banking licence. Lower cost of funds.[retail]
ps.I guess I am like most HGH investors in taking a little off the top, in advance of a capital raise..
Quote from: winner (n) on Dec 03, 2023, 04:24 PMNew capital .....another $200m like a while ago? Or more? Maybe less?
Some punters might get a bit tired/wary of filling the begging bowl again
Jeff will need to have a very good story .... Not forgetting to include the magic phrase eps accretive
eps accretive is the sexiest phrase in the investor lexicon. Unsurprisingly, investment bankers and companies that hand around the begging bowl on a regular basis already know this. Sigh....if only, (in colloquial terms), this dirty pillow talk was always true. I am sure we can both vividly recall how both OCA and ARV have used the excitement of eps accretive talk in conjunction with handing around the begging bowl and look how "wonderfully" that's worked out for their shareholders! Hope its not the case with HGH but the reality is there hasn't been all that much eps growth in recent years, (if you add back all the one-off exceptional items they exclude below the line). Maybe that's the real reason the share price is in the dog box?
Quote from: Basil on Dec 03, 2023, 05:52 PMeps accretive is the sexiest phrase in the investor lexicon. Unsurprisingly, investment bankers and companies that hand around the begging bowl on a regular basis already know this. Sigh....if only, (in colloquial terms), this dirty pillow talk was always true.
HGH reported EPS F21 was 14.9 cents
Raised $200m during F22 and on weighted number shares basis it went to 16.1 cents
But when all the new shares were counted over a full year F23 EPS was 14.0 cents
The magic of accretion eh
Big Deloittes Top 200 Awards dinner tonight ......everybody dressed up in their best gear etc etc
Finalists in the 2degrees Best Growth Strategy section are
Heartland
Comvita
Scales Corp
Jeez, tough call ...who'll get the bragging rights
COMVITA won Best Growth Strategy (heartland 2nd) at last nights Deloittes Top 200 Awards
Obviously David Banfield is a smooth talker and does better raves than our Jeff
Oh well, need to try harder Jeff
Incredible......
lol sums up my thoughts.
Quote from: lorraina on Dec 07, 2023, 08:44 AMIncredible......
lol sums up my thoughts.
I didn't want to say I laughed my head off when I heard that
Jeff needs to come up with something like Comvita's POISED FOR TAKEOFF .......and progress their BCorp cert
Reminds me of when Rod Drury won the award for Xero without it ever making a profit and at that time losing tens of million per annum. (Still struggling all these years later) Who are these Muppets that give out these awards and don't they realize that ongoing growth in earnings is what really matters, not how many ESG goals they tick off a checklist.
Who should have won the award? Well, I'd happily nominate Turners which has shown remarkable growth in the years since the very popular Tina campaign started. They won the marketing awards last year, but I'd argue they deserve this accolade as well. Maybe next year when they crack the $50m profit mark.
Hey Basil ....big year for Xero at those awards
Last night the muppets made Xero Company of the Year and the CFO was CFO of the Year
Cool eh
Quote from: Basil on Dec 07, 2023, 09:34 AMReminds me of when Rod Drury won the award for Xero without it ever making a profit and at that time losing tens of million per annum. (Still struggling all these years later) Who are these Muppets that give out these awards and don't they realize that ongoing growth in earnings is what really matters, not how many ESG goals they tick off a checklist.
Who should have won the award? Well, I'd happily nominate Turners which has shown remarkable growth in the years since the very popular Tina campaign started. They won the marketing awards last year, but I'd argue they deserve this accolade as well. Maybe next year when they crack the $50m profit mark.
Anybbody still remembering when Peter Harris won the entrepeneur of the year award in 2017 and one year later the Reserve Bank had to shut down his firm? - Now, this did demonstrate how useful all these awards are.
Though maybe they are useful, something like a red flag? Run for the hills?
Quote from: winner (n) on Dec 07, 2023, 11:28 AMHey Basil ....big year for Xero at those awards
Last night the muppets made Xero Company of the Year and the CFO was CFO of the Year
Cool eh
Who are these sick people?
Quote from: Basil on Dec 07, 2023, 05:58 PMWho are these sick people?
Judges were
Fran O'Sullivan (Enough said)
Jonathan Mason
Neil Paviour-Smith
Ross George
Hinerangi Raumati-Tu'ua
https://top200.co.nz/judges/
Quote from: winner (n) on Dec 07, 2023, 07:13 PMJudges were
Fran O'Sullivan (Enough said)
Jonathan Mason
Neil Paviour-Smith
Ross George
Hinerangi Raumati-Tu'ua
https://top200.co.nz/judges/
Good to see they had appropriate Maori representation on board. On the other hand - the female quota looks a bit thin ...
Quote from: BlackPeter on Dec 07, 2023, 12:27 PMAnybbody still remembering when Peter Harris won the entrepeneur of the year award in 2017 and one year later the Reserve Bank had to shut down his firm? - Now, this did demonstrate how useful all these awards are.
Though maybe they are useful, something like a red flag? Run for the hills?
Similar to the Time Person of the Year. They are usually in jail shortly thereafter lol.
Maybe Taylor Swift https://www.latimes.com/entertainment-arts/music/story/2023-12-06/taylor-swift-time-person-of-the-year-2023-makes-history will be next to be arrested for tax fraud after Shakira lol
Downgrade....... hands up who saw this coming........ but don't worry they are "positioning for the next stage of growth."
Livestock struggling....
https://www.nzx.com/announcements/423497
Heartland has gone through a process of revising its FY2024 net profit after tax (NPAT) guidance to reflect the following:
• short-term operational performance challenges – which have an impact of $8 million to $10 million
• Heartland Bank Limited's (Heartland Bank) proactive response to issues affecting a subset of legacy lending via a post-COVID-19 overlay, a non-cash item – which has an impact of $11.5 million, and
• the expected FY2024 impact on underlying NPAT related to the acquisition of Challenger Bank Limited (Challenger Bank) , positioning Heartland for its next stage of growth (Challenger Bank NPAT) – which has an impact of A$3.5 million.
Heartland now expects NPAT to be in the range of $93 million to $97 million, excluding any impacts of fair value changes on equity investments held and the impact of the de-designation of derivatives. Excluding the impact of the (non-cash) post-COVID-19 overlay and Challenger Bank NPAT, the range is $108 million to $112 million, reflecting Heartland's underlying operational performance. The guidance range was previously $116 million to $122 million, excluding any impacts of fair value changes on equity investments held, the impact of the de-designation of derivatives, and any costs related to the acquisition of Challenger Bank.
Australian Livestock Finance
Livestock prices continued to fall in the first five months of FY2024 due to adverse weather conditions and drought concerns. Many producers destocked or consolidated debt from selling livestock at lower rates, while others retained livestock for longer periods to gain weight and recoup value. The resulting impact has seen growth challenges and compressed NIM for Heartland's Australian Livestock Finance portfolio.
Thanks LF. I have been looking at buying back in, was concerned about the impact of the slow down eventually hitting the banks and of course the drought in Aust. No idea from here. Maybe will take a position early New Year....
No rush now..
what a clanger....cant see the improvements they are touting in the next half given the environment....
wont be rushing in and buying anytime soon....profit downgrades come in 3's
Not much interest on the 'buy side' today.....
Much now resting on the success of their Challenger acquisition. What could possibly go wrong?
Happy not to hold and watching from the sidelines.
My goodness...that's thrown the cat amongst the pigeons. Agree with Snapper, this is a real clanger right out of Left Field.
The size of the new overlay is a real surprise. Costs regarding Challanger are not a surprise to me.
I think what's two ongoing concerns is they make a lot of assumptions about a stronger second half. We'll see. Secondly there seems to be an ongoing drift towards and increasing number of expenses being taken below the line as extraordinary items. i.e the forecast is far from a "clean" result.
It didn't used to be this way in years gone by.
As previously expressed, I remain of the view that the analysts' consensus dividend outlook over the next few years 12, 13 and 14 cps through to FY26 is too optimistic, FAR too optimistic now.
There's also the very strong likelihood of a capital raise in due course to establish Challenger bank on a sound capital footing, which is currently overhanging the market. I'm with others, there's no hurry whatsoever to take a position at this stage. What if downgrades come in three's and this is only the first?
Quote from: Greekwatchdog on Dec 14, 2023, 10:33 AMThanks LF. I have been looking at buying back in, was concerned about the impact of the slow down eventually hitting the banks and of course the drought in Aust. No idea from here. Maybe will take a position early New Year....
No rush now..
However their long term strategy is right in my opinion.
Agree no rush.
Interesting to note quite a few Aussie banks grouped in a tight bunch on a PE of 10.5
HGH before extraordinary items, (of which there are many), now look like doing only about 13.5 cps this year.
13.5 x 10.5 = $1.42. Just as well HGH are going to grow much faster than the Aussie banks in the years ahead and have fewer problems doing so...or are they?...Hmmm
Just a matter of looking at each bank's strategy and deciding for yourself whether they are capable of executing it.
For me HGH know Reverse mortgages,motor vehicle lending and Lives stock lending.The ups and down of the motor vehicle and lives stock lending will continue in future years.
Proactive provisioning / financial engineering (or whatever yoy want to call it) to smooth out earnings over time always comes back to bite the perpetrators on the bum ...... Jack Welch from GE was a master of it but it all turned to custard in the end
There's only one NPAT number to look at now for Hesrtland ...the real one
Trend is
F21. 87.0m
F22. 95.2m
F23. 95.5m
F24. 95.0m say
Good trend eh ....and of course heaps more shares on issue now
So expected F24 EPS (real) is 13.2 cents ....was 14.9 cents in F21 and 16.1 cents in F22
All I can sai hmmmm
Long term holder and continue to add if the price is right.
For me, this result is what I feared when they announced their pivot to Australia at a time when all economies and consumers were under all sorts of pressure. I sold out at that time and haven't got back in since.
So they didn't expect or consider the very things that they are now announcing:
1.A decrease in purchase of new cars
2.Adverse climactic conditions in Australia impacting livestock purchases
3. A tighter deposit market affecting NIM
4.Increased costs from The Challenger Bank purchase.
5.Legacy lending issues impacting bottom line.
All of those could and should have been known or predicted. Poor strategic thinking and appalling timing in making a major organisational change. Now the stakes are very high that the Aussie initiative goes well. If it doesn't then all Heartland have going for them is their reverse mortgages ie eggs in one basket.
Maybe the second half of the year will be better, we'll see. But HGH have gone from a steady growth, high-ish yield stock to something riskier. It should have higher dividends to compensate for that risk, but they will be lucky to even maintain current levels.
The silver lining is that if you buy into the business model, the lower SP might be attractive. But what was that about not buying on a downtrend...
some good posts on here...todays GDP numbers show a slow down is still occuring....will sit back patiently to see how the next 6 months pans out....fully expect no turn around and a much weaker SP in 6 months time
Agree with all of the above, all very well said and frankly I am quite relieved as I was VERY close to buying back in again, so this was a very timely update from HGH as far as I am concerned. It's really disappointing that people paid (literally millions), haven't got more foresight in an economic slowdown and cost of living crisis as Lounge Lizard has so eloquently said. Frankly, less time on their mindless ESG crap and more time with strategic thinking wouldn't go amiss.
In addition, the extra risk of taking a new bank into the market in Australia should be noted as well as the aforementioned probable pending capital raise and ongoing constraint on paying dividends in the medium term to help fund Challanger's growth.
Having now reflected on this a bit more and remembering they have a very high level of "finance company" type lending (which they clearly have been managing in a sub optimal way), and with the additional risks of that and a new bank in Australia, assuming it gets approved, my quick back of the envelope position is I'd want to see a 1 PE discount to the major Aussie banks in that 10.5 PE group so taking Winner's real eps of 13.2 at face value and applying a PE of 9.5 = $1.25 = (my quick back of the envelope price point where I'd start to get interested again). Obviously its not going down there overnight so this can go on the backburner for sometime in 2024 and I'll follow the downtrend on the chart as much as anything else and let that tell me where the bottom is.
Frankly I can understand how holders would feel bitterly disappointed with this kick in the guts just before Christmas.
Must be reading things wrong,
In F22 a Covid overlay of $9.6m was created in case punters couldn't pay
In F23 they said not used so released ...to profit
Now it seems to have miraculously reappeared (using term 'legacy') and it seems to have increased to $16m
Did they stuff up last year or was it case of taking proavtivity too far?
Maybe I do have it all wrong ...Jeff's not always clear in what he writes
Seems to echo Basil comments ...these high paid managers don't have the finger on the pulse and seem surprised how cost of living issues affect punters
Well I see things a little more positively.
Have had a sizeable holding since it first spun out of PGC. All I no is this share has been very good to me over the years. I sold down a chunk some years ago, so mostly a free carry position that I hold. Have also been adding from day one with the DRP. Just the dividend's alone add up over time.
This update was not unexpected especially with the farming in Australia being very tough mainly due to the weather and higher interest rates. Its a downgrade but not a major is how I see it.
I rate the CEO and IF there is capital raise with Challenger I will be participating.
Jeff has stated his ambition to double underlying NPAT within 5 years
• Since 2012, Heartland's NPAT has more than tripled.
• Ambition to continue track record of income growth by doubling underlying
NPAT within 5 years.
Disc Added more this morning
Jeff.......
Geoff died.
The bit about not maximising NIM to be socially responsible was good comedy (end of paragraph below). Regardless, happy to keep holding for long term growth story despite the tide going out short term.
"Rising interest rates in New Zealand and Australia have created a more challenging environment in which to manage margins. Heartland intentionally delayed passing the full impact of these increases onto some borrower customers, specifically in the case of New Zealand Reverse Mortgages and Australian Livestock Finance. While this did not maximise potential NIM, it was considered the socially responsible and more sustainable approach."
Quote from: Mos on Dec 14, 2023, 05:53 PMThe bit about not maximising NIM to be socially responsible was good comedy (end of paragraph below). Regardless, happy to keep holding for long term growth story despite the tide going out short term.
"Rising interest rates in New Zealand and Australia have created a more challenging environment in which to manage margins. Heartland intentionally delayed passing the full impact of these increases onto some borrower customers, specifically in the case of New Zealand Reverse Mortgages and Australian Livestock Finance. While this did not maximise potential NIM, it was considered the socially responsible and more sustainable approach."
C'mon Mos don't ya feel good the benevolent executives used your money to help a few retirees live beyond their means?
Quote from: Mos on Dec 14, 2023, 05:53 PMThe bit about not maximising NIM to be socially responsible was good comedy (end of paragraph below). Regardless, happy to keep holding for long term growth story despite the tide going out short term.
"Rising interest rates in New Zealand and Australia have created a more challenging environment in which to manage margins. Heartland intentionally delayed passing the full impact of these increases onto some borrower customers, specifically in the case of New Zealand Reverse Mortgages and Australian Livestock Finance. While this did not maximise potential NIM, it was considered the socially responsible and more sustainable approach."
Always find the list of excuses attached to a downgrade fascinating ......somewhat surprised a bank would use the "socially responsible" card but I guess they had to add something given they obviously could not see the downturn the country has been in.....unfortunately commentary about how bright the future is nearly always comes after the downgrade excuses....IMO a fair amount of stench attach to the outlook commentary
Quote from: Plata on Dec 14, 2023, 06:19 PMC'mon Mos don't ya feel good the benevolent executives used your money to help a few retirees live beyond their means?
I kind of do. But I feel I shouldn't.
For Bar Review
Heartland Group (HGH) downgraded its FY24 underlying NPAT guidance -20% at the midpoint, a mix of short-term operational headwinds, costs relating to the purchase of Challenger Bank and additional provisioning. The negative 2023 September quarter New Zealand GDP print, released the same day as the guidance downgrade, underscores the risks for HGH in the face of a weakening consumer environment. Material potential upside remains in the form of lowering Australian borrowing costs when HGH completes its acquisition of Challenger Bank, though the uncertain path for the NZ consumer over the coming months leads us to maintain our NEUTRAL rating with a target price of NZ$1.70.
What's changed?
Earnings: FY24 lowered to within new guidance range, later years decreased due to lower forecast receivable growth
Target price: Lowered -15cps (-8%) to NZ$1.70.
NPAT downgrade a mixture of one-offs and ongoing challenges
New FY24 guidance is for underlying NPAT of between NZ$93m to NZ$97m compared to prior guidance of NZ$116m to NZ$122m. The key changes are: 1) the introduction of a NZ$11.5m provision linked to low quality legacy loans in the Motor and Asset Finance divisions, 2) a NZ$8m to NZ$10m negative impact from NIM compression and lower than expected receivable growth, and 3) -NZ$3.5m of expected operational losses from three months owning Challenger Bank. There is an additional -NZ$2.1m (after-tax) of one-off transaction costs relating to the Challenger Bank acquisition.
Modest lending rate increases and competitive deposit market squeezing NIM
HGH's conservative policy on hiking lending rates and increased competition in the deposit market, with competitors no longer having access to the RBNZ's Funding for Lending programme, is hurting its NIM. HGH has limited increases in its lending rates, particularly in its Reserve Mortgage and Livestock divisions, despite upwards pressure from rising deposit rates. NIM is also being suppressed by a decrease in churn in lower rate Motor loans. We forecast NIM to bottom in FY25 before rising as rates moderate.
Completion of Challenger Bank the key focus, timeline pushed back to March 2024
HGH's near-term priority remains the completion of the acquisition of Challenger Bank Australia. HGH had been hoping to receive regulatory approval before the end of 2023. It is taking longer than anticipated and the company is now targeting the end of 1Q CY24. The purchase would grant HGH a deposit takers license in Australia, enabling it to replace higher cost wholesale financing. How quickly HGH is able to lower its cost of funding then depends on the pace it can build its deposit book. HGH expects Challenger Bank to contribute a net NPAT loss of -NZ$3.5m in FY24 but breakeven in FY25.
Downgrade summary
Operational challenges (-NZ$8m–$10m NPAT impact): HGH has experienced a slowdown in receivable growth, particularly in the Motor and Australian Livestock divisions. The slowdown in Motor is linked to generally lower levels of consumer demand for vehicles and a delay in the purchase of vehicles due to the imminent reversal of the Clean Car Feebate scheme by the new coalition government in NZ. The low level of growth in Australian Livestock is due to adverse weather impacts. HGH has also experienced pressure on its NIM from a combination of higher deposit costs and its cautious approach when raising lending rates.
Legacy loan provisioning (-NZ$11.5m): The NZ$11.5m provision is split between Motor (NZ$7.5m) and Asset Finance (NZ$4.0m). HGH has a lower level of confidence in the collectability of legacy loans in this division. These loans pre-date HGH's shift to improve the quality of its loan book. Overall HGH's FY24 YTD annualised impairment expense is 0.35%, consistent with our forecast.
Challenger Bank acquisition (-NZ$3.5m): HGH expects to complete its acquisition of Challenger Bank by 31 March 2024. Challenger Bank is currently loss making and forecast to decrease HGH's NPAT by -NZ$3.5m in FY24, though it is expected to move to breakeven in FY25. In addition, one-off transaction costs incurred in FY24 are expected to amount to -NZ$2.1m.
Earnings revisions
Changes to FY24 earnings are material, though the one-off impacts of the economic provision and Challenger Bank acquisition costs do not flow through to future periods. We modestly reduce earnings expectations in future years due to the softer than expected receivable growth in the Motor and Australian Livestock books, as well as a lower NIM expectation.
inancials: Jun/ 23A 24E 25E 26E
Rev (NZ$m) n/a n/a n/a n/a
NPAT* (NZ$m) 95.9 95.1 124.9 143.0
EPS* (NZc) 13.5 13.2 17.2 19.4
DPS (NZc) 11.5 11.5 12.0 12.5
Imputation (%) 100 100 100 100
*Based on normalised profits
Thanks for posting Greekwatchdog. DPS of 11.5 sounds very good FY24.
Challenger bank is forecast to be profitable FY26 as HB will be moving the reverse mortgage business and stockco into it.
Tomlinson thought the future was bright investing another $10m at $1.80 in the last cap raise.
This is a really material downgrade no question. Further to my comments yesterday it seems they can't get out of their own way with their myopic ESG focus. If funding costs increase, lending rates should also increase to match...its been this way for hundreds of years with banks but HGH think they know better with their "social engineering".
They complain about softness with vehicle lending demand, but they won't lend on a major segment of the market, diesel vehicles because of their naive belief that diesel is dirty, and we need to make another loud, meaningless and sanctimonious ESG statement.
So many items taken below the line it makes my head spin. Even if you ignore all their creativity with all their extraordinary items and to be clear I think they should all be taken as normal expenses, (especially their under provision for bad and doubtful debts on motor vehicle loans)...but running with their highly creative approach and 13.5 cps normalized earnings, HGH closed yesterday at 11.5 times FY24 earnings. (Really about 12.5 times real earnings).
Not very attractive relative to many of the lower risk Australian banks.
Looking further ahead if they can make those extraordinary eps numbers Forbar are forecasting for FY25 and FY26 then the shares are good value on a FY25 PE of only 9. I guess it all comes down to whether you believe they can grow like that in a very soft economy despite them handicapping themselves with their ESG nonsense. https://www.nzherald.co.nz/nz/gdp-fall-shock-finance-minister-nicola-willis-blames-economy-shrink-on-labour/SFP4BBYWWFAF7NQ7YMBNM3O6WE/
HGH predicting a good recovery next half. Hmmm From another paywalled Herald article on the recession.
QuoteIt won't be easy. For many New Zealanders, the next six months will involve a trifecta of tough economic conditions - high interest rates, lingering high inflation and the job and business insecurity of a recession.
Not sure what this means but this bit in BusinessDesk sounds interesting -
So we took great interest in the end of rural services firm Elders' agreement with Bendigo and Adelaide Bank division Rural Bank, where the lender's services were offered through the Elders network.
Rural Bank is paying Elders A$17m to end the deal, which the rural services firm said will free it up to offer a refreshed range of financial services to its customers. That made us muse on Heartland's purchase of PGG Wrightson's finance arm all those years ago, and how the minnow bank has made ends meet in niches such as the rural sector.
In fact, Heartland's purchase of StockCo last year gives it an ongoing livestock finance distribution relationship with Elders, and a spokesperson said the lender continues to work closely with the Australian rural services firm and discuss future opportunities as they arise. A real stirrer might ponder as to whether that included financing a takeover of PGG Wrightson, of which Elders owns 12.3%, having lifted its stake in August.
Quote from: winner (n) on Dec 16, 2023, 06:38 PMNot sure what this means but this bit in BusinessDesk sounds interesting -
So we took great interest in the end of rural services firm Elders' agreement with Bendigo and Adelaide Bank division Rural Bank, where the lender's services were offered through the Elders network.
Rural Bank is paying Elders A$17m to end the deal, which the rural services firm said will free it up to offer a refreshed range of financial services to its customers. That made us muse on Heartland's purchase of PGG Wrightson's finance arm all those years ago, and how the minnow bank has made ends meet in niches such as the rural sector.
On 31st August 2011 Heartland paid $100m vor "PGG Wrightson Finance." Zis vas a vailure vor Heartland. "PGG Wrightson" zubzequently ztrated up their own "GoLivestock" vinance arm, taking the cream vrom the old "PGG Wrightson Finance" business. Does ze Heartland owned "PGG Wrightson Finance" ztill even exist?
Ze Heartland/ PGG Wrightson deal zounds analagous to ze Rural Bank / Elders deal. Zo bad eez zees deal vor Rural Bank, zhat Rural Bank are paying Elders $A17m to end it!
"Elders the rural services firm said will free it up to offer a refreshed range of financial services to its customers."
Zounds like Elders have zeen how zuccessful 'GoLivestock' has been vor PGG Wrightson in New Zealand, and zhey are going to mimic such an arrangement in Australia?
Quote from: winner (n) on Dec 16, 2023, 06:38 PMIn fact, Heartland's purchase of StockCo last year gives it an ongoing livestock finance distribution relationship with Elders, and a spokesperson said the lender continues to work closely with the Australian rural services firm and discuss future opportunities as they arise.
Deed Heartland not learn their lesson vrom purchasing "PGG Wrighson Finance"? It vill be interesting to see vhat 'special arrangement' (eef any) Elders zigns up to vith Stockco. Zees has ze potential to not end vell vor Heartland, eef Elders .'go it alone' on 'vinancing een ze vuture'.
RB
Term Deposit 6.4% for 11 months
That's pretty keen
Still better to own the bank than put money in it eh
That is a pretty good rate Winner. At the moment I am sitting on the fence with investment in HGH shares and TD's. TD interest can be quite good for utilising excess imputation credits at the end of the tax year.
Quote from: Mos on Dec 18, 2023, 03:46 PMThat is a pretty good rate Winner. At the moment I am sitting on the fence with investment in HGH shares and TD's. TD interest can be quite good for utilising excess imputation credits at the end of the tax year.
I'm right there with you on the fence. Shares are on attractive metrics for FY25 IF they can make the 17 cents some brokers believe they can. I have my doubts, plenty of them. Yeap Winner, I got that reminder from them today about that special rate for 11 months and their 7 month rate which was 6.2% from memory. Paying top dollar for those terms that's for sure but they don't want to pass on the costs to borrowers for ESG reasons. Hmmm Maybe they're aiming for
B Corp Certification next year ?
Jeff often has remarked that the prospects of HGH are tied in closely with the state of the economy.
I see the new Govt are forecasting on a per capita basis, (excluding the impact of new incoming migrants) we are forecast to be in a recession for the next 2 years. Gosh that's very grim considering we've been in a recession for most of 2023 already even with record migration!
Doesn't give me any confidence when it comes to getting off the fence and getting back into HGH.
I'm also mindful of a likely fairly significant sized capital raising coming to set up Challenger bank for commencing its operations and its probable effect on the share price and also the fact they will be dividend constrained for many years funding the capital requirements of Challenger as it grows.
Jeff says that 'tied to the economy' quite often and also mentions employment
But as you say it's not looking very rosy is it
Between the government's announcements & the Tsy's numbers, the fiscal outlook is now a bit worse than Nat's own pre-election plan ....and the worrying thing is that there's no clarity on how things will be fixed.
Country stuffed for a few years
And Aussie economy not looking that bright for Heartland either
No doubt about it Winner, its going to take many years to try and fix some of the damage done by the Labour wrecking ball.
Aussie in better shape not that our economy sets a high bar to beat does it !
Quote from: Basil on Dec 20, 2023, 03:57 PMNo doubt about it Winner, its going to take many years to try and fix some of the damage done by the Labour wrecking ball.
Aussie in better shape not that our economy sets a high bar to beat does it !
And a worry is that we can no longer rely on Jeff 'doing what we said we would do'
That mantra is no more
Treasury forecasts pretty dire ..and they were prepared before last weeks poor GDP print
They say -
Unemployment has increased and expected to now hit 5.2%
Wage growth is slowing
That's not good news for Hesrtland
On the other hand dairy prices were up again overnight
Quote from: winner (n) on Dec 20, 2023, 04:55 PMAnd a worry is that we can no longer rely on Jeff 'doing what we said we would do'
That mantra is no more
Yes, I here where you are coming from. The number of so called one-off major items they are taking below the profit line as extraordinary items has never been higher and is getting quite disconcerting. Really stretching the credibility of so called "normalized" profit. Despite a strong GDT auction result overnight HGH busted down through multiyear support at $1.50 to finish at a new multi year low of $1.48
Brought up the chart for the last 6 months, pretty clear downtrend...you'd have to be very brave to be applying new capital here at this point.
HGH share price sharply down ....started to slide when Willis started outlining how gloomy thing were
Closed at 148
Let us know when you are buying again Winner.
posts meant for KPG thread
Chart has three support lines converging on $1.44 though below that is vague around $1.30ish. Who would've thought you need seasick pills to be invested in a bank! The past six years have been a gut wrenching roller coaster for holders, but a bonanza for momentum traders.
Just curious, genuine question (above the pay grade of a semi-retired suburban accountant), can anyone explain in plain english, (not Te Reo or gobbledygook tech speak), what is this "de-designation of derivatives" that they are taking below the line as an extraordinary item ?
Don't all banks use derivatives to manage / hedge risks and isn't the gain or loss on them just a normal operating item ? What am I missing here or is it that Jeff is just trying to pull the wool over our eyes with another way of smoothing the profit ? Extract from most recent announcement follows
QuoteHeartland now expects NPAT to be in the range of $93 million to $97 million, excluding any impacts of fair value changes on equity investments held and the impact of the de-designation of derivatives. Excluding the impact of the (non-cash) post-COVID-19 overlay and Challenger Bank NPAT, the range is $108 million to $112 million, reflecting Heartland's underlying operational performance. The guidance range was previously $116 million to $122 million, excluding any impacts of fair value changes on equity investments held, the impact of the de-designation of derivatives, and any costs related to the acquisition of Challenger Bank.
Quote from: Basil on Dec 20, 2023, 07:46 PMJust curious, genuine question (above the pay grade of a semi-retired suburban accountant), can anyone explain in plain english, (not Te Reo or gobbledygook tech speak), what is this "de-designation of derivatives" that they are taking below the line as an extraordinary item ?
Don't all banks use derivatives to manage / hedge risks and isn't the gain or loss on them just a normal operating item ? What am I missing here or is it that Jeff is just trying to pull the wool over our eyes with another way of smoothing the profit ? Extract from most recent announcement follows
I am not sure Basil, no doubt creative accounting to make the bottom line look better....broke the 1.50 support level, currently one would only buy at current levels if they thought growth was going to return one way or the other
Quote from: Basil on Dec 20, 2023, 07:46 PMJust curious, genuine question (above the pay grade of a semi-retired suburban accountant), can anyone explain in plain english, (not Te Reo or gobbledygook tech speak), what is this "de-designation of derivatives" that they are taking below the line as an extraordinary item ?
Don't all banks use derivatives to manage / hedge risks and isn't the gain or loss on them just a normal operating item ?
Fortunately I think only a tiny fraction of accountants will ever have to encounter hedge accounting, and I don't think there really is a way describe it in plain english though I'll do my best. TLDR: In FY22 HGH recorded a $16.7m accounting gain on a handful of swaps that were retained and not sold/settled in cash - the gain simply reflected a change in accounting classification) and the de-designation is the accounting reversal of that gain in subsequent periods. There is no change in the cash interest received or the cash interest paid. HGH have been hedge accounting for a long time and this is the first time ever the accounting classification for some of them were changed (and was and will continue to be a nil cashflow item). Note that HGH didn't look to include the gain in underlying earnings in FY22.
I did a bit of a write up on it on ST when it happened - post 16128 - or below
https://www.sharetrader.co.nz/showthread.php?8425-HGH-Heartland-Group-Holdings&p=978750&viewfull=1#post978750
Like all banks & financial institutions, HGH funds via shorter term debt but can lend via longer term loans. This causes an interest rate mismatch which is managed economically using interest rate swaps to ensure margin is protected and cash volatility is limited. Hedging is common in a range of industries and you often see a gain or loss on derivatives where they have been settled in cash or as its revalued. But for certain activities, when a hedge is taken out for a specific contract (say to cover the capital borrowed to write a loan) where the principal, duration & repayments are known it is to be taken under hedge accounting rules, which pairs the contracted interest expense to the contracted income (or underlying activity), as there is no need for the hedge to revalue (it retires naturally on repayment). There are strict rules on what qualifies for hedge accounting - the purpose of the hedge and the corresponding activity (IE HGH's borrowing) have to be explicitly documented at the time the hedge is taken out so the accounting between the two can be paired going forward, and going forward the hedge needs to work as documented in order for it to remain qualified for hedge accounting (IE - if you made a fancy new product, documented it, but the outcome deviated for better or for worse it could no longer qualify).
HGH have been hedge accounting for some time but in FY22 was the first time ever where swaps were removed from hedge accounting classification. They recognized a $16.7m gain on interest rate swaps where were used to economically hedge the interest rate risk on fixed rates with terms longer than 12 months. A portfolio of swaps were put into cash flow hedge accounting relationships with their premium saving products, with the underlying risk hedged on 3 month BKBM. Those products are traditionally priced at a margin above 3 month BKBM but the deposit market in FY22 was quite bizarre and banks were able to achieve the margin on premium saver products below zero at various points. This was a very positive, albeit rare and unprecedented, development - and one at odds with the documented strategy put in place for the hedges when they were taken out.
Given the point above, a hard line interpretation of the accounting standard required the cumulative cash flow hedge reserve balance to be recognised in the income statement - this is the start of the de-designation. The balance reflected the present value of the future income benefit these particular swaps would generate over the coming financial years.
This left the company with a number of options, with the primary ones being: settle the swaps (in cash) and enter into new ones and placing those into new accounting relationships (madness given how well in the money the swaps were) or retain those swaps and leave them without an accounting relationship.
As the hedges will provide significant economic benefit to HGH over the coming years ($16.7m) they decided to retain the hedges but leave them outside an accounting relationships. This is because as the derivatives settle in cash, interest income is booked, as is underlying, core operational earnings.
The consequence of there being no accounting relationship is that the derivative has no place to revalue, as the cash flow hedge reserve was taken to the P&L in FY22. Therefore revals must go through the income statement. As it was a rare (first time) accounting anomaly (that happened to work out well) that didn't arise due to say trading derivatives, heartland treated the event as a non underlying gain in FY22, and do not consider its unwind in future periods to be representative of core underlying earnings.
They could have settled the swaps, taken out new ones, and entered those into the accounting relationship and there would be no impact on hedge accounting gains or losses, but the business would be $16.7m poorer in cash for it. There is no change to the cash interest received or the cash interest paid despite the change in accounting policy.
The majority of the gain's unwind was recorded in FY23. Per the FY23 annual report, only $7.7m remains subject to unwind across FY24 and FY25. I'm not sure how it'll be phased but I assume maybe $5m with the tail in FY25.
I think it's very fair for investors to be wary of normalisations and good practice to start at statutory NPAT, give the normalisations a good eye over and only add them back if they are convinced its a bonafide non operating or non-recurring expense. Personally I think the gain in FY22 was a bit of a fluke and so therefor should its accounting reversal. But there is a lot to be said for businesses / industries where you see stat npat, understand it, and leave it alone. A lot of the new accounting rules post GFC (including new expected credit loss provisions and hedge accounting) are good initiatives and make institutions safer but do alter the resemblance of NPAT to underlying cash, and banks were already hard enough to pin down on core cash earnings. Not nearly as bad as retirement villages!
Sorry long post and won't be of interest to many, including possibly accountants lol
Jeez talk of a capital raise made me wonder how our Greg is thinking
Maybe having to pump more millions into both heartland and Oceania after Christmas
Little wonder he hasn't been taking the DRPs ....needs the dollars
Whatever Greg can afford it but I'm sure he rather be spending on other ventures ..or buy a few more horses and have real fun
Brilliant, thanks very much Fiordland Moose. I suspect you are the only one on here that could have explained it that well. Much appreciated. :)
Maybe Greg quite happy taking a long term view of business opportunities but sorry to be limited to a 10% maximum holding in HGH 🤔
Quote from: Basil on Dec 21, 2023, 09:08 AMBrilliant, thanks very much Fiordland Moose. I suspect you are the only one on here that could have explained it that well. Much appreciated. :)
(
All this de-designation stuff seemed to come about after 'discussions' with the auditors a couple of years ago....as they said at the time
In the financial year ended 30 June 2022 (FY2022), Heartland took a one-off gain in relation to derivatives that were de-designated from hedge accounting relationships due to a change in interpretation of applicable technical accounting standards which Heartland was advised of during the audit of its FY2022 financial accounts."
Changed auditors since lol
Quote from: Fiordland Moose on Dec 20, 2023, 10:44 PMLike all banks & financial institutions, HGH funds via shorter term debt but can lend via longer term loans. This causes an interest rate mismatch which is managed economically using interest rate swaps to ensure margin is protected and cash volatility is limited. Hedging is common in a range of industries and you often see a gain or loss on derivatives where they have been settled in cash or as its revalued
Aren't
all ze derivatives 'marked to market' on ze balance sheet at balance date, as market eenterest vrates change (i.e. are revalued by ze market)?
Quote from: Fiordland Moose on Dec 20, 2023, 10:44 PM<snip>
HGH have been hedge accounting for some time but in FY22 was the first time ever where swaps were removed from hedge accounting classification. They recognized a $16.7m gain on interest rate swaps
<snip>
The consequence of there being no accounting relationship is that the derivative has no place to revalue, as the cash flow hedge reserve was taken to the P&L in FY22. Therefore revals must go through the income statement.
<snip>
This was a very positive, albeit rare and unprecedented, development - and one at odds with the documented strategy put in place for the hedges when they were taken out.
'Virst time ever.' 'Vrare and unprecedented'. Zo not reflective of ze business going vorwards (or backvards)?
I have ze zame attitude to hedging adjustments in accounts to zhat of allied vighter pilots crossing ze vestern vront. Both must be 'completely taken out.'
Quote from: Fiordland Moose on Dec 20, 2023, 10:44 PMheartland treated the event as a non underlying gain in FY22, and do not consider its unwind in future periods to be representative of core underlying earnings.
Vhat Heartland theenk, zhould be ze zame as vhat Heartland zhareholders theenk!
RB
Not the sort of outlook we want for the market and HGH,however we have been there before and are still here.!!
the Treasury also opened a box of surprises - detailing a grim economic forecast compounded by inflation, global issues and the cost of building.
Quote from: Red Baron on Dec 21, 2023, 10:39 AMAren't all ze derivatives 'marked to market' on ze balance sheet at balance date, as market eenterest vrates change (i.e. are revalued by ze market)?
The answer depends on the effectiveness of the hedge. Ineffective hedges are put through the P&L whereas effective hedges (that qualify for hedge accounting) go through the Balance Sheet / Cash Flow Reserve account.
Trust me - this is not an area worth spending any time on. Experts could debate this for hours but I have neither the interest or expertise. But you can glean a view of future gains or losses depending on the reserve balance at a point in time, assuming the hedges are closed out at those same rates. The only thing we need to worry about are bonehead decisions like taking a US denominated fixed rate loan and using various instruments to convert it to NZD floating (I'm looking at you Ryman).
Info here: https://viewpoint.pwc.com/dt/us/en/pwc/accounting_guides/derivatives_and_hedg/derivatives_and_hedg_US/chapter_9_effectiven_US/92_introduction_to_e_US.html#pwc-topic.dita_1807123004126092
been on my dividend portfolio watch list for over a year now but I suspected the current macro environment would eventually catch up and give me a better entry point, only issue here is the poor macro environment still has a ways to go and me thinks so one could easily get burnt diving in to early.......shall start to purchase @ $1.35 but get the feeling that there will be better buying in a few months time.
Quote from: snapiti on Dec 22, 2023, 06:30 AMbeen on my dividend portfolio watch list for over a year now but I suspected the current macro environment would eventually catch up and give me a better entry point, only issue here is the poor macro environment still has a ways to go and me thinks so one could easily get burnt diving in to early.......shall start to purchase @ $1.35 but get the feeling that there will be better buying in a few months time.
Agree 100% but just watch the TA, the chart will tell you when a bottom has formed. Logn way to go with the recession in N.Z. and now the RBNZ is given the monocular focus of inflation, you can bet Orr keeps rates higher for longer, (is FAR too slow to bring them down), and there are more serious risks to unemployment rising that the Treasury are currently forecasting.
I backed up the truck a few years ago at $1.30 when the chart said "go". I think there's a very good chance of the same price level happening again. The question in my mind this time though is, will ~ $1.30 be the bottom ?
Some interesting reading for those interested.
https://www.bankingday.com/challenger-red-faced-once-more-in-banking
https://www.reuters.com/markets/commodities/australian-sheep-cattle-prices-slump-el-nino-scorches-pastures-2023-11-29/
https://www.agriculture.gov.au/abares/research-topics/agricultural-outlook/livestock-prices#falling-livestock-prices-reflect-higher-animal-supply
https://www.aa.co.nz/cars/the-indicator/
https://www.businessinsider.com/stock-market-crash-sp500-outlook-returns-inflation-spi-valuations-smead-2023-12
Just some extra thoughts I had this morning on this one for 2024 and beyond that came to mind while out walking my dog. Also mulling over the prospects for the long term outlook for the rest of this decade. There are no guarantees that even if they get the necessary regulatory approvals with the Challenger bank and do the necessary capital raise, that it will be immediately or even in the short term, eps and almost certainly not dps accretive to the company.
It takes lots of time and money to build a brand and whilst it's acknowledged that the Australian authorities have a government guarantee on retail term deposits to a certain level, from vague memory its $250K over there, that doesn't automatically follow that they will build their retail depositor base without substantial investment over time not just in marketing but in systems and human resources also. In addition, I think they could be dividend constrained for quite some years as they need to meet minimum Australian mandated capital requirements.
I'm not suggesting in the medium to long term it's a bad idea, just its impact on eps and dps in the short - medium term, perhaps for as long as the rest of this decade might not be an ideal fit for what some are wanting from their investment. For now, I see HGH as a trader's stock. There will probably be a time to buy it at some stage in 2024, and probably a time to sell it at some stage in 2025 or 2026. I looked this up. 10 years ago HGH were $1.59. There's been some very profitable opportunities to buy and sell it over the years, and some have very skillfully taken advantage of those but buy and hold hasn't worked very well in the last decade and I think trading it will give better returns in the next decade than buy and hold..
Frankly, I really believe the board have lost their way with their excessive focus on all things ESG and Jeff is too ambitious. My level of confidence in the board and management is best described as low. It occurred to me this morning that if they took a more commercial approach with lending and maintaining margins and just let the business grow organically as it was, the dividend growth profile over the rest of this decade could have looked a heck of a lot more attractive than how I presently perceive it. No doubt others will be investing for the benefits Challenger bank will hopefully provide in the medium to long term and I get that, but caution that eps growth is not an absolute certainty.
Another thought was this. Whether shareholders like to admit it or not, a LOT of HGH's lending fits the standard M.O. of a finance company and frankly, I can't see any reason at all to prefer this over Turners, unless this is on really dirt-cheap metrics and then only as a trade. Reflecting on this, I don't have anywhere remotely near the same level of confidence they can grow eps and dps in the same way TRA can for the rest of this decade and they're on quite similar metrics so why bother with this unless its screaming cheap? Buy and hold for Turners, yes absolutely but not for this, its buy at the bottom and sell when the time is right. I'm not going to diversify just for the sake of it either...I'd rather simply have more in a company whose management I have full confidence in. Others will no doubt see it differently and that's perfectly fine.
That's all that came to mind today. Best wishes for 2024 folks.
The Challenger bank if it proceeds will be material with potential upside in lower borrowing costs.
Will be first for a NZ bank in Australia and I'm thinking that when and if the announcement is made that the share price will re rate.
For long term holders the dividend has been consistently good. I have already had more in dividends than the original purchase price. If you look at the share price of $1.45 Fbar in latest note have FY24 EPS of $0.135 and DPS of $.115 which is a fcast PE of 10.7.
Of course there is the prospect of a cap raise but I for one think at the current price it's good buying.
I emailed the CEO just before Xmas about the prospect of a CR and got a quick response saying
"Heartland carefully considers all options to strengthen its balance sheet. The Board's underlying objective is to increase shareholder value. Regarding any capital which may be required to support the proposed acquisition of Challenger Bank, Heartland is considering a number of options."
I do agree that in the short term the divi could well be constrained but I'm sure long term holders will continue to do well and you don't have the tax implications that traders have.
Our Jeff has stated his ambition to double underlying NPAT within 5 years. Sounds good to me.
Disc, have been adding.
Well said Shareguy. Like you, I'm very excited about the future of HGH both here in NZ and as the owner of a Bank in Australia. Kiwis in both NZ and Australia will be keen to support a NZ owned Bank in Australia.
Will Challenger be good for HGH .......discussion is a echo of what might happen when they acquired Australia Seniors Finance in OZ a few years ago.
Seem to have worked out OK
Pretty clear downtrend since $2.50 2 years ago. Beagle's nose for a feed says wait for a P.E. of 9.
9 x 13.5 = $1.21. That metric has happened before in a recession and is a real chance again. Risky business buying in a downtrend.
Quote from: Basil on Jan 02, 2024, 02:12 PMPretty clear downtrend since $2.50 2 years ago. Beagle's nose for a feed says wait for a P.E. of 9.
9 x 13.5 = $1.21. That metric has happened before in a recession and is a real chance again. Risky business buying in a downtrend.
Current downtrend result of rerating ........P/B ratio of about 1.9 down to just over 1.0 currently .....and Beagle sees it going down to 0.9 and then it's cheap/BUY and we all get rich again as multiple expands
Can't help but noticing that TRA has seen decent multiple expansion over last year and P/B near historical highs ........could say becoming quite overvalued and due for a decent rerating down ....unlike HGH maybe a SELL now and buy back say $3.50
HGH/TRA similar financials in consistent ROE and relatively high dividend payout percentage
Be interesting to see how market reacts over next few months.
Price to book is much more relevant when comparing apples with apples, i.e one financial institution with another, but finance is currently only generating a modest part of Turners profits and their real brilliance is in their marketing.
TRA has grown earnings very nicely in recent years. On the other hand, Heartland's eps growth has been disappointing.
Unpacking that a bit more and looking at my standard 5 year analysis period, off Jarden Direct's website, TRA has grown earnings from 26 cents in 2019 to a broker average forecast of 40 cents in FY24, that's a highly impressive CAGR of 9% per annum.
On the other hand HGH has grown earnings from 13 cents in 2019 to a forecast for FY24 of only 13.5 cents, that's less than 1% average growth eps annum!
I would argue that Turners deserves to trade at a significantly higher PE multiple than HGH but it doesn't.
I also think with HGH's recent poor track record with earnings growth they deserve to trade 1-2 PE below their Australian peer group which have grown faster, but they don't. Jeff has a heck of a lot of work to do to achieve his ambitious goals for the future. Maybe if he wasn't so obsessed with all things ESG...
Basil .....you should a sum of parts valuation of Turners
What's the Auto Retail division with its brilliant marketing (and growth) worth and what's the financial part (finance, insurance, credit, property) worth ....assuming different multiples for each part?
Add the 2 parts and you might get more than 5 bucks eh
It's all interconnected so there's no need to make it more difficult than it needs to be.
Woke up this morning and for some reason the saying of "go woke, go broke' came to mind in regard to HGH.
Didn't think any more about it until a few minutes ago watching CNBC and they had a segment on Aust banks and most are up single digits percentage over the last year. Just looked up HGH chart for the last year and oh dear....down from more than $1.80 this time last year. Hmmm... maybe something in that saying.
Craigs latest says
Current trading multiples
At the current price HGH is trading on:
A price-to-book multiple of 1.0x (vs. Aus sector average of 1.4x)
A rolling forwards P/E of 10.0x (vs Aust sector average of 13.9x, with the 4 major banks averaging 14.8x).
A forward cash dividend yield of 7.0% based on 75% payout (vs Aust sector average of 5.7% with an average payout of 77%).
Outperform
Disc Have been buying
Suppose a lot depends on which set of numbers you use for HGH, normalized profit with all the things Jeff is busy stuffing below the bottom line as so called one off extraordinary items or statutory profit before so called normalization.
Got to be careful with average sector comparatives too. Quick look on Jarden's website has PE's for 2023 of ANZ, WBC and BEN all at 11. Barramundi hold ANZ, Macquarie and WBC and I have a lot of BRM so no need for me to replicate direct ownership of Au banks
Rather buy more TRA than HGH, on similar metrics with their much superior eps growth track record and have been doing so. Lost confidence in Jeff and the woke board and management at HGH
My gut says HGH to report disappointing numbers next month. Might be interested at 9 times statutory profit for a trade...that's a fair bit lower SP than here
Quote from: Shareguy on Jan 15, 2024, 06:14 PMCraigs latest says
Current trading multiples
At the current price HGH is trading on:
A price-to-book multiple of 1.0x (vs. Aus sector average of 1.4x)
A rolling forwards P/E of 10.0x (vs Aust sector average of 13.9x, with the 4 major banks averaging 14.8x).
A forward cash dividend yield of 7.0% based on 75% payout (vs Aust sector average of 5.7% with an average payout of 77%).
Outperform
Disc Have been buying
Think there's a danger in comparing multiple of NZ companies v Oz ones (even if dual listed) and concluding it must make them 'cheap'
Doesn't always take into account relative company size, the impact of a much largerASX than NZX, home bias etc etc
FBU great example ....for decades has generally traded at lower multiples than BLD and JXH ....and as such brokers always say they are cheap.
And the averages used by Craig's re Oz banks would be a bit lower if they left CBA out .....they trade on really high multiples
FWIW current Price/Book numbers for Oz banks ranked high to low
CBA 2.6
NAB 1.6
ANZ 1.1
WBC 1.1
HGH 1.0
BEN 0.8
BOQ 0.6
Note CBA the big outlier
Taking into account the factors (size, home bias etc) mentioned above I reckon HGH is priced about right ...maybe a little on high side
No doubt other punters will see it different
QuoteTaking into account the factors (size, home bias etc) mentioned above I reckon HGH is priced about right ...maybe a little on high side
Agree 100% but don't overlook the "woke discount" as well, as they continue to shoot themselves in the foot with their endless pursuit of all things woke. (Probably knocks about another 10 cps off fair value in my opinion).
Quote from: Basil on Jan 17, 2024, 01:02 PMAgree 100% but don't overlook the "woke discount" as well, as they continue to shoot themselves in the foot with their endless pursuit of all things woke. (Probably knocks about another 10 cps off fair value in my opinion).
I'm under the impression that 'wokeness' is a good thing and punters put a premium on good companies
I'M just pleased that they aren't sponsoring that Rugby v Cricket game.
Quote from: Basil on Jan 15, 2024, 05:53 PMWoke up this morning and for some reason the saying of "go woke, go broke' came to mind in regard to HGH.
..
Quote from: Basil on Jan 17, 2024, 01:02 PMAgree 100% but don't overlook the "woke discount" as well, as they continue to shoot themselves in the foot with their endless pursuit of all things woke. (Probably knocks about another 10 cps off fair value in my opinion).
Trying to understand why the woke word has found its way to the HGH thread?
https://en.wikipedia.org/wiki/Woke
Woke is an adjective derived from African-American Vernacular English (AAVE) meaning "alert to racial prejudice and discrimination".[1][2] Beginning in the 2010s, it came to encompass a broader awareness of social inequalities such as racial injustice, sexism, and denial of LGBT rights. Woke has also been used as shorthand for some ideas of the American Left involving identity politics and social justice, such as white privilege and reparations for slavery in the United States.[3][4][5]I'm still wondering......
Leftie ....... Besides the ESG stuff Heartlaand been doing for a while 'wokeness' came to a head with this paragraph at last announcement ....social responsibility and all that - being nice to customers at expense of shareholders -
Rising interest rates in New Zealand and Australia have created a more challenging environment in which to manage margins. Heartland intentionally delayed passing the full impact of these increases onto some borrower customers, specifically in the case of New Zealand Reverse Mortgages and Australian Livestock Finance. While this did not maximise potential NIM, it was considered the socially responsible and more sustainable approach."
Devils advocate here winner... but don't you need to be mindful of these things when growing a business?... it's competing with some established players and need these points of difference to stand out and get market share. Also for clarity I'm totally not into all this feel good stuff, but unfortunately it's part of the game now...
Quote from: Ricky Bobby on Jan 18, 2024, 09:15 AMDevils advocate here winner... but don't you need to be mindful of these things when growing a business?... it's competing with some established players and need these points of difference to stand out and get market share. Also for clarity I'm totally not into all this feel good stuff, but unfortunately it's part of the game now...
Plenty of studies showing that in the long run companies who care about their customers are much more successful than companies seeing to rip them off.
I like successful companies and want them to stay long term successful. If treating customers with respect is called woke, than I do like woke companies.
Quote from: winner (n) on Jan 18, 2024, 08:39 AMLeftie ....... Besides the ESG stuff Heartlaand been doing for a while 'wokeness' came to a head with this paragraph at last announcement ....social responsibility and all that - being nice to customers at expense of shareholders -
.... While this did not maximise potential NIM, it was considered the socially responsible and more sustainable approach."
I appreciate recent comments and I understand terms such as "socially responsible" etc..... trouble is that 'woke' means different things to different people and different things in terms of the context in which it is said.
While I have been critical of HGH from the time of its last badly managed cap raise (around the $1.80 mark if I recall rightly) ...... I wouldn't be calling HGH 'woke.'
Quote from: Left Field on Jan 18, 2024, 11:52 AMWhile I have been critical of HGH from the time of its last badly managed cap raise (around the $1.80 mark if I recall rightly) ...... I certainly wouldn't be calling HGH 'woke.'
It may have something do with them no longer financing vehicles that use diesel - apparently to assist saving the planet. Notwithstanding such vehicles could be employed to help with said task....
The decline and fall of HGH continues. Trading at $1.39 currently - a 23% haircut for those railroaded into the cap raise only 18 months ago. The TA still looks terrible - I see $1.35 or even $1.30 on the horizon. If the divy is cut, or another cap raise is required, then all bets are off as to where the SP goes from there.
I also don't like the look of things in the Aussie agricultural sector where HGH has really gone all in. Climate change is going to make things pretty tough for HGH's number one customer - farmers. The big picture doesn't look good at all in my opinion.
With a lot of rain farmers on East Coast of Australia ,farmers will be trying to build up stock numbers.Ideal for StockCo.
HGH's largest sector is Reverse Equity lending which is continuing its strong performance.
Quote from: LoungeLizard on Jan 24, 2024, 04:07 PMThe decline and fall of HGH continues. Trading at $1.39 currently - a 23% haircut for those railroaded into the cap raise only 18 months ago. The TA still looks terrible - I see $1.35 or even $1.30 on the horizon. If the divy is cut, or another cap raise is required, then all bets are off as to where the SP goes from there.
I also don't like the look of things in the Aussie agricultural sector where HGH has really gone all in. Climate change is going to make things pretty tough for HGH's number one customer - farmers. The big picture doesn't look good at all in my opinion.
Hey ll .."it's 40% haircut from $2.30 just prior to that cap raise
Ouch
Quote from: LoungeLizard on Jan 24, 2024, 04:07 PMThe decline and fall of HGH continues. Trading at $1.39 currently - a 23% haircut for those railroaded into the cap raise only 18 months ago. The TA still looks terrible - I see $1.35 or even $1.30 on the horizon. If the divy is cut, or another cap raise is required, then all bets are off as to where the SP goes from there.
I also don't like the look of things in the Aussie agricultural sector where HGH has really gone all in. Climate change is going to make things pretty tough for HGH's number one customer - farmers. The big picture doesn't look good at all in my opinion.
That's a pretty negative view relying on a small (and partially outdated) number of observations.
But first - I don't think that big picture investing becomes better if somebody watches every cent a share drops or rises ... These things don't matter unless you have to sell at such a point) and stop you to look at the big picture.
Looking at the risk you are higlighting - you are right, Australian agriculture looked 6 months ago like a risk when everybody was worried about the impact of El Nino. Funny thing is that farmers are now restocking their paddocks (and many didn't even destock). While El Nino is a reality, it appears it brought in a warmer world as well more humidity. Sure - can all go pearshaped in future, but this is not different to the way it always was (i.e. not a higher or new risk).
You forgot as well their bread and butter business: Reverse Mortgages. As far as I know are they the largest player in this discipline in Australia. Good business to be made - and quite decoupled from what the climate is doing.
Investing is always a rollercoaster ride ... if you make a big fuzz out of every down turn and every rise you loose the view for the important things ... and so far was HGH both a reliable dividend payer and it provided over time as well nice share price appreciation despite some moaners liking to complain about every down and every risk. I think I bought my first shares of them for something like 70 cents (They changed the ticker and I the broker, so too much effort to find the records).
Unless you never invested in HGH - what has changed? The TA is relevant only for traders ... and the weather was always unpredictable ...
Quote from: BlackPeter on Jan 24, 2024, 04:53 PMThat's a pretty negative view relying on a small (and partially outdated) number of observations.
But first - I don't think that big picture investing becomes better if somebody watches every cent a share drops or rises ... These things don't matter unless you have to sell at such a point) and stop you to look at the big picture.
Looking at the risk you are higlighting - you are right, Australian agriculture looked 6 months ago like a risk when everybody was worried about the impact of El Nino. Funny thing is that farmers are now restocking their paddocks (and many didn't even destock). While El Nino is a reality, it appears it brought in a warmer world as well more humidity. Sure - can all go pearshaped in future, but this is not different to the way it always was (i.e. not a higher or new risk).
You forgot as well their bread and butter business: Reverse Mortgages. As far as I know are they the largest player in this discipline in Australia. Good business to be made - and quite decoupled from what the climate is doing.
Investing is always a rollercoaster ride ... if you make a big fuzz out of every down turn and every rise you loose the view for the important things ... and so far was HGH both a reliable dividend payer and it provided over time as well nice share price appreciation despite some moaners liking to complain about every down and every risk. I think I bought my first shares of them for something like 70 cents (They changed the ticker and I the broker, so too much effort to find the records).
Unless you never invested in HGH - what has changed? The TA is relevant only for traders ... and the weather was always unpredictable ...
I think an 18 month continual downtrend isn't a blip. The hint is in the word "trend." HGH has been out of favour ever since the cap raise - I said at the time that the pivot to OZ was really risky and so it has proved to be - both with the financial effect and with market sentiment.
Yes, sure things can and turn around but when warning signs appear on the dashboard you can either do something or you can do nothing. I prefer to do something. That isn't trading, it's just being pro-active. I sold out completely and I'm waiting until things get better. But I think they will get worse before they do. Yes, investing is a roller coaster ride, but unlike an actual roller coaster, you
can choose to get off it if the ride gets too scary!
Quote from: LoungeLizard on Jan 24, 2024, 05:25 PMI think an 18 month continual downtrend isn't a blip. The hint is in the word "trend." HGH has been out of favour ever since the cap raise - I said at the time that the pivot to OZ was really risky and so it has proved to be - both with the financial effect and with market sentiment.
Yes, sure things can and turn around but when warning signs appear on the dashboard you can either do something or you can do nothing. I prefer to do something. That isn't trading, it's just being pro-active. I sold out completely and I'm waiting until things get better. But I think they will get worse before they do. Yes, investing is a roller coaster ride, but unlike an actual roller coaster, you can choose to get off it if the ride gets too scary!
No need to defend your actions - sometimes I get off as well when FA and TA look bad.
And while we all can say with absolute conviction afterwards how sensible this was ... I remember as well the times where I got off when the TA looked bad and the trend turned on me short after.
Sometimes it is sensible, and sometimes it is not ... and the only way to distinguish between the both groups is with the benefit of hindsight.
So yes - we all can get off during the ride, but we always hae to pay a fee and sometimes we need to pay a penalty on top to get back on it.
Try to keep track of all your fees for getting on and off as well as of all your penalties for getting off and not quick enough getting back on again. If you add this up and you still make better money than the indices, than you should keep doing what you do.
Otherwise - maybe not.
Here are some interesting stats ...
https://tradeciety.com/24-statistics-why-most-traders-lose-money
... but obviously - we all belong to the 1% of traders who are different :) ;
Anyway - I remember the last long HGH decline, and in that I got off as well (and yes, that did pay off ... I was lucky :) ). This time I didn't. No big deal in my view - as long as the long term perspective of the company (FA) looks healthy - and so far I think it does.
Quote from: BlackPeter on Jan 24, 2024, 05:56 PMNo need to defend your actions - sometimes I get off as well when FA and TA look bad.
And while we all can say with absolute conviction afterwards how sensible this was ... I remember as well the times where I got off when the TA looked bad and the trend turned on me short after.
Sometimes it is sensible, and sometimes it is not ... and the only way to distinguish between the both groups is with the benefit of hindsight.
So yes - we all can get off during the ride, but we always hae to pay a fee and sometimes we need to pay a penalty on top to get back on it.
Try to keep track of all your fees for getting on and off as well as of all your penalties for getting off and not quick enough getting back on again. If you add this up and you still make better money than the indices, than you should keep doing what you do.
Otherwise - maybe not.
Here are some interesting stats ...
https://tradeciety.com/24-statistics-why-most-traders-lose-money
... but obviously - we all belong to the 1% of traders who are different :) ;
Anyway - I remember the last long HGH decline, and in that I got off as well (and yes, that did pay off ... I was lucky :) ). This time I didn't. No big deal in my view - as long as the long term perspective of the company (FA) looks healthy - and so far I think it does.
Well, that's the thing about fortune telling - we can only be sure we are predicting the future in hindsight. Sort of like having a flashback of a premonition. ;D
HGH share price 2 years hit $2.59
Nearly half that now
50% OFF SALE ....BARGAIN ....BUY BUY BUY
Quote from: lorraina on Jan 24, 2024, 04:35 PMWith a lot of rain farmers on East Coast of Australia ,farmers will be trying to build up stock numbers.Ideal for StockCo.
HGH's largest sector is Reverse Equity lending which is continuing its strong performance.
Everything I've read about future Aussie weather patterns is the increasing severity of the drought/flood cycle. And average farm incomes are expected to be down by up to
40% this financial year. That can't be good for HGH can it?
Quote from: winner (n) on Jan 24, 2024, 06:11 PMHGH share price 2 years hit $2.59
Nearly half that now
50% OFF SALE ....BARGAIN ....BUY BUY BUY
Bit like a 50% off Briscoes sale eh lol....but are you better off shopping at K Mart? ;)
Craigs reckon 14 cps this year and say @ a PE of 10 its rated outperform at the current level.
Has traded at a PE of 9 times before in a recession when accounts were not thoroughly messed up with dubious extraordinary items.
Jeff has made quite a mess of things with extraordinary items and nor provisioning enough for bad and doubtful motor vehicle loans. Claims to be proactive in the latest provisioning but the reality is its exactly the opposite, he's reactive and too late under provisioning these matters in a recession.
With all the uncertainty with plans in Australia I see a fair PE as 9, (not 10). 9 x 14 = $1.26.
TA, the downtrend continues. I'm not surprised and while uncertainty hangs thick in the air regarding half year report numbers next month, the level of dividend, the size of the potential capital raise and whether their Australian plans will get regulatory approval, it's hard to see what the catalyst is for the well-entrenched downtrend to change direction. Like all downtrends, they will change at some point, and I look forward to seeing evidence on that with the TA.
HGH could be a BUY at some stage this year.
Jeff should have known better and took heed of the lessons from others in that proactive provisioning / earnings smoothing always come back to bite you on the bum.
Jack Welch at GE was a master of doing ths stuff ...until it all turned to custard for them
Need to use the reported npat and this normalised one .....but Jeff's credibility is now such you have to wonder if there are gremlins in the reported npat
Reality is all provisioning is at best, just educated guesswork based on empirical evidence of the past performance of different classes of loans. If the economy turns to custard like it did in 2023, provisioning is never going to be enough. The market has been wide awake to this and has been marking down HGH's share price for the last 6 months. As Jeff has often said, the performance of the bank is tied to the performance of the economy, or words to that effect, therefore its prudent to be well abreast of the fact that the Reserve bank are expecting very anemic economic growth in the next 3 years, (recessionary conditions on a per capita basis if you take all the immigration out).
Agree, its getting bloody hard to know or trust what the real eps is.
We've had one downgrade...just as well downgrades never come in 3's...oh hang on a minute....
Right time to join the faster growing Australian economy.
I heard Greg Tomlinson wants an Aussie bank so he can start buying Aussie wine companies and similar more easily?..
The usual story playing out with a NZ company expanding into Australia?
When will they ever learn?
Quote from: Teitei on Jan 25, 2024, 09:24 AMThe usual story playing out with a NZ company expanding into Australia?
When will they ever learn?
Heartland have already zuccessfully eggsbanded eento Australia. Remember 'Zeniors Vinance' and reverse mortgages? Vhen a new market gets a taste vor your product, you need to zupply a bigger pie to zatisfy zhat hunger. And at zome point you need a beegger oven to bake zhat beegger pie. Zees eez ze challenge, and now 'non zhareholders' are balking at vunding zees 'Challenger'. Eef you don't like zpendinmg money to make money zhen Heartland eez not vor you, and zhat is vine. Just leave those who do underztand zee business model to get on vith eet!
And vhy zhould you leesten to my opinion? Vell I have 'vront line expertise', vhen eet comes to conquering voreign lands!
RB
Quote from: lorraina on Jan 24, 2024, 07:05 PMRight time to join the faster growing Australian economy.
Always good playing where the grass is greener
The Red Baron nailed it with his international view. Once he sorts the English language he will be a formidable force on this site :)
Red Baron makes me smile...... nice post......
(However..... I'm going to wait on the sidelines till HGH starts winning its AUS conquest.)
RB's posts are easier to read and make more sense than Waltzings
Snoopy is a pretty cool guy
Quote from: winner (n) on Jan 25, 2024, 10:18 AMAlways good playing where the grass is greener
Grass isn't always greener on the other side of the fence. Very dry hot country subject to really terrible climate extremes. Lending to Australian farmers...what could possibly go wrong. Hmmm...
Waiheke Island looks nice and green today.
Cattle numbers.
Australia 24.4 million.
NZ.........6.3 million. which includes Waiheke Island.
Hopefully the posts over on Financial tech make more senese than the posts that arnt on this thread from ...
I still have confidence in the growth plan including Australia. Heartland have doubled the Australian Reverse Mortgage business since acquiring it 10 years ago; not a bad track record. Stockco has less tailwinds and has had a more challenging start under Heartland ownership, but there is not reason it can't be a solid contributor over the long term with a few ups and downs along the way that are part and parcel of agricultural businesses. The Challenger Bank acquisition should deliver long term lower cost of funds and more deposits. The overall track record of delivery over the past decade is better than most NZX listed businesses.
10 year performance. Is it better than the NZX50 Mos?
Some time back from memory with release of FY23 results they boasted that total shareholder return had beaten the NzX50 over the last 5 years from memory by a modest amount but that was when the share price was about $2.
I'm pretty sure it's now a fair bit worse than the NZX50 over the last 5 years. NZX50 itself, a very weak performer and is still well under where it was 3 years ago.
I still therefore maintain the only way to get a decent return from HGH is to trade it.
Quote from: LoungeLizard on Jan 24, 2024, 06:20 PMEverything I've read about future Aussie weather patterns is the increasing severity of the drought/flood cycle. And average farm incomes are expected to be down by up to 40% this financial year. That can't be good for HGH can it?
That's another horrible outlook - and I don't doubt that you read that somewhere, but is it true? and if yes - is this a blib or is it a trend?
If I look at the big picture:
- number of humans on this planet expected to peak between 2060 and 2080 - i.e. still going up.
- last time I checked humans didn't reduce their input of food, and most of it comes from agriculture;
- agricultural prices going up faster than the rest of the goods (well, this is what my wife tells me - and she is always right :) );
... and you are saying farming income is dropping? Makes no sense to me, but maybe you can point us to the black hole eating all this money consumers are willing to fork out for their food ...
Just for clarity - I realise that every year there will be (some) farmers who will have a miserable year. I expect that in some years many farmers will have a miserable year. No idea whether 2024 is one of the first or the second category, and - who cares? But this is as it always was and should not impact on HGH's long term business, and neither should it in my view impact on a long term assessment of the agricutural industry (and their finance).
Farmers supply something essential for humanity, and no doubt farmers will find a way to produce the stuff humans need under any conditions unless we assume humanity will starve. Maybe production costs will go up, but so will prices. And customers will pay for it.
Of course - if you say only Australia is impacted by climate change, then you might be right and its bad business to grow produce in Australia. They just could import the cheap produce from somewhere else, couldn't they? However - here is news for you: Farmers in Europe, in the Americas and in Asia do have issues as well. Too dry, too wet, too windy, too hot, too cold. And don't get me started with Africa ...
Quote from: BlackPeter on Jan 26, 2024, 10:52 AMThat's another horrible outlook - and I don't doubt that you read that somewhere, but is it true? and if yes - is this a blib or is it a trend?
If I look at the big picture:
- number of humans on this planet expected to peak between 2060 and 2080 - i.e. still going up.
- last time I checked humans didn't reduce their input of food, and most of it comes from agriculture;
- agricultural prices going up faster than the rest of the goods (well, this is what my wife tells me - and she is always right :) );
... and you are saying farming income is dropping? Makes no sense to me, but maybe you can point us to the black hole eating all this money consumers are willing to fork out for their food ...
Just for clarity - I realise that every year there will be (some) farmers who will have a miserable year. I expect that in some years many farmers will have a miserable year. No idea whether 2024 is one of the first or the second category, and - who cares? But this is as it always was and should not impact on HGH's long term business, and neither should it in my view impact on a long term assessment of the agricutural industry (and their finance).
Farmers supply something essential for humanity, and no doubt farmers will find a way to produce the stuff humans need under any conditions unless we assume humanity will starve. Maybe production costs will go up, but so will prices. And customers will pay for it.
Of course - if you say only Australia is impacted by climate change, then you might be right and its bad business to grow produce in Australia. They just could import the cheap produce from somewhere else, couldn't they? However - here is news for you: Farmers in Europe, in the Americas and in Asia do have issues as well. Too dry, too wet, too windy, too hot, too cold. And don't get me started with Africa ...
This was the article that prompted my thinking. There are plenty of other stats indicating tough times ahead for Aussie farmers.
https://www.theguardian.com/australia-news/2023/oct/05/australian-farms-expected-to-take-financial-hit-as-prices-dive-and-dry-summer-looms (https://www.theguardian.com/australia-news/2023/oct/05/australian-farms-expected-to-take-financial-hit-as-prices-dive-and-dry-summer-looms)
Quote from: LoungeLizard on Jan 26, 2024, 11:11 AMThis was the article that prompted my thinking. There are plenty of other stats indicating tough times ahead for Aussie farmers.
https://www.theguardian.com/australia-news/2023/oct/05/australian-farms-expected-to-take-financial-hit-as-prices-dive-and-dry-summer-looms (https://www.theguardian.com/australia-news/2023/oct/05/australian-farms-expected-to-take-financial-hit-as-prices-dive-and-dry-summer-looms)
Sure - if you predict the near future from the position of a cyclical high, things always look sour.
I guess depends all on your investment horizon ...
I think the evidence for Global warming is compelling.
Quote from: Basil on Jan 26, 2024, 12:08 PMI think the evidence for Global warming is compelling.
No its not Global warming its climate change, record amounts of snow have been recorded in many places over the last couple of years.
Quote from: BlackPeter on Jan 26, 2024, 10:52 AM- agricultural prices going up faster than the rest of the goods (well, this is what my wife tells me - and she is always right :) );
... and you are saying farming income is dropping? Makes no sense to me, but maybe you can point us to the black hole eating all this money consumers are willing to fork out for their food ...
They tried 'Black Hole', but zhat name did not go down zo vell in ze vocus research groups.
In ze end they zettled on ze name "Woolworths"
RB
Quote from: BlackPeter on Jan 26, 2024, 11:30 AMSure - if you predict the near future from the position of a cyclical high, things always look sour.
I guess depends all on your investment horizon ...
I guess so, but in my opinion HGH have got problems in the short term with profitability, margins and dividends all under pressure, and in the longer term with increasing extreme weather patterns likely to make farming in OZ a very difficult business indeed. The OZ expansion might - might - turn out to be a masterstroke, but there's also a real possibility that it will cripple HGH over an extended time period.
Anyway, I'm no longer a holder. I don't envy those that missed the last train out of town and have been left stranded on the platform, but I suppose if you wait long enough there might be another one eventually...
Quote from: Basil on Jan 26, 2024, 12:08 PMI think the evidence for Global warming is compelling.
Absolutely ... all the scars I got from the deluded climate change deniers on the other channel are evidence for that :) ;
So, yes we agree - climate change is happening, and no doubt it will impact farmers all around the globe, which happens to include as well Australia.
My point was - no matter how difficult farming will become, people still need food ... i.e. at the end it will be the consumer paying for all of the additional costs, not the producer. I see agriculture longterm as a profitable business and financing it will be as well.
Quote from: BlackPeter on Jan 26, 2024, 05:16 PMAbsolutely ... all the scars I got from the deluded climate change deniers on the other channel are evidence for that :) ;
So, yes we agree - climate change is happening, and no doubt it will impact farmers all around the globe, which happens to include as well Australia.
My point was - no matter how difficult farming will become, people still need food ... i.e. at the end it will be the consumer paying for all of the additional costs, not the producer. I see agriculture longterm as a profitable business and financing it will be as well.
No not absolutely because Global warming is the wrong wording and meaning, its climate change.I don't think many people deny climate change is happening its more the influence of the man made side of things that is where the debate comes in.
jeez this is getting sold down.....market somewhat weary of upcoming results.....totally justified IMO
Results will not be great, hard to see any real believable positive spin attached as well.
Long term a good stock to have in your divi portfolio if you get in at the right price
$1.30 the right price for snaps hopefully with a divi attached
Will $1.30 be a good price for Snaps if the divi is no longer attached?
While we are discussing climate change, did anyone here know there was once a rainforest in Otago? Technically we are still in an ice age I believe.
Quote from: winner (n) on Jan 24, 2024, 06:11 PMHGH share price 2 years hit $2.59
Nearly half that now
50% OFF SALE ....BARGAIN ....BUY BUY BUY
Quite right - some people buy stuff when its cheap, and others wait to buy the same stuff when its expensive. Makes them feel better - they don't like to buy cheap. Each to their own.
Just looked at the 10 years performance of HGH. 10yr P/E (based on SP=$1.38) is 11.1; You could say, that's not cheap, but wait - this comes with a Earnings CAGR of 8.3; Looks pretty reasonable priced to me :)
And for whoever trusts analysts forecasts: 3yr forward P/E is 8.2 (this is cheap) and 3 year forward earnings CAGR is still 4.7;
So, yes - analysts expect earnings growth rates to drop (makes sense, it is difficult to keep the growthrate when the numbers get larger), but still - 4.7 CAGR in combination with a 8.2 PE looks still quite sensible priced to me.
Could it get cheaper? Sure, it can. Its just - not everybody can be the first to enter the train when it is already leaving the station ...
Quote from: mike2023 on Jan 27, 2024, 07:32 AMWill $1.30 be a good price for Snaps if the divi is no longer attached?
While we are discussing climate change, did anyone here know there was once a rainforest in Otago? Technically we are still in an ice age I believe.
yep me thinks long term buying @ 1.30 will have it rewards, however many of heartlands finance sectors are going to be facing headwinds for at least another 12 months so SP could be under selling pressure for a while, I am happy to bank a chunk @ $1.30 in the belief there might be some short term pain at this price but long term it's offers good value IMO
Traditionally it is not unusual to see finance/2nd tier lenders to trade at 9 x earning so agree with Beagle that $1.25 to 1.30 is about where this thing sits.
Always thought HGH traded at to higher multiples so pleased I have waited
Quote from: Basil on Jan 26, 2024, 10:44 AM10 year performance. Is it better than the NZX50 Mos?
Some time back from memory with release of FY23 results they boasted that total shareholder return had beaten the NzX50 over the last 5 years from memory by a modest amount but that was when the share price was about $2.
I'm pretty sure it's now a fair bit worse than the NZX50 over the last 5 years. NZX50 itself, a very weak performer and is still well under where it was 3 years ago.
I still therefore maintain the only way to get a decent return from HGH is to trade it.
Spot on Basil .....HGH is a traders dream, Esp if you want decent returns over time avoid the disappointment of the share price regularly falling significantly.
Currently one can see the impact of what happens when they piss the market off and sentiment sours.
Not long ago HGH was valued at 1.9x Book Value when Jeff 'put a word in here' the numbers that got punters excited and it was gung-ho ho
A surprise heavily discounted capital raise and attempts to smooth profits ending in profit warnings its now trading at less than Book Value ....market really pissed off with Jeff and his team.
Whilst loyal shareholders still happy with their yield they are 'less rich' then a while ago ...but no worries still a good yield.
Looking forward no worries either ......that P/B will go up again and share price will again go well over $2
See what I mean in chart
IMG_5624.jpeg
If Heartland was trading today at 1.8x Book (less than a while ago) it's market cap would be $1.88
Current market cap $0.98b
Surely the impact of that discounted cap raise and profit downgrades hasn't 'cost' shareholders nearly a billion bucks ...one could say that
Thanks for the chart mate. Briscoes having a half price store-wide sale. Is that a sign that it's time to buy HGH lol
Quote from: Basil on Jan 28, 2024, 10:56 AMThanks for the chart mate. Briscoes having a half price store-wide sale. Is that a sign that it's time to buy HGH lol
Do they ever remove these sale signs at Briscoes? While I am not a frequent customer of them, everytime I go into one of their shops the stuff I am looking for appears to be on sale.
If that's the time to buy HGH, than it is always a good time to buy HGH ... but maybe this is true ... particularly when the SP of this cyclical is in the lower quartils, which is like - NOW!
No doubt about it BP, that's Briscoes M.O., always quite a lot of things on sale eh, but a store-wide 50% off sale is a little bit uncommon for them. Probably most of the stuff is still cheaper at K Mart though ;)
I think Winners chart is very useful in that it shows just how annoyed the market is with HGH. Only other time in recent years it's been below that yellow normal zone is with the huge Covid dip, but most companies got smashed temporarily in March 2020 so I think we can ignore that dip and attribute that to the exogenous shock of the onset of Covid...and in doing that we need to go back a full decade to 2013-4 when the last time HGH were well under book value.
So on book value and PE HGH does look cheapish, maybe go a bit lower yet but maybe we are somewhere close to the bottom ?
My memory is fading as I get older...what was going on a decade ago that caused HGH to be cheap then ?
Quote from: BlackPeter on Jan 28, 2024, 11:29 AMDo they ever remove these sale signs at Briscoes? While I am not a frequent customer of them, everytime I go into one of their shops the stuff I am looking for appears to be on sale.
If that's the time to buy HGH, than it is always a good time to buy HGH ... but maybe this is true ... particularly when the SP of this cyclical is in the lower quartils, which is like - NOW!
Great buying when cyclicals in the lower quadrants ...can't go wrong
Quote from: Basil on Jan 28, 2024, 12:08 PMNo doubt about it BP, that's Briscoes M.O., always quite a lot of things on sale eh, but a store-wide 50% off sale is a little bit uncommon for them. Probably most of the stuff is still cheaper at K Mart though ;)
Fair enough ...
Quote from: Basil on Jan 28, 2024, 12:08 PMI think Winners chart is very useful in that it shows just how annoyed the market is with HGH. Only other time in recent years it's been below that yellow normal zone is with the huge Covid dip, but most companies got smashed temporarily in March 2020 so I think we can ignore that dip and attribute that to the exogenous shock of the onset of Covid...and in doing that we need to go back a full decade to 2013-4 when the last time HGH were well under book value.
So on book value and PE HGH does look cheapish, maybe go a bit lower yet but maybe we are somewhere close to the bottom ?
Absolutely - and I did not intend to question the usefulness of winners chart in any way shape or form.
Quote from: Basil on Jan 28, 2024, 12:08 PMMy memory is fading as I get older...what was going on a decade ago that caused HGH to be cheap then ?
Don't think there was any special reason - it was just Heartland was just created from the ashes of the old building society - and people had to get used to this finance company turning into a real bank - well, at least on paper :) ;
Great buying at that stage for 50 or 60 cents a share ... and I remember percy doing a dance every time the EPS increased ... and yes, they made a habit out of that. Good old times, that.
As winner would say - Sp goes with EPS, and the rest is history.
Well, having trashed HGH, I would have to agree with the general consensus - if you can get in around $1.30 (and not before) then you probably are going to do alright. Strange though that HGH has gone from a steady-as you-go long term investment to a bit of an opportunistic, traders stock.
One caveat is that imo the next report will be a bit of a stinker. NP and EPS will take a hit and dividends could be cut. There's also the prospect of a capital raise that will go down like a lead ballon with investors along with the SP.
That's why I won't be buying back into HGH just yet- there's more bad news to come I'm thinking.
Have to agree LL, and the chart doesn't give any encouragement
To buy straight away. I have this "silly" thing about not buying in a downtrend. Saved me coming to grief many times before.
$1.30 is merely a line in the sand......
Whether the HGH SP goes higher or lower depends on the next few updates.
Best to be patient and decide when you have the info'.
I am genuinely worried they are going too far with their ESG crap. DYOR but some of the B.S. in the most recent presentation worries me. New ESG criteria for business loans, no lending on diesel vehicles and not passing on the increased cost of funds on some floating rate facilities are 3 examples of things that worry me. Could they even announce they are aiming to be a certified "B Corporation" in 2024?
Quote from: Basil on Jan 28, 2024, 07:03 PMI am genuinely worried they are going too far with their ESG crap. DYOR but some of the B.S. in the most recent presentation worries me. New ESG criteria for business loans, no lending on diesel vehicles and not passing on the increased cost of funds on some floating rate facilities are 3 examples of things that worry me. Could they even announce they are aiming to be a certified "B Corporation" in 2024?
Synlait / Heartland merger eh - solves all problems 🥸
Quote from: Basil on Jan 28, 2024, 05:55 PMHave to agree LL, and the chart doesn't give any encouragement
To buy straight away. I have this "silly" thing about not buying in a downtrend. Saved me coming to grief many times before.
Nothing silly about that! Holders wanting to accumulate, or buyers wanting to get in, would be well informed by the chart. It's screaming "wait".
Quote from: BlackPeter on Jan 28, 2024, 02:45 PMFair enough ...
Absolutely - and I did not intend to question the usefulness of winners chart in any way shape or form.
Don't think there was any special reason - it was just Heartland was just created from the ashes of the old building society - and people had to get used to this finance company turning into a real bank - well, at least on paper :) ;
Great buying at that stage for 50 or 60 cents a share ... and I remember percy doing a dance every time the EPS increased ... and yes, they made a habit out of that. Good old times, that.
As winner would say - Sp goes with EPS, and the rest is history.
The 50-60c was about the time that George Gould sold out. Was a great buying opportunity which subsequent dividends have paid for :)
American regional banks under pressure again. Some pretty sizeable falls . Hope it doesn't lead to another small bank crisis of confidence.
Who cares.?
Will not affect the price of fish in Zanzibar...lol.
Kiwibank listing on cards again?
Shoot the man from from Craig's ....he says if a NZer wants to invest in a bank he has to go the anz, Wbc etc way .....no mention of that transtasman bank hgh
Kiwibank could be a billion-dollar (partially) listed baby
https://businessdesk.co.nz/article/markets/kiwibank-could-be-a-billion-dollar-partially-listed-baby
Paywalled?
Just noticed on Jarden Direct's website HGH was #1 stock bought week before last and #2 last week and yet the shares keep plumbing new multi year lows on solid volume. Hmmm...Institutions selling to retail?
650k traded today and SP down to $1.31. Institutions selling rather than buying I would have thought. Can they hear the drums, Fernando?
Quote from: lorraina on Feb 02, 2024, 10:49 AMWho cares.?
Will not affect the price of fish in Zanzibar...lol.
We'll see. Pretty sizeable fall in the HGH SP since American regional banks started feeling the heat earlier this month. Related ?, coincidence ?..who knows for sure. The possibility of another regional banking crisis with flow on effects here cannot be ruled out in my opinion and is yet another risk to be cognisant of.
Isn't the problem with american regional banks their exposure to commercial real estate loans? I'm not sure HGH has similar exposure and I don't think we're seeing issues with Office and retail space here in NZ on a comparable scale with that they're seeing in some US cities afaik?
Think that's a big part of it but NIM compression another worry. Small banks having to pay up more to get deposit support. Think HGH were complaining about exactly that in their presentation accompanying their recent downgrade.
P.S. Just saw on CNBC this morning despite the S&P 500 being up nearly 5% year to date the regional banking index is down a pretty decent sized drop of 10.5%. HGH is down 11.5% year to date. Coincidence?... you folks be the judge.
Jeez ...weekly close at 128 ...wow
Except for couple of months in covid times this is lowest since the ticker code changed
Unloved big time
Jeff needs to come clean next week ...or else could be close a buck before announcement in a few weeks
Is the Beagle/Basil in for a feed at these levels? You have a good nose for HGH big feeds
"Post-COVID-19 staff turnover, illness and a focus on the core system upgrade (which is now complete) in Heartland Bank's Collections & Recoveries area have resulted in collection efforts being constrained. These challenges are being actively resolved, but coupled with the passage of time, confidence in the collectability of these arrears has been eroded and Heartland Bank considers it appropriate to take a $10.5 million overlay."
What??? They just forgot to nag them for payment on the loans? You would think recovering the loans would take priority over a system upgrade. Do you guys think this is BS or what? This reads worse to me than just admitting they were jumping the gun in releasing covid overlay. EPS shaping up to be ~13.5 cents.... what do they say about catching falling knives again?
I didn't interpret it as BS. Rather it was additional details on loan provisions and they are drawing a line under COVID impacts - IOW they are not expecting any more was my view. System upgrades are often challenging and things can slip through the cracks which as you say is not good. Per the next part of the release:
"Overall, impairments continue to perform within expectations with a YTD impairment expense ratio (annualised impairment expense as a percentage of average Receivables) of 0.35% (1H2023: 0.29%)."
Quote from: Rawz on Feb 09, 2024, 06:22 PMIs the Beagle/Basil in for a feed at these levels? You have a good nose for HGH big feeds
I had a wee dabble in HGH shares last year, not many, only a 4% portfolio allocation. Lost a bit, cut my losses and got out, from memory at just over $1.60.
Are they a good buy now ? I would argue they probably are about fair value now on a fundamental basis. I really thought things were going to go a lot better for them in FY24 and the downgrade was a shocker in my opinion.
9 times about 13.5 - 14.0 cents is about $1.25 but are they really going to earn that much this year and what size capital raise is coming? Bottom picking is a messy business, and the chart looks absolutely terrible. At this point I am waiting for some technical sign that we've hit a bottom. Buying a strong downtrend is very risky. I'd much rather buy a stock at fair value when the chart says a bottom is in and there's some reasonably solid technical indicator like a break back up through the 30 day moving average to support the good value thesis. Sitting on my hands for now and watching the carnage unfold.
Muddying the waters is all the extraordinary items and questions about whether they will get regulatory approval for their stated ambitions.
An excellent post from Muse on the other channel for those that haven't seen it.
Quotedid you read that profit update? there was heaps to not like about it and has set off some heavy volumes this week which I can only imagine is an insto(s) selling down their position....2023 calendar year ave daily volume was about 300k - this week up to 816k. Some of the key things on the minds of many:
* Challenger expected to lose A$3.5m in the 3 month period from 31 March to 30 June 2024. This doesn't include expenses associated with the transaction. Mgmt say "This is expected to transition quickly to a profit-making position as material deposit raising occurs" but I think its fair to be weary on how long it will take to be efficiently & economically raising deposits in Australia in scale. What channel will they quickly raise deposits from? People know HGH in NZ - how are they going to attract depositors in Australia - I would have thought it would take time to build up brand awareness. The company is paying cold hard cash for a business that is presently deeply loss making. I don't think anyone realised what a loss making business this was and mgmt could have done a better job at communicating and taking shareholders along the journey, rather than surprising all with this. This will result in more goodwill being included on the balance sheet, and they already included a whack of goodwill after (in my view) overpaying for StockCo - so goodwill as a proportion of BV is increasing. Should probably be reflected in a lower price/bv multiple.
* The company has lost some credibility in my view regarding provisioning. In post #167222, I talked to how they used up $5.6m of the $8m economic overlay, and did not top it up (and hence why I regarded the FY23 result as a miss to their guidance), and how their provisioning as a % of gross receivables actually fell when one would normally have thought it'd go up with the macro backdrop. It's clear to me that they should have topped up their provisioning last year. and with a potential, and in my view, likely, equity raising coming to support the acquisition of challenger, it raises fair questions of have they provisioned enough, or are they trying to soften the blow in the lead up to the acquisition? I note the extra provisions this year relate to old/historic loans to auto retailers & motor book (nothing written in the last 5 years), so good to see its not happening on the new loans written after they changed lending mix, but still not a good look.
I think they have screwed the pouch a bit.
Had they just provisioned more at 30 June 2023, the market wouldn't have liked it, but it'd would have had time soak in and readjust & re-rate. Or at least include increased provisions in the initial FY24 guidance. They didn't do any of that & went ahead and issued quite bullish guidance and talked a big game of 5 year npat growth, only to have to backtrack on guidance very quickly. It looks naive at best, to me. That has unnerved the market, probably fairly so, and now the SP is tanking right at the time they will probably have to do a decent sized equity raising. It will in my view have to be at a pretty discounted level to get it done given sentiment. If its underwritten it will be quite expensive. And it'll be meaningful - the chit chat is $150-200m, when the marketcap is at about $915m as of today. Given the weak share price and potential size of the issue, it'll be well dilutive particularly for any of those who aren't in a position to take their pro rata. I also wouldn't be surprised to see the stock crash below its theoretical ex price or discounted raising price, like it did during the StockCo placement & rights issue.
So I think there are a few holders like me with that on their mind and thats really impacted sentiment.
I took a bit of risk management action back when I saw El Nino starting to hit the headlines and the share price was pretty strong so I'm thankful for that, but no where near enough. a little bit more after the announcement. I still hold and while I'm cognisant of what I just wrote I sorta can't be bothered to sell anymore as I do think its below its FMV and it'll rebound well after the overhangs are removed (ie, selling at / near the bottom of the cycle often not a wise thing to do), likewise I anticipate the SP to be in a rough patch particularly if an equity raising is required. I'm certainly not buying anymore at these levels, though if a rights issue is announced sorta wont feel like I have a choice given the potential dilution, or wait for as long as possible to see if cheaper to pick up on the secondary market if below the discounted issue price. I'd quite like to do the later. I suspect an insto or two is thinking the same thing.
anyway those are my random thoughts, as of this hour. certainly not advice on what to do or what will actually happen, just reasonably held suspicions on how things could play out.
& edit - as an aside - I do openly wonder if it would become in shareholders best interest for the Challenger acquisition not to proceed, simply as a result of the possible dilution. The AU RM acquisition was a great success. StockCo they overpaid for and I think a lot of their assumptions on its future financial performance have proved faulty (ie, stock lending is an industry where 'things happen' is normal and price should have reflected that). I know getting a banking license is incredibly tough and opens the door to a lot of low cost funding which they can refinance their entire australian business with, but they are effectively already paying for their own involvement (& future upside) by buying so far above book value, taking on all these meaningful transaction losses, absorbing Challengers losses for a period of time (a year?), and then raising extra regulatory capital and working capital to fund it all.
I hope the jr banker at Jarden or whatever investment bank that is giving them advice on transaction structuring and shareholder returns has enough real world experience to address all that stuff. but not hopeful.
Quote from: Basil on Feb 09, 2024, 10:00 PMI had a wee dabble in HGH shares last year, not many, only a 4% portfolio allocation. Lost a bit, cut my losses and got out, from memory at just over $1.60.
Are they a good buy now ? I would argue they probably are about fair value now on a fundamental basis. I really thought things were going to go a lot better for them in FY24 and the downgrade was a shocker in my opinion.
9 times about 13.5 - 14.0 cents is about $1.25 but are they really going to earn that much this year and what size capital raise is coming? Bottom picking is a messy business, and the chart looks absolutely terrible. At this point I am waiting for some technical sign that we've hit a bottom. Buying a strong downtrend is very risky. I'd much rather buy a stock at fair value when the chart says a bottom is in and there's some reasonably solid technical indicator like a break back up through the 30 day moving average to support the good value thesis. Sitting on my hands for now and watching the carnage unfold.
Muddying the waters is all the extraordinary items and questions about whether they will get regulatory approval for their stated ambitions.
I am trying to decide to re enter as well. I am still happy to wait in the sidelines post result. I guess you could say its cheap at these levels, but its cheap for a reason and that slope is quite slippery Mind you, tpugh picking the bottom of these things
Quote from: Greekwatchdog on Feb 10, 2024, 01:59 PMI am trying to decide to re enter as well. I am still happy to wait in the sidelines post result. I guess you could say its cheap at these levels, but its cheap for a reason and that slope is quite slippery Mind you, tpugh picking the bottom of these things
I think it's fair to say it's cheap for a number of good reasons. Muse makes some excellent points. It also hasn't escaped my attention that inclusive of all the
so-called one-off's, their track record with eps growth in recent years has been poor. Their growing obsession with all things ESG as mentioned several times earlier, is something I find quite off-putting. Which is better value, a company growing eps at about 1% per annum in recent years on a forward PE of 9-9.5 or a company growing eps at a CAGR of 7% on a forward PE of 11 ? Speaking of backing up the truck as Rawz hinted at, that's why I backed up the truck and for that matter, the trailer as well, on TRA last year, (subsequently rebalanced on index inclusion).
As you imply, there's a lot of merit in seeing how bad the half year result for HGH is and letting this downtrend play itself out. In the back of my mind is Balance suggesting downgrades happen in 3's. Maybe that's what's going to happen here ? I think every man and his dog thinks there's a sizeable rights issue coming as do I, and its hard to see the shares getting any forward momentum until that's done and dusted.
Half year result on 27th Feb will not be a good one and I'm guessing there will be more selling down ahead of that date. Trust in HGH management has been severely dented and the market is primed to react badly if the result is as bad as it could be - costs up, profits down, divvy cut etc. Even the institutions, for whom the rushed cap raise was meant to favour, have taken a bath and are selling down.
I had thought that $1.30 might be the floor but the Challenger deal has revealed a hidden basement into which HGH are shovelling money. :o
My crystal ball now says an SP of $1.20 could be on the cards, perhaps even $1.10 if things really turn sour in OZ...
$1.26...oh dear, Jeff's halo has well and truly gone and been passed over to Todd.
Jeff can't seem to do anything right and Todd can't seem to do anything wrong.
Glad I am backing the right horse in this race.
Quote from: Basil on Feb 12, 2024, 03:37 PM$1.26...oh dear, Jeff's halo has well and truly gone and been passed over to Todd.
Jeff can't seem to do anything right and Todd can't seem to do anything wrong.
Glad I am backing the right horse in this race.
Might be a form reversal over next year
No doubt you prepared to change horses when you have to ..like get off one and jump on the other
1.20 $ today is another bad day It's quite strange how kiwi companies never get going over the ditch .
Its looking bad for a while yet where it will end no one knows .
Harmony more loved at the moment and the sp could be worth more soon if this keeps up!!!
Oh my goodness, did indeed hit $1.20 intraday and closed down another 6 cents at $1.22 That's pretty shocking, Shares are almost in free-fall. They'll be lucky if they can raise fresh capital @ $1 the way this is going. Market has lost confidence in Jeff.
As Muse has suggested above, it didn't feel right when announcing FY23 results that loan loss provisioning was down given the economic backdrop. Obviously had to hit their "normalised" FY23 target so Jeff could get his annual bonus. Subsequent creative talk about how they're being prudent to recently provide extra loss provisioning comes across as complete B.S. They simply didn't provide enough in the first place and have been caught out. Credibility of Jeff is now seriously in question...market thinks he's full of it. I think he's far to ambitious and he probably needs to go and a straight talker, conservative no B.S. old school banker replacement appointed. HGH incl all their so-called one-offs has had a miserable track record of eps growth over the last half decade. Almost all the Australian banks have done better.
Just a heads up for anybody who is interested learning a bit more about banking and HB in particular.
Leanne Lazarus CEO Heartland Bank will be at the NZ Share Holders, Auckland branch evening tomorrow night.
The theme of the evening is banking and a representative of the Reserve bank, Jess Rowe will also be there.
Grabbed some this morning for the Grandkids thru their sharesies acc.Grandkids range from 2 to 5 years old so hopefully by the time they can access their acc they will be plenty higher.
Quote from: Stockgathering on Feb 13, 2024, 09:04 AMJust a heads up for anybody who is interested learning a bit more about banking and HB in particular.
Leanne Lazarus CEO Heartland Bank will be at the NZ Share Holders, Auckland branch evening tomorrow night.
The theme of the evening is banking and a representative of the Reserve bank, Jess Rowe will also be there.
Leanne Lazarus? Is that a sign Heartland are poised to come back from the dead?
Quote from: LoungeLizard on Feb 13, 2024, 12:34 PMLeanne Lazarus? Is that a sign Heartland are poised to come back from the dead?
I thought maybe you were Leanne ;) LL?
Interesting, low demand for new loans and higher deposit rates squeezing margins. An indication of what's to come for Heartland ? Heartland's loan growth will certainly not be helped by the ridiculous ESG hurdles they make borrowers try and jump over. https://www.nzherald.co.nz/business/asb-announces-11-per-cent-drop-in-half-year-profit/MB3ORBKYQVG3BH2GX3WBCBIR5Q/
Quote from: Basil on Feb 14, 2024, 04:44 PMInteresting, low demand for new loans and higher deposit rates squeezing margins. An indication of what's to come for Heartland ? Heartland's loan growth will certainly not be helped by the ridiculous ESG hurdles they make borrowers try and jump over. https://www.nzherald.co.nz/business/asb-announces-11-per-cent-drop-in-half-year-profit/MB3ORBKYQVG3BH2GX3WBCBIR5Q/
i last bought a few years back at 1.66 and sold a couple of years later at 1.88. They were writing all this stuff in their annual reports i didnt understand and were getting into divirsity hires. Good signals to get out. No regerts on my part.
Quote from: Minimoke on Feb 14, 2024, 05:22 PMNo regerts on my part.
I see what you did there. 😊 No doubt about it mate, they've taken their ESG nonsense to more extreme levels in recent times. "Bankers" eh 😉
Result announcement tomorrow. Looks like the market is expecting a dud.
Quote from: Pierre on Feb 26, 2024, 03:41 PMResult announcement tomorrow. Looks like the market is expecting a dud.
You beat me to it, Pierre. SP at a new 52 week low of $1.19. I've thought for a while now that the half term report won't be a good one. If there's even a mention of a cap raise then the SP will be under serious pressure. Perhaps a buy at that point?
Had an interesting chat with a couple of guys out on my boat a few days ago who attended the recent shareholders association presentation. The lady presenting, Lazarus, was apparently extremely evasive when it came to at least 2 questions from the floor regarding a capital raise to fund the Challanger bank expansion. Pretended even to not understand the question. The clear impression I got from those two gentlemen's report on how things went on the night is there's a capital raise coming, almost certainly. I'm also expecting a very weak first half report. Not holding for some time now but could be interested in a few @ $1.
Quote from: Basil on Feb 26, 2024, 03:59 PMHad an interesting chat with a couple of guys out on my boat a few days ago who attended the recent shareholders association presentation. The lady presenting, Lazarus, was apparently extremely evasive when it came to at least 2 questions from the floor regarding a capital raise to fund the Challanger bank expansion. Pretended even to not understand the question. The clear impression I got from those two gentlemen's report on how things went on the night is there's a capital raise coming, almost certainly. I'm also expecting a very weak first half report. Not holding for some time now but could be interested in a few @ $1.
Last capital raise (the famous $1.80 one when share price was about 225) was announced at time of results
So TOMORROW COULD BE THE DAY
Watch this space
Way share price collapsing TOMORROW US CAP RAISE DAY
SP at $1.16 on high volume. Somethings up (as the actress said to the bishop) ;D
interesting price fall today on good volume, never a good omen the day before financial report
Closed down 9 cents to $1.17, (7.14%) on huge volume of more than 2.5 million shares. Very leaky ship! Bad news coming tomorrow for sure.
$1.15 seemed a get out point for some big punters
Quote from: Basil on Feb 26, 2024, 05:11 PMClosed down 9 cents to $1.17, (7.14%) on huge volume of more than 2.5 million shares. Very leaky ship! Bad news coming tomorrow for sure.
totally agree
Surely an inquiry warranted if there is a CR announced tomorrow and/or dividend suspended.
Quote from: Teitei on Feb 26, 2024, 06:25 PMSurely an inquiry warranted if there is a CR announced tomorrow and/or dividend suspended.
Agree.
Quote from: Teitei on Feb 26, 2024, 06:25 PMSurely an inquiry warranted if there is a CR announced tomorrow and/or dividend suspended.
Agree also, something smells here like three-day old fish left out of the fridge, but any complaint raised needs to be someone who has been affected, i.e. a current shareholder so that counts me out. Not that hard to write up a formal complaint to the NZX requesting an investigation. Go for it.
Quote from: Basil on Feb 26, 2024, 07:02 PMAgree also but it needs to be someone who has been affected, i.e. a current shareholder so that counts me out. Not that hard to write up a formal complaint to the NZX requesting an investigation. Go for it.
I bailed out at $1.78 (checking my record) and took my haircut then! Lucky escape?
Will be interested to get back in if there's a CR depending on the state of the Aussie operations. Have an aversion myself to NZ companies going into Australia to take on the big Aussie players on their home turf.
Writing about dead fish - I forgot about some salmon I bought at the supermarket a month or so ago and left it in the car overnight. That was bad enough - let alone 3 days!!!!!
Quote from: Teitei on Feb 26, 2024, 07:07 PMI bailed out at $1.78 (checking my record) and took my haircut then! Lucky escape?
You're a smart guy, I don't think luck had much to do with it. I sold most of mine in the low $1.80's and cleaned out the rest in the late $1.60's. Probably averaged a very similar price to you. Pleased to be sitting on the sidelines with the popcorn at hand.
It's obviously too much hard work for these "b"ankers to get out of bed and release the information in a timely manner that gives people enough time to digest the news thoroughly before the market opens.
Quote from: Basil on Feb 27, 2024, 09:28 AMYou're a smart guy, I don't think luck had much to do with it. I sold most of mine in the low $1.80's and cleaned out the rest in the late $1.60's. Probably averaged a very similar price to you. Pleased to be sitting on the sidelines with the popcorn at hand.
It's obviously too much hard work for these "b"ankers to get out of bed and release the information in a timely manner that gives people enough time to digest the news thoroughly before the market opens.
Looking ominous for a trading halt & capital raising?
Yes not a good sign. Briefing is at 10.30. I guess they have to change a few figures after the drop yesterday.
Quote from: Teitei on Feb 27, 2024, 09:39 AMLooking ominous for a trading halt & capital raising?
Looks that way mate. Not releasing info by 9.45 is unheard of.
Quote from: Basil on Feb 27, 2024, 09:44 AMLooks that way mate. Not releasing info by 9.45 is unheard of.
Even for a banker
Might have had to wait for ANZ to say Sir John was leaving them ....to help Hesrtland out
Quote from: Basil on Feb 27, 2024, 09:44 AMLooks that way mate. Not releasing info by 9.45 is unheard of.
With the added complication of the sp drop yesterday suggesting there has been a serious leak.
Underwriters for the cash issue now unhappy ?
NZX are going to have to step in here and halt this surely ?
Quote from: Basil on Feb 27, 2024, 09:53 AMUnderwriters for the cash issue now unhappy ?
NZX are going to have to step in here and halt this surely ?
Irrespective, something smells badly.
Half year results announcement date
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) advises that it intends to announce its financial results for the six-month period ended 31 December 2023 on Tuesday 27 February 2024.
A live webcast for investors and analysts will be held at 10.30am NZDT on the same day. Shareholders are welcome to join the webcast. The webcast can be accessed via this link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Z0WoJGvX
So it's trading.....
Well no CR and a divi.
Result will need some digging into, but holders have - seemingly - dodged a bullet this time around. The devil is in the detail though - I'm unconvinced that they are out of the woods despite the optimistic tone.
Buying....
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/426934/413626.pdf
Something in there for everyone. If you accept all the normalizations they do I suppose the result is not to bad but NIM has been tracking down for years and I am unconvinced that trend will change anytime soon.
Absolutely disgraceful they left the information release so late.
Quote from: Basil on Feb 27, 2024, 10:22 AMhttp://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/426934/413626.pdf
Something in there for everyone. If you accept all the normalizations they do I suppose the result is not to bad but NIM has been tracking down for years and I am unconvinced that trend will change anytime soon.
Absolutely disgraceful they left the information release so late.
Yep, the delay is inexcusable and further evidence of something fishy going on at HGH.
I still feel a cap raise is inevitable, once Challenger gets full regulatory approval. It would be tempting to buy in at current levels, but investors got burnt badly with the last raise so it should be a case of once bitten twice shy. Best to stay on the sidelines I feel.
Heartland's ambition is to achieve an underlying NPAT of $200 million and an underlying cost-to-income (CTI) ratio of less than 35% by the financial year ending 30 June 2028 (FY2028).
Divi full imputation with 11 percent yield
Extract from presentation under outlook.
QuoteExcluding the impact of the (non␂cash) increase in provisions for a
subset of legacy lending, and
Challenger Bank NPAT, the
underlying guidance range is $108
million to $112 million, reflecting
Heartland's underlying operational
performance (which is the basis
upon which the underlying 1H2024
results are presented)
So that's unchanged and at the mid point $110m if you accept that the normalization is the result of true one off costs that's 16 cps. Put a no growth bottom of the cycle PE of 9 on that = $1.44. Raised over half a billion dollars on term deposits already with Challenger bank at 1.3% lower than their current cost of funds over there.
No capital raise at this stage but one is probably coming. At some point it's probably appropriate to say, hey, maybe they can pull this off and at the mid 120's, trading cum a 4 cent fully imputed divvy that goes ex divvy next week the risks and rewards appear to be equally in balance.
After reviewing the presentation a bit more I have come to the initial conclusion that I think it's okay to dip one's toes in here so I just did that in a very small way. I'm calling it, I think $1.13 yesterday was the bottom.
Still a happy holder.
Quote from: Basil on Feb 27, 2024, 11:04 AMExtract from presentation under outlook.
So that's unchanged and at the mid point $110m if you accept that the normalization is the result of true one off costs that's 16 cps. Put a no growth bottom of the cycle PE of 9 on that = $1.44. Raised over half a billion dollars on term deposits already with Challenger bank at 1.3% lower than their current cost of funds over there.
No capital raise at this stage but one is probably coming. At some point it's probably appropriate to say, hey, maybe they can pull this off and at the mid 120's, trading cum a 4 cent fully imputed divvy that goes ex divvy next week the risks and rewards appear to be equally in balance.
After reviewing the presentation a bit more I have come to the initial conclusion that I think it's okay to dip one's toes in here so I just did that in a very small way. I'm calling it, I think $1.13 yesterday was the bottom.
That's a fair and measured call there, Basil, and you may well be proved right - the bottom of $1.13 was hit on the fear of no divvy and/or cap raise, so take them off the table plus a better than expected report, a dip-the-toe in buy could be the right response. SP up to $1.25 so obviously some are thinking the same thing.
The overhang of the still-on-the-cards capital raise could derail that strategy though if, like last time, it is deeply discounted. The SP plunged from $2.25 to $1.80 pretty quickly and then kept going. If history repeats itself I don't think $1.13 would be the bottom.
All conjecture of course.Depends on one's risk/reward appetite as much as anything. Give a hound a sniff of an easy 4c divvy and he's in for a feed!
Quote from: LoungeLizard on Feb 27, 2024, 11:34 AMGive a hound a sniff of an easy 4c divvy and he's in for a feed!
LOL, too funny, you know me well mate.
I agree 100% a capital raise is on the cards and it will probably be a rights issue of some kind and agree it could be at lower than $1.13 but if you don't have some shares you probably miss out.
I quite like the cheaply priced capital raises where you can apply for $50,000 of new cheap shares even if you only have a token small shareholding. That would suit me very well in the circumstances and maybe food for thought for others ?
The way I see it, there's quite a few shares trading now at very beaten down "doggy" level's. Pick the dog with the least flea's I reckon. 😊
If they go back to paying 11 cps fully imputed in FY25 that's 12.2% gross yield + probably slowly increasing after that. That's pretty attractive.
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Current situation on market screener. 3 analysts following. Will be revised after this result, but I note underlying profit target for FY24 has not changed.
Average target price $1.73
Average earnings FY25 $119m rising to $138m in FY26.
EPS for FY25 17.49 cps. DPS 12 cents per share
At $1.19, back out the 4 cent divvy, shares go ex next week that's $1.15 Net effective outlay.
At $1.15 and taking the eps and DPS at face value from market screener the metrics look like this
FY25 PE 1.15 / 0.1749 = 6.58
FY25 Gross yield 12 cps / 0.72 = 16.67 cps gross / $1.15 = 14.5% gross.
Then there's more growth to come in future years. Those are extremely attractive metrics and if they can get the growth they are targeting in future years it would seem there's serious money to be made here. Hmmm Opportunity knocks ?
Disc: I have been accumulating at $1.19. Yeah I know there are risks and a probable capital raise coming but my Beagle nose is registering a solid feed coming here if one patiently holds for a couple / few years.
Quote from: Basil on Feb 27, 2024, 04:17 PMhttps://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Current situation on market screener. 3 analysts following. Will be revised after this result, but I note underlying profit target for FY24 has not changed.
Average target price $1.73
Average earnings FY25 $119m rising to $138m in FY26.
EPS for FY25 17.49 cps. DPS 12 cents per share
At $1.19, back out the 4 cent divvy, shares go ex next week that's $1.15 Net effective outlay.
At $1.15 and taking the eps and DPS at face value from market screener the metrics look like this
FY25 PE 1.15 / 0.1749 = 6.58
FY25 Gross yield 12 cps / 0.72 = 16.67 cps gross / $1.15 = 14.5% gross.
Then there's more growth to come in future years. Those are extremely attractive metrics and if they can get the growth they are targeting in future years it would seem there's serious money to be made here. Hmmm Opportunity knocks ?
Disc: I have been accumulating at $1.19. Yeah I know there are risks and a probable capital raise coming but my Beagle nose is registering a solid feed coming here if one patiently holds for a couple / few years.
Agree. Have been doing the same.
Quote from: Shareguy on Feb 27, 2024, 04:29 PMAgree. Have been doing the same.
Good stuff mate. Hope it's a case of great minds think alike rather than fools seldom differ lol
Market not too impressed with result
Share price at 119 way below where it was a few months ago
I think market doesn't like Jeff's normalisation game and has caught on his bad debt smoothing is a problem ..he's been caught out ....and market only believes the real number innReported NPAT
Little wonder share price today is where it is ...after all Net profit after tax (NPAT) of $37.6 million. NPAT decreased by $11.1 million (22.7%)
So npat down 23% ......no wonder share price down ... about 23% down from a few months ago
As a matter of interest the last 12 months (23H2 + 24H1) reported npat is $84.8m ...the lowest it's been since 2020.
Wow. ...Basil been seduced by Jeff's rave and what analysts say
That's a first ...maybe
Anyway good on you for taking advantage of market inefficiencies
But don't panic if things take a little longer than you expect to come right .....stay in for the long haul.
Good advice mate. Just opened up a quite modest sized position. Its not my first rodeo. Bought hundreds of thousands in gloom a few years back at $1.30 and then sold them when in boom. Only playing around with free Heartland money I've made in the past so all shares currently held are "free carry"
For what it's worth, I think the analysts on Market Screener are a bit too optimistic for FY25 and beyond but nevertheless even if its 10% lower in earnings and dividends those metrics look compelling as long as there's no more "normalization" in FY25, he says, rather hopefully. Need to hold my nose or skip through all the ESG and Te Reo nonsense parts of reports though eh ;)
Quote from: Basil on Feb 27, 2024, 05:06 PMGood advice mate. Just opened up a quite modest sized position. Its not my first rodeo. Bought hundreds of thousands in gloom a few years back at $1.30 and then sold them when in boom. Only playing around with free Heartland money I've made in the past so all shares currently held are "free carry"
For what it's worth, I think the analysts on Market Screener are a bit too optimistic for FY25 and beyond but nevertheless even if its 10% lower in earnings and dividends those metrics look compelling as long as there's no more "normalization" in FY25, he says, rather hopefully. Need to hold my nose or skip through all the ESG and Te Reo nonsense parts of reports though eh ;)
me thinks the hound caught a case of FOMO today.....suspect a tough year ahead for HGH
The wider macro-economic issues alluded to in HGH's December update made for quite downbeat reading - and the market responded accordingly. Yet, a mere two months later, HGH seem to be now quite bullish about their prospects. What changed? The adverse OZ climactic conditions, tight deposit market, legacy issues in their loan book, cost of living crisis affecting the purchase of new cars etc are all still there, yet somehow in the space of two months they are now trumpeting their great growth prospects and are dangling the carrot of achieving 200m NP in a little over 4 years. Hmmmm....
NPAT,NIM,EPS and dividend are all down. The degree to which they are down depends on how much you believe in the "underlying" figures after Jeff has waved his magic wand over the accounts, but the "underlying" figures are all still down nonetheless.
So after the spinning has stopped, I'm thinking this isn't as good a report as it may seem. The SP has lifted on the result not being as bad as predicted, but that doesn't mean the result is a good one. Dead cat bounce anyone? The macroeconomic pressures and risks are, after all, still there. And a cap raise if and when it comes could throw the SP into another tailspin. Personally, I'd like to see a good second half report before I'd consider jumping on this horse again.
Good luck to all!
The hound sniffed a feed and always follows his own nose because it's almost never wrong. Believe it or not I am capable of demonstrating patience...yes, I know, Beagle's are not known for it.
Maybe have a look at those metrics in post # 682 again. Very important to think ahead into FY25 and beyond rather than focus on FY24 like many are doing. It's always darkest before the dawn.
Not disputing any of that LL, just saying at $1.15 net, after the 4 cent give-back divvy payable on 20 March, all that is now in the share price. Overall, I thought the loan book growth was very good. Better times are coming in due course. Those with patience will get a decent feed here. If we're not at the bottom, I think we are very, very close. I have plenty of dry powder to continue to accumulate. Only a 3.7% portfolio position at this stage.
Pick the beaten down dog with the least fleas is the name of the game here. Choices as I see them are WHS, OCA, RYM, FBU or HGH...not touching SML at any price. I reckon there's a heck of a lot less fleas on the HGH dog than any of those others. Honestly not worried, bought hundreds of thousands of them years ago when everyone hated them at $1.30, waited quite a while, sold them and made heaps. Watch this space, history is going to repeat.
Quote from: Basil on Feb 27, 2024, 07:23 PMThe hound sniffed a feed and always follows his own nose because it's almost never wrong. Believe it or not I am capable of demonstrating patience...yes, I know, Beagle's are not known for it.
Maybe have a look at those metrics in post # 682 again. Very important to think ahead into FY25 and beyond rather than focus on FY24 like many are doing. It's always darkest before the dawn.
Not disputing any of that LL, just saying at $1.15 net, after the 4 cent give-back divvy payable on 20 March, all that is now in the share price. Overall, I thought the loan book growth was very good. Better times are coming in due course. Those with patience will get a decent feed here. If we're not at the bottom, I think we are very, very close. I have plenty of dry powder to continue to accumulate. Only a 3.7% portfolio position at this stage.
Pick the beaten down dog with the least fleas is the name of the game here. Choices as I see them are WHS, OCA, RYM, FBU or HGH...not touching SML at any price. I reckon there's a heck of a lot less fleas on the HGH dog than any of those others. Honestly not worried, bought hundreds of thousands of them years ago when everyone hated them at $1.30, waited quite a while, sold them and made heaps. Watch this space, history is going to repeat.
Well good luck Basil - I hope you're right. I get the metrics but what I'm saying is that macroeconomics trumps company metrics every time. I don't like the overall picture even though some of the details look ok.
What bothers me also is that Jeff is trying to present a growth path that needs virtually everything to go his way. I mean - a reported NP of 37.6m (down by 11m) is somehow going to turn into 200m in a little over 4 years - a 530% increase. To me it smacks of Jeff, alarmed by the collapsing SP, has had to make a sows ear seem like a silk purse. Desperate stuff.
Anyhoo, let's re-convene in 6 months and see how things are progressing with the transformation. If a cap raise is announced and divys are cut (again) then you might get a sense of deja vu there Basil, when the SP takes a dive towards $1.
Quote from: LoungeLizard on Feb 27, 2024, 08:45 PMWell good luck Basil - I hope you're right. I get the metrics but what I'm saying is that macroeconomics trumps company metrics every time. I don't like the overall picture even though some of the details look ok.
What bothers me also is that Jeff is trying to present a growth path that needs virtually everything to go his way. I mean - a reported NP of 37.6m (down by 11m) is somehow going to turn into 200m in a little over 4 years - a 530% increase. To me it smacks of Jeff, alarmed by the collapsing SP, has had to make a sows ear seem like a silk purse. Desperate stuff.
Anyhoo, let's re-convene in 6 months and see how things are progressing with the transformation. If a cap raise is announced and divys are cut (again) then you might get a sense of deja vu there Basil, when the SP takes a dive towards $1.
Not quite that extreme. $37.6 m is half year.
After a $15M Write down too.
$110m underlying in FY24 to $200m in FY28 is 90%.
Not saying he can do that but circa $130m in FY25 is doable and the forward PE on that is 7, cheaper than at any time in the last decade.
I get it the macro isn't good but they're doing about $110m underlying in the current economic malaise which I think is quite satisfactory.
In summary I think all the crap is already in the share price but none of the opportunity in the years ahead.
Quote from: Basil on Feb 27, 2024, 07:23 PMThe hound sniffed a feed and always follows his own nose because it's almost never wrong. Believe it or not I am capable of demonstrating patience...yes, I know, Beagle's are not known for it.
Maybe have a look at those metrics in post # 682 again. Very important to think ahead into FY25 and beyond rather than focus on FY24 like many are doing. It's always darkest before the dawn.
Not disputing any of that LL, just saying at $1.15 net, after the 4 cent give-back divvy payable on 20 March, all that is now in the share price. Overall, I thought the loan book growth was very good. Better times are coming in due course. Those with patience will get a decent feed here. If we're not at the bottom, I think we are very, very close. I have plenty of dry powder to continue to accumulate. Only a 3.7% portfolio position at this stage.
Pick the beaten down dog with the least fleas is the name of the game here. Choices as I see them are WHS, OCA, RYM, FBU or HGH...not touching SML at any price. I reckon there's a heck of a lot less fleas on the HGH dog than any of those others. Honestly not worried, bought hundreds of thousands of them years ago when everyone hated them at $1.30, waited quite a while, sold them and made heaps. Watch this space, history is going to repeat.
Interesting list of beaten dogs there Basil......wish you all the best with HGH, if I was taking a punt it would be on HGH to out perform the rest
As someone on the other forum said it seems odd to be talking about $200m in 4 years time... how about what happens between now and then? How many more shares will be on issue?
Quote from: entrep on Feb 27, 2024, 10:57 PMAs someone on the other forum said it seems odd to be talking about $200m in 4 years time... how about what happens between now and then? How many more shares will be on issue?
I haven't had a chance to read through, 200mil is a big number! Easiest way to increase npat is reduce debt... how's that looking and what's their cashflow position like?.. man it's been a tough results period so far, but not surprised with how had business is at the moment. Looks like every industry is struggling...
Craigs positive with outperform
Multiples and Price Target Current trading multiples
At the current price HGH is trading on:
A price-to-book multiple of 0.8x (vs. Aus sector average of 1.5x)
A rolling forwards P/E of 8.3x (vs Aust sector average of 14.5x, with the 4 major banks averaging 15.7x).
A forward cash dividend yield of 8.5% based on 73% payout (vs Aust sector average of 5.4% with an average payout of 75%).
Price Target
Our $1.76 Price Target is based on the average of:
$1.93 - a forward PE of 12.0x (prev. $1.96), consistent with the long-term average for the ANZ sector and HGH's historical discount to the Aust sector.
$1.51 - a target P/BV of 1.0x (prev. 1.2x, $1.53). This is based on our estimate of HGH's average 3-year forward ROE relative to post-tax Ke.
$1.79 - a target dividend yield of 6.0% based on the ANZ sector long-term average.
Our revised Price Target implies a forward PE of 10.9x, P/BV of 1.16x, and a cash dividend yield of 6.1% (gross yield 8.5%).
Quote from: Basil on Feb 27, 2024, 10:17 PMAfter a $15M Write down too.
$110m underlying in FY24 to $200m in FY28 is 90%.
Not saying he can do that but circa $130m in FY25 is doable and the forward PE on that is 7, cheaper than at any time in the last decade.
I get it the macro isn't good but they're doing about $110m underlying in the current economic malaise which I think is quite satisfactory.
In summary I think all the crap is already in the share price but none of the opportunity in the years ahead.
Apologies. FY23 NP was 96m. It's going to be less than that this year I would say. I'm not sure underlying NP after adjustments and one-offs is the way to go - too easily manipulated and there will always be more "one-offs." So 96m to 200m in 4 years. I think that's pretty unlikely given history and the fact that the banking industry is still in a cyclical slump. And as noted, how many shares will be on offer then - what will EPs and divvys be?
But hey, I'm not saying I am right to be pessimistic, but when they announced the pivot to OZ and ushered in a rushed cap raise that was bad for smaller investors and decimated the SP, I lost complete trust in Jeff to look after my money and bailed out at $1.80. I haven't regretted that decision and Jeff has a way to go to rebuilding this investors trust. The next 6-12 months will tell the story.
I love it when Craig's get excited ...or super excited
Comparing multiples with the '4 major ANZ banks' is justvstupid lazy analysis
I get all the negative sentiment prevailing and the trust issues. I also get that people are rolling their eyes at the $200m profit target for FY28 but I see that as an aspirational goal more than a fixed target.
For mine, we're at the bottom of the economic cycle and HGH normally trades at a forward PE of 9 at times like this. If HGH announce in August a forecast profit of ~ $125m for FY25 or thereabouts which I think is quite plausible that's a forward PE of just under 7 based on the net entry price of $1.14 this morning, ($1.18 - 4 cents back in a few weeks). I think that's a compelling buy. $1.14 is only one cent more than the intra day low it hit the other day on fears of
a) A capital raise
b) Dividends being suspended
c) Profit being reported such that they would have to do another downgrade on FY24 underlying profit outlook.
None of those fears have come to pass which for me de-risks the stock. I foresee them growing eps at a faster rate in the next 4-5 years as the economic cycle improves than they have in the last 5 years. I don't think they will get to $200m in FY28 but eps growth rates of mid-single digits in the medium term seems quite plausible to me.
In my long experience following this stock Winner, (and I have done very well out of it over the years), the forward PE is usually within a range of 1 or 2 of its peer group, more commonly on the downside. Outside of that range is an actionable event in my experience, either buy if a lot lower or sell if a lot higher. We are at a point where this indeed is at an actionable anomaly to its peer group and HGH looks extremely cheap by all metrics relative to its peers.
I think a lot of people on here and the other channel are allowing their unconscious bias to cloud their thinking. The indicators and forward metrics, (PE gross yield, peer group comparative metrics and discount to book, are truly compelling at a $1.14 net entry price. I bought more on the open this morning.
From me, more buying less talking about it now, you can either see through the current sentiment and see the forward metrics and the opportunity here or you can't...I'm not here to sell it to anyone.
Result had impairments at $24.0m but Jeff says that included 'a $16.0m increase in provisions for a subset of legacy lending' so we can deduct to give underlying impairment of only $8.0m.
Is this $16.0m a safety net just in case these legacy landings turn really bad?
But that begs the question what happens to Underlying NPAT if they end up actually having to be written off?
Quote from: winner (n) on Feb 28, 2024, 10:53 AMResult had impairments at $24.0m but Jeff says that included 'a $16.0m increase in provisions for a subset of legacy lending' so we can deduct to give underlying impairment of only $8.0m.
Is this $16.0m a safety net just in case these legacy landings turn really bad?
But that begs the question what happens to Underlying NPAT if they end up actually having to be written off?
It does my head in trying to determine whether "underlying" profit is real or not. I prefer to stick to the figure that they are prepared to report. I mean, look at this statement:
"The arrears experienced in a subset of longer dated Motor Finance loans are a result of operational issues in "Heartland Bank's Collections & Recoveries area and do not reflect any underlying issues with the credit quality of the book. This is primarily a resourcing issue caused by illness, employee turnover due to overseas travel, and a focus on Heartland Bank's core banking system upgrade (which is now complete). This is being addressed through a specialised recruitment strategy and automation. Underlying impairments are otherwise performing as expected given the challenging economic conditions. Heartland's asset quality continues to shift towards loans with lower risk exposures."
Sounds like gobbledegook to me. Reported NP is down 22% and hence interim dividend has been cut from 5.5c to 4c. That's all I need to know.
Quote from: LoungeLizard on Feb 28, 2024, 11:19 AMIt does my head in trying to determine whether "underlying" profit is real or not. I prefer to stick to the figure that they are prepared to report. I mean, look at this statement:
"The arrears experienced in a subset of longer dated Motor Finance loans are a result of operational issues in "Heartland Bank's Collections & Recoveries area and do not reflect any underlying issues with the credit quality of the book. This is primarily a resourcing issue caused by illness, employee turnover due to overseas travel, and a focus on Heartland Bank's core banking system upgrade (which is now complete). This is being addressed through a specialised recruitment strategy and automation. Underlying impairments are otherwise performing as expected given the challenging economic conditions. Heartland's asset quality continues to shift towards loans with lower risk exposures."
Sounds like gobbledegook to me. Reported NP is down 22% and hence interim dividend has been cut from 5.5c to 4c. That's all I need to know.
Agree with your thinking loungelizard
Bit like Fletcher Building ......when things get stuffed up and cost money don't count it ...like it is legacy after all eh
Always safer / better / less risky to buy at valuation lows ...now is the time for HGH
Mind you Book Value per share dropped 8 cents in H1
As matter of interest P/B ayatollah about 0.8 is still higher than what small aussie banks like BOQ and BEN are currently trading at ....so could more than fairly valued
Never mind must be all onwards and upwards from here
IMG_5668.png
Comparing HGH and FBU is comparing apples and lemons.
FBU have had a absolute endless series of so called one-off write downs over the years and has proven over time it is a highly cyclical no growth company and there are clear signs there's more so called one-off write-downs to come. NZICC and Western Australia pipes issue.
On the other hand, HGH have had a few one off's regarding Harmoney, reporting requirements around hedging and this latest which is simply under provisioning of past due motor vehicle receivables, but has a proven track record of growing earnings over time, yet some, despite doing very well out of the company in the past are happy to throw the baby out with the bathwater but for reasons unknown are happy to forgive the management of companies like FBU who are recidivist offenders. Go figure?
Two things occur to me, some people are simply laser focused on the current result, blinkers on and that's all they see. Others think ahead and sift the wheat from the chaff. The other thing is personalities. Once some people decide they really don't trust the CEO they make any narrative the company comes out with fit their own pre-conceived view.
This dog does his best to cut through all that B.S., does his best to take an objective view on forward earnings and positions himself well for the next big feed. I'll stick to what I know has worked exceptionally well for me over the years. When the forward metrics look absolutely dirt cheap you ignore all the sentiment and BUY. Buying this at $1.14 net is like buying Turners at $3.50 last year when nobody wanted them.
Have topped up further, expect you are right Basil, dirt cheap.
Buying a bank under Nav which was $1.39 at Dec23.
What gets me going is the deposits raised at Challenger. $523m raised at average rate that is 1.34 percent lower than current fund cost.
And don't forget our Jeff's target of $200m NPAT by 2028
Quote from: Shareguy on Feb 28, 2024, 03:43 PMBuying a bank under Nav which was $1.39 at Dec23.
What gets me going is the deposits raised at Challenger. $523m raised at average rate that is 1.34 percent lower than current fund cost.
And don't forget our Jeff's target of $200m NPAT by 2028
NAV or NTA?
NTA was $1.05 at December ...down from $1.09 pcp
Whatever good buying today ...can't go wrong at these prices
Quote from: Shareguy on Feb 28, 2024, 03:43 PMBuying a bank under Nav which was $1.39 at Dec23.
What gets me going is the deposits raised at Challenger. $523m raised at average rate that is 1.34 percent lower than current fund cost.
And don't forget our Jeff's target of $200m NPAT by 2028
Maybe Heartland can turnaround Challenger and if they can, then hats off to Jeff...
https://www.bankingday.com/challenger-red-faced-once-more-in-banking (https://www.bankingday.com/challenger-red-faced-once-more-in-banking)
Challenger remains the big unknown. It will either turn out to be a masterstroke or a millstone. It will be fascinating to see how it turns out.
Challenger probably needs a full upgrade of its banking system software. Noted in the latest report Heartland have now completed their system upgrade. That sort of major capex now has to be expensed under the new reporting standards. Probably just as well HGH didn't treat that as another one-off extraordinary item lol
I know Winner prefers his book value methodology when it comes to peer comparisons and I respect that, but I have always preferred earnings, because earnings drive share prices and I always will prefer earnings comparisons.
So here is the same group of 6 peers I have always used over many, many years to compare their forward metrics. Note, this group I have used has never changed and to remove any bias whatsoever from any one broker or on my part the FY25 forward metrics are straight off the consensus of all analysts on Market Screener.
Note: HGH has almost always been with 1 or 2 PE above or below the average, usually about 1 below but I have never seen anything like this disparity before.
BEN 11,7
BOQ 11.7 (Not a typo they are the same)
WBC 14.4
ANZ 12.9
NAB 15.1
HGH 6.75
Average of peer group 13.16
HGH is trading at only ~ HALF the forward multiple of its peer group. I have never seen anything anywhere remotely like this in all my years of following HGH. It's a very strong buy relative to its peer group and by all previous metrics this company has ever traded on.
Quote from: winner (n) on Feb 28, 2024, 03:59 PMNAV or NTA?
NTA was $1.05 at December ...down from $1.09 pcp
Whatever good buying today ...can't go wrong at these prices
NAV is $1.39
Quote from: Basil on Feb 28, 2024, 04:16 PMChallenger probably needs a full upgrade of its banking system software. Noted in the latest report Heartland have now completed their system upgrade. That sort of major capex now has to be expensed under the new reporting standards. Probably just as well HGH didn't treat that as another one-off extraordinary item lol
Challenger Bank doing something right;
In the seven-week period commencing 8 January 2024,
retail deposit growth of $528 million was achieved, at a
rate which is 1.34% lower than Heartland Australia's
current cost of funds.
[saving au $7.0752 mil]
All the gloom around Stock Co a while ago didn't lead to much damage ...segment profit only downward few million
Weather all good now they say.
No OCR increase today
Market response ........ govt stock plunging
Somecwould say good sign for Heartland
Quote from: winner (n) on Feb 28, 2024, 04:52 PMAll the gloom around Stock Co a while ago didn't lead to much damage ...segment profit only downward few million
Weather all goo now they say.
StockCo all good.
Reverse Equity loans all good.
Challenger Bank deposits all good.
Australian economy looking stronger than NZ's.
Looks as though Jeff's timing is all good too.
Quote from: lorraina on Feb 28, 2024, 04:24 PMChallenger Bank doing something right;
In the seven-week period commencing 8 January 2024,
retail deposit growth of $528 million was achieved, at a
rate which is 1.34% lower than Heartland Australia's
current cost of funds.
[saving au $7.0752 mil]
Jeez ...keep that up and it's about $4 billion a year $50 lower cost of funds
That $200m looking easy peasy
Quote from: lorraina on Feb 28, 2024, 05:08 PMStockCo all good.
Reverse Equity loans all good.
Challenger Bank deposits all good.
Australian economy looking stronger than NZ's.
Looks as though Jeff's timing is all good too.
I seem to remember the same things being said from some quarters when the cap raise and strategy pivot was announced. $1.80 was a steal they said. Well yes, it was a steal - just not in the way they thought.
Maybe it's time to let go of resentments and embrace the fact HGH has never in its history before traded on such compelling forward metrics ..
Quote from: Basil on Feb 28, 2024, 08:45 PMMaybe it's time to let go of resentments and embrace the fact HGH has never in its history before traded on such compelling forward metrics ..
Fair enough, I'll let it go. But he who doesn't learn from - recent - history is doomed to repeat it. Check-in when the next cap raise is announced.
And as a dividend sniffing hound, let's check out this metric. EPS has collapsed from 7.3 to 5.3cents per share. And net cash flows from operating activities are now in the negative. The dividend has been cut from 5.5c to 4c but even then - where's the money going to come from for future dividends, particularly if operating costs continue to climb. Issuing more shares to fund Challenger is only going to squeeze things further. HGH do not appear to be able to fund current dividends and the final dividend will be cut to probably about 4c. That's 6.6% gross yield on current SP. And that's if you're lucky. Worth the risk? I don't think so.
You can get 6.3% term deposit - at Heartland - guaranteed. Sometimes owning the bank isn't the right thing.
That $200m in 2028 'ambition' only requires core lending receivables growth rates at historical rates
Sort of says the extra profit in Aussie doesn't have to be outrageously high
Pretty conservative 'ambition' I reckon even if it is doing a lot more with not more resource (cost)
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Revisions from analysts are in and on average they see eps of 16 cents for FY25 and 18 cents for FY26
Dividends are 11 cps for FY25 rising to 12 cps for FY26.
I'm happy with those forecasts and think they are fair and reasonable.
At yesterday's close of $1.22 less the almost immediate giveback of a 4 cent divvy = net purchase price of $1.18 the metrics are
FY25 PE 7.3 FY25 Gross yield 12.9% (11/0.72 = 15.27 / 118)
FY26 PE 6.6 FY26 Gross yield 14.1% (12/0.72 = 16.67 / 118)
I welcome the opportunity, if it presents, to invest further funds at a discounted price in a capital raise to support their Australian growth ambitions.
Quote from: LoungeLizard on Feb 28, 2024, 09:12 PMFair enough, I'll let it go. But he who doesn't learn from - recent - history is doomed to repeat it. Check-in when the next cap raise is announced.
And as a dividend sniffing hound, let's check out this metric. EPS has collapsed from 7.3 to 5.3cents per share. And net cash flows from operating activities are now in the negative. The dividend has been cut from 5.5c to 4c but even then - where's the money going to come from for future dividends, particularly if operating costs continue to climb. Issuing more shares to fund Challenger is only going to squeeze things further. HGH do not appear to be able to fund current dividends and the final dividend will be cut to probably about 4c. That's 6.6% gross yield on current SP. And that's if you're lucky. Worth the risk? I don't think so.
You can get 6.3% term deposit - at Heartland - guaranteed. Sometimes owning the bank isn't the right thing.
Please correct me if I'm wrong but:
4c divi would have imputation credits of 1.556c. If total annual dividend was 8c with imputation credits gross dividend would be 11.112c. At today's sp of $1.23 = 9.03% gross yield. Considerably better than your 6.3% term deposit.
Hopefully the final dividend will be better than the 4c :)
Quote from: SCOTTY on Feb 29, 2024, 10:18 AMPlease correct me if I'm wrong but:
4c divi would have imputation credits of 1.556c. If total annual dividend was 8c with imputation credits gross dividend would be 11.112c. At today's sp of $1.23 = 9.03% gross yield. Considerably better than your 6.3% term deposit.
Hopefully the final dividend will be better than the 4c :)
Depends on whether you value a fully imputed share or not. I'm retired so I have a stack of unused credits that I can't apply. So, yes, not including the effect of imputation, for me the return is 6.6%. I can get close to that on a term deposit and claim most of the tax back.
Looking at HGH's accounts I think future dividends are under real pressure. It's baffling for me that those that focus primarily on dividends are buying in at the precise time that dividends have been cut and are likely to be cut further. All of a sudden the focus has shifted to growth in the SP, which is a very uncertain, long term thing. If there is a capital raise you are going to be left with a share whose SP is going south together with a below average yield. Not a good place to be.
I see a trading opportunity with HGH and those, like Basil, who got in at sub $1.20 might get the divvy and out again ex-dividend at the price they got in at. If so, good on you. I'm not a trader and in the medium term, regardless of what PE forward projections say, I'm wary of buying in at this point. PE projections are a very useful tool and I appreciate Basils talent at this form of analysis - I've used them to guide my thinking a number of times - but there's other potentially negative issues at play here, which for a conservative investor like myself, make me uneasy.
But, each to their own. HGH will come right at some point, when that is no-one knows for sure. That's the fun part in investing - trying to second guess the market!
HGH took ~ $15m in one-off extraordinary items this half as the result of legacy issues with old loans that they believed they were not vigilant enough to collect.
That's what driven the dividend cut this half.
I am treating this as a one off item because it is the first and only time HGH in their entire history as a listed company has ever taken a hit from extra loan provisioning, (Covid provisioning aside).
I'm happy to look through this in making my assessment as to future income and I think the vast majority of people find the imputation credits very valuable. Frankly I find the thought of a 14% gross yield in FY26 and growing in the years that follow extremely attractive. I note all the analysts are also looking through this latest loan provisioning in determining their expectations of future dividends and I posted the gross yield forecasts above.
I get it that some people are sick of the one-off's and that the reasons behind them are sometimes very complicated, (their derivatives which Fiordland Moose explained) and sometimes have poor optics, like their provisioning around their investment in Harmoney and the most recent provisioning all seems a bit much in recent years.
I also get it there are risks with their expansion with Challenger bank as to firstly whether the deal is approved from a regulatory perspective and secondly funding it with deposits and a capital raise. I think the early signs in terms of raising over half a billion dollars on deposits at 1.34% below their current cost of funds in Australia are very encouraging.
I'm also not enamored at all with their obsession around all things ESG.
What I also get that some don't seem to, is that all the above and then some is fully factored into the price and then some for good measure. HGH has never in its entire history as a listed company traded at the extremely low forward earnings multiples it currently trades on which are circa half its peer group. Listen up LL because this is the key to my investment thesis. I expect this hugely anomalous situation to revert to the average over time, regardless of whether the Challenger bank acquisition proceeds or not. Over time I expect HGH's PE to revert to a normal range of 11-13 not the ~ 7 it currently sits at, that's with or without the Challenger bank deal proceeding.
Further, my contention is we are currently scraping along the bottom of the economic cycle and as interest rates ease the economy will improve. I also note the latest inflation data in Australia yesterday, low 3% range from memory, was highly encouraging and is tracking well below N.Z's 4.7% so there's every chance they will ease interest rates before us and their economy will outperform our's. I think this is a very good time to be expanding into Australia.
If they can pull this off and get somewhere around $180m in profit in FY28 on an expanded capital base which should be somewhere in the low 20 cents per share earnings I think this could easily go back over $2 in the next few years. In the meantime the yields I posted in #721 of 12.9% in FY25 and 14.1% in FY26 are extremely attractive so we've got the prospect of being paid extremely well while we wait for that growth.
I think the opportunity outweighs the risks.
Quote from: Basil on Feb 29, 2024, 11:04 AMHGH took ~ $15m in one-off extraordinary items this half as the result of legacy issues with old loans that they believed they were not vigilant enough to collect.
That's what driven the dividend cut this half.
I am treating this as a one off item because it is the first and only time HGH in their entire history as a listed company has ever taken a hit from extra loan provisioning, (Covid provisioning aside).
I'm happy to look through this in making my assessment as to future income and I think the vast majority of people find the imputation credits very valuable. Frankly I find the thought of a 14% gross yield in FY26 and growing in the years that follow extremely attractive. I note all the analysts are also looking through this latest loan provisioning in determining their expectations of future dividends and I posted the gross yield forecasts above.
I get it that some people are sick of the one-off's and that the reasons behind them are sometimes very complicated, (their derivatives which Fiordland Moose explained) and sometimes have poor optics, like their provisioning around their investment in Harmoney and the most recent provisioning all seems a bit much in recent years.
I also get it there are risks with their expansion with Challenger bank as to firstly whether the deal is approved from a regulatory perspective and secondly funding it with deposits and a capital raise. I think the early signs in terms of raising over half a billion dollars on deposits at 1.34% below their current cost of funds in Australia are very encouraging.
I'm also not enamored at all with their obsession around all things ESG.
What I also get that some don't seem to, is that all the above and then some is fully factored into the price and then some for good measure. HGH has never in its entire history as a listed company traded at the extremely low forward earnings multiples it currently trades on which are circa half its peer group. Listen up LL because this is the key to my investment thesis. I expect this hugely anomalous situation to revert to the average over time, regardless of whether the Challenger bank acquisition proceeds or not. Over time I expect HGH's PE to revert to a normal range of 11-13 not the ~ 7 it currently sits at, that's with or without the Challenger bank deal proceeding.
Further, my contention is we are currently scraping along the bottom of the economic cycle and as interest rates ease the economy will improve. I also note the latest inflation data in Australia yesterday, low 3% range from memory, was highly encouraging and is tracking well below N.Z's 4.7% so there's every chance they will ease interest rates before us and their economy will outperform our's. I think this is a very good time to be expanding into Australia.
If they can pull this off and get somewhere around $180m in profit in FY28 on an expanded capital base which should be somewhere in the low 20 cents per share earnings I think this could easily go back over $2 in the next few years. In the meantime the yields I posted in #721 of 12.9% in FY25 and 14.1% in FY26 are extremely attractive so we've got the prospect of being paid extremely well while we wait for that growth.
I think the opportunity outweighs the risks.
Fair enough. You may well turn out to be absolutely right, Basil. You have an excellent track record in spotting opportunities, and I, like others, value your insight. I err on the side of extreme caution so I've missed out on opportunities and this could be one of them.
But by the same token, I've never taken much of a loss in all my time of investing. I actually did alright in investing in HGH relatively early and bailing out very quickly at $1.80 before the cap raise fiasco kicked in. So maybe in missing out on a few highs I've avoided the lows as well. There's more than one way up the mountain! Best of luck with this one, mate.
Thanks for your kind words mate and yes, this is not without risks and fair enough if its not for you. TRA is a much lower risk way to play the recovering economy and they have proven over the last 4 years their business model is extremely resilient in tough economic times. Who would have thought they could get 4 record years of profit in a row through Covid, the recession and all the cost-of-living pressures in the last couple of years. Truly remarkable! I love it, their marketing and execution overall is absolutely brilliant, and I very happily retain a substantial holding long term. Honestly, I couldn't be happier and more comfortable about the way TRA management are looking after our interests. I never lose a single minute of sleep with that one and the forward metrics with them make for a truly compelling long-term hold ! We'll both do really well there in the years ahead :)
The path to $200m in 2028 is their ambition but not too outrageous
Seems it's just a continuation of what they've done in the past ..see chart
Note: started reverse mortgages and acquired Seniors AU in 2014
IMG_5669.png
Some seem worried about cap raises
Why worry ....they are always eps accretive ....more capital ...more profit ....profit drives share price
Nice image Winner, thanks for sharing. Forbar are at $168m for FY28 but not allowing anything in the way of growth for motor vehicle and other types of new potential lending in Aust.
I expect and am fully prepared for a large capital raise later this year to kick start the capital of Challenger bank in order to meet minimum Aust regulatory requirements for capital. I'm happy to support their growth ambitions in Australia. Off the expanded capital base yes, I think $200m is not an unreasonable target. Broker average is for 18 cps in FY26 so extrapolate a couple of years of eps growth at mid to late single digit figures and eps could be 20-21 cps by FY28. Put a normal mid-range PE of 12-13 on that and that suggests $2.40-$2.70 by FY28 is quite feasible.
Quote from: LoungeLizard on Feb 28, 2024, 04:06 PMMaybe Heartland can turnaround Challenger and if they can, then hats off to Jeff...
https://www.bankingday.com/challenger-red-faced-once-more-in-banking (https://www.bankingday.com/challenger-red-faced-once-more-in-banking)
Challenger remains the big unknown. It will either turn out to be a masterstroke or a millstone. It will be fascinating to see how it turns out.
Whatever of these options Challenger will turn out to be, it is Heartlands ticket into the Australian money market. Only an Australian bank is allowed to take deposits in Australia. They need them to fund their rapidly growing Australian REIT business - and picking up these funds in Australia is much cheaper and less risky (exchange rates) than shifting funds from NZ.
I think Challenger was for them a must buy, but sure - if the ticket generates on top of an entry its own money, this would be like the goose laying golden eggs, wouldn't it?
Can Heartland succeed in Oz where so many NZ companies have failed?
Latest article by Jenny Ruth for those who have a subscription.
I have had HGH on my buy watch list for sometime and have decided to put 50% of the allocated funds to work. These funds have a 10 year view which when it comes to Heartland they need to be as I think Heartlands is in for a tough 12 months due to the macro environment.
I do have my concerns about this comment from the company ~$15m in one-off extraordinary items this half as the result of legacy issues with old loans that they believed they were not vigilant enough to collect.
This comment smells rank based on experiences I know of from how the company goes about chasing up over due loans. They are extremely persistent
What I think it really means is they have a rapidly increasing amount of loans that they believe will not be recoverable, this is due to the macro environment and I believe you will see more of these surprises at their next 2 financial.
Seems the $200m in 2028 is an AMBITION DOWNGRADE ...apparently it was $220m in 2028 before
Can't be true ..can it?
Getting larger in Aussie will be no problem .....Jeff has sent Chris Flood over there to see it happens
Good bloke that Chris
Quote from: snapiti on Mar 01, 2024, 07:49 AMWhat I think it really means is they have a rapidly increasing amount of loans that they believe will not be recoverable, this is due to the macro environment and I believe you will see more of these surprises at their next 2 financial.
You could be right but to be clear, there has only ever been one of these surprises in relation to loans in HGH's entire history, so I'd bet on you being wrong.
Quote from: winner (n) on Mar 01, 2024, 08:01 AMSeems the $200m in 2028 is an AMBITION DOWNGRADE ...apparently it was $220m in 2028 before
Sales and Marketing 101, it's important for aspirational goals and targets to be realistically achievable otherwise rather than acting as a motivational force, they demotivate the team. I know Jeff has coped a lot of criticism for this goal but I see it as something that's very helpful. It's important the whole team are engaged in working towards achieving this outcome, or as close as they can get to it. It gives them a clear focus and target to work towards and ifs frankly far more productive than team members focusing on mindless ESG nonsense.
Concerns over the Challenger bank acquisition based on other companies from N.Z. not succeeding in Australia appear to me to be very simplistic in their nature, (unconscious bias). HGH already has a highly successful business over there with 41% of the reverse home loan equity market and it's been going for many years, is highly profitable with very low risk and is growing very strongly, circa 20% per annum. Reverse home loans also have no margin risk as the interest rates can be adjusted (or not adjusted as the case may be when their cost of funds declines 134 basis points) as their cost of funds changes.
Good things take time. Thing is with the share price where it is with economic concerns here, if you wait for better economic times in say 12-18 months, it's very unlikely the share price will be where it currently sits. The analogy I would use is this, if you buy a boat in Winter, you will get a lot better price than in Spring or Summer.
Quote from: Basil on Mar 01, 2024, 09:37 AMYou could be right but to be clear, there has only ever been one of these surprises in relation to loans in HGH's entire history, so I'd bet on you being wrong. Sales and Marketing 101, it's important for aspirational goals and targets to be realistically achievable otherwise rather than acting as a motivational force, they demotivate the team. I know Jeff has coped a lot of criticism for this goal but I see it as something that's very helpful. It's important the whole team are engaged in working towards achieving this outcome, or as close as they can get to it. It gives them a clear focus and target to work towards and ifs frankly far more productive than team members focusing on mindless ESG nonsense.
Concerns over the Challenger bank acquisition based on other companies from N.Z. not succeeding in Australia appear to me to be very simplistic in their nature, (unconscious bias). HGH already has a highly successful business over there with 41% of the reverse home loan equity market and it's been going for many years, is highly profitable with very low risk and is growing very strongly, circa 20% per annum. Reverse home loans also have no margin risk as the interest rates can be adjusted (or not adjusted as the case may be when their cost of funds declines 134 basis points) as their cost of funds changes.
Good things take time. Thing is with the share price where it is with economic concerns here, if you wait for better economic times in say 12-18 months, it's very unlikely the share price will be where it currently sits. The analogy I would use is this, if you buy a boat in Winter, you will get a lot better price than in Spring or Summer.
HGH in their modest time as a listed company have had many favorable macro economic tail winds, unfortunately many who use second tier lenders are really struggling because of the cost of living and interest rates, that aint going away in a hurry, certainly farmers are doing it tough as well, amazing how companies like to cover up poor results with smoke n mirrors comments, reality is once a loan is taken out it could be considered a legacy loan tomorrow, Hopefully the $15m "legacy" loans written off is a one off, as you suggest Basil, to clear the deck, but I doubt it will be, best you can hope for is for less next time and perhaps they will call the next round of loan write offs by another name. HGH SP has been falling for sometime and I suspect it was the market expecting "legacy" loans to be an issue due to the same macro environment which is still in place
Quote from: snapiti on Mar 01, 2024, 12:02 PMHGH in their modest time as a listed company have had many favorable macro economic tail winds,
The last 4 years with the Covid pandemic and all the associated roll on effects have been extremely challenging for many businesses. Many have faced unprecedented challenges and I think HGH have come though it very well, including the regional bank mini crisis in the US about this time last year.
Quote from: snapiti on Mar 01, 2024, 12:02 PMamazing how companies like to cover up poor results with smoke n mirrors comments, reality is once a loan is taken out it could be considered a legacy loan tomorrow,
Quote from: snapiti on Mar 01, 2024, 12:02 PMbest you can hope for is for less next time and perhaps they will call the next round of loan write offs by another name.
WOW, that's a very cynical and jaundiced view
Quote from: snapiti on Mar 01, 2024, 12:02 PMI suspect it was the market expecting "legacy" loans to be an issue due to the same macro environment which is still in place
Acknowledge we are currently scraping along the bottom of the economic cycle. If you're waiting for the "Red Sea to part" so too speak and better economic times to make themselves completely obvious the shares are not going to be close to where they are priced in an economic trough.
Quote from: snapiti on Mar 01, 2024, 07:49 AMI have had HGH on my buy watch list for sometime and have decided to put 50% of the allocated funds to work. These funds have a 10 year view
Given your most recent post mate I am not sure why you bothered? Just as an aside, I have found there is no mileage in holding these through thick and thin over the years. Buy in gloom and sell in boom. Usual trading range is a forward PE of 9-18. Trades move with the economic cycles so they're not short term trades per se. We're about 7 forward PE for FY25 which has never happened before and I note is cheaper than the trough Covid low on a forward earnings basis.
Yeah, I get it a lot of people are jaundiced from a number of one-off items in recent years, I really do and some like you are super cynical and think the recent extra loan provisioning will be a recurring theme but I believe all that is priced in and some extra for good measure due to uncertainty about the regulatory approval for the Challanger bank acquisition and the possible capital raise.
Its always darkest before the dawn.
Quote from: Basil on Mar 01, 2024, 01:25 PMGiven your most recent post mate I am not sure why you bothered? Just as an aside, I have found there is no mileage in holding these through thick and thin over the years. Buy in gloom and sell in boom. Usual trading range is a forward PE of 9-18. Trades move with the economic cycles so they're not short term trades per se. We're about 7 forward PE for FY25 which has never happened before and I note is cheaper than the trough Covid low on a forward earnings basis.
Yeah, I get it a lot of people are jaundiced from a number of one-off items in recent years, I really do and some like you are super cynical and think the recent extra loan provisioning will be a recurring theme but I believe all that is priced in and some extra for good measure due to uncertainty about the regulatory approval for the Challanger bank acquisition and the possible capital raise.
Its always darkest before the dawn.
I just like going into an investment eyes wide open, happy to bank a few and will be happy to bank some more should they decline another 20%
Fair enough Snapper. I've also invested in a carefully measured way with plenty in reserve for further investment and / or a capital raise.
Quote from: Basil on Mar 01, 2024, 05:19 PMFair enough Snapper. I've also invested in a carefully measured way with plenty in reserve for further investment and / or a capital raise.
It's interesting Basil, that you see a potential cap raise as an opportunity to buy more, whilst some - including me - see it as a potential bear trap waiting for investors to fall into.
We all know just how deleterious the last cap raise was back in 2022. Shareholders who participated in that are now holding shares worth a third less. And the divvy on those shares has now been cut.
I guess it will be said that that was then and this is now. As if HGH are fundamentally different to the bank they were only 18 months ago. It's strange to me that some who participated in the last cap raise - and took a bath like everyone else - still talk up the prospect of the next one. Faith in Jeff obviously runs deep.
I'm not saying all cap raises end badly for investors, but a lot do. Personally, I prefer companies that fund their business strategy with plain old credit facilities or by issuing bonds. You can only go to the well so often before investors get sick of the yo-yo effect on the share price.
Actually, one wag on the other channel said that if it wasn't for HGH's string of cap raises, the SP would be $5 by now. A joke of course, but there might be a grain of truth in it
Quote from: LoungeLizard on Mar 01, 2024, 07:11 PMIt's interesting Basil, that you see a potential cap raise as an opportunity to buy more, whilst some - including me - see it as a potential bear trap waiting for investors to fall into.
People will see what they want to see. I see the economy in a bottoming process and fresh capital raising giving the prospect of strong growth in Australia and that fresh capital if its sought, will be on an extremely attractive earnings multiple. I guess it all depends on whether you're looking backwards or forwards. I prefer looking forwards, a Beagle's nose picks up the scent of the next feed better when facing that way.
Quote from: LoungeLizard on Mar 01, 2024, 07:11 PMWe all know just how deleterious the last cap raise was back in 2022. Shareholders who participated in that are now holding shares worth a third less. And the divvy on those shares has now been cut.
I participated but have processes in place to manage risk and one of those is if a stock goes into a confirmed downtrend I cut my losses and wait for a better time. Fact is Heartland's financial performance is inextricably linked to the performance of the economy and as our economy has tanked, so too have HGH shares. As stated in earlier posts I think we're now scaping along the bottom of the economic cycle.
Quote from: LoungeLizard on Mar 01, 2024, 07:11 PMI guess it will be said that that was then and this is now. As if HGH are fundamentally different to the bank they were only 18 months ago. It's strange to me that some who participated in the last cap raise - and took a bath like everyone else - still talk up the prospect of the next one. Faith in Jeff obviously runs deep.
What's different is the phase of the economic cycle we're now in. Interest rates are at a peak and the prospects for improvement over time should be clear. I didn't take a bath with the cap raise but I got a bit of a haircut. I try and win big and lose little and manage downside risk. Nobody wins every time. Its not about blind faith as you imply. I am prepared to give Jeff the benefit of the doubt for his one and only write down in receivables in the companies history on the basis that the share price now fully accounts for the effect of that, and then some.. If it happens again, I'll take a different view.
Quote from: LoungeLizard on Mar 01, 2024, 07:11 PMI'm not saying all cap raises end badly for investors, but a lot do. Personally, I prefer companies that fund their business strategy with plain old credit facilities or by issuing bonds. You can only go to the well so often before investors get sick of the yo-yo effect on the share price.
Actually, one wag on the other channel said that if it wasn't for HGH's string of cap raises, the SP would be $5 by now. A joke of course, but there might be a grain of truth in it
Turners have learned that lesson and got that message loud and clear from their investors and their shares are nearly $5 and I prefer that method of growing too which is why I have 2.5X in them compared to HGH at present. What's changed is the metrics. As mentioned earlier, they're now compelling and completely disjoined and far below their peer group who all face the same headwinds from the current low ebb in the economic cycle. HGH has been harshly dealt too by the market since their December 2023 trading update whereas its peer group have performed strongly and the disconnect is now so extreme I think HGH for all its ESG nonsense and recent fumbles is now a deep value buy. If you think it's a value trap, that's fine mate.
As far as I am concerned, a forward PE of about 7 covers a multitude of misdemeanors, (and that's what they are not commercial crimes), for a company that will grow eps over time with or without the Challanger bank acquisition. If you focus on the things you're not happy with you will lose the opportunity to buy a stake in this company that's the cheapest it's ever been in its history on a forward earnings basis. You snooze, you lose in my opinion but please, I am not here to sell the idea to anyone so what anyone does they do of their own volition but as always, I am happy to explain what I have done and why and I think I've done that in a very thorough way now.
Disc ~ 5% portfolio position.
Quote from: LoungeLizard on Mar 01, 2024, 07:11 PMIt's interesting Basil, that you see a potential cap raise as an opportunity to buy more, whilst some - including me - see it as a potential bear trap waiting for investors to fall into.
We all know just how deleterious the last cap raise was back in 2022. Shareholders who participated in that are now holding shares worth a third less. And the divvy on those shares has now been cut.
I guess it will be said that that was then and this is now. As if HGH are fundamentally different to the bank they were only 18 months ago. It's strange to me that some who participated in the last cap raise - and took a bath like everyone else - still talk up the prospect of the next one. Faith in Jeff obviously runs deep.
I'm not saying all cap raises end badly for investors, but a lot do. Personally, I prefer companies that fund their business strategy with plain old credit facilities or by issuing bonds. You can only go to the well so often before investors get sick of the yo-yo effect on the share price.
Actually, one wag on the other channel said that if it wasn't for HGH's string of cap raises, the SP would be $5 by now. A joke of course, but there might be a grain of truth in it
I have never known banks NOT to undertake capital raisings on a fairly regular basis - it's in their DNA!
I often scratch my head as to why they bother to pay dividends and in fact, they have at times paid dividends and raised capital at the same time! Guess shareholders in banks see them as dividend stocks so they must keep the faith.
I agree with you that HGH is currently trading cum-CR as that's the market consensus out there that they need additional capital to tackle Australian banking properly. And many (including me) are wary indeed of NZ companies expanding into Australia!
Great article by Jenny Ruth the other day on the Heartland Australian expansion...extract
Heartland already has years of operating experience in Australia under its belt and there is another crucial signal that it's likely to succeed across the Tasman. Challenger has starting raising retail deposits and, in the seven weeks beginning Jan 8 this year, raised $528 million at a rate that Heartland said was 134 basis points lower than its current cost of funds. It has financed the reverse mortgage business in Australia to date through wholesale money by selling medium term notes and through securitisation.
She goes on to note that Heartland have a dominant market share of 41% in the reverse home loan business in Australia with strong ongoing growth of 20% per annum. HGH already have a very strong and highly profitable market presence in Australia.
Analysts forecasts EPS and DPS
Craigs FY24 13, 10
Craigs FY25 14, 10.8
Craigs FY26 17, 12.8
Price target $1.76
Forsyth Barr FY24 15.1 , 10
Forsyth Barr FY25 15.8, 11
Forsyth Barr FY26 18.4, 12
Price target $1.37
Worth noting: Both analysts are picking good growth in earnings and dividends in FY25 and FY26.
Quote from: Teitei on Mar 02, 2024, 10:06 AMI have never known banks NOT to undertake capital raisings on a fairly regular basis - it's in their DNA!
I often scratch my head as to why they bother to pay dividends and in fact, they have at times paid dividends and raised capital at the same time! Guess shareholders in banks see them as dividend stocks so they must keep the faith.
I agree with you that HGH is currently trading cum-CR as that's the market consensus out there that they need additional capital to tackle Australian banking properly. And many (including me) are wary indeed of NZ companies expanding into Australia!
Over last 6 and a half years HGH have made $529m in profits and paid out $387m in divies....ie retained $142m for future growth. Not much eh ..reflectingbpayout ratio of 73%
DRP has given them $79m capital and capital raises over that time another $257m capital.
Could say (cynically) capital raises are needed to keep paying the high dividends.
That high payout ratio will always be a drag on the share price.
When I say the high dividend payout will be a drag on the share price I'm really saying that it's unlikely to get to $2.50
But as Basil wisely points out the HGH share price is subject to extremes in market sentiment ...like gloom now and often times of super exuberence (the $2.50 time) ..or in investing terms undervalued and overvalued
One can see how that market sentiment changes from that Price/Book chart I put up the other day. Whether your preferred valuation multiple is P/B or PE (essentially the same) now is a great time to be buying HGH but as Basil points out when that multiple gets very (excited punters) have plans in place to see ....and await the next opportunity
I'm sure Basil won't mind me summing up his current thinking in that HGH is now dirt cheap and in a couple of years the forecast dividends will be even juicier than now (meeting divie hound in him) but if punters get excited and share price goes over $2.20 his exit plans will will be enacted
Can't lose strategy methinks
Glad someone gets it but the fact that most don't confirms my belief that sentiment is extremely negative...a classic buy in gloom strategy that's got a very high probability of sucess
The impact of Heartland's high dividend payout ratio and capital raises can Belsen in table below
Like underlying NPAT last 5 years have grown at 10.% pa (reported NPAT at 7.6%pa) but underlying EPS has grown at 5.1% pa. Remember the rule that EPS drives share price.
Book Value (or Shareholder Funds) is essentially the value of the company. It basically increases from retained earnings plus new capital. In $ terms it has grown at 9.2% pa but on a per share basis it's grown at just 4.0% pa. Remember BV is also a key driver of market valuations (ie share price)
Hope you can see this is why I keep saying high dividends and the need for capital raises has been and no doubt continue to be a drag on the share price...after all on a per share basis HGH is a low growth company and if anything its share price is driven by prevailing sentiment.
Whatever currently gloomy times so good time to buy.
I've also noted the number of shares over the years ...from capital raises and from DRP
IMG_5675.png
Even the Heartland web site seems to be crying out BUY BUY at $1.22
IMG_5676.jpeg
Nothing wrong with 5.1% CAGR in eps and that's not inconsistent with its peer group.
I think they can do about that going forward too so using my deep value filter (Ben Graham no growth PE of 8.5, (adjusted for 10 year risk free rate at 4.8% instead of 4% gives about 7.8 for a no growth company + 1 PE of every % of CAGR gives a fair PE of 7.8 + 5.1 = 12.9 which is about the midpoint of their average multiple over the years. Interestingly, HGH's peer group is currently trading on that sort of metric.
BEN 11,7
BOQ 11.7 (Not a typo they are the same)
WBC 14.4
ANZ 12.9
NAB 15.1
HGH 6.75
Average of peer group 13.16
That suggests to me HGH is fairly priced when at the midpoint of their PE range which is normally 9-18 but the extremes of negativity and positivity with this one are really quite pronounced and in my view are definitely actionable events.
Quote from: Basil on Mar 03, 2024, 02:07 PMNothing wrong with 5.1% CAGR in eps and that's not inconsistent with its peer group.
I think they can do about that going forward too so using my deep value filter (Ben Graham no growth PE of 8.5, (adjusted for 10 year risk free rate at 4.8% instead of 4% gives about 7.8 for a no growth company + 1 PE of every % of CAGR gives a fair PE of 7.8 + 5.1 = 12.9 which is about the midpoint of their average multiple over the years. Interestingly, HGH's peer group is currently trading on that sort of metric.
BEN 11,7
BOQ 11.7 (Not a typo they are the same)
WBC 14.4
ANZ 12.9
NAB 15.1
HGH 6.75
Average of peer group 13.16
That suggests to me HGH is fairly priced when at the midpoint of their PE range which is normally 9-18 but the extremes of negativity and positivity with this one are really quite pronounced and in my view are definitely actionable events.
Yep sure is definitely actionable at the moment ...hope many take the opportunity
HGH's share price sure is inextricably tied in with the state of the economy. I'm surprised more people can't see that 2023/2024 is probably the bottom of the economic cycle. Markets always thinking 6-12 months ahead so even a faint glimmer the worst is over here could be a trigger point to get HGH moving north.
Inflation tracking a lot lower in Australia so they will ease interest rates sooner. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/monthly-consumer-price-index-indicator/latest-release
QuoteYep sure is definitely actionable at the moment ...hope many take the opportunity.
You can lead a horse to water, but you can't make it drink.
Winner, as you mentioned in an earlier post the BV per share has increased about 4% over your chosen period.
As you also mentioned some of this increase is because of capital raises.
I just wondered if people realise the magnitude of the Aug 22 capital raise.
By my calculations because the capital raise was materially above BV per share the capital raise approximately raised the BV by 5%.
Capital raise was at $1.80, BV at the time was closer to $1.40
There were a lot doubters and nay sayers around when Heartland started doing reverse mortgages in Australia buying Seniors Australia
Why go to Australia and heck buying off private equity as well got a few saying a bad move.
Seems to have worked out well
As Basil says dominant share of reverse mortgages market and doing well in other segments ......and Oz businesses make up decent share of overall Group profits
Challenger will turn out just fine
Quote from: winner (n) on Mar 03, 2024, 02:02 PMEven the Heartland web site seems to be crying out BUY BUY at $1.22
IMG_5676.jpeg
No-ones mentioning the TA. I wonder why? Don't buy in a downtrend, don't try and catch a falling knife - all those wise sayings have fallen on deaf ears in seems.
IF the TA worm starts to turn, IF key indicators in the next report (NP, EPS, NIM, FCF) start looking positive, IF Challenger gets bank approval and legacy issues don't eventuate, then and ONLY then, would I be interested again in HGH. I don't care if I miss the first 20c of growth but if I've removed the risk of losing capital by buying too soon - in a downtrend, with a bad mid-term report - then I'd much rather do that.
If Jeffs dreams come true, then missing out on early gains will be a pittance compared to the long term ones.
You snooze you lose? I prefer to think of it as sleeping easy rather than face the waking nightmare that recent HGH investors have found themselves in.
Quote from: LoungeLizard on Mar 04, 2024, 11:00 AMNo-ones mentioning the TA. I wonder why? Don't buy in a downtrend, don't try and catch a falling knife - all those wise sayings have fallen on deaf ears in seems.
IF the TA worm starts to turn, IF key indicators in the next report (NP, EPS, NIM, FCF) start looking positive, IF Challenger gets bank approval and legacy issues don't eventuate, then and ONLY then, would I be interested again in HGH. I don't care if I miss the first 20c of growth but if I've removed the risk of losing capital by buying too soon - in a downtrend, with a bad mid-term report - then I'd much rather do that.
If Jeffs dreams come true, then missing out on early gains will be a pittance compared to the long term ones.
You snooze you lose? I prefer to think of it as sleeping easy rather than face the waking nightmare that recent HGH investors have found themselves in.
very interesting you say that....Beagle is on here saying he would not buy until up trend was confirmed.....in saying that I change my mind about investments
Brokers recent research.
Craigs.Overweight...Target Price [12mths].$1.76
Forbar.Neutral......Target Price..........$1.37
Jarden.Overweight...Target Price [12mths].$1.92
Current share price $1.22
Quote from: lorraina on Mar 04, 2024, 11:45 AMBrokers recent research.
Craigs.Overweight...Target Price [12mths].$1.76
Forbar.Neutral......Target Price..........$1.37
Jarden.Overweight...Target Price [12mths].$1.92
Current share price $1.22
As Mr Graham said "In the short run, the market is a voting machine but in the long run it is a weighing machine."
Market voting for $1.22 but the brokers seem to have different models of weighing machines
At least they give us some comfort
Quote from: snapiti on Mar 04, 2024, 11:36 AMvery interesting you say that....Beagle is on here saying he would not buy until up trend was confirmed.....in saying that I change my mind about investments
I'm only prepared to buy in a downtrend in truly exceptional circumstances. Has to be extreme value, extreme negative sentiment and my Beagle nose for a feed all telling me to act.
Quote from: lorraina on Mar 04, 2024, 11:45 AMBrokers recent research.
Craigs.Overweight...Target Price [12mths].$1.76
Forbar.Neutral......Target Price..........$1.37
Jarden.Overweight...Target Price [12mths].$1.92
Current share price $1.22
Thanks for sharing. Removing any bias average 12 month target price is $1.683 and presently trades at a net $1.18, ($1.22 last time I looked less the 4 cents you get back almost immediately with the interim fully imputed dividend). $1.683 / $1.18 gives 42.7% potential upside in the next year.
Quote from: LoungeLizard on Mar 04, 2024, 11:00 AMI don't care if I miss the first 20c of growth but if I've removed the risk of losing capital by buying too soon - in a downtrend, with a bad mid-term report - then I'd much rather do that.
Fair enough mate, I get where you are coming from.
Quote from: LoungeLizard on Mar 04, 2024, 11:00 AMNo-ones mentioning the TA. I wonder why? Don't buy in a downtrend, don't try and catch a falling knife - all those wise sayings have fallen on deaf ears in seems.
Interesting to see Basil and Winner ramping HGH together..... seems HGH has powerful friends making lots of noise.
However, I'm with you LL...... The TA is not great.... not even a golden cross in sight.
Then there is Basil's much stated view that
"bad news always comes in three's." and perhaps many of us have lost count since the dark $1.80 cap raise days....!?
Nice to watch this one play out from the sidelines. GLH.
Quote from: Left Field on Mar 04, 2024, 12:39 PMInteresting to see Basil and Winner ramping HGH together..... seems HGH has powerful friends making lots of noise.
However, I'm with you LL...... The TA is not great.... not even a golden cross in sight.
Then there is Basil's much stated view that "bad news always comes in three's." and perhaps many of us have lost count since the dark $1.80 cap raise days....!?
Nice to watch this one play out from the sidelines. GLH.
Not very often Beagle is wrong about his punt....W69 very shrewed as well
Thanks for your kind words Snapper. Last time I backed up the truck properly on HGH was @ $1.30-$1.35 in Nov 2020...that turned out to be a very lucrative experience. The forward metrics and share price are even more attractive this time. This time I have taken a more measured approach, knowing its likely there's a capital raise coming in due course.
Quote from: Basil on Mar 04, 2024, 01:08 PMThanks for your kind words Snapper. Last time I backed up the truck properly on HGH was @ $1.30-$1.35 in Nov 2020...that turned out to be a very rewarding experience. Forward metrics and share price even more attractive this time.
The compliment is well earned Basil not forgetting to mention many would have also saved themselves a heap of capital from your prudent warnings about other stocks
Quote from: Left Field on Mar 04, 2024, 12:39 PMInteresting to see Basil and Winner ramping HGH together..... seems HGH has powerful friends making lots of noise.
However, I'm with you LL...... The TA is not great.... not even a golden cross in sight.
Then there is Basil's much stated view that "bad news always comes in three's." and perhaps many of us have lost count since the dark $1.80 cap raise days....!
Nice to watch this one play out from the sidelines. GLH.
Yep, I'm with you there LF. The sideline is the safest place to be for the moment. That may change of course and if/when it does I will be the first to look at buying. At the moment there's a yawning chasm between the SP and the 200MA line and every time a resistance level looks to have formed it's smashed on the downside.
I'm not an accountant (does it show?) - my degree was in economics - and I'm very doubtful about the assertion that our AND the Australian economies are truly in recovery mode. OZ growth has more or less flatlined with cost of living pressures, high inflation and interest rates. Livestock agriculture - HGH's target sector - is particularly under pressure and, if anyone has noticed, OZ are going through sustained drought conditions which are predicted to get worse. I'm unconvinced about the future of livestock farming in Australia in the coming years.
As far HGH is concerned, the next 6 months will be telling. A good end of term report will calm nerves but a bad one - and a further cut to dividends - will drive the SP down further. Given that investors got badly burnt with the last cap raise HGH might have to deeply discount the next one. In those circumstances $1 share could become a reality - back to where it was 4 years ago.
Quote from: lorraina on Mar 04, 2024, 11:45 AMBrokers recent research.
Craigs.Overweight...Target Price [12mths].$1.76
Forbar.Neutral......Target Price..........$1.37
Jarden.Overweight...Target Price [12mths].$1.92
Current share price $1.22
I sometimes heard it suggested that Jarden have the best and most thorough analysts. Penny for your thoughts on that.
I think most people would agree with that comment,however some analysts seem to be very good on the odd stock.
HGH for example.When HGH was formed Craigs' target price was always set about 5 cents below the then current share price.
Think Craigs always had a neutral opinion.Jarden's were usually a bit more positive,but the real surprise was Forbar's analyst, who always seemed to be spot on with his target price and HGH's earnings.
Now today.?..........I just do not know.
I had heard that Jarden were not on earnings call and have not updated their research note (as of a couple of days ago) so $1.90 might change.
Lorraina, Any idea as to how recent that note is?
The last cap raise 08/22 Jarden participated to the tune of 12m shares at $1.80 each. Jarden according to last disclosure 12/22 have 35 million shares or five percent of shares for both Jarden and Harbour. Looks like a large unrealized loss at current price.
As far as who has the best and most accurate research notes, in my opinion it depends on the analyst. Arie from Jarden in my opinion is the best in the retirement sector. And like most people sometimes they ALL get it wrong.
Seems broker analyst gurus are only good at following the share price with their targets ....up and down
Chart from Marketscreener starts mid 2019
IMG_5677.jpeg
Quote from: Shareguy on Mar 04, 2024, 03:13 PMI had heard that Jarden were not on earnings call and have not updated their research note (as of a couple of days ago) so $1.90 might change.
Lorraina, Any idea as to how recent that note is?
The last cap raise 08/22 Jarden participated to the tune of 12m shares at $1.80 each. Jarden according to last disclosure 12/22 have 35 million shares or five percent of shares for both Jarden and Harbour. Looks like a large unrealized loss at current price.
As far as who has the best and most accurate research notes, in my opinion it depends on the analyst. Arie from Jarden in my opinion is the best in the retirement sector. And like most people sometimes they ALL get it wrong.
HGH.NZ | Heartland Group Holdings Limited | Financials
1H24 impacted by impairments; looking ahead
to Aus Bank establishment
Results | 01 March 2024 (19:08 NZDT)
Hey Basil ....where was HGH on most sold or most bought last week rankings that Jarden produce
Could be interesting
HBL/HGH share price since it listed below
Basil says good buying when way below trend line ......and should sell when way above trend line.
Methinks he's right this time ....again
IMG_5678.png
Cool chart mate. Shows the share price is more of out whack now than even during the extreme panic and fear of the onset of the global Covid pandemic in March 2020. Makes no sense to me. Plenty of patience required and it will revert to the trendline or above in due course. Yeap, I have traded all those extremes over the years and done handsomely well. I see no good reason to believe it won't happen again but good things take time.
# 1 last week in Jarden's buy's, v #8 the week before that.
Trades ex 4 cent fully imputed divvy tomorrow.
Quote from: Crackity on Mar 04, 2024, 02:53 PMArts degree eh LL
Hah! You could say that Crackity. A good economist needs a foot in both camps - the real world and the world of economics. ;)
But you could probably say the same thing about Accountants...
Quote from: winner (n) on Mar 04, 2024, 04:23 PMHBL/HGH share price since it listed below
Basil says good buying when way below trend line ......and should sell when way above trend line.
Methinks he's right this time ....again
IMG_5678.png
Not a bad philosophy and the hounds pedigree in this matter is beyond rebuke. It's both the timing and the issues that HGH are currently facing that bothers me and keeps makes me keep my powder dry. Sometimes the SP is way below the line for good reasons and until those reasons change the SP won't either. If the next few announcements are positive and the line starts to move up, then jump in quick. If things in OZ become problematic, then hold your horses. Gambling that the downtrend has stopped - without any real evidence - and that this is a good time to buy is just that - a gamble.
BTW - OCA is WAY below the line but I don't see anyone lining up to buy. Too many imponderables? The jury still out on their new strategy? A cut in dividend? Sound familiar?
Quote from: LoungeLizard on Mar 04, 2024, 06:08 PMBTW - OCA is WAY below the line but I don't see anyone lining up to buy. Too many imponderables? The jury still out on their new strategy? A cut in dividend? Sound familiar?
Yes, OCA is below the line ...but the big problem is that the OCA trend line is sloping down
Quote from: winner (n) on Mar 04, 2024, 07:02 PMYes, OCA is below the line ...but the big problem is that the OCA trend line is sloping down
Hang on - are you saying that HGH's trend line is NOT sloping down? Evidence?
And I get your chart shows the trend line sloping up, but I don't see it in the SP, event line or in any momentum analysis. What points are you plotting?
OCA's trend line from 2022 looks remarkably like HGH's. ie a confirmed downtrend. If you go back to the year dot, as Winner's graph does with HGH, then you can plot the peaks from years ago and give the appearance of an upward trending line. If you do this with OCA, and ignore the trend from the last couple of years you can make OCA look like they are going up. I respect your graphing skills there Winner and find them really useful, but not in this case. The trend line for the last couple of years tells the real story.
Quote from: LoungeLizard on Mar 04, 2024, 07:37 PMOCA's trend line from 2022 looks remarkably like HGH's. ie a confirmed downtrend. If you go back to the year dot, as Winner's graph does with HGH, then you can plot the peaks from years ago and give the appearance of an upward trending line. If you do this with OCA, and ignore the trend from the last couple of years you can make OCA look like they are going up. I respect your graphing skills there Winner and find them really useful, but not in this case. The trend line for the last couple of years tells the real story.
LL FWIW Here's a comparison of HGH v OCA SP performance over the last 5 years.
Hardly inspiring for either company.
Quote from: Left Field on Mar 04, 2024, 08:10 PMLL FWIW Here's a comparison of HGH v OCA SP performance over the last 5 years.
Hardly inspiring for either company.
Nice graph there LF. The profile, as I said, is remarkably similar. And for the last 2 years they've both been in a relentless downtrend. Different companies with different stories of course, but if one is going to compare them, you at least need to use the same time period.
You'd have to be very brave to adopt those two unloved "puppies" at the same time. Arguable though that both have never been better value so you never know, maybe both will be a rewarding experience....
Basil is one of a rare breed ......an acconomist ....one who specialises in both accounting and economics
Jardens latest note says
A potentially dilutive equity raise (~10cps at $200m raise) are likely to weigh on the stock until resolved.
How much capital does Heartland need when they make $200m in 2028
Say that's a ROE of 12% which implies something like $1.65 billion needed
Current shareholder funds are just over $1 billion ......so need another $600m at least in next few years
Profits F24 to F28 could total $700m and if current divie policy maintained they will retain about $200m of those earnings
The DRP could contribute another $50m or so
So we have $250m of the $600m that might be needed by 2028
That's $350m short and if Craig's are right on the $200m coming soon we'll still probably see another raise in a few years.
That's how I see it what a lot also depends on what equity ratio Heartland are happy with
All the signs are there they will do well in Australia, an entrenched dominant market share of 41% in the reverse home loan business is no easy thing to achieve by any means. I'm happy to support them with their growth ambitions and agree with your comment above Winner, it's likely the next capital raise won't be the last.
Their expectation was that Challanger would lower their cost of funds there by 50-100 bps, midpoint 75 bps but the signs are very encouraging with 134 bps lower funding costs with the initial ~ $500m raised on term deposit there. That's getting on toward doubling the cost savings they were expecting. The other thing with having a dominant market share is you don't need to be the price leader so they should enjoy a really good NIM with their reverse mortgage book there.
I feel like we're on the cusp of something special here. After so many decades of Australian owned banks dominating the N.Z. market, Challenger will dominate the reverse home loan market over there with nice juicy fat margins on this very low risk lending.
$200m in 2028
Going from $110m to $200 seems big step.
A big chunk of it is going to come from a big decrease in CTI ...cost to income .....from around 44% now to <35% in 2028.
IT and more things being done on online .......ie less people .....doing heaps more with a little more ...good stuff
Rough sums see that building up and contributing about $50m in 2028...... that is expenses at 35% of income instead of 44%
So it's not all about lending more but doing it very efficiently
trading x divi today but still the same closing SP as yesterday
Quote from: Shareguy on Mar 05, 2024, 08:58 AMJardens latest note says
A potentially dilutive equity raise (~10cps at $200m raise) are likely to weigh on the stock until resolved.
If it's projected that the expansion will require further funds, they are probably better off getting on with it. Otherwise the cap raise overhang will keep the SP subdued for the foreseeable future, regardless of how the OZ expansion goes.
Jeff's next preso -
Australia is a vast expanse of opportunities. We already have 41% of the reverse mortgage market and growing fast in other segments. And soon Challenger Bank will be going gangbusters. I feel like we're on the cusp of something special here.
I have a dream. I dream if $200m profit in 2028
I have a dream. I dream of many shareholders who came along with and are now much richer.
Thought I'd offer a few perspectives on the 1H results as there is the (increasingly) usual good, bad and ugly. A lot of good stuff has already been written here about how the current valuation metrics compare to its historical range, the ugly TA and chart, macro background and investor sentiment, so won't bother to comment on those as I don't have anything new to offer there.
Below I've mainly focused on credit risk and cashflow as I believe these by and large missed by the brokers and broader investment community.
The Good
Fantastic that Challenger has ramped up deposit raising (and at comparatively superior rates to HGH AU's wholesale rate) as I had been concerned that it could a long time for Heartland to raise deposits in Australia given it doesn't have any apparent brand recognition or pre-existing channel to raise deposits. Am heartened that there is a clear pathway to raising funds in quick order than can be used to refinance the Australian business at much better levels, although we don't know yet the marketing/customer acquisition costs associated with Challengers efforts. In theory the 134bps savings referenced could go straight to AU's NIM - in practice I reckon it'll be just a portion of that (maybe half to 2/3rds) as Heartland passes on its lower cost of funds to grow marketshare.
On the earnings call Jeff & co sounded reasonably wedded to HGH's dividend payout ratio, so for those who are primarily invested into HGH for yield that'll be of some comfort. I do acknowledge and concur with many of the points made around the irony of paying out dividends while raising capital, and more particularly how capital intensive its RM business is (more on that below).
Actual incurred credit losses (net of recoveries) were in-line with last year - likewise more on this below. A good result.
and finally I thought the business did an admirable job of managing its fixed costs, and retained aspirations of shrinking its cost to income ratio over time.
Impairment Expense and Credit Risk
It's worth recalling the impairment expense recorded in HGH's P&L is the aggregate of the actual incurred credit losses (eg write offs) during the period, recoveries of previously written off receivables, and the movement in provision for all future expected credit losses. It's instructive to break them apart.
Actual net incurred credit losses (write offs less recoveries) was $7.8m vs $7.5m last year, and equated to 0.36% of average gross finance receivables (excl. reverse mortgages of which there were nil), the same as last year. This is well down from the 0.81% recorded in FY20 when it was doing P2P lending via Harmoney's p2p platform. Back in FY20 personal lending accounted for about 7.3% of all non-reverse mortgage lending, compared to 0.8% in 1H FY24, and carried a very high loss rate (but high NIM%), to the extent that HMY actually shut down that part of the business.
Credit losses.jpg
Obviously NIM has come down over the period as high margin personal lending has been replaced with lower margin but higher quality lending. That said NIM has clearly been under pressure as the business declined the opportunity to pass on all its costs in the RM business and competitive pressures particularly with the car dealer market. The best way to get a view on the risk adjusted mix of the business is net lending margin, which is NIM less net incurred credit losses, which reinforces the above point. Worth bearing mind the point of the cycle we are currently in & how that could evolve in the future.
Provisions
On the other channel I have harped on about FY23 being under provisioned. It's interesting that in the FY23 result conference call mgmt said they expected FY24 to have a similar overall credit result, guidance was provided, & guidance was reiterated as late as November 2023 at the AGM, before being downgraded largely on account of additional provisioning just a month later in December, so its difficult to argue mgmt's credibility here hasn't been degraded. But what's the risk of additional large provisions and how does current provisioning compare to history?
Provisions.jpg
Provisions solely relate to non RM lending - RM's have never carried a provision for future expected credit losses - something I've written about before on the other channel and to keep it brief won't touch on the reasons why but I do remain broadly comfortable with this looking at their latest lending metrics. Provisions increased from 1.21% of gross non RM receivables to 1.66% at 31 Dec 2023. This is well down on the peak of 2.02% at 30 June 2020, when the world looked like it was ending thanks to covid and personal lending was 7% of lending (vs 0.8% now). I think these are the only real sense checks available to see how well provisioned (or not) the group is - will leave others to decide for themselves. But say the group needed to move to its 2.02% peak provision rate - that would require an additional $15m increase in provisions.
Cashflow and Cash NIM
The RM business has fantastic long term tail winds and Heartland has a strong position the industry, but it is a capital intensive industry as interest is capitalised. By my estimates, that capitalisation accounted for half the increase in the RM book from 30 June 2023 to 31 December 2023, ie the RM book grew from $2.4bn to $2.64b, an increase of $237m, with net origination (origination less repayments) of $119m, implying $118m of growth through capitilised/compounded balances. That from one perspective is a marvelous financial thing as the receivables compound until the RM is retired (either through the borrower selling the house to downsize, move into a retirement village, or pass away), but it also has cashflow consequences that have to be funded.
The point above is evident to me in looking at HGH cash NIM (per the statement of CF) relative to its reported P&L NIM. Picking out the cash interest received and cash interest paid in the cashflow statement provides with with a cash NIM. Over previous 5 full financial years 'cash nim' to 'reported nim' has averaged 56.4%, and been as high as 65%. In 1H FY24, that number shrank to 28.1%. So from a quality of earnings perspective things have deteriorated. That cash will be received, but its further down into the future.
The fall in cash nim to reported nim probably due to two things: the increasing proportion of RM as a % of the total book, and a falling repayment rate within the RM book. In the last 3 years, the repayment rate in NZ averaged 14.6% vs 12.9% now, and in Australia 16.2% vs 13.8% now. The housing market plays a part of this based on comments made by mgmt in the past, with declined and modest house prices, and slower turnover of stock, reducing the number of voluntary house sales that would normally see people repay their reverse mortgage (ie want a high price before selling down to move into a retirement village, or just longer to sell).
Capital requirements
I've been banging on for a long time about the need to raise capital to acquire challenger and that hasn't changed. But it's also worth remembering that Heartland Bank (NZ subsid.) has 4.5 years to reach the new capital adequacy rules. Total capital has to go from 14.07% to 16% by 1 July 2028, and core capital to 11.5%. The brokers all seem to forecast this will be met in the normal course of business but I haven't looked closely as the specifics of their modelling. Retained earnings, reinvested dividends, falling interest rates causing a positive revaluation of mark to market assets, additional subnote issues like the one they did last year could all be tailwinds to achieving the new requirements. If those didn't do the trick, a review of payout policies or equity capital would have to be on the table. I don't have a view on it, but worth mentioning.
There are a few other rats and mice within the result but I think the above points are the key issues. Apologies for the long post.
Great post there FM. A lot to digest. I'm impressed by your objectivity as I seem to recall you being very positive by the HGH metrics/vision at the time of the cap raise and you intended to participate. Us lesser mortals would have been embittered at being burnt to such a degree, but you are obviously made of sterner (and flame-proof) stuff. ;)
Excellent post Fiordland Moose, many thanks indeed for drilling right down into the subjects you covered so well. Will review in more detail later.
So, do you mind sharing whether you like the company at this price point given the record low forward metrics that I've been talking about, and have you been adding at these level's ?
Yes great post FM, very interesting indeed. Hopefully it won't be long to wait until we find out Challenger approval or otherwise. And most importantly funding. It seems that Heartland have no doubts on approval. I just don't no if they can be that confident.
As a matter of interest past cap raises by Hesrtland have been -
Feb 14 at 88 cents
Dec 16 at $1.46
Nov 17 at $1.70
Aug 22 at $1.80
Xxx 24 at $1.xx
Also as a matter of interest the DRP prices have been ........most recent first
1.69
1.64
Suspended
2.11
2.27
1.80
1.25
1.59
1.54
1.47
1.63
1.77
1.80 Sep 17
If nothing else shows why HGH a real bargain around $1.20 today
Would appear a number of people who have been sitting on the sidelines have decided now is the time to buy.
Perhaps the tide has turned.?
Quote from: lorraina on Mar 05, 2024, 03:22 PMWould appear a number of people who have been sitting on the sidelines have decided now is the time to buy.
Perhaps the tide has turned.?
Yep, it does look that way. Not for me, but I wish everyone well. If there's a sustained upturn I may yet join in. Not before the inevitable cap raise though - any gains made between now and then will be wiped out and then some.
That's the thing about tides - they go out again just as quick!
It's been noted on the other channel that whilst HGH on the NZX has lifted today, it is currently 15% down (18c) on the ASX. Extremely low volumes though. Probably nothing.
Correct Nothing...lol.
2,145 shares at au$1.02
Sellers for 960 shares are at au$1.15.
Meantime in the land of the long white cloud HGH are trading ex the 4 cps divie at $1.25.
It seems for some really strange reason people didn't want the 4 cent fully imputed dividend...the day it goes ex divvy is the strongest day in months, go figure lol
I see that that other flea ridden dog OCA on a roll
Close at 63 today ....was 55 a few days ago
Methinks chart will look a lot better by end of week with an even higher share price.
Even stocks like OCA look good when completely oversold
Or maybe market happy Brent on his way
Quote from: Basil on Mar 05, 2024, 05:07 PMIt seems for some really strange reason people didn't want the 4 cent fully imputed dividend...the day it goes ex divvy is the strongest day in months, go figure lol
Those just interested in divie still reluctant to buy just yet
And then there's a few who don't want to miss out .....another 4 or 5 cents tomorrow they won't notice they could have missed a bit buying yesterday
Quote from: winner (n) on Mar 05, 2024, 05:07 PMI see that that other flea ridden dog OCA on a roll
Close at 63 today ....was 55 a few days ago
Methinks chart will look a lot better by end of week with an even higher share price.
Even stocks like OCA look good when completely oversold
Or maybe market happy Brent on his way
My goodness, anyone brave enough to adopt both this unloved mutt and that other flea ridden mangy OCA thing last week is doing really well but who on earth would be crazy enough to do that in the same week lol Gosh though Winner, you could be right. Looks like the makings of a new uptrend in OCA. Maybe there's something in this buying at extreme deep value strategy.
Quote from: Basil on Mar 05, 2024, 05:19 PMMy goodness, anyone brave enough to adopt both this unloved mutt and that other flea ridden mangy OCA thing last week is doing really well but who on earth would be crazy enough to do that in the same week lol Gosh though Winner, you could be right. Looks like the makings of a new uptrend in OCA. Maybe there's something in this buying at extreme deep value strategy.
Careful there, Basil. You'll be recommending the Warehouse next!
And Synlait lol
Bloody heck ......
In Australia, the four major banks have also reached new peaks – CBA is trading at a record high; NAB, owner of BNZ, its highest post-global financial crisis in 2009; ANZ, highest since 2017; and Westpac, highest since 2015.
Smith said the banks have sailed through the period of high interest rates relatively unscathed with bad debt levels and provisions lower than people expected.
$2 only a matter of time. Lots of patience will reap big rewards here.
Quote from: Basil on Mar 07, 2024, 07:30 PM$2 only a matter of time. Lots of patience will reap big rewards here.
Like your confidence Basil....I am not as confident as you but happy to have picked a chunk up with DRP attached and including that sit on a nice 10% gain.
Yep think you are right when you say some patience is needed here to reap the best rewards.
Quote from: Basil on Mar 05, 2024, 05:07 PMIt seems for some really strange reason people didn't want the 4 cent fully imputed dividend...the day it goes ex divvy is the strongest day in months, go figure lol
hard to understand investors logic sometimes, it presented an excellent buying opportunity, thanks Mr markets
1.30 Basil.....you been down at the boat club preaching
Hey Snapper. This is the sort of timeframe I am thinking of, from a previous post on 27 February and that price was cum the 4 cent fully imputed divvy.
QuoteDisc: I have been accumulating at $1.19. Yeah I know there are risks and a probable capital raise coming but my Beagle nose is registering a solid feed coming here if one patiently holds for a couple / few years.
Very early days but it's nice to see a few runs on the board already.
Quote from: snapiti on Mar 08, 2024, 01:02 PMhard to understand investors logic sometimes, it presented an excellent buying opportunity, thanks Mr markets
There's always possibilities around dividend time. It's the busy time for traders and unquestionably there's buying opportunities to get a dividend and exit with a profit. Good on you if that's the case.
But the longer term issues and uncertainties surrounding HLG are still to be resolved and if you are in it for the long term, then it really isn't best to start counting your (paper) chickens just yet. There's obviously a bit of chatter about HLG at the moment and it may just turn out to be a dead cat bounce off a 52 week low - extrapolating from a week of trading is a fools errand.
AS I've said before, unless there's an uptrend supported by data, I'm not interested in a speculative 10 or 20c gain - just not my thing. There's plenty of movements of that magnitude everywhere, everyday. Chasing each one is a mugs game and the odds are against you.
So, still happy to sit here and listen to the chatter. If Challenger get's, as expected, it's banking licence, then a cap raise will most likely follow. And where the SP goes after that will be the next talking point :-\
Maybe the cap raise is the reason its getting a little pump right now?
I'm expecting the capital raise to be announced along with the announcement of the Challenger banking license approval which could be 6-12 months away.
I think it got oversold after the half year profit announcement by some people who were disappointed with the reported number and this minor retracement so far is exactly that, only minor and just the start. Still very heavily oversold on a relative basis with its peer group. I get that some people will say that's fully warranted but my view is over the medium term HGH track's its peer group multiples fairly closely.
I've learned before that HGH can deliver huge returns if you buy when its heavily oversold and patiently wait for the recovery.
Quote from: lorraina on Mar 04, 2024, 11:45 AMBrokers recent research.
Craigs.Overweight...Target Price [12mths].$1.76
Forbar.Neutral......Target Price..........$1.37
Jarden.Overweight...Target Price [12mths].$1.92
Current share price $1.22
Methinks that Jarden guy must have been on happy pills when he came up with avrarget of 192
With Heartlands high dividend payout etc 192 in a years time would be at pretty extreme multiple
In other words a time when Basil would be looking to sell ....you know his buy when valuations are low but capital management risk strategy and selling when high.
Be good to see HGH close to 2 bucks in a years time.
Take off ...close 131 today
Up only way from here
Heartland 1.0 reached $2.38 before Jeff shelved the old version and released Heartland 2.0, currently trading at $1.31, at a lower yield. Had HGH 1.0 been allowed to continue its slow, sustained growth path, the SP would probably be around $2.60-$2.70 by now with a good yield. Those that didn't read the writing on the wall and exited their position at the last cap raise, will wait a long, long time before they get anywhere near the sort of profits they left on the table.
But for those that are now considering following the pack in entering the market now, they need to be aware that HGH 2.0 is no longer focused on the smaller NZ investor. The manner of the last cap raise showed that - a 30% capital destruction exercise in a matter of weeks. That last cap raise ($1.80), announced 23/8/22, was a 15% discount on the SP at the time ($2.12). The SP never recovered and went into a sharp decline to where it is now. Given that everyone - Institutions included - are sitting on big losses from that raise, I would think that HGH 2.0 may have to discount the SPP even more.
But assume that in 6 months time HGH do come round with the begging bowl and the discount is again 15%. Even if the SP has risen to say, $1.50 by then - doubtful but possible - a 15% discount will take the SP to under where it is trading today. Investors will have seen no growth and be looking at a reduced or suspended dividend to boot. If you are one of the lucky ones who bought near the bottom, you may get out with your capital intact. Anyone buying in after that will either have to sell down at a loss, or double down with participation in yet another cap raise. Deja vu, all over again :)
Sorry to rain on the parade, but when every man and his monkey is reaching for the buy button, then that is when there needs to be a few countervailing viewpoints in the mix. Good luck to all in guessing when the Cap raise steamroller will arrive. It could be here sooner than you think. In the meantime...party on :D
Maybe Heartland attractive acquisition target ...pretty cheap at moment
Action in Oz today -
The Australian market came alive with a $6 billion takeover offer by Nationwide Building Society to buy Australian securities exchange-listed (ASX) Virgin Money UK, which climbed 32.7% to A$4.075 (NZ$4.37)
On Wall Street, the Nasdaq Composite rose 1.51% to 16,237.38 points; the S&P 500 was up 1.03% to 5,157.36; and the Dow Jones Industrial Average gained 0.34% to 38,791.35.
The Virgin Money activity spurred fellow banks listed on the NZ market. ANZ was up 65c or 2.08% to $31.95; Westpac increased 76c or 2.64% to $29.60; and Heartland Group gained 5c or 3.97% to $1.31.
https://www.youtube.com/watch?v=vjD3EVC1-zU
Winner, Just reverting to average peer group forward PE for FY25 would see it at $2.08 ! $2+ next year is quite plausible.
Quote from: Basil on Mar 08, 2024, 07:17 PMhttps://www.youtube.com/watch?v=vjD3EVC1-zU
Winner, Just reverting to average peer group forward PE for FY25 would see it at $2.08 ! $2+ next year is quite plausible.
Basil - by "peer group" do you mean the other digital or neo-banks currently running in OZ? I'd be doubtful of those forward PE projections if that is the case, given that many of them are struggling to keep their heads above water. It would be wrong to compare Challenger/Heartland to the big conventional banks as you'd be comparing totally different entities.
I think I'm right in saying that Volt bank was the first such digital bank to gain a full banking licence in OZ back in 2017. It folded in 2022. Others, like Challenger itself, have struggled to attract enough deposits to be able to function. Judo Bank has probably been the most successful of this new wave of digital banks but even there the SP has been a real rollercoaster and they've faced the twin problem that all these small neo-banks have faced - namely attracting enough deposits whilst maintaining a decent net interest margin. Currently, there are economic headwinds that affect both these areas and the small banks are more susceptible to them.
It's a super-competitive and risky area of the banking business that HGH are entering in OZ, but they will be migrating their Reverse-mortgage and STockCo clients into the Challenger system, so that will help to prop things up. For a while.
I posted the peer group I have used for over a decade quite recently. I've also posted that in my experience HGH tracks its peer group average multiple quite closely the vast majority of the time.
Quote from: Basil on Mar 08, 2024, 09:09 PMI posted the peer group I have used for over a decade quite recently. I've also posted that in my experience HGH tracks its peer group average multiple quite closely the vast majority of the time.
In that case, if you are comparing the PE metrics of huge, established high street bank like ANZ with the metrics of Challenger Bank, an absolute minnow operating solely as a digital bank, then, respectfully I don't think that's very useful.
Thee are some metrics that are worth comparing, and indeed digital banks can - and should - for example, have a better Cost to Income ratio. Jeff is looking to undercut the established banks in this area. Liquidity ratio, NIM, loans/deposits ratio and others are also useful to compare.
But predicting the SP for extremely small, very new digital banks that barely have a foothold and don't have the scale or operate like the conventional banks is pretty much a finger in the air prediction. A good talking point - nothing wrong with that I hasten to add - but best taken with quite a few grains of salt!
Quote from: Basil on Mar 08, 2024, 07:17 PMhttps://www.youtube.com/watch?v=vjD3EVC1-zU
Winner, Just reverting to average peer group forward PE for FY25 would see it at $2.08 ! $2+ next year is quite plausible.
And hopefully a bit more and then a SELL ......cashing up this cycle gains eh
Quote from: LoungeLizard on Mar 08, 2024, 10:18 PMIn that case, if you are comparing the PE metrics of huge, established high street bank like ANZ with the metrics of Challenger Bank,
Look, this is getting pretty circular...To be clear I am comparing the metrics of HGH which is a well-established bank with those of a peer group in Australia. I have been doing this very successfully for over a decade and I have already shared both the peer group I use and the close correlation in the metrics.
If you want to come up with arguments why this shouldn't work, that's your prerogative but I am telling you it works extremely well and has worked for over a decade and is a very useful tool in determining if HGH is seriously undervalued or overvalued.
I sent you a copy of Jenny Ruth's article. HGH has a dominant market share with its reverse mortgage book in Australia. It's not some start up minnow. Its already has about $1.6 Billion in highly profitable and low risk reverse mortgage lending and they are going to back this into Challenger if they get a banking license.
With or without that approval HGH has a highly successful, well-established banking operation in Australia already and I believe they will grow eps regardless of whether or not the license is approved. This has never been on cheaper forward metrics at any time, either Heartland 101 or Heartland 102. Let that sink in or not, I've done my best to help you open both eyes to the opportunity ahead.
Perhaps we should simply let the share price do the talking now for a while.
It maybe the case that the extraordinary high cost of living and the speed at which this occurred has put a real strain on many retirees, who's only asset is their home, I believe this has made many consider a reverse mortgage product like heartland offers.....plenty of growth left in this sector with an ever increasing retirement base looking to free up some capital.
WE HAVE TAKEOFF
Share price on its way to above $2 again
Over $2 it becomes 'overpriced' and one needs to keep a close eye on the charts to assess when maximum return is likely and SELL
Price/Book preferred multiple for me .....but at end of day it's essentially the same as Basil's peer group multiples monitoring.
FYI average P/B has been about 1.35 ......the recent tops seen share price at about $2.20 and about $2.50 respectively.
Main thing is we are on our way back
IMG_5684.png
With share price taking off goingbto get less DRP shares than we might have expected
Never mind ....one of the few times when DRP shares are worth taking .....unlike those over 2 bucks lol ....or even 170/180 lol
Quote from: winner (n) on Mar 10, 2024, 11:52 AMWE HAVE TAKEOFF
Share price on its way to above $2 again
Over $2 it becomes 'overpriced' and one needs to keep a close eye on the charts to assess when maximum return is likely and SELL
Price/Book preferred multiple for me .....but at end of day it's essentially the same as Basil's peer group multiples monitoring.
FYI average P/B has been about 1.35 ......the recent tops seen share price at about $2.20 and about $2.50 respectively.
Main thing is we are on our way back
IMG_5684.png
Those figures adjusted for when the stock went ex div?
I think the best way to look at it as on its P/nta (nta really just calculated as BV less goodwill) as goodwill balances have grown post stockco acquisition and i reckon they overpaid. Whats ur chart look like ex div and on a p/nta basis?
still reckon it'll show how oversold it is - but might reduce the historical top upbounds and potential upside when viewed in that context
Quote from: Fiordland Moose on Mar 10, 2024, 02:26 PMThose figures adjusted for when the stock went ex div?
I think the best way to look at it as on its P/nta (nta really just calculated as BV less goodwill) as goodwill balances have grown post stockco acquisition and i reckon they overpaid. Whats ur chart look like ex div and on a p/nta basis?
I'll stick with p/b as it's really the direction the line is going in is the key.
And whether they 'overpaid' for StockCo is subjective anyway .... They paid ~$170m for it and booked $140m of goodwill but seem to generating reasonable profits from it .......as you have to say it has some strategic value.
As at June 23 the recoverable amount from selling (calculated as part of impairment testing) was $30m
Quote from: Basil on Mar 09, 2024, 10:38 AMLook, this is getting pretty circular...To be clear I am comparing the metrics of HGH which is a well-established bank with those of a peer group in Australia. I have been doing this very successfully for over a decade and I have already shared both the peer group I use and the close correlation in the metrics.
If you want to come up with arguments why this shouldn't work, that's your prerogative but I am telling you it works extremely well and has worked for over a decade and is a very useful tool in determining if HGH is seriously undervalued or overvalued.
I sent you a copy of Jenny Ruth's article. HGH has a dominant market share with its reverse mortgage book in Australia. It's not some start up minnow. Its already has about $1.6 Billion in highly profitable and low risk reverse mortgage lending and they are going to back this into Challenger if they get a banking license.
With or without that approval HGH has a highly successful, well-established banking operation in Australia already and I believe they will grow eps regardless of whether or not the license is approved. This has never been on cheaper forward metrics at any time, either Heartland 101 or Heartland 102. Let that sink in or not, I've done my best to help you open both eyes to the opportunity ahead.
Perhaps we should simply let the share price do the talking now for a while.
Fair enough Basil. I'm not questioning your undoubted skill at analysing the metrics of companies to determine the right time to buy/sell. I just don't, in this case, go along with the peer group comparison. Risk factors, scale of operations, business strategy are entirely different. But, as we have both have said - each to their own. More than one way to turn a profit. I'll watch with interest and see how things turn out. I'm as comfortable watching on, popcorn at hand, as you are with diving in. Enjoy the ride!
Quote from: LoungeLizard on Mar 10, 2024, 04:27 PMFair enough Basil. I'm not questioning your undoubted skill at analysing the metrics of companies to determine the right time to buy/sell. I just don't, in this case, go along with the peer group comparison. Risk factors, scale of operations, business strategy are entirely different. But, as we have both have said - each to their own. More than one way to turn a profit. I'll watch with interest and see how things turn out. I'm as comfortable watching on, popcorn at hand, as you are with diving in. Enjoy the ride!
Hey loungelizard, what you think of my Price/Book chart
Heartland all by itself ...no peer group comparisons or relativities to the market or anything ...just how Heartland has gone over the years
You have to agree sentiment is changing for the good ...and HGH has never been this cheap
Quote from: winner (n) on Mar 10, 2024, 05:14 PMHey loungelizard, what you think of my Price/Book chart
Heartland all by itself ...no peer group comparisons or relativities to the market or anything ...just how Heartland has gone over the years
You have to agree sentiment is changing for the good ...and HGH has never been this cheap
You're on to it, Winner. Price to book is one of the best indicators of where the SP is - or should be - in historical terms. Whether there's an upswing developing or not is debatable, but even I can see how one might be encouraged to have a punt at this stage.
For me, it's just the risk profile of HGH at this point in time. As I've said I am a notoriously risk averse investor - I have the odd "fun" investments (eg PEB - although that hasn't delivered much fun of late!) - but most of my stocks have proven over time that the tortoise tends to beat the hare with less stress. I'm not interested in trying to time the market - although I must admit I did well in following Basils lead on both HLG and TRA.
But here's a case in point - IFT is my biggest holding (30%) and I dived in only 5 years ago at $3.75. It's now $10.58 -getting on to trebling in value in 5 years. It has delivered an after-tax return of 20% per year over the last
10years. My kind of stock.
I was a fan of HGH up until the pivot to OZ changed the risk profile and the cap raise showed a new contempt for the small NZ investor. I took my (reduced) profits and sold at $1.80. Looking at the SP today, I was glad I did. There's now too many variables with the new HGH direction for anyone to really get their head around. It might work or it might not. A lot of it comes down to trust in Jeff which for me is in short supply. He looks like a guy who wants to make a name for himself by taking on the big boys in their backyard, and he wants your funds to do it with. No thanks. At least, not until the dust of the next cap raise has settled.
I hope your predictions come right, Winner - if all goes well then maybe $2 per share in say, 18 months time, might come to pass. But bear in mind that by that stage it will only return it back to the levels it was three years ago. And I don't think anyone doubts that dividends will be cut along the way.
I got all excited seeing folks talking up HGH, but I'd have to say regardless of how it's fundamentals may or may not appear to stack up, there is no TA (or momentum trader) that would touch this for a buy-in right now. The only tiny thing is HGH perked up from oversold on the RSI (weekly chart) but even then on only 15% of average weekly volume. Every other TA signal says 'hurry up and wait'.
https://invst.ly/13wxb5
Good luck, fortune favours the brave, as they as they, but it's not their money is it. :o
Hey buzz ...... impressive looking candle just week eh.
Looks very bullish to me (not a candle expert) ....definitely not an Abandoned Baby
IMG_5685.jpeg
It was an abandoned baby so I adopted it lol
Quote from: winner (n) on Mar 10, 2024, 07:14 PMHey buzz ...... impressive looking candle just week eh.
Looks very bullish to me (not a candle expert) ....definitely not an Abandoned Baby
IMG_5685.jpeg
Yeah, could just be Basil and you loading up ;D like who knows, only 15% of weekly volume and against an increasing weekly trend of volume capitulating.
We'll see, I'd never buy a weekly candle which is under every other TA indicator. That's it from me, I'm content to sit back and 'wait'. The Risk/reward right now is too tenuous and doesn't support the recent optimism imho.
Quote from: Basil on Mar 10, 2024, 08:17 PMIt was an abandoned baby so I adopted it lol
You such a good soul mate .....possibly there are other abandoned babies looking to be adopted lol
Quote from: winner (n) on Mar 11, 2024, 01:26 AMYou such a good soul mate .....possibly there are other abandoned babies looking to be adopted lol
Who would be brave enough though to adopt two abandoned babies in one week. ;)
Quote from: Buzz on Mar 10, 2024, 06:18 PMI got all excited seeing folks talking up HGH, but I'd have to say regardless of how it's fundamentals may or may not appear to stack up, there is no TA (or momentum trader) that would touch this for a buy-in right now. The only tiny thing is HGH perked up from oversold on the RSI (weekly chart) but even then on only 15% of average weekly volume. Every other TA signal says 'hurry up and wait'
Maybe you might want to have another look at the chart today because others now seem to want to give baby a cuddle and there's been a clear break above the 30 day moving average at $1.29
Quote from: Basil on Mar 11, 2024, 08:56 AMWho would be brave enough though to adopt two abandoned babies in one week. ;)
Maybe you might want to have another look at the chart today because others now seem to want to give baby a cuddle and there's been a clear break above the 30 day moving average at $1.29
Depends on your perspective. 30 Day MA for those with a shorter term outlook, 200 MA for those who want to see a longer term trend. A positive 30 day MA can be the start of a long term trend, or it can just be a blip. At the moment HGH is good for trading and short term gains, but as Buzz says, longer term investors will "hurry up and wait."
That big green candle last week is more impressive than the big red candle Nvida produced the other day
Interesting where both go from here
Quote from: LoungeLizard on Mar 11, 2024, 10:53 AMDepends on your perspective. 30 Day MA for those with a shorter term outlook, 200 MA for those who want to see a longer term trend. A positive 30 day MA can be the start of a long term trend, or it can just be a blip. At the moment HGH is good for trading and short term gains, but as Buzz says, longer term investors will "hurry up and wait."
Look - there are many different trading / investing methods, and more than one of them is successful.
If TA works for you, this is great. Does not mean though that many longer term investors would or should use it. Actually - if many would use it, it would stall the market (see below).
Most "longer term investors" I do know don't care at all about TA. They will check whether an asset appears to be good value for the given price (using whatever criteria they use, but they won't be TA related), and buy if the price is right. Never heard Warren Buffett talking about MA30 or MA200. Have you?
While TA has certainly its merits (as one of many trading tools in the box) - it is crucial for momentum "investors" (who are basically misnamed day traders), it is useful for normal traders - and sure, it might give long term investors some additional clues when to go in (and potentially when to go out).
Your MA's are basically a gauge for the populous view of the crowd (called market) what a stocks is worth. And sure - sometimes the crowd is right, but often it is wrong. Same as the determination of a lynch jury in the Wild West, which clearly was important (though irrelevant, because predictable) for the poor sod who got hanged, but gave no indication at all whether the accused was guilty - TA just tells you how the (greed and fear driven) crowd feels at a certain moment in time, not whether a stock is over or undervalued.
Apart from that - ever thought about what happens if everybody "smarts up" and follows your instructions for longer term investors? Right - all these smart people will refrain from buying undervalued assets in a downtrend and the market just dries up.
The only way to stop a downtrend is when "smart money" and longer term investors see value which robotic TA followers won't - and buy into a downtrend. Are you saying that none of the longer term investors you know are smart?
What TA disciples are doing is basically following the herd. Absolutely - a valid strategy for a few (though not foolproof either) - and works for sheep, but clearly not the strategy for all "longer term investors".
Same as every herd needs a leader (who can't follow the herd, otherwise they just procrastinate) - does the market need leaders (i.e. people who don't follow the herd and its TA tracks), but make their own decisions. And yes, these are the successful longer term investors :) who shape the market;
Quote from: BlackPeter on Mar 11, 2024, 12:01 PMLook - there are many different trading / investing methods, and more than one of them is successful.
If TA works for you, this is great. Does not mean though that many longer term investors would or should use it. Actually - if many would use it, it would stall the market (see below).
Most "longer term investors" I do know don't care at all about TA. They will check whether an asset appears to be good value for the given price (using whatever criteria they use, but they won't be TA related), and buy if the price is right. Never heard Warren Buffett talking about MA30 or MA200. Have you?
While TA has certainly its merits (as one of many trading tools in the box) - it is crucial for momentum "investors" (who are basically misnamed day traders), it is useful for normal traders - and sure, it might give long term investors some additional clues when to go in (and potentially when to go out).
Your TA's are basically a gauge for the populous view of the crowd (called market) what a stocks is worth. And sure - sometimes the crowd is right, but often it is wrong. Same as the determination of a lynch jury in the Wild West, which clearly was important (though irrelevant, because predictable) for the poor sod who got hanged, but gave no indication at all whether the accused was guilty - TA just tells you how the (greed and fear driven) crowd feels at a certain moment in time, not whether a stock is over or undervalued.
Apart from that - ever thought about what happens if everybody "smarts up" and follows your instructions for longer term investors? Right - all these smart people will refrain from buying undervalued assets in a downtrend and the market just dries up.
The only way to stop a downtrend is when "smart money" and longer term investors see value which robotic TA followers won't - and buy into a downtrend. Are you saying that none of the longer term investors you know are smart?
What TA disciples are doing is basically following the herd. Absolutely - a valid strategy for a few (though not foolproof either) - and works for sheep, but clearly not the strategy for all "longer term investors".
Same as every herd needs a leader (who can't follow the herd, otherwise they just procrastinate) - does the market need leader (i.e. people who don't follow the herd and its TA tracks), but make their own decisions. And yes, these are the successful longer term investors :) who shape the market;
I'm in agreement with what you say there BP. I'm not a TA expert nor is it a tool that I use much in making my investment decisions. If anything I am more like the typical Buffet style investor looking at the macroeconomic trends and business fundamentals that might hopefully point towards value and growth opportunities.
There are times when the TA looks so terrible that you would either have to be very brave or foolish to go against it, but again that's up to the individuals risk/reward profile. I don't know where you get the idea that I'm saying long term investors are not smart when it comes to HGH. Some are saying that it's far too soon to start pronouncing that the downturn is over, others are saying that this is the exact moment to buy. There's no atypical, generic investor - everyone chooses their own path. I find it interesting and helpful when opinions - respectively - diverge about a particular company. Only way to learn. Confirmation bias isn't a great teacher.
Quote from: LoungeLizard on Mar 11, 2024, 10:53 AMDepends on your perspective. 30 Day MA for those with a shorter term outlook, 200 MA for those who want to see a longer term trend. A positive 30 day MA can be the start of a long term trend, or it can just be a blip. At the moment HGH is good for trading and short term gains, but as Buzz says, longer term investors will "hurry up and wait."
Trouble with using 200MA to see a longer term trend in place is that one misses out on most of the action
Like 200MA today us 160 .....say 150 in a month .....share price is say 150 then and heck you've missed the first 40 cents of the rise .....30% gone.
Quote from: winner (n) on Mar 11, 2024, 01:48 PMTrouble with using 200MA to see a longer term trend in place is that one misses out on most of the action
Like 200MA today us 160 .....say 150 in a month .....share price is say 150 then and heck you've missed the first 40 cents of the rise .....30% gone.
You're right..... assuming that the HGH SP is now on a continual rise to riches for holders. Assuming no chance of a bounce back. Assuming no cap rise etc etc.
The rampers are right..... Enjoy the moment.
Quote from: Left Field on Mar 11, 2024, 04:13 PMYou're right..... assuming that the HGH SP is now on a continual rise to riches for holders. Assuming no chance of a bounce back. Assuming no cap rise etc etc.
The rampers are right..... Enjoy the moment.
Yep, at the end of the day they are all just lines on a graph trying to project the future from a few points of data. The more data points the more certain the projection, but that means waiting and possibly missing out on the early gains, as Winner said. Horses for courses.
Speaking of which, I kind of liked the slow, dependable Clydesdale that was Heartland 1.0. Old Dobbin was making good progress and was almost certain to get the rider to where he wanted to go. Then Jeff traded Dobbin in for a sleek, young thoroughbred that hasn't yet been broken in. Likely to offer a bumpy ride and may not get you to where you want it to. Worst case scenario - the rider ends up on the ground, face down in a pile of manure...
Quote from: LoungeLizard on Mar 11, 2024, 06:02 PMYep, at the end of the day they are all just lines on a graph trying to project the future from a few points of data. The more data points the more certain the projection, but that means waiting and possibly missing out on the early gains, as Winner said. Horses for courses.
Speaking of which, I kind of liked the slow, dependable Clydesdale that was Heartland 1.0. Old Dobbin was making good progress and was almost certain to get the rider to where he wanted to go. Then Jeff traded Dobbin in for a sleek, young thoroughbred that hasn't yet been broken in. Likely to offer a bumpy ride and may not get you to where you want it to. Worst case scenario - the rider ends up on the ground, face down in a pile of manure...
Our man Greg Tomlinson has a few stallions and mares who breed real fast colts and fillies
http://www.nearcostud.co.nz/
Reverse mortgage book has been growing at a "gangbusters" rate of both sides of the Tesman.
Effective marketing is the key. Use of an old greying Beagle in their Reverse mortgage guide is cunning. Maybe time for a new puppy and some other new things is the very subtle message.
https://www.heartland.co.nz/reverse-mortgage/free-insights-guide?utm_source=&utm_medium=&utm_campaign=rmnz-ret-ig-button-jan24&utm_content=rmnz-ret-ig-button-jan24&utm_term=
Everything you need to know about the Aussie banking sector in 2 minutes...I'm quite keen for this bloke to be CEO of HGH's australian banking operations.
Skip to 27 seconds in. A classic - enjoy:
https://www.youtube.com/watch?v=M_3T-Af57Pg
KPMG quarterly report on NZ banks says "Net interest margins (Nims) for the sector at December last year stood at an average of 2.34%, an improvement on the 2.1% average recorded in 2022"
Heartland better pull finger and stop theirs declining
DRP shares at 1.27 .....that's good ...take cheap DRP shares .....same as buy low sell high
Bit of a down day yesterday with a close at 128
But don't forget thats 13% above recent low ......and there's been another 3.5% from divie ...pretty good
All heading in right direction
Market is always thinking 6-12 months ahead so to be ahead of the market you need to be thinking more than 12 months ahead and as we come into the last quarter of HGH's FY24 year we need to be thinking not so much about what they will do in FY25 but FY26, FY27 and beyond.
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Average broker eps for FY26 is 18.42 cps, put a normal, (we will be in a different part of the economic cycle by then with lower interest rates), market PE on that of 12-13 and you get a share price of $2.21 - $2.40.
Average broker DPS forecast is 11.83 so that gives 16.43 cps inclusive of imputation credits which is a 12.6% gross yield on $1.30.
I would expect more mid - late single digit eps growth to come in the years after FY26 and the share price and dividends to move in line with that.
No doubt the naysayers will see it differently and frankly, I couldn't care less. Always happy to back my own nose for a feed because its right 90%+ of the time.
Quote from: Basil on Mar 14, 2024, 01:04 PMMarket is always thinking 6-12 months ahead so to be ahead of the market you need to be thinking more than 12 months ahead and as we come into the last quarter of HGH's FY24 year we need to be thinking not so much about what they will do in FY25 but FY26, FY27 and beyond.
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Average broker eps for FY26 is 18.42 cps, put a normal, (we will be in a different part of the economic cycle by then with lower interest rates), market PE on that of 12-13 and you get a share price of $2.21 - $2.40.
Average broker DPS forecast is 11.83 so that gives 16.43 cps inclusive of imputation credits which is a 12.6% gross yield on $1.30.
I would expect more mid - late single digit eps growth to come in the years after FY26 and the share price and dividends to move in line with that.
No doubt the naysayers will see it differently and frankly, I couldn't care less. Always happy to back my own nose for a feed because its right 90%+ of the time.
nothing wrong with a bit of near bottom of the cycle / contrarian style investing particularly for cyclicals
always sounds easy to say in retrospect but when you are looking at a share near the bottom of the cycle thats when things metrics will look their worst and human psychology kicks in. It's not often you'll get bottom of the cycle pricing when things have already turned around and the company is reporting growth in profitability again.
From a provision point of view they could be well provisioned enough and if they got back up to historic highs may require only a $15m pre tax / 10.8m post tax adjustment. The scope of operations are already established and operating - challenger is about refinancing their funding costs, growing nim and growing mkt share. Cap raise and possible dilution are the bigger issues as far as I'm concerned - one can position themselves for that - and to a certain extent has been trading cum cap raise for some time.
just got to watch those credit ratings as they come in. business will be increasingly de-risked as they are maintained, but I think fitch may wait a bit to see what happens when challenger is done and the details of a cap raise are clear.
auto warehouse credit rating affirmed last week
https://www.fitchratings.com/research/structured-finance/fitch-affirms-two-tranches-of-heartland-auto-warehouse-2018-1-outlook-stable-06-03-2024
Bloody heck ....extended trading today
Guy on other channel says it's rebalance day - HGH will exit the FTSE small cap index today at mkt close
Hope no carnage
Quote from: Fiordland Moose on Mar 14, 2024, 04:07 PMalways sounds easy to say in retrospect but when you are looking at a share near the bottom of the cycle thats when things metrics will look their worst and human psychology kicks in. It's not often you'll get bottom of the cycle pricing when things have already turned around and the company is reporting growth in profitability again.
"Growth in profitability again" That could happen as early as August 24 when they report and give forward guidance for FY25.
Quote from: winner (n) on Mar 15, 2024, 10:49 AMGuy on other channel says it's rebalance day - HGH will exit the FTSE small cap index today at mkt close
Sounds like a potential opportunity to me.
Quote from: winner (n) on Mar 15, 2024, 10:49 AMGuy on other channel says it's rebalance day - HGH will exit the FTSE small cap index today at mkt close
Any tactics suggestions to try take advantage of this?
Watch the final 15 minutes of the day's trade from 4.45 - 5.00 p.m. and see what the match price is going to be. If you like what you see the match price is likely to be, lodge a bid in the last 5-10 minutes of trade.
Quote from: Basil on Mar 15, 2024, 04:03 PMWatch the final 15 minutes of the day's trade from 4.45 - 5.00 p.m. and see what the match price is going to be. If you like what you see the match price is likely to be, lodge a bid in the last 5-10 minutes of trade.
Looks like $1.23?
20 mil on the sell side, 7 mil on the buy side? What happens if not enough demand at match price?
Quote from: SuperMario on Mar 15, 2024, 04:51 PM20 mil on the sell side, 7 mil on the buy side? What happens if not enough demand at match price?
Well, I recon this means not everything will be sold ...
Having said that - I see 19,3m on the buy side - and this does nto include the $1.23 bids, so I assume the auction is balanced.
Looks like it's all gone at $1.23
Quote from: BlackPeter on Mar 15, 2024, 04:57 PMWell, I recon this means not everything will be sold ...
Having said that - I see 19,3m on the buy side - and this does nto include the $1.23 bids, so I assume the auction is balanced.
YEP - here we go: Match Price 1.23, Match volume 20.36m.
But I recon now its too late :) ;
I bought some more at $1.23
Quote from: Basil on Mar 15, 2024, 05:05 PMI bought some more at $1.23
Back to $1.30 on Monday ....you laughing all way to bank eh
Can't help wondering if the weakness in the share price in recent weeks is all related to the FTSE index exit event that culminated in the match process this afternoon? These index changes are announced weeks ahead of time and I wonder if the earlier selling pressure which drove it down to the recent low was a result of the initial announcement of the planned exit and sellers front running that, or was it perhaps weak hands disappointed with the half year number reported? Hard to say which but I am happy to take a dogged approach holding for better times ahead whilst also keeping plenty of dry powder in reserve to support any possible future capital raise.
It was interesting, it looked like there was 17.6mil at $1.23, 1.7mil at $1.20, and 1mil at $1.15 for sale leading up to the 5pm 20mil at $1.23 that happened. I wonder what was going on with the lower two.
Quote from: SuperMario on Mar 15, 2024, 06:08 PMIt was interesting, it looked like there was 17.6mil at $1.23, 1.7mil at $1.20, and 1mil at $1.15 for sale leading up to the 5pm 20mil at $1.23 that happened. I wonder what was going on with the lower two.
Sellers doing a reverse book build of their position posting tranches of shares for sale at various prices w/ attendant volume. Index trackers need to get out but spread the position across multiple price points. Buyers doing the same thing on the other side. Final price determined by a venn diagram type algorithm that will move the most stock at one price
Days like today just highlights the stupidity of the concept of indices ....esp when components keep changing .....stars in losers out ...like buying high and selling low
Whatever those who take the opportunities that this stupidity inevitably create that are to be applauded
In a paper on the stupidity of índices changing I noted this ' in the year after a change in the S&P 500 Index, deletions beat additions by 22%, on average. '
Indices per se buy high and sell low ...... so don't dismiss any stock that's been kicked out of an index ....the damage has often been done
Quote from: winner (n) on Mar 15, 2024, 06:25 PMDays like today just highlights the stupidity of the concept of indices ....esp when components keep changing .....stars in losers out ...like buying high and selling low
Whatever those who take the opportunities that this stupidity inevitably create that are to be applauded
You are right, Index funds can be (and are) played so easily (given that their buy and sell decisions are both involuntary (they have to ...) and as well announced ahead of the time.
On the other hand - in the long run do index funds (despite this weakness) outperform most (nearly all?) actively managed funds, and I suppose this includes as well most private portfolios.
Could be a topic for an interesting discussion, wondering whether it might deserve a special thread?
Barramundi and Marlin have a proven track record of beating their benchmarks over the years after fees which is why I'm more than happy to leave my Australian and International investing to them. I've outperformed the NZX for so many years I've lost count. Index investing definitely has a place for people who lack the skills to beat the index or the knowledge of which fund manager to use.
Anyway...back to HGH, I think including dividends there's a 95%+ chance it will beat the NZX50 over the next three years.
Quote from: Basil on Mar 16, 2024, 01:30 PMBarramundi and Marlin have a proven track record of beating their benchmarks over the years after fees which is why I'm more than happy to leave my Australian and International investing to them. I've outperformed the NZX for so many years I've lost count. Index investing definitely has a place for people who lack the skills to beat the index or the knowledge of which fund manager to use.
Anyway...back to HGH, I think including dividends there's a 95%+ chance it will beat the NZX50 over the next three years.
Barramundi and Marlin have a proven track record of beating their benchmarks over the years after feesIs this right? Ah, I see - you said they are beating their benchmarks. Maybe they are not very challenging?
As far as I can see did the SP of Baramundi drop over the last 20 odd years from above $1 to now something like 73 cents, and the dividend is currently somewhere between 7 and 8%. I doubt it was ever higher.
That's actually worse than NZX average. But anyway, each to their own, and not really related to HGH.
More info here for those interested. https://barramundi.co.nz/assets/Investor-Centre/Barramundi-Monthly-Update-March-2024.pdf
They listed in 2006, very unfortunate timing, at $1 but got smashed in the GFC down to about 35 cents. It all depends on your starting reference point. Post GFC they have done outstandingly well and pay 8% tax free dividends every year as well as regular free warrant issues. Their benchmark is the S&P ASX 200 index hedged 70% to the $N.Z Over the last 5 years their annualized performance after fees and tax is 14.6% per annum vs benchmark. 9.2% per annum. That's 5.4% per annum average outperformance after fees and tax. With outstanding performance like that I am happy for them to do their thing for me across the ditch.
Partnership with TSLA , but not as good as most of the banks with their 1% Green loans .
https://www.informedinvestor.co.nz/heartland-bank-announced-as-a-preferred-finance-provider-for-tesla/?fbclid=IwAR1W3i8dDaF9OJ0noy8dG5tuIhMz4Sl7zNhlXVjNWntmTfHBfJfUcufVkDg_aem_Aa2oS6xRH-m8oyySsruHfRN58X3lQYphNK8VSxQAagbTMo1Vr4ozPYgtd8q_5AOfda-qA1BbCa1hbKRkWAxjQPq-&utm_medium=paid&utm_source=fb&utm_id=6589072110861&utm_content=6589072113461&utm_term=6589072112461&utm_campaign=6589072110861
Other banks just greenwashing. HGH is very bright lime green with every ESG box under the sun already ticked.
Next week's trading may show the direction of travel in the SP. Indice drop-out done and dusted. Traders taken their profit and moved on.
So - will the SP continue to rise and a trend emerge or will the surge turn out to be nothing more than a blip and the SP remain in the low 1.20's until something is reported to send it one way or the other (Challenger becomes a bank (positive) or another cap raise (negative)?
My 2 cents is that we will probably see a holding pattern of limited gains / losses from here on until the end of year report card, which will probably be the true indicator of whether HGH 2.0 is going to be a success or not.
Not a great day for HGH?
128,000k shares for $1.17 at closing. Looks like the downward trend remains?
We'll see. I suspect there was an overhang from the index exit on Friday that needed to be cleared.
Jeez a close at 117
Chart looking ugly now ....that big green candle followed by 2 big red candles
Maybe an ABANDONED BABY pattern has formed ....or about to form
Feels like it
Don't think it's an Abandoned Baby pattern ...whatever it is it's ugly
But not ugly enough to stop me buying a few more at that 117
Probably too early to tell where this is going, but maybe the rose tinted glasses might have to come off. If a cap raise comes in at this level then the discounting will push the SP towards $1. And those still at the table will face the same option as they did 18 months ago. Raise their stakes and hope for the best or fold and cut their losses. The cap raise is the real over-hang and until that is resolved the SP will stay in the doldrums.
Quote from: Basil on Mar 11, 2024, 08:56 AMWho would be brave enough though to adopt two abandoned babies in one week. ;)
Maybe you might want to have another look at the chart today because others now seem to want to give baby a cuddle and there's been a clear break above the 30 day moving average at $1.29
What happened on Friday, down on 21m volume? Today following through on that sentiment. The 30EMA was no match for that volume.
QuoteHGH will exit the FTSE small cap index today at mkt close
Posted on the other channel on Friday by Muse.
My view remains, we're either at the bottom or very close.
Quote from: Basil on Mar 18, 2024, 06:37 PMPosted on the other channel on Friday by Muse.
My view remains, we're either at the bottom or very close.
Definitely high thigh at least
Quote from: Crackity on Mar 18, 2024, 09:17 PMDefinitely high thigh at least
Careful you don't get your hand smacked ;D
Quote from: Basil on Mar 18, 2024, 05:46 PMWe'll see. I suspect there was an overhang from the index exit on Friday that needed to be cleared.
I think you are probably right, Beagle.
I am still going to wait however for the CR. There's always the possibility of course that they will simply do a placement to selected instos ($85m) with a small rights issue ($35m) to remaining shareholders - hardly a burden.
Quote from: Teitei on Mar 19, 2024, 10:33 AMI think you are probably right, Beagle.
I am still going to wait however for the CR. There's always the possibility of course that they will simply do a placement to selected instos ($85m) with a small rights issue ($35m) to remaining shareholders - hardly a burden.
The instos got given the inside track in the last cap raise and lost a third of their money like everyone else. Might be harder to generate same level of enthusiasm this time? I think HGH will do the time-honoured thing. Wait for a piece of good news - Challenger given a banking licence for which they will need more capital for anyway - then present it as a "great opportunity" to buy at a discounted price. And so it goes on...
Quote from: Teitei on Mar 19, 2024, 10:33 AMThere's always the possibility of course that they will simply do a placement to selected instos ($85m) with a small rights issue ($35m) to remaining shareholders - hardly a burden.
Jarden estimate a Challenger capital raise will be between $150-200mn
Quote from: Fiordland Moose on Mar 19, 2024, 11:35 AMJarden estimate a Challenger capital raise will be between $150-200mn
That's suggestive of a rights issue of 1:5 or 1:4 at the current price which is about the level that I think is already widely anticipated by the market.
1:4 @ $1.10...show me where to sign, I'm keen.
Quote from: Basil on Mar 19, 2024, 11:57 AMThat's suggestive of a rights issue of 1:5 or 1:4 at the current price which is about the level that I think is already widely anticipated by the market.
1:4 @ $1.10...show me where to sign, I'm keen.
Say $150m so $85m placement and a 1:8 rights issue at $1.10 will raise the required amount.
I would like to see a $200mil placement to an Aussie intos.
Quote from: lorraina on Mar 19, 2024, 01:11 PMI would like to see a $200mil placement to an Aussie intos.
Could be the quick and easy way
But massive dilution ....like would Greg like having 20% less of the company than now
Not only Greg.
The whole team hold a lot of shares.
Could say they have "The Owners' Eye".
More shares in play means a lower EPS and probably a lower dividend. It might be accretive if they were buying an existing profitable bank, but they are not. As of this moment Challenger is losing money and will need propping up.
Unless the downtrend corrects itself, buying more of anything is never a good strategy.
HGH is in a verrrrryyyyy long term downtrend now. This chart is a weekly chart, and the pre-Covid support/resistance levels have kicked in, and not in a good way. Now that its out of the index, insto support for it will be non existent, leaving it as a retail only play. With a weekly "death cross" coming up, its likely that the downwards price movement will continue.
Screenshot 2024-03-19 115402.png
Quote from: lorraina on Mar 19, 2024, 01:11 PMI would like to see a $200mil placement to an Aussie intos.
Can only raise 10% of market cap via placement without shareholders' approval. Companies like to do it fast and easy to avoid price reaction.
Quote from: LoungeLizard on Mar 19, 2024, 01:33 PMMore shares in play means a lower EPS and probably a lower dividend.
How do you know that ? The reverse mortgage book in Australia is highly profitable already, $1.6 Billion in size and Challenger will dramatically lower their cost of funds on that book that's growing at ~ 20% per annum. In the medium term I'm confident it's eps accretive. You do understand the simple process of reversing into Challenger their existing business in Australia, surely? Honestly, I am beginning to wonder if you do... Professional analysts' consensus is for good growth in eps and dps in the years ahead but you know better eh mate.
Quote from: KW on Mar 19, 2024, 01:48 PMNow that its out of the index, insto support for it will be non existent,
It got kicked out of the FTSE small companies index not the NZX50 so that part of your theory is invalid. Yes its in a downtrend. Everyone hates a cyclical at the bottom of the cycle and sentiment is absolutely terrible. It takes real courage to buy here, I get that and have it.
Quote from: Teitei on Mar 19, 2024, 12:41 PMSay $150m so $85m placement and a 1:8 rights issue at $1.10 will raise the required amount.
Not a big ask or taxing on the stock in my opinion. Happy to take another 100,000 @ $1.10 in a placement or rights issue or on market, (have a bid on market to that effect in the hope of some more extreme irrational pessimism).
Quote from: Basil on Mar 19, 2024, 02:09 PMHow do you know that ? The reverse mortgage book in Australia is highly profitable already, $1.6 Billion in size and Challenger will dramatically lower their cost of funds on that book that's growing at ~ 20% per annum. In the medium term I'm confident it's eps accretive. You do understand the simple process of reversing into Challenger their existing business in Australia, surely? Honestly, I am beginning to wonder if you do... Professional analysts' consensus is for good growth in eps and dps in the years ahead but you know better eh mate. It got kicked out of the FTSE small companies index not the NZX50 so that part of your theory is invalid. Yes its in a downtrend. Everyone hates a cyclical at the bottom of the cycle and sentiment is absolutely terrible. It takes real courage to buy here, I get that and have it.
No need to resort to insinuations there, Basil. I respect your viewpoints even if I don't agree with them. I ask the same of you.
I am quite aware that the reverse mortgage and Stockco business's are going to be folded into Challenger bank. Hence my comment about "propping up," But they will need to accelerate their growth in order to cover the legacy costs and issues that Challenger has. And in an increasingly doubtful macroeconomic environment.
And remember - HGH posted a cut in profit and EPS in their interim report.
So in the short-medium term the never-wrong analysts expect EPS will increase? I don't happen to think so. And I expect the final dividend to be cut, not increased.
Quote from: LoungeLizard on Mar 19, 2024, 03:14 PMSo in the short-mediumm term EPS will increase. I don't think so. And I expect the final dividend to be cut, not increased.
Yes, you've mentioned that many, many times now and every single analyst out there disagrees with you and so do I.
Quote from: Basil on Mar 19, 2024, 03:19 PMYes, you've mentioned that many, many times now and every single analyst out there disagrees with you and so do I.
Fair enough.I'm not saying I will turn out to be right, but as you so often say, it's good to hear an alternative viewpoint. You don't learn anything in an echo chamber. Let's see what the end of year report has to say, shall we?
Quote from: Basil on Mar 19, 2024, 03:19 PMYes, you've mentioned that many, many times now and every single analyst out there disagrees with you and so do I.
Its the only NZX stock that I am adding currently. Agree there is risk, but agree with Basil and others that downside should be limited. I'm prepared to take the risk but agree could be wrong.
Quote from: Shareguy on Mar 19, 2024, 03:24 PMIts the only NZX stock that I am adding currently. Agree there is risk, but agree with Basil and others that downside should be limited. I'm prepared to take the risk but agree could be wrong.
Long term you should be fine. HGH are a solid business but have over-reached a bit and there is -and will continue to be - some weakness in the SP. The graphs all show that. The Cap raise will create a new low. Challenger will need to become profitable in itself, not be a deadweight that drags the other profitable arms of HGH down. It will be a long haul for many before they see the green again in their investment. And I say again - just to annoy Basil - the yield may not be that great for a few years. But if you have the patience of Job and time on your side, you will probably be ok.
Gave fair warning above. Thank goodness for the ignore button lol Sorry LL, life's too short to read the same negativism regurgitated dozens of different ways.
Your prerogative, mate. The viewpoint I have re HGH is not really for you anyway - your mind is clearly made up. Just adding a cautionary, balancing note for those who might feel there's some quick money to be made. And since I'm no longer a holder I really don't care much which way this goes. I hope I am wrong actually, so no one gets burnt again, like last time.
Quote from: lorraina on Mar 19, 2024, 01:31 PMNot only Greg.
The whole team hold a lot of shares.
Could say they have "The Owners' Eye".
"The Owner's Eye" eh ....they seem to have taken their eyes off the ball ...like the Crusaders
Both need to pull their socks up pronto
Greg Tomlinson's stable of listed companies not doing too well eh. Big stakes in this and OCA, both in the dog box. Maybe he's past his prime ? Hope his horses are performing better otherwise they'll end up as dog tucker lol.
Quote from: Basil on Mar 19, 2024, 06:31 PMGreg Tomlinson's stable of listed companies not doing too well eh. Big stakes in this and OCA, both in the dog box. Maybe he's past his prime ? Hope his horses are performing better otherwise they'll end up as dog tucker lol.
Add seeka to this list as well... not many divs coming in...
Back in early 2022 Jarden raised $60m in convertible notes from family offices to shore up its balance sheet as it expanded into Australia. I understand Greg is one of the larger noteholders. Conditions not been kind to Jarden since. They've folded their wealth management business into FirstCape, releasing $90m in cash back to Jarden. I'd wager Greg is keen to receive some of his capital back.
Quote from: lorraina on Mar 19, 2024, 01:11 PMI would like to see a $200mil placement to an Aussie intos.
+1
well, perhaps 2/3 to AU instos, balance as rights issue, with the later being the lower of insto placement price or a discount to vwap post completion of the institutional placement.
Its almost as if its being priced like Challenger is to Heartland what Ansett was to Air NZ. Those Aussies really see the Kiwi's coming lol
https://www.bankingday.com/challenger-red-faced-once-more-in-banking
Early Challenger Bank AU deposit market experience
exceeding Heartland expectations
• Challenger Bank is actively raising deposits ahead of
being acquired by Heartland Bank and will continue to do
so. This will enable Heartland to optimise the advantage
of a lower cost of funds post-acquisition completion.
• Recent success of Challenger Bank in the AU deposit
market has exceeded Heartland's expectations.
• In the seven-week period commencing 8 January 2024,
retail deposit growth of $528 million was achieved, at a
rate which is 1.34% lower than Heartland Australia's
current cost of funds.
Looking as though HGH have Challenger Bank moving forward on the right track very quickly.
ps.HGH's market share of Aussie REL is 43%.Think that is already an outstanding success.
Challenger Bank fast growing deposits are proving HGH made the choice.
Crikey quite a difference between KW's article on Challenger Bank and HGH's optimistic commentary.
SP reflecting this uncertainty.
Look at the date of KW's article,and note HGH's was this year[27th February].
Quote from: Left Field on Mar 20, 2024, 01:31 PMCrikey quite a difference between KW's article on Challenger Bank and HGH's optimistic commentary.
SP reflecting this uncertainty.
Yup, if you're banking (pun intended) on a turnaround, its usually better to wait for the turnaround to occur. Because as Buffet says "Turnarounds seldom do". This is the problem with buying shares in a downtrend, you might be waiting years for the share price to recover, losing even more in the interim, or being permanently stuck in a turnaround that doesnt.
That and NZ companies buying underperforming Australian companies in order to gain market share, after the Aussie owners have already cash stripped them bare, fills me with dread. Didnt just happen to Air NZ but a long list of Kiwi companies, like The Warehouse's foray into Australia with Silly Sollys
ps.HGH's market share of Aussie REL is 43%.Think that is already an outstanding success.
An excellent foundation to build on.
PS ATM,EBO,FRE,MFT appear to be outstanding successes in Aussie.
Quote from: lorraina on Mar 20, 2024, 01:18 PMEarly Challenger Bank AU deposit market experience
exceeding Heartland expectations
• Challenger Bank is actively raising deposits ahead of
being acquired by Heartland Bank and will continue to do
so. This will enable Heartland to optimise the advantage
of a lower cost of funds post-acquisition completion.
• Recent success of Challenger Bank in the AU deposit
market has exceeded Heartland's expectations.
• In the seven-week period commencing 8 January 2024,
retail deposit growth of $528 million was achieved, at a
rate which is 1.34% lower than Heartland Australia's
current cost of funds.
Looking as though HGH have Challenger Bank moving forward on the right track very quickly.
ps.HGH's market share of Aussie REL is 43%.Think that is already an outstanding success.
Challenger Bank fast growing deposits are proving HGH made the choice.
I'd like to have a look at what makes up that figure. Looks suspiciously high, given that one of the reasons Challenger was off-loaded was that it wasn't, for years, able to attract sufficient funds. All of a sudden, in 7 weeks they attract 1/2 billion in new deposits? Assuming of course they are "new" deposits and not a migration of existing funds in Stockco and the reverse mortgage business's. Bit naughty if that is the case.
Quote from: lorraina on Mar 20, 2024, 01:51 PMps.HGH's market share of Aussie REL is 43%.Think that is already an outstanding success.
An excellent foundation to build on.
PS ATM,EBO,FRE,MFT appear to be outstanding successes in Aussie.
Is it really a success when every single one of its major competitors have publicly said they are not interested in offering reverse mortgages, and in fact have deliberately exited that market? HGH's competition is the Govt who doesnt look to make money out of it. If the market was a prime opportunity, the Big 5 banks would be all over it like flies on shit.
Its capital intensive KW...I believe that's why the big banks have exited the market.
HGH have and continue to do very well in this very stable fast growing market.[Profitable for HGH],thanks to the Aussie banks kindness of exiting the sector.
Aussie Govt has added creditability to the REL market.
This is HGH's tenth year in RELs.
And yes there were a great number of detractors when HGH bought into the sector.
.
Quote from: Basil on Mar 20, 2024, 02:20 PMIts capital intensive KW...I believe that's why the big banks have exited the market.
The progressing of REL loans took too long for the big banks.Takes a few weeks from start to finish.
Volume switching places. Sellers now out-number buyers 2:1. Looks to me like a continuation of the down-trend coming up.
Quote from: LoungeLizard on Mar 20, 2024, 02:40 PMVolume switching places. Sellers now out-number buyers 2:1. Looks to me like a continuation of the down-trend coming up.
And closing today at $1.15. The firm downtrend remains in place.
You guys must be loving this. The old I told you so....yeah, well, save that for 12 months time and we'll see who's right. I still believe that $1.13 cum the 4 cent divvy, ($1.09 ex divvy), was either the bottom or very close to it. Regional US banks up 2% overnight, sign of something to come here ?
The shrillness of the naysayers' calls tells me we're at extreme pessimism and frankly, provides great encouragement regarding this deep value purchase.
Two side of the same coin I say @Basil. I don't think anyone was claiming you were telling them "I told you so" when the price was going up and you were bull-posting.
Posts from bulls and bears are equally valid as long as there is some logical backing behind them. You had backing as the price was pumping and the bears also have backing now as the price is falling.
I would urge you to not be so defensive. An echo chamber is helpful for no one.
Quote from: Basil on Mar 20, 2024, 02:20 PMIts capital intensive KW...I believe that's why the big banks have exited the market.
Basil's right but I suspect it's less to do with the fact that the reverse mortgage businesses NIM is more often than not capitalised rather than received in cash (which I wrote about a page or two back). It's all to do with the RBNZ/RBA risk weighting of asset classes and the big 4 banks status as a DSIB (domestic systematically important bank) in which they are required to hold a prudential capital buffer over and above all the other registered banks in NZ.
Interest income from HGH's reverse mortgage book is most often capitalised to the receivables balance rather than paid in cash. That's understandable given the nature of the lend (but a very valid concern that cash NIM is decreasing as a proportion of reported NIM). That compares to traditional big bank lending where its more often received in cash. So HGH's RM business is more working capital intensive than traditional lending, which for all intents and purposes is mortgage lending, which tends to be paid in cash.
From a capital / capex perspective, there are two issues.
First, and the lesser consideration, is RM loans actually have quite a significantly shorter shelf life than a traditional mortgage. From an origination to fully paid off perspective, a home loan is about 20-30 years on average. The HGH RM life is about 6-7.5 years. So the face value of the loan is actually paid off faster in the RM business. That's good.
But the big issue is central bank mandated risk weighting of assets. Within the disclosure statement of all NZ registered banks you'll find a schedule showing the risking weighting and subsequent capital / cash required to be held on hand and not lent out or distributed for each type of asset at varying LVRs.
In a nutshell, mortgage lending, particularly non investor mortgage lending, is the lowest game in town. The lower the better, which means banks can have less capital tied up as a reserve for the bad stuff happening and lend the excess out or pay out in dividend.
For RM's in NZ, a loan taken out below a 30% LVR has a risk weighting of 40%, with a sliding scale of 100% at or above an 80% LVR. HGH's RM book has a 44.6% risk weighting (in which they must hold a minimum of 8% on balance sheet), a decline from the 50% the year prior (the RBNZ positively made some concessions in their latest consultation on RWA for RMs). HGH's weighted average RM LVRs are very low - with a 9.6% weighted average origination LVR and total weighted average of 22.8%. By way of comparison, if HGH was to lend to a homeowner on a 79% LVR, the risk weighted assets for that would only be 35%!
The ANZ's mortgage book has something like a 17% risk weighted average. So they simply don't have to keep as much capital relative to heartland. and that really matters to the ANZ, and the other big three, because they are DSIBS, so they must keep an extra DSIB buffer over and above all the other banks. So that's why they dont do RMs, because the prudential buffer compounds the additional RWA% for the RM business.
that and lorraina is right....RMs are a specialist, bespoke product. Financial advice must be taken. There is a long lead time to getting the loans written. They aren't as vanilla as a traditional mortgage. Banks hate that...they want mass market template lending.
Ironically though, for HGH, reverse mortgages have the effect of lowering the overall RWA % and attendant capital requirements for heartland. Unrated corporates lending (of which NZ HBL has over $2bn of exposure), require a 100% risk weight. So RMs are far more capital efficient than traditional business lending. I'm just working off the NZ disclosure statement (as AU isn't yet a bank), but the mix of RM as a% of the total book drove down the overall risk weighting 300bps in 1H24. That's good. Sadly, cashflow still suffers as a result.
Quote from: LoungeLizard on Mar 20, 2024, 02:08 PMI'd like to have a look at what makes up that figure. Looks suspiciously high, given that one of the reasons Challenger was off-loaded was that it wasn't, for years, able to attract sufficient funds. All of a sudden, in 7 weeks they attract 1/2 billion in new deposits? Assuming of course they are "new" deposits and not a migration of existing funds in Stockco and the reverse mortgage business's. Bit naughty if that is the case.
You are co-mingling things...ie stockco doesn't have deposits to shove into challenger. Challenger bank can raise deposits but historically struggled to find a purpose or niche to lend into and get receivables. They had a valuable banking license but no strategy or business from which to use it. Heartland isn't buying challenger bank to buy its book, its bank mgmt team, its niche or strategy. it's buying it to get its banking license so it can raise retail deposits and refinance its massive, inefficient, wholesale funding structure with cheaper retail deposits. It's not buying a business; it's buying a fund raising channel. that's it, clear and I hope simple.
The problem with just looking at a NIM % saving (134bps or whatever it was) doesn't tell us much about the CaC or customer acquisition cost to obtain those funds. It's very well and possible they spent up big on adwords, brokers, etc to obtain those funds. We just dont know how efficient it has been.
Challengers loss attributed to heartland in the guidance provided for the balance of the year isn't because challenger bank is a loss making pig on its lending....which was my fear before the 1H release....it's because challenger went ahead and raised half a billion of in new deposits and paid interest to the depositors but didn't lend it out and thus received no income (doesn't take a banking professional to figure out why that combination will have lost money)...they did so when heartland agreed to underwrite the cost of raising those deposits so when the purchase was settled they could use those already raised deposits to refinance the wholesale funding of the existing heartland australian book at a significantly lower cost of funds, which ought to have the effect of materially increasing NIM for the group in future periods.
the challenge (excuse the pun), is weighing up the $ NIM and NPAT growth from that, divided by the incremental shares issued as part of a capital raise, given how large the capital raise could be, how low the current market cap is, and the all important effect on earnings and dividends PER SHARE. It's possible something may have made good sense and was EPS/DPS accretive at $1.80 is no longer the case at $1.15 given the dilution. Haven't done the sums yet.
an oldie but a goldie on the RM business, from 2019
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/327018/290747.pdf
Heartland Australia's RM marketshare has come a long way.
Quote from: Fiordland Moose on Mar 21, 2024, 11:40 PMYou are co-mingling things...ie stockco doesn't have deposits to shove into challenger. Challenger bank can raise deposits but historically struggled to find a purpose or niche to lend into and get receivables. They had a valuable banking license but no strategy or business from which to use it. Heartland isn't buying challenger bank to buy its book, its bank mgmt team, its niche or strategy. it's buying it to get its banking license so it can raise retail deposits and refinance its massive, inefficient, wholesale funding structure with cheaper retail deposits. It's not buying a business; it's buying a fund raising channel. that's it, clear and I hope simple.
The problem with just looking at a NIM % saving (134bps or whatever it was) doesn't tell us much about the CaC or customer acquisition cost to obtain those funds. It's very well and possible they spent up big on adwords, brokers, etc to obtain those funds. We just dont know how efficient it has been.
Challengers loss attributed to heartland in the guidance provided for the balance of the year isn't because challenger bank is a loss making pig on its lending....which was my fear before the 1H release....it's because challenger went ahead and raised half a billion of in new deposits and paid interest to the depositors but didn't lend it out and thus received no income (doesn't take a banking professional to figure out why that combination will have lost money)...they did so when heartland agreed to underwrite the cost of raising those deposits so when the purchase was settled they could use those already raised deposits to refinance the wholesale funding of the existing heartland australian book at a significantly lower cost of funds, which ought to have the effect of materially increasing NIM for the group in future periods.
the challenge (excuse the pun), is weighing up the $ NIM and NPAT growth from that, divided by the incremental shares issued as part of a capital raise, given how large the capital raise could be, how low the current market cap is, and the all important effect on earnings and dividends PER SHARE. It's possible something may have made good sense and was EPS/DPS accretive at $1.80 is no longer the case at $1.15 given the dilution. Haven't done the sums yet.
Good points FM. Its hard though not to escape the conclusion, from the risks you have outlined, that this was a $50m gamble on buying "a fund raising channel" regardless of the potential downside on NIM, legacy costs, NPAT, EPS etc. Similarly, the cap raise needed to fund the purchase had a huge negative effect on shareholder wealth and the next one could be similar.
Perhaps it will all come right but the new risk profile and lower yield of HGH 2.0 doesn't interest a conservative investor like myself. Those that have stuck with HGH, bought in at $1.80, will literally have to wait years to just breakeven. If patience is a virtue, HGH investors are going to have to be saints ::)
Quote from: Fiordland Moose on Mar 21, 2024, 11:40 PMthe challenge (excuse the pun), is weighing up the $ NIM and NPAT growth from that, divided by the incremental shares issued as part of a capital raise, given how large the capital raise could be, how low the current market cap is, and the all important effect on earnings and dividends PER SHARE. It's possible something may have made good sense and was EPS/DPS accretive at $1.80 is no longer the case at $1.15 given the dilution. Haven't done the sums yet.
I appreciate your thoughtful and well articulated posts and you may have a good point here, as does KW that there's an existing downtrend and I have a lot of respect for both your opinions and acknowledge there's risks buying at this point, but that doesn't change my fundamental thesis that no matter whether you view this on a price to NAV basis, on a standalone forward PE basis or on a comparative peer group analysis, HGH has never been cheaper.
This isn't without risk, (the yacht anchored next to me in the Hauraki Gulf yesterday was named "Risky Business" maybe that's a sign lol)..but at the same time from long experience I know the market dislikes uncertainty and sentiment has never been worse towards Heartland. Further, I strongly believe we've been scraping along the bottom of the economic cycle for a while now and while acknowledging there's still some way to go, hopefully as cental banks around the world start easing I think we're set for a slow recovery starting later this year or early 2025. It's always darkest before the dawn.
At the end of the day, I am investing about two thirds of previous profits made on good calls on HGH before so it's all free carry. What risk others are prepared to take based on their experience with HGH is up to them but I'm very content with my track record and size of my current position on this one. There's room to lift that by another 100,000 if the price is right which will also be free carry.
I'm always happy to read well-articulated intelligent posts on any stock, both negative and positive but highly repetitive trolling comments is pollution I would rather filter out. I think I'm well placed to know the difference.
Quote from: LoungeLizard on Mar 22, 2024, 09:29 AMGood points FM. Its hard though not to escape the conclusion, from the risks you have outlined, that this was a $50m gamble on buying "a fund raising channel" regardless of the potential downside on NIM, legacy costs, NPAT, EPS etc. Similarly, the cap raise needed to fund the purchase had a huge negative effect on shareholder wealth and the next one could be similar.
Perhaps it will all come right but the new risk profile and lower yield of HGH 2.0 doesn't interest a conservative investor like myself. Those that have stuck with HGH, bought in at $1.80, will literally have to wait years to just breakeven. If patience is a virtue, HGH investors are going to have to be saints ::)
While they say its all about time in the market, whoever says this is wrong. Timing your buys (and sells) is of the essence, no matter which stock you are talking about.
So, yes - anybody who buys any stock at its peak is screwed for a long time, no matter, whether the stock is called GTK, RYM, OCA, HGH, HLG, WHS, FPH - or even MFT or SUM.
You are absolutely correct - anybody who bought HGH at $1.80 clearly made (with the benefit of hindsight) an expensive mistake. However - this is absolutely irrelevant here and now. These things happen with any stock if the hype wave is at its peak. The only relevant question is - is it a good idea to buy HGH now? Do the potential gains at the current price outweigh the clearly still existing risks (nothing in life is risk free).
So, I guess, this is the discussion we should have, not whether people paid at some stage too much for the stock considering its peaks and troughs. Every stock was at some stage in history too dear, including HGH. Boring.
Quote from: BlackPeter on Mar 22, 2024, 10:27 AMWhile they say its all about time in the market, whoever says this is wrong. Timing your buys (and sells) is of the essence, no matter which stock you are talking about.
So, yes - anybody who buys any stock at its peak is screwed for a long time, no matter, whether the stock is called GTK, RYM, OCA, HGH, HLG, WHS, FPH - or even MFT or SUM.
You are absolutely correct - anybody who bought HGH at $1.80 clearly made (with the benefit of hindsight) an expensive mistake. However - this is absolutely irrelevant here and now. These things happen with any stock if the hype wave is at its peak. The only relevant question is - is it a good idea to buy HGH now? Do the potential gains at the current price outweigh the clearly still existing risks (nothing in life is risk free).
So, I guess, this is the discussion we should have, not whether people paid at some stage too much for the stock considering its peaks and troughs. Every stock was at some stage in history too dear, including HGH. Boring.
Yep, fair enough BP. Moving on, but also being aware that history sometimes has a habit of repeating itself. I am of course talking about a cap raise. There's no question that there's another one coming, in whatever form, and that is likely to have a dilutive effect.
The rest - the future of HGH 2.0 - is a matter of debate. I have no skin in the game so if the TA and the next report changes its tune, I may be back in. Good luck to holders in the meantime.
Quote from: LoungeLizard on Mar 22, 2024, 01:22 PMYep, fair enough BP. Moving on, but also being aware that history sometimes has a habit of repeating itself. I am of course talking about a cap raise. There's no question that there's another one coming, in whatever form, and that is likely to have a dilutive effect.
The rest - the future of HGH 2.0 - is a matter of debate. I have no skin in the game so if the TA and the next report changes its tune, I may be back in. Good luck to holders in the meantime.
Sounds like we are in heavenly harmony 8) . Most of the posters here see this cap rise you talked about coming (in order to kick start the Australian REL business in earnest) ... and if it works out (and so far I don't see, why not), this will be the bottom of the SP. And obviously - cap rises are always dilutive (per share), no matter whether you add the appropriate amount of cash to buy more shares, or not.
Still - some cap rises are just to pay out holders on the run (MFB), some are to pay for past sins (like the last RYM CR) and others are a worthwhile investment.
So far I'd see the (likely) cap rise coming as one of the third category.
But I guess time will tell.
I think Heartland got to promote themselves as a FINTECH a lot more ....might get some punters in to pump the share price up and take focus off being a bank.
Being 145 years in business implies being old fashioned and rather staid in ways they do things ..but they do things the modern digital way ..like fintechs should.
Kiwi's won the Sail GP today handsomely in the Heartland of N.Z. in Lyttleton Harbour today, (Winner Winner Chicken dinner), and now lead the entire series slightly ahead of the Australians. Didn't start well but the sailing itself was top notch. Good Omen for better things going forward with Heartland bank.
HGH share price trending up
IMG_5714.jpeg
HGH was #1 stock most bought by Jarden clients last week according to Jarden Direct website.
MLN was #3 Of course I had nothing to do with this lol
Interesting article by Mark Lister of Craigs, is it time to ditch term deposits? Plenty of food for thought in this https://craigsip.com/news/is-it-time-to-ditch-the-term-deposits?utm_source=insights-enews-260324&utm_medium=email&utm_campaign=insights-enews&utm_content=is-it-time-to-ditch-the-term-deposits&_cldee=_4DzIPyuZhQxF62tZSAKv5T39qKXqfJ5IW-1VHzb5GRNMHkt9vhZVg7DEuaZ1U63&recipientid=contact-f4e18c1d7f2de8119427005056a307fc-739d472038f94390ae1495d24e66bf50&esid=f2f513df-69e6-ee11-a2ee-00505681265f
What occurs to me for those looking ahead is that by as early as the middle of next year we could be looking at term deposits paying in the 4-5% range. On the other hand investors in Heartland starting FY26 in July 2025 are looking at a gross dividend yield of 13.81% (based on fully imputed dividends of 11.8 cps which is the average of broker forecasts for that year), see https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
That's about three times the prospective income from HGH shares that a term deposit will pay you and this situation will unfold in less than 18 months. Hmmm...I think he has a very good point. Tick tock....
Glad I don't take the DRP and reinvested at $1.15, pulled the trigger just before the dip to $1.12 but won't be worried about 3c long term. I've enjoyed a 12.4%p.a. gross dividend yield since Apr 2020.
Learnt from observing/reflecting that it could have been good to sell at various points and buy back in but HGH has been a great investment even if I could have done better. Nice to see $1.21/$1.22 today
Quote from: Basil on Mar 26, 2024, 12:45 PMInteresting article by Mark Lister of Craigs, is it time to ditch term deposits? Plenty of food for thought in this https://craigsip.com/news/is-it-time-to-ditch-the-term-deposits?utm_source=insights-enews-260324&utm_medium=email&utm_campaign=insights-enews&utm_content=is-it-time-to-ditch-the-term-deposits&_cldee=_4DzIPyuZhQxF62tZSAKv5T39qKXqfJ5IW-1VHzb5GRNMHkt9vhZVg7DEuaZ1U63&recipientid=contact-f4e18c1d7f2de8119427005056a307fc-739d472038f94390ae1495d24e66bf50&esid=f2f513df-69e6-ee11-a2ee-00505681265f
What occurs to me for those looking ahead is that by as early as the middle of next year we could be looking at term deposits paying in the 4-5% range. On the other hand investors in Heartland starting FY26 in July 2025 are looking at a gross dividend yield of 13.81% (based on fully imputed dividends of 11.8 cps which is the average of broker forecasts for that year), see https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
That's about three times the prospective income from HGH shares that a term deposit will pay you and this situation will unfold in less than 18 months. Hmmm...I think he has a very good point. Tick tock....
Hmmm.?........Yes.
"Better to own the bank than putting money in the bank"
Quote from: lorraina on Mar 26, 2024, 01:41 PMHmmm.?........Yes.
"Better to own the bank than putting money in the bank"
Esp when the bank has the 'owners eyes' running it
Quote from: TGB on Mar 26, 2024, 01:39 PMGlad I don't take the DRP and reinvested at $1.15, pulled the trigger just before the dip to $1.12 but won't be worried about 3c long term. I've enjoyed a 12.4%p.a. gross dividend yield since Apr 2020.
Learnt from observing/reflecting that it could have been good to sell at various points and buy back in but HGH has been a great investment even if I could have done better. Nice to see $1.21/$1.22 today
HGH definitely a traders stock. The SP has declined 25% in the last 5 years and a whopping 45% since the cap raise was announced only 18 months ago. For holders it has been a nightmare, but some have made a quick buck along the way.
It has been a bit sad to see my gains erode but equally I haven't lost any money either so I can't say it's been a nightmare.
Quote from: TGB on Mar 26, 2024, 02:00 PMIt has been a bit sad to see my gains erode but equally I haven't lost any money either so I can't say it's been a nightmare.
I get what you are saying - if you've been with HGH for a while you are still in the green. But losing gains is still losing money you might have had, and that's why HGH has become a traders stock - the gains you have at any one time are not secure and you have to be ready to jump in and out, if that's your thing.
Or, you could buy into an indexed fund or perhaps a stock like Infratil which has nearly tripled in value in the last 5 years, and with the only odd blip has shown steady, consistent growth. And that's
my thing. ;)
Quote from: LoungeLizard on Mar 22, 2024, 01:22 PMYep, fair enough BP. Moving on
Please do what you said, it's getting super boring now. You keep remining us its down XYZ since the last capital raise, over and over and over... like we didn't hear you the first three dozen times.
QuoteThe only relevant question is - is it a good idea to buy HGH now? Do the potential gains at the current price outweigh the clearly still existing risks (nothing in life is risk free).BlackPeter
Bears repeating as someone has obviously, already forgotten this.
Quote from: Basil on Mar 26, 2024, 04:21 PMPlease do what you said, it's getting super boring now. You keep remining us its down XYZ since the last capital raise, over and over and over... like we didn't hear you the first three dozen times.Bears repeating as someone has obviously, already forgotten this.
It's a free country, Brother. You can always use the ignore button, like you said.
Good institutional support at the close @ $1.20. I'm calling it, $1.13, cum the 4-cent interim divvy, ($1.09 ex divvy) was this cycle's low point.
Quote from: LoungeLizard on Mar 26, 2024, 03:07 PMI get what you are saying - if you've been with HGH for a while you are still in the green. But losing gains is still losing money you might have had, and that's why HGH has become a traders stock - the gains you have at any one time are not secure and you have to be ready to jump in and out, if that's your thing.
Or, you could buy into an indexed fund or perhaps a stock like Infratil which has nearly tripled in value in the last 5 years, and with the only odd blip has shown steady, consistent growth. And that's my thing. ;)
Well, might just show off my age, but I do remember times when IFT owners licked their wounds for years after having bought in at the peak. Hint - just switch your time window to 20+ years and look at the nice peak around 2007, and how long it took the people buying at peak to recover their coin.
Always a bit sad, if people praise individual stocks because 5 years is the longest period of time they can remember ...
But sure, everybody needs to decide, whether they want to apply a traders strategy or an investor strategy. Both strategies can be successful (I suppose?), though for some reason one hears more about really successful investors than about traders. I am wondering why?
Not sure, however why anybody would call an undervalued stock like HGH a traders stock? If the fundamentals are right, than this is the time when prudent investors will go in. Only traders would jump in when the stock is already fully valued, wouldn't they?
BP - I think Winners image below says it all. In terms of high's and lows, HGH does throw up real opportunities of being overvalued and undervalued from time to time. I call these opportunities "actionable events" Those that can't see this is one of those actionable opportunities should get themselves down to Specsavers really quickly lol. The only question left in my mind revolves around is this the time to back up the truck or take the more measured approach I have taken so far ? Hmmm...I guess fortune favors the brave...
By the way, off topic, you've just made an outstanding point about Infratil. I just looked up the long-term chart on Yahoo finance, (Jarden only goes back 10 years) and it wasn't until 2018, 11 years later that IFT made a meaningful break about its 2007 peak. That's more than 11 years of going nowhere while Morrison and Co milk shareholders for their ongoing egregiously high fees. Maybe we're due for another decade plus long period of woeful performance after the last 5 years of outperformance? My Marlin units NAV is up 26% since 1 November 2023 and yet IFT have barely participated in the international markets strong rally since then. Hmmm....no wonder some are trying to talk it up.
Quote from: winner (n) on Mar 10, 2024, 11:52 AMWE HAVE TAKEOFF
Share price on its way to above $2 again
Over $2 it becomes 'overpriced' and one needs to keep a close eye on the charts to assess when maximum return is likely and SELL
Price/Book preferred multiple for me .....but at end of day it's essentially the same as Basil's peer group multiples monitoring.
FYI average P/B has been about 1.35 ......the recent tops seen share price at about $2.20 and about $2.50 respectively.
Main thing is we are on our way back
IMG_5684.png
Can't eat NAV - Marlin SP up only 10% from 1 Nov 2023 till now.
VOO/SPY on the otherhand, up 2.3x that.
Am rooting for Basil's call on HGH to be correct.
Two juicy dividends between then and now on MLN, you can definitely eat those ;D , but I get into the DRIP at a 3% discount. Think shares were trading at a premium to NAV back in early Nov and a decent discount now. I bought in solid numbers @ 86 cents in early December and had just under 4 cents in divvies since then so quite content with that. Approx 19% gain in share price incl divvies since early Dec.
Is it time to back the truck up on HGH FM ;)
Just giving you a stir.
Never invested in the LICs as prefer to go directly in ASX stocks and access US etfs directly via IBKR. Wrong thread but one thing I always wondered about was the discount to NTA seemingly representing value. I would have thought given the LICs come with high forever mgmt fees a discount should apply to them to represent the present value of perpetual mgmt fees. If doing this you'd need to addback any provision for mgmt & performance fees as you'd double count one years worth of fees. Sorry off topic I know
Hey Basil, your figs on IFT above seem a bit out of kilter (specially as you use NAV BRM's recent performance.) I'll post some figs on the IFT thread for you.
In the appropriate thread I have previously highlighted how on average over the years they have well and truly outperformed their benchmark index's (the relevant index adjusted for a degree of FX hedging) after fees and tax. If it weren't for that, you would have a point. The 2% tax free quarterly PIE distributions are ideal for semi or retired investors. Then there's the warrants to play with...
Here's Barramundi as an example. Adjusted NAV return after fees and tax for 5 years 14.6% per annum, annualized. ASX200 Benchmark is 9.2% 70% hedged to $N.Z. That's a 5.4% per annum outperformance after all fees and tax and it's a tax-free PIE so distributions are tax free in my hands. I have a real boatload of Barramundi, (the last 3 months in particular, with them have also been a lot of fun) and a lot of Marlin. https://barramundi.co.nz/investor-centre/portfolio-performance/
LF - Go onto Yahoo Finance and bring up a 20 year chart for IFT and see for yourself.
Director Harvey (or his wife) took the divie in shares by way of DRP
Be interesting how many insiders did as well ...esp our Greg
Quote from: BlackPeter on Mar 26, 2024, 05:16 PMWell, might just show off my age, but I do remember times when IFT owners licked their wounds for years after having bought in at the peak. Hint - just switch your time window to 20+ years and look at the nice peak around 2007, and how long it took the people buying at peak to recover their coin.
Always a bit sad, if people praise individual stocks because 5 years is the longest period of time they can remember ...
But sure, everybody needs to decide, whether they want to apply a traders strategy or an investor strategy. Both strategies can be successful (I suppose?), though for some reason one hears more about really successful investors than about traders. I am wondering why?
Not sure, however why anybody would call an undervalued stock like HGH a traders stock? If the fundamentals are right, than this is the time when prudent investors will go in. Only traders would jump in when the stock is already fully valued, wouldn't they?
I bought into IFT only a few years ago, so that's my own personal timeframe. I'm not too interested in what was happening 20 years ago - totally different company in a totally different phase of operations.
Have a look at the recent chart postings on IFT thread. They tell the real story. And the prospects going forward are exceptionally good.
Quote from: LoungeLizard on Mar 27, 2024, 10:43 AMI bought into IFT only a few years ago, so that's my own personal timeframe. I'm not too interested in what was happening 20 years ago - totally different company in a totally different phase of operations.
Have a look at the recent chart postings on IFT thread. They tell the real story. And the prospects going forward are exceptionally good.
Well, those who are not interested in learning from history are bound to repeat it. This is roughly how the saying goes, isn't it?
If you want to know how greed, hype and fear is contaminating all threads, then just have a look at e.g. the ups and downs of e.g. ATM (A2M) and e.g. RYM or OCA - and lets face it, while Groupthink is a popular leader, it never turned out to be a good guide.
Have a look as well into the other channel, they do have a longer history (and admittedly still more trolls). Amazing collection of hyped up and hyped down threads.
But I forgot - you said you are not interested to learn from history. In my view a lost opportunity, but sure - in this case: enjoy the ride!
According to the ABR Bendigo Bank looks to exit its Reverse Mortgage book "Homesafe" (c$500m) due to the capital it is consuming.
Quote from: BlackPeter on Mar 27, 2024, 11:19 AMWell, those who are not interested in learning from history are bound to repeat it. This is roughly how the saying goes, isn't it?
If you want to know how greed, hype and fear is contaminating all threads, then just have a look at e.g. the ups and downs of e.g. ATM (A2M) and e.g. RYM or OCA - and lets face it, while Groupthink is a popular leader, it never turned out to be a good guide.
Have a look as well into the other channel, they do have a longer history (and admittedly still more trolls). Amazing collection of hyped up and hyped down threads.
But I forgot - you said you are not interested to learn from history. In my view a lost opportunity, but sure - in this case: enjoy the ride!
When did I say I don't learn from history? That's the opposite of what I've been banging on about HGH of late. It's a question of relevance - there's relevent, recent history and then there's the not so relevent, far distant past. 20 years is interesting in a historical sense but not relevant to the trends of today. You point towards IFT being in the doldrums for quite a few years - many of the most successful companies on the NZX and internationally, started very slowly, making losses in some cases. There's plenty of people who would have liked to have invested in Apple, Amazon or Xero or FPH.
Interesting you mention ATM - life changing investment for me. ;D
Quote from: winner (n) on Mar 25, 2024, 02:16 PMHGH share price trending up
IMG_5714.jpeg
$1.27 - big move towards the retracement to $1.40?
Quote from: Teitei on Mar 28, 2024, 12:38 PM$1.27 - big move towards the retracement to $1.40?
Sssshhh...you'll just wake up the haters again. Just let the share price do the talking.
Haters are gunna hate, it's what they do. https://www.youtube.com/watch?v=nfWlot6h_JM
https://www.youtube.com/watch?v=vjD3EVC1-zU&list=RDMM&index=2
Quote from: Basil on Mar 28, 2024, 12:46 PMSssshhh...you'll just wake up the haters again.
Sad that you label anyone who disagrees with you a "hater"
There's a BIG difference between disagreeing and repeating exactly the same negativism with no variation in the narrative at all, several dozen times.
Quote from: Basil on Mar 28, 2024, 08:34 PMThere's a BIG difference between disagreeing and repeating exactly the same negativism with no variation in the narrative at all, several dozen times.
C'mon again, you've done this yourself for many years across numerous shares/companies. Usually they're the ones that you bought and had a bad experience with, then sold and slagged for months or years, repetitively with the same argument. You're on record which is not erasable.
Let's just calm down, just because you're backing some company doesn't mean everyone who says something detracting from your current views is worthy of your scorn. Everyone is entitled to their opinion and opportunity to voice it, regardless of whether it irks you.
Pot kettle black.
HGH share price .....strong uptrend ...that's good
IMG_5723.jpeg
A guy called Muse on the other channel has calculated HGH beta as 1.59
A beta that is greater than 1.0 indicates that the security's price is theoretically more volatile than the NZX. For example, HGH beta is 1.59 it is assumed to be nearly 60% more volatile than the NZX. This indicates that adding HGH to a portfolio will increase the portfolio's risk, but probably also increase its expected return.
One can see what Basil's thinking eh ......increase his overall returns by buying HGH at a low price (and probably selling high) .....and enjoy watching the beta do it's job with HGH outperforming the NZX50 by a wide margin.
Beta and volatility often your best friend
Quote from: winner (n) on Mar 29, 2024, 08:04 AMHGH share price .....strong uptrend ...that's good
IMG_5723.jpeg
Great chart, W69.
Pity the long term trend line is not so good eh?
Quote from: Teitei on Mar 29, 2024, 09:06 AMGreat chart, W69.
Pity the long term trend line is not so good eh?
Long term trend line is UP
But looking to the future the chart say over the last few years looks promising ....like going from low point to a new high
Quote from: winner (n) on Mar 29, 2024, 09:17 AMLong term trend line is UP
But looking to the future the chart say over the last few years looks promising ....like going from low point to a new high
We must be looking at different charts?
HGH's uptrend broke down in Jan 2022 and has been trending down ever since. To be blunt, it is a shocker of a chart!
Nevertheless, I view it as having the potential to reach $1.50 this year when interest rates are cut so it's a great trade.
Oh Basil. You just made me spit my coffee everywhere ;D ;D ;D
Quote from: Basil on Mar 26, 2024, 04:21 PMPlease do what you said, it's getting super boring now. You keep remining us its down XYZ since the last capital raise, over and over and over... like we didn't hear you the first three dozen times.Bears repeating as someone has obviously, already forgotten this.
Quote from: Teitei on Mar 29, 2024, 10:05 AMWe must be looking at different charts?
HGH's uptrend broke down in Jan 2022 and has been trending down ever since. To be blunt, it is a shocker of a chart!
Nevertheless, I view it as having the potential to reach $1.50 this year when interest rates are cut so it's a great trade.
$2+ on the cards for 2025 or 2026. Muse and Winner are right. High beta your best friend in a recovery. Muse is a very intelligent person and adds a lot of value on the other channel. Wish we had Muse posting on here. Broker average is over 18 cps for FY26. Put a normal mid range PE of 12.5 on that and you're north of $2.
Quote from: Basil on Mar 29, 2024, 11:00 AM$2+ on the cards for 2025 or 2026. Muse and Winner are right. High beta your best friend in a recovery. Muse is a very intelligent person.
Wish we had Muse posting on here.
You do ! lol.
Quote from: Untamed on Mar 29, 2024, 10:07 AMOh Basil. You just made me spit my coffee everywhere ;D ;D ;D
I guess that means our dinner date is off lol
Quote from: Basil on Mar 29, 2024, 11:11 AMI guess that means our dinner date is off lol
just spoke to Muse and they are available if you still have the reservation but want to know what sort of car you drive first
LOL Still driving my 2019 Holden Calais V...last of the Holdens but it was made in Germany, is that good enough or could you recommend me a new car to buy, its super important I make that date lol
Only 15 months away from starting FY26, (1 July 2025). Matket always looking 6-12 months ahead so to be ahead of the curve we need to look 12-36 months ahead so time to take another look as far out as FY26 at peer group metrics.
Based on average forecasted earnings for FY26 all off Market Screener, for the same peer group I have used for more than a decade now we have FY26 PE's as follows:-
BEN 12.2
BOQ 10.4
WBC 13.5
NAB 14.6
ANZ 12.6
Average of peer group 12.6
HGH 6.95.
(12.6 / 6.95) x 1.28 = $2.32
If HGH reverts to the average of its peer group, (it normally trades plus or minus 1) at some stage in FY26 the share price will be $2.32.
If punters get super excited about growth and it reverts to top of trading range of a forward PE of 18 like it has at times before the share price could theoretically go as high as 18 / 6.95 x 1.28 = $3.32
I was eating some Mainland cheese yesterday and the old Mainland advertisement jingle came to mind
"Good things take time"
HGH Cap raise at $1.00 per share to fund Challenger acquisition for which it now has regulatory approval.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/429162/416302.pdf
Quote from: Left Field on Apr 08, 2024, 08:36 AMHGH Cap raise at $1.00 per share to fund Challenger acquisition for which it now has regulatory approval.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/429162/416302.pdf
No sales sense ...everybody knows 99 cents is cheap while $1.00 is not cheap
All too hard for our Jeff ...packing a sad and getting out and leaving the mess he's leaving behind to be tidied up by others
Risk around Heartland has increased significantly
Thrown Basils peer comparison valuations model in the rubbish ...will never trade above $1.50 again ...no matter how eps accretive things get
F24 targeted to be 6 cents a share
That's not too bad in light of 200+ million more shares
Maybe targeted has a hidden meaning
These accelerated institutional placements really do disadvantage retail shareholders.
They get their $1.00 new shares on 11th April while retail shareholders do not get theirs until 26th April, giving the institutions an advantage of taking profits for 2 weeks as the shares trade ex-entitlement 9th April. * Theoretical ex-entitlement price - $1.17
At least the path to $200m profit in 2028 is still there
Quote from: winner (n) on Apr 08, 2024, 08:47 AMNo sales sense ...everybody knows 99 cents is cheap while $1.00 is not cheap
Look at it this way ... with Heartland a dollar is still a dollar, no cheap discounting going on :);
Anyway - for Heartland achieving this "indicative regulatory approval" (subject to a successful CR) is good news. Given that Heartland is the first non-Australian bank coming so far in Australia, we probably can be as well a bit proud.
From a personal perspective ... based on the info I have so far, happy to participate in the CR.
At first glance:- a few thoughts.
I don't think any of this will come as a surprise to anyone on here. Frankly I am very pleased Jeff is going, (I think I've said that I wanted him to go on here before, certainly if I haven't said it, I've thought it many times), he has become far to ESG obsessed in recent years. I am a little surprised at the size of the discount to the last traded share price. Its good though to get this out of the way as potentially this whole thing could have been hanging over the shares all year.
Couldn't disagree more with Winner's comment that peer group multiple comparisons are no longer relevant or that it will never trade above $1.50 again.
Well said BP. I'm also happy to participate in the capital raise and will apply for more shares.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/429162/416304.pdf - Presentation
Quote from: winner (n) on Apr 08, 2024, 08:53 AMAll too hard for our Jeff ...packing a sad and getting out and leaving the mess he's leaving behind to be tidied up by others
Two J(g)e(o)ffs down in two years! Ze end of a dynasty! Or maybe not? I have a vriend in advertising and zhey have been vorking on ze advertisement to secure a new head at Heartland.
-----------------------
Chief Jeff Required
Heartland Group Holdings
A position of 'Chief Jeff' has arisen to head a progressive forward thinking spelling agnostic financial group. We say 'spelling agnostic' because applicants under the name 'Geoff' will also be considered. We respect the tangata whenua of our birth nation and are a rainbow tick employer. This means that Maori women who have had a sex change and wish to be called Jeff are also encouraged to apply.
Salary and benefits are negotiable but will be in the zillions bracket. An unfortunate consequence of the stresses of such a high powered job means that the lucky appointee will probably lose most of their hair (it happened to the other two JGeoffs). So as compensation, the board has agreed to fully fund a 'Barry Gibb Bee Gees wig' for the successful applicant, and an associated package of disco dance lessons.
Applications should be addressed to:
Jeffthree vacancy,
Heartland Groupie Holdings,
Show us the love downtown,
Auckland,
Ashburton,
Rural Heartland New Zealand
-------------------
RB
Maybe eps accretive from FY26, or if not, FY27, what do you think Fiordland Moose ?
Found this quite encouraging. Uptick in funds raised on deposit and serious increase in the indicated interest rate saved considering its was ~ $500m and 1.34% before.
QuoteFrom 30 December 2023 to 29 March 2024, Challenger Bank achieved retail deposit
growth of A$702m at a rate that is 1.74% lower than Heartland Australia's current cost of
funds.1
Emphasis added.
I really want Heartland to take a fully commercial approach and bank all this margin improvement themselves. They are the dominant player in the reverse mortgage business over there and need to stop their obsession with all things ESG.
Aye you are probably right re FY26 or onwards - far enough away and too many variables to do any sensible guess work. But it won't come as a surprise that I reckon it is dilutionary (given the weight of the capital raised and the low share price) to FY25 earnings. For that, I had to take a stab at status quo FY25 NPAT - so just used FY23 uNPAT of $110 which happened to be the consensus of the 3 brokers I've read. Yeah its dilutionary, but the pro-forma EPS (at a dollar) puts it at an obscene PE ratio. This whole process had a doom loop feature to it - the lower the SP trended, the more dilutionary the capital raise would be, which had the effect of pushing the SP lower and making it more dilutionary again.
Would have been accretive at the higher prevailing SP back mid to late last year, when guidance had been reiterated, before the missteps of not getting the provisioning right. Data table showing that below. Also have a range of NIM savings as I had also picked up on the NIM savings expanding. So perhaps 2% could be achievable? Fingers crossed more? But I don't bank on it.
HGH FY25 dilution.jpg
Note - for the above - I just popped in the $1 cap raise price and revised 1.74% NIM savings into my pre-existing spreadsheet. Ironically I had previously got a $1 cap raise price with previous assumptions. I haven't properly read any of the materials and updated my thinking from them so a bit dated and take with a reasonable grain of salt.
And - just to be clear - the dilution analysis simply reflects the cost savings on the 31 December 2023 estimated Australian debt. It doesn't take into account this or next years position which would expand those earnings further, nor does it assume additional book growth coming specifically from the growth capital injected into Australia. It's very much a backwards looking figure, albeit with the starting FY25 npat assumption a steady state / more normal trading year. I am sure the brokers and the company, taking into account the above factors, would show less dilution. I'll turn my mind to that when I have time.
Those motor vehicle and asset finance book NPL and 30 day plus have tracked up post 31 December 2023. May need to top up the provision - I posted about that previously with a pro-forma PBT/NPAT impact. Need to have a look at again.
Jeff leaving just as Challenger get their licence? Not a good sign however you look at it.
Just like last time this placement favours the institutional investors - they get their $1 shares a full two weeks before retail investors. And like last time it is highly likely that there will be a dump of shares post entitlement leading to a plunge in the SP. History repeating itself.
Final dividend will be cut and I'll believe the "EPS accretive" line when I see it. Going forward I think HGH will struggle to maintain dividends let alone increase them.
Challenger is a real roll of the dice - no-one can say how this will play out for investors. But the CEO leaving at this time isn't a good sign. Watching and waiting is going to be the safest and best option imo.
Thanks Fiordland Moose. Good work and much appreciated.
The FY26 forward metrics look very cheap, (as you suggest, obscene), and I think strong growth in eps will eventuate over time.
I think apart from the doom loop you suggested, it's also a loss of confidence in Jeff and as you have suggested before, perhaps in no small part due to the expression of confidence around provisioning at last year's ASM and then only one month later, the opposite. Pleased he's going and hopeful of a fresh properly commercial approach going forward. The rate at which the savings in Australian funding costs have grown suggests to me 2%+ is plausible going forward.
I'm going to apply for all shares under my entitlement as well as the maximum 100% uplift to see how many more I can get at $1.00.
Quote from: LoungeLizard on Apr 08, 2024, 10:48 AMJeff leaving just as Challenger get their licence? Not a good sign however you look at it.
Just like last time this placement favours the institutional investors - they get their $1 shares a full two weeks before retail investors. And like last time it is highly likely that there will be a dump of shares post entitlement leading to a plunge in the SP. History repeating itself.
Final dividend will be cut and I'll believe the "EPS accretive" line when I see it. Going forward I think HGH will struggle to maintain dividends let alone increase them.
Challenger is a real roll of the dice - no-one can say how this will play out for investors. But the CEO leaving at this time isn't a good sign. Watching and waiting is going to be the safest and best option imo.
Well, I guess you always need somebody to stir, and you are clearly good in hosing down everything with generic (and in its generality clearly wrong) black sludge. Unbalanced generalisations are always wrong.
While warnings supported by data are great - just spreading negativity feels a bit pointless.
Lets look into your statements:
Jeff leaving just as Challenger get their licence? Not a good sign however you look at it.
Maybe you need to try to look a bit harder to find a different viewing point? Jeff is now for 15 years in this job, and no matter how you measure his performance, he brought the company a long way forward. But yes, he might get as well a bit stale (his overemphasis of ESG might be one symptom of that). Happens to all great leaders - there is a reason they try to replace the leaders of countries after typically 8 to 10 years. Remember - its the new brooms who are said to sweep well. So, I think a fresh leader with a new perspective for the next big challenge in Australia might be a good thing.
I prefer organisations which renew their leaders at (or short after) their prime instead of procrastinating with them until the inevitable biological solution.
Final dividend will be cut and I'll believe the "EPS accretive" line when I see it. Going forward I think HGH will struggle to maintain dividends let alone increase them. Anything of substance you could add? FM's interesting analysis shows a different picture for the coming years ... and no matter which analyst you take - I see EPS predictions everywhere going upwards after 2025. Sure, analysts are always optimistic, but this does not mean that we need fact free negativity to outbalance ...
Challenger is a real roll of the dice - no-one can say how this will play out for investors.Well, yes - how is this different from any other investment choice? If you put your money under the mattress, you can loose it as well - and there is not even a reward for taking the risk of loosing your money.
Come on, Lizard - I think you can do better. By all means, keep playing the Advocatus Diavolo (though don't expect me to lend you my avatar) for HGH, but please ... instead of just spreading pointless negative sludge - could we try a bit more balanced and fact based posts?
Worth remembering, at the last raise the mechanism gave punters shares at a near 2% discount compared to institutions (priced at 1.80 or a weighted average trade price). People still complained about that one, often preferring rights issues as your entitlements are clear and fair.
Seems like whatever companies do to raise capital there will be complaints. Tough gig.
Glad you're taking my genuine concerns about HGH seriously there, BP. ;)
For the record, I was virtually the only one on this site, and amongst a handful on the other, that gave clear warnings about the last cap raise and what might - and did - happen to the SP. If I sound like a broken record then that's because I have said it all before - and nothing has changed.
Rather bizarrely, the same people who were critical of my contrary views then, bought in to CR, and then, realising their error, dumped their shares at ta loss, are the same ones who are cmost critical now. Even more bizarrely, those who stayed in and took a 35% haircut, are still super-sensitive about the very suggestion that they got it wrong. Doubling down can work, but sure as hell didn't in this case.
Well, I've said this before as well - good luck to holders. I don't like seeing people losing money, even if they had fair warning. Those taking a punt - and that's what HGH has become, a punters stock - may get some joy after a few bumpy years . Personally I'd rather invest in something with more dependable growth, but each to their own.
Our Greg putting $14m into the pot
Hope Oceania don't do raise on next month or two
Hoping to pick some of these up for a buck in the coming weeks.
Quote from: entrep on Apr 08, 2024, 02:05 PMHoping to pick some of these up for a buck in the coming weeks.
You may well get the opportunity.
1.) It's not just Jeff leaving just as Challenger get their licence, the announcement outlines 5 more key personnel changes at a crucial time. Personnel changes of this magnitude usually indicate issues.
2.) Will HGH promised dividends stand and will the Challenger takeover be "EPS accretive"?? While we all hope so, and as today's statement points out the nice growth in Challengers deposits, HGH does not mention the costs of assimilating Challenger, like aligning software systems, the need to train staff, staff layoffs, or any the likelihood of unforeseen issues, the need for provisions and write-downs etc etc. In addition, in Challenger's existing role as operating a fiduciary Funds Management division, an APRA-regulated Life division and an APRA regulated authorised deposit-taking institution means there are likely to be other calls on the increased deposits including Challenger Life Company Limited which is Australia's largest provider of annuities.
What could possibly go wrong?
Is it better to buy up trending bank shares on extremely high (for banks), metrics or one that's been beaten down on a record ever low metric ?
Harbour opines on the Aussie banks https://www.harbourasset.co.nz/research-and-commentary/harbour-navigator/
Tough crowd to please. Some, including myself, were calling for Jeff to go and others hated the uncertainty of will they, won't they get approval for this acquisition.
Now he's going and the approval is forthcoming and the capital raise under way and we have HGH on the same record ever low forward metric and some are still deeply unhappy. You'd be forgiven for thinking one or two would only invest if it was on a forward PE of only 1 lol.
Winner throwing away his previous deep value playbook as well as my well proven comparative peer group analysis and relying on the Warriors winning their games as his new value accretive strategy. Oh my goodness...I'm lost for words which is a first for a very long time lol
Quote from: Basil on Apr 08, 2024, 04:44 PMIs it better to buy up trending bank shares on extremely high bank metrics or one that's been beaten down on a record ever low metric ?
Harbour opines on the Aussie banks https://www.harbourasset.co.nz/research-and-commentary/harbour-navigator/
If the SP goes below $1.00 as Winner mentioned on the other channel, HGH may well be a good 'BUY'. Alternately we could wait longer till there is 'good news' and an 'up trend.'
Its already on the lowest forward metrics it's ever been on since HGH 101 or 201 series has existed. Bank license approval is good news as is the increased level of new deposits Challenger is getting at far higher than expected cost savings.
Winner told me privately It only goes under $1 if the Warriors draw their next three games in a row ;)
Its all good, we're now on our way to $200m+ in FY28.
I am pleased the Bank licence approvals have been granted.
And will be happy once the "darn" capital raise is done and dusted.
Jeff Greenslade has done great work,getting HGH formed,getting a NZ Bank licence,buying the REL business and developing it,and capping it all off by getting an Australian Banking Licence.
Laid very strong foundations.
Just a pity former Chairman Geoff Ricketts died before the Australian Banking business was achieved.
That $200m profit in 2028 will be about 20 cents share
That's not too bad from estimated 14 cents this year .....40% increase over 4 years
Jeez eps 20 cents valued like some of those Oz banks would give a share price close to $3
Great time to be buying ...a down beaten stock with strong growth on the way
People buying in the capital raise at $1 could triple their money in four years. Even if it got back to the midpoint of its traditional metrics range of 9-18, i.e. 13.5, that suggests $2.70 is quite plausible and that's for $200m profit and assumes 1,000m shares on issue by then with DRIP issues over the next 4 years. But they are talking $200m+ in their presentation so maybe $3 is quite plausible? If extreme pessimism now eventually swings back to over optimism in the years ahead like it has so many times before with this stock, we could be looking at top end metrics of 18 on eps of as much as 22 cents by FY28 giving a high-end case of as much as ~$4
Whatever...need to get as many shares as possible in the capital raise at $1 while all the naysayers think its doom and gloom and this will never recover and if the share price goes close to that $1 level in the lead up to the retail close out date of 22 April, this old dog will be looking for a proper truckload.
Quote from: winner (n) on Apr 08, 2024, 07:15 PMThat $200m profit in 2028 will be about 20 cents share
That's not too bad from estimated 14 cents this year .....40% increase over 4 years
Jeez eps 20 cents valued like some of those Oz banks would give a share price close to $3
Great time to be buying ...a down beaten stock with strong growth on the way
The offer at significant discount to SP at the time of Trading Halt, suggests low expectations from HGH imo. Although I'm sure they'll achieve a good proportion or even full placement, that discount will be reflected in the market tomorrow, a roughly 15% discount to Friday last week. Shareholders taking a haircut either way.
The TA on this is dreadful, falling out (down) from the long term down channel and well below all meaningful EMA's. Just awful. No momentum trader should touch it. It looks like a loooong road to SP recovery and with slashed dividends and uncertainty whether even they are sustainable, HGH imo at this point in time is not an investment, it is a speculative punt on the future, and who knows how long the future is.
As KW would say, "never buy in a down trend, you bloody idiot"!
There's only one old dog on here that has the track record of consistently timing the low and high points of this stock and it isn't KW.
Sometimes you have to grow a pair and throw the TA momentum playbook in the trash can for a while...this is one of those times.
Quote from: winner (n) on Apr 08, 2024, 07:15 PMThat $200m profit in 2028 will be about 20 cents share
Thats a gross target, not an eps target. Just need a few more cap raises along the way to get there.
Quote from: entrep on Apr 08, 2024, 02:05 PMHoping to pick some of these up for a buck in the coming weeks.
Yep, that's a real possibility once trading gets under way. Those who kept their powder dry and waited will do much better and have more options, than those who think they timed the market and bought in at $1.17 let alone those who got carried away with the dead cat bounce and bought in at $1.30. There will many who I imagine will be forced to take the full entitlement just to try and average down. How that is perceived as a "win" is beyond me.
There's a good chance that the SP, post entitlement, will gravitate to $1.10 and perhaps to $1. If there's a major sell off like the last cap raise, then sub $1 is possible. Not likely but possible. Maybe it's a buy at those levels, IF Challenger can turn a profit, there's no skeletons in the closet, and Jeffs claim to acheive $200m NP by 2028 starts to look realistic. Oh hang, on Jeffs not there any more. IS the new CEO going to say the same thing?
Peak cynicism and pessimism by almost everyone. Almost every man, his dog and cat thinking this will never recover from its deeply oversold level because...wait for it, it's never done that as part of a normal cycle before lol. I love it and the vast multitude of naysayers confirms to me we're at the low point of this cycle and that I'm on the right track.
Quote from: Basil on Apr 08, 2024, 08:30 PMPeak cynicism and pessimism by almost everyone. I love it and that confirms to me we're at the low point of this cycle and that I'm on the right track.
DO I need to remind you that you said exactly the same thing at the last cap raise? That didn't turn out well...
Metrics are profoundly compelling now. You want to compare notes on who's correctly called the top and bottom on this before on Heartland 101 or 201. I stick with peer group metrics comparisons because it works and makes me a LOT of money with this one.
Quote from: Basil on Apr 08, 2024, 08:30 PMPeak cynicism and pessimism by almost everyone. Almost every man, his dog and cat thinking this will never recover from its deeply oversold level because...wait for it, it's never done that as part of a normal cycle before lol. I love it and the vast multitude of naysayers confirms to me we're at the low point of this cycle and that I'm on the right track.
I'll say this as nicely as I can. For some time, you have said you are focused on the dividends (earnings), a "dividend hound". No one is disputing your prowess as momentum trader, you have made many successful calls and well done for doing so, as well as exiting when the circumstances changed.
However, neither HGH nor OCA are consistent with dividend investing. They are both speculative punts on upside capital valuations, both are severely compromised on market cap. These are the only two that I follow, perhaps there are more that you've promoted?
Have you evolved your investment thesis, or are you reverting to type, momentum trades? Neither of which BTW meet your TA entry criteria. HGH especially, there's nothing that would attract a momentum trade.
Putting it simply, I've evolved my strategy to include special opportunities of very deep value. When the value is compelling, I'm prepared to buy against the prevailing TA trend. HGH is not a speculative punt. It has a long history of solid dividend payments, and I am confident growth in dividends will return in due course in the years ahead. Challenger was never going to be about growth in eps in the current year or the one immediately thereafter. Good things take time. On the other hand, speculative punt probably describes OCA quite well lol. When gambling, I keep the bets quite small. You get into less trouble that way lol
Jenny Ruth's latest article reckons "Few New Zealand chief executives can claim such a hugely successful track record that Heartland's Jeff Greenslade owns." (Behind paywall so not read by me.)
Winner and Lorianna/Percy have been long term beneficiaries of Jeff's skills, and I recall you both opting in for the last Cap raise. I also seem to remember Winner saying somewhere that his original HGH holding was purchased about the 80c mark?
Perhaps Winner and Percy can share with us what your HGH holding's DCA SP are? Thanks.
Sorry I do not know what DCA SP is.?
Yes was there in the beginning.
A long time ago.Think I loaded up around 60 cents.
Will support this capital raise.
Quote from: lorraina on Apr 09, 2024, 07:55 AMSorry I do not know what DCA SP is.?
'Debauched Cash Advance' or 'Dollar Cost Average'. One of ze two?
RB
Lorraina ...DCA SP is Dollar Cost Average ...in other other words whst the average cost of your Heartland Shares
For me if I go back to year 1 I have no idea but it will be a big negative number from buying and selling over the time ..generally selling high
The current ones about $1.25/$1.30 but my record keeping is pretty poor
Quote from: LoungeLizard on Apr 08, 2024, 08:33 PMDO I need to remind you that you said exactly the same thing at the last cap raise? That didn't turn out well...
This time it IS different. Last time was clouded with ifs, buts and maybes of whether they would get an aussie banking licence. This time the CR is after having been granted that elusive Oz banking licence.
Thanks for sharing folks.......yes Winner is correct, I was meaning the Dollar Cost Average of your current holding.... I find it a useful tool.
Lorriana seems very 'well positioned' with DCA of (say) around .60c and your Div yield is a thing of great beauty. Well done.
Winner .... I guess still a work in progress?
My thinking is that if your DCA after the current cap raise is likely to be lower than the diluted market SP........ (say lower than $1.00 to $1.17) .... then you will be well positioned........ if the Challenger takeover goes well.
Quote from: Left Field on Apr 09, 2024, 08:27 AMThanks for sharing folks.......yes Winner is correct, I was meaning the Dollar Cost Average of your current holding.... I find it a useful tool.
Lorriana seems very 'well positioned' with DCA of (say) around .60c and your Div yield is a thing of great beauty. Well done.
Winner .... I guess still a work in progress?
My thinking is that if your DCA after the current cap raise is likely to be lower than the diluted market SP........ (say around $1.00 to $1.17) .... then you will be well positioned........ if the Challenger takeover goes well.
Current lot may be 'work in progress' but previous forays over the years been very rewarding
I'm sure current 'work in progress' will be just as rewarding
Quote from: Whome on Apr 09, 2024, 08:23 AMThis time it IS different. Last time was clouded with ifs, buts and maybes of whether they would get an aussie banking licence. This time the CR is after having been granted that elusive Oz banking licence.
I disagree. It's exactly the same set of circumstances. Getting the banking licence is, quite frankly, the easy part. Making it work - maintaining capitalisation, interest margins and costs etc, all against a backdrop of very difficult economic conditions is far harder. And the CEO - the guy who initiated the whole thing - has bailed.
The other thing is that HGH has done something like 5 or 6 capital raises. They don't seem to be able to self-fund their own operations and they don't seem to want to issue bonds. Each time the SP goes into a tailspin. SO why were people lining up to buy BEFORE this well-flagged CR, knowing that the SP is likely to end up trading below their entry point. Didn't make any sense to me and still doesn't.
Quote from: winner (n) on Apr 09, 2024, 08:53 AMCurrent lot may be 'work in progress' but previous forays over the years been very rewarding
I'm sure current 'work in progress' will be just as rewarding
I could ~ triple my current holding and it would be all free carry from previous profits. Not sure what that makes my DCA or future yield lol
True that Jeff has put in place a lot of milestones and foundations for growth but sadly, eps growth in recent years has been pretty poor and below the peer group. Hopefully that changes going forward, but current metrics are priced like it will never grow again, which is clearly ridiculous.
All banks will face a demand for more services on line and that for example allow for electronic vaults which you BUY...
The current one banking model serves all is very 1980's and one wonders how long it will be before banks in the pacific farm out there service platforms.
Banks therefore simply become brands over time as the services provide by the finance industries expand.
https://www.nzx.com/announcements/429294
Institutional component of HGH Offer successfully completed
Quote from: keerti on Apr 09, 2024, 11:24 AMhttps://www.nzx.com/announcements/429294
Institutional component of HGH Offer successfully completed
135m shares placed instead of the 105m for the institutional pool - so additional 30m shares looking for a quick profit?
Looks to me like sp will be heading towards $1.01 or $1.02 shortly?
I think it will probably hold at around $1.10 for a while, as those who see it as a bargain prop up the SP. In a week or two, $1 is definitely possible and could be worth a punt at that point. But where it goes from there depends on HGH's results, so still a bit risky even at those levels. Interesting times!
Quote from: keerti on Apr 09, 2024, 11:24 AMhttps://www.nzx.com/announcements/429294
Institutional component of HGH Offer successfully completed
Very disappointing that retail investor's could not participate. Had applied through Craig's and was told that even lead manager Jarden's retail clients did not get any.
Started trading again today at $1.05......Currently trading around $1.09......
Quote from: Shareguy on Apr 09, 2024, 12:24 PMVery disappointing that retail investor's could not participate. Had applied through Craig's and was told that even lead manager Jarden's retail clients did not get any.
Same as last time - Insto's get the inside track every time. It will be two weeks before retail investors get a bite, by which time the SP will have gravitated towards $1 anyway. No advantage to being a current holder, particularly if you've been buying in the last couple of weeks at $1.15-$1.30. Those buyers are underwater already, even with their 1:7 entitlement.
Lizard said ... The other thing is that HGH has done something like 5 or 6 capital raises. They don't seem to be able to self-fund their own operations
Yep consequence of maintaining high dividend payout ratios
Could say capital raises needed to pay dividends ...I gave detail of this over the years on this thread a few weeks ago.
Quote from: winner (n) on Apr 09, 2024, 03:06 PMLizard said ... The other thing is that HGH has done something like 5 or 6 capital raises. They don't seem to be able to self-fund their own operations
Yep consequence of maintaining high dividend payout ratios
Could say capital raises needed to pay dividends ...I gave detail of this over the years on this thread a few weeks ago.
Yep, doesn't make a lot of sense to me - going to investors with a begging bowl every few years, just so they can give it back by way of dividend. And each time the SP gets hit. HGH are running quite a capital hungry business - reverse mortgages and now a new bank. Wouldn't be surprised at all if there's another CR in a couple of years ::)
what does snow Leopard mean by this responce to balance on the other channel, I read the $131m raised meant 131m new shares
Balance said
35m shares placed instead of the 105m for the institutional pool - so additional 30m shares looking for a quick profit?
Looks to me like sp will be heading towards $1.01 or $1.02 shortly?
Obviously the wording has confused a few people
Snow leopard said
$131M consists of:
$105M for the placement;
$26M of the $105M of the pro-rata Entitlement Offer, being that bit of said offer that is applicable to the institutiona
now given it was a book build offer to insto's, under written @ $1....does the $131m raised for 105m shares mean the book build got cleared at
$131m divided by 105m shares = $1.24 per share
Quote from: snapiti on Apr 09, 2024, 06:48 PMwhat does snow Leopard mean by this responce to balance on the other channel, I read the $131m raised meant 131m new shares
Balance said
35m shares placed instead of the 105m for the institutional pool - so additional 30m shares looking for a quick profit?
Looks to me like sp will be heading towards $1.01 or $1.02 shortly?
Obviously the wording has confused a few people
Snow leopard said
$131M consists of:
$105M for the placement;
$26M of the $105M of the pro-rata Entitlement Offer, being that bit of said offer that is applicable to the institutiona
Vot our furry mountain dwelling vriend means eez zhat you are all 'dummkopfs', but he eez too polite to zay zo!
quote vrom ze leenk
https://www.nzx.com/announcements/429294
"NZ$210 million will be raised under the 1/Entitlement Offer AND 2/Placement."
Ze placement haz raised $NZ105m as voretold.
"The Placement AND Institutional Entitlement Offer closed on Tuesday 9 April 2024 and raised gross proceeds of approximately NZ$131 million."
Zubtraction tells us zhat ze "Institutional Entitlement Offer" raised $NZ131m-$NZ105m=$NZ26m
Zhis "Institutional Entitlement" (vhich represents 98% of ze allowable institutional entitlement according to ze link), vent to existing institutional zhareholders who vere
already on ze share register.Ze remaining $NZ105m-$26m= $79m vill be raised from ze zmall zhareholders already on ze zhare register
who are not institutions.'Balance' has read eet wrong. Ze institutional pool vas
not expanded. Zhose extra zhares he zpeaks of vere just the institutional part of ze "Entitlement Offer", which ze institutions vith enough voresight to be "existing shareholders" of Heartland, pre capital raising, vere always going to be entitled to.
RB
Quote from: Red Baron on Apr 09, 2024, 08:17 PMVot our furry mountain dwelling vriend means eez zhat you are all 'dummkopfs', but he eez too polite to zay zo!
quote vrom ze leenk
https://www.nzx.com/announcements/429294
"NZ$210 million will be raised under the 1/Entitlement Offer AND 2/Placement."
Ze placement haz raised $NZ105m as voretold.
"The Placement AND Institutional Entitlement Offer closed on Tuesday 9 April 2024 and raised gross proceeds of approximately NZ$131 million."
Zubtraction tells us zhat ze "Institutional Entitlement Offer" raised $NZ131m-$NZ105m=$NZ26m
Zhis "Institutional Entitlement" (vhich represents 98% of ze allowable institutional entitlement according to ze link), vent to existing institutional zhareholders who vere already on ze share register.
Ze remaining $NZ105m-$26m= $79m vill be raised from ze zmall zhareholders already on ze zhare register who are not institutions.
'Balance' has read eet wrong. Ze institutional pool vas not expanded. Zhose extra zhares he zpeaks of vere just the institutional part of ze "Entitlement Offer", which ze institutions vith enough voresight to be "existing shareholders" of Heartland, pre capital raising, vere always going to be entitled to.
RB
I prefer Snoopy's analysis, it doesn't require a linguist to decipher the gobbledegook pigeon German translation. Especially for what is already a confusing or ambiguous situation.
Quote from: Buzz on Apr 09, 2024, 08:31 PMI prefer Snoopy's analysis, it doesn't require a linguist to decipher the gobbledegook pigeon German translation. Especially for what is already a confusing or ambiguous situation.
Snoopys paralysis by analysis is a yeah/nah for me, his latest target Spark only requires a quick 10 minute study of the company's history and performance over the last decade to know its a fantastic spray and walk away investment.
Quote from: Breezy on Apr 10, 2024, 06:49 AMSnoopys paralysis by analysis is a yeah/nah for me, his latest target Spark only requires a quick 10 minute study of the company's history and performance over the last decade to know its a fantastic spray and walk away investment.
Quite vright Breezy. Eef anyvone prefers ze ravings of a 'pumped up pompous pup' to a highly educated member of ze german aristocracy, zhen ve know vhere zhey can go! Zorry eef my 'pidgin english' makes my posts hard to vollow. But eet eez better zhan my dire pidgeon Deutsche!
And now back to Heartland.
RB
...... flat .... and ... bouncy ...
https://www.goodreturns.co.nz/article/976523009/nz-sharemarket-down-0-5-again.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+9+Apr+2024
Interesting comment,
QuoteMatt Goodson, managing director of Salt Funds Management, said the local market was "a little bit soggy, and maybe it was focussed on the Heartland equity raise".
Heartland Group resumed trading and was down 7c or 5.98% to $1.10 after completing its institutional placement that raised $131m, with 98% of shareholders taking up their entitlements.
The retail offer of one new share for every 6.85 shares held, at $1 a share, opens on Thursday and will complete Heartland's $210m capital raising to help fund the purchase of the Australian Challenger Bank.
Goodson said Heartland's institutional offer was well bid. "It was good to get the raise out of the way and in combination with pulling back the dividend to 50% of net profit, Heartland won't be back to the market for a considerable period of time, if ever."
I think shareholders need to attend the annual meeting and send the message loud and crystal clear, we are really sick and tired of you issuing new shares, especially on more advantageous terms to new institutional shareholders who then flood the market and take a quick buck.
From where I sit the dividend situation for FY25 and beyond is quite opaque. While they've stated this years position clearly, all they had to say going forward was.
QuoteHaving regard to the equity raise, acquisition of Challenger Bank and associated growth opportunities, the Board expects to target a total dividend payout ratio in the financial year ending 30 June 2024 of 50% of underlying net profit after tax. The Board will, as it has historically, actively manage dividend settings and carefully consider the declaration of any dividend based on Heartland's capital needs, ROE accretive growth opportunities, balance sheet flexibility and Heartland's financial performance
Has Goodson read more into this than he should or does their retrenchment to 50% divvy payout ratio for FY24 signal their future strategy, (remembering it has historically averaged about 70%) ? Thoughts ?
From above post ....Goodson said Heartland's institutional offer was well bid. "It was good to get the raise out of the way and in combination with pulling back the dividend to 50% of net profit, Heartland won't be back to the market for a considerable period of time, if ever."
Should make Lizard keen to get back into Hgh ....no more cap raised
Quote from: winner (n) on Apr 10, 2024, 08:49 AMFrom above post ....Goodson said Heartland's institutional offer was well bid. "It was good to get the raise out of the way and in combination with pulling back the dividend to 50% of net profit, Heartland won't be back to the market for a considerable period of time, if ever."
Should make Lizard keen to get back into Hgh ....no more cap raised
Self defeating statement from Goodson?
Banks by definition, being in the business of cash/capital, need capital to grow and the greater the growth, the bigger the capital required.
Reverse mortgage is a very capital
Intensive and cashflow sapping business until critical market size and loan maturity profiles are reached - another 10 or 15 years imo to go for HBL.
Only alternative is to cut back on dividends to fund the growth.
Or as the other banks have done, place more emphasis on fee income like credit cards, funds management etc.
Quote from: Teitei on Apr 10, 2024, 09:07 AMBanks by definition, being in the business of cash/capital, need capital to grow and the greater the growth, the bigger the capital required.
Reverse mortgage is a very capital
Intensive and cashflow sapping business until critical market size and loan maturity profiles are reached - another 10 or 15 years imo to go for HBL.
The latest Elders market update to the ASX suggests all is not well in the Aust farming scene.
https://elders.com.au/for-investors/updates/asx-announcements/
Just saying....
Yeh saw this as well, say the same goes for Nz as well...
Quote from: winner (n) on Apr 10, 2024, 08:49 AMFrom above post ....Goodson said Heartland's institutional offer was well bid. "It was good to get the raise out of the way and in combination with pulling back the dividend to 50% of net profit, Heartland won't be back to the market for a considerable period of time, if ever."
Should make Lizard keen to get back into Hgh ....no more cap raised
Never say never - and I direct that towards Goodson when he seems to suggest that HGH's days as a serial capital raise merchant are over. Does he have any idea how capital hungry HGH's business model is?
I'm no banker, thank God, but either HGH will go to the well once again, or they are going to have to seriously retrench dividends, which will irk some even more. With all those extra shares floating around and a new payout ratio of only 50% of NP, shareholders better get used to the idea of Heartland 2.0 cutting its dividends. I'd figured that the final dividend would be cut to 4c but it may turn out to be less than that, particularly if there's a few hiccups with Challenger. On the bright side, if the SP gets below $1, the yield might still be ok for new investors.
The SP is going to be under serious pressure in the days ahead. The last CR saw the SP hit the placement price of $1.76 within a week of trading. Will it hit $1 in a similar time frame? Time will tell.
The problem holders face now is the SP went into a long steady decline since the last CR and KW, - our resident TA expert - warned about going against a pretty strong downtrend. There was no sign prior to the announcement of this new CR that there was any upswing happening, so will the downtrend continue? There's no good evidence to suggest that it won't unless there's a shift in market sentiment which won't happen until HGH 2.0 starts producing some good numbers. Cutting the final divvy to 3-4c, which is likely, isn't going to help the SP either.
I don't see an upside for holders at the moment - the risk of Jeffs master plan going south are still there, and the macroeconomic picture still isn't good. Much better to be an onlooker and wait for either an upswing to happen, or the SP to get low enough ($1) to risk a punt.
Well said Lizard..... I've been watching HGH as I like beaten down shares that show signs of life .... however I still see lots of warning signs with HGH and I'll need to see definite signs of a turnaround in HGH fortunes and upside TA signals before I invest.
I also agree with Bull on the other channel who said.... "(HGH) hasnt been that great of an investment for cap gain , was good as a income stock but that appears to have dis-appeared as well now unless challenger turns into a roaring success. but that will take time. in the mean time the cut in div payout to under 50% of npat implies this may not be a income stock again for a while."
That's all from me on HGH..... no more posting till I think HGH is a BUY.... better things to do....I'll leave it to holders. Good luck all.
In conjunction with TA it is always wise to test the performance of a stock against its peers. If its underperforming the entire industry, that should be ringing alarm bells. The market always knows why a particular stock is uninvestable, even if the average retail punter doesnt. The truth will out eventually.
So how is HGH performing against its ASX peers?
"Investors increasingly priced out of the country's largest banks – some of the most expensive in the world – are turning to smaller alternatives for cheaper exposure to the sector ahead of expected interest rate cuts.
Long the unloved peers to their larger rivals, investors have pushed the share price of small lenders like Judo Bank up over 32 per cent and Tasmania's MyState up 14.7 per cent. Even Bendigo and Adelaide Bank outperformed the ASX, climbing 4.3 per cent this year."
https://www.afr.com/markets/equity-markets/expensive-big-banks-send-investors-toward-long-laggard-smaller-rivals-20240408-p5fi5d
Quote from: KW on Apr 10, 2024, 03:55 PMIn conjunction with TA it is always wise to test the performance of a stock against its peers. If its underperforming the entire industry, that should be ringing alarm bells. The market always knows why a particular stock is uninvestable, even if the average retail punter doesnt. The truth will out eventually.
So how is HGH performing against its ASX peers?
"Investors increasingly priced out of the country's largest banks – some of the most expensive in the world – are turning to smaller alternatives for cheaper exposure to the sector ahead of expected interest rate cuts.
Long the unloved peers to their larger rivals, investors have pushed the share price of small lenders like Judo Bank up over 32 per cent and Tasmania's MyState up 14.7 per cent. Even Bendigo and Adelaide Bank outperformed the ASX, climbing 4.3 per cent this year."
https://www.afr.com/markets/equity-markets/expensive-big-banks-send-investors-toward-long-laggard-smaller-rivals-20240408-p5fi5d
Couldn't read the article but it will be interesting to see how HGH stacks up against the other digital banks, once it gets going.
Of course, 3 of the 4 most prominent digital banks in Australia, including Volt, have already folded, most of them citing the inability to raise sufficient funds to meet banking requirements. And although Judo, the 4th most prominent, is doing better of late, it's current share price is 40% lower than it was 18 months ago. Which I guess puts in on a par with HGH...
Challenger itself is/was a loss making entity, so it will be very interesting to see how HGH goes in turning it around and taking the OZ banks on.
Challenger was losing money recently for a range of reasons including winding down previous operations but obviously still had its existing head office cost structure and more recently also because they have been taking hundreds of millions in deposits in the lead up to the ownership changeover and investing it in money market funds rather than lending it out. That changes going forward. Back Heartland's 1.9 Billion reverse home loan business into Challenger straight away and with a circa 2% lower funding cost going forward than what they are currently paying, that's $38m per annum increased NIM right there.
I also see 3-4 cents in the way of final divvy, I think that's clear enough, but this was never going to be about the divvy the year Challanger was bought or the one immediately thereafter.
It's clear a lot of people have their panties in a bunch over this acquisition, but I remain of the view it will be eps accretive over time. That might take until FY26 or even FY27 and that's okay with me. I also see dividends being at a lower level than the 70% they have averaged in previous years, maybe 50-60% and I'm okay with that too.
This is still a bitter pill to swallow. I am a buy and hold type. It doesn't seem to long ago I bought $50,000 worth of shares at $1.79ish in the last capital raise.
Now with my average cost at $1.48 per share - I suppose I throw the max I can at it to lower my average and hope for the best.
I hope they can keep the yearly dividend at least 8 cents plus some imputation credits. Which at least makes any $1 purchase acceptable to me.
In regards to concern about StockCo and Australian having an agricultural downturn I assume their stock trading conditions are similar to here. Here the same number of lambs are being sold to traders whom will require finance to purchase. It's the price they are paying that is different to last year. Last year a store lamb to buy was $125 while this year it's about $77. That adds up to a lot less money needed to be borrowed.
Yes the experts got the covid recovery money printing wrong unlike in 2008 GFC....
the inflation hikes were the fastest ever?
it could take 5 years for markets to rebuild due to the loading up of government debt and no way for them to repay it off any time soon.
GFC took 10 years to repair....
very few professional insto's get it right all the time and retail investors are at the mercy of the markets.
Got an email re capital raise
Had an Entitlement Number and I though jeez that's a huge number of shares I can apply for ...and 100% more
Stupid me ...it's a code to do the stuff online
I don't usually post unless I have something to say, but Monday was the final straw with Heartland.
I have followed this company for many years (at one stage it was my biggest position), listening to the story of its potential, while feeling uneasy about its annual reporting, online annual meetings, smoothed earnings, rapid cap raises, increasing share count, not passing full interest rate costs onto customers, provisioning and a bunch of excuses for why they treat retail investors like sh*t.
While I have to rely on my own instincts, and a bit of advice from the others on Stocktalk, I decided to hold on before making any hasty decisions, in order to have a chat with Leanne Lazarus (CEO Heartland NZ) at the NZSA Auckland Meeting about a month or so ago. I liked Leanne and really appreciated her fronting up (I haven't seen Jeff's face in person for years). Leanne, after being unable to answer a few tough questions from the floor, about Challenger being loss making and how they were going to fund the whole thing (she really played down the chance of a capital raise), really put the final nail in the coffin. I did see Ronaldson at the NZSA meeting, so he may have a different take on things.
I used the opportunity after the meeting to spend another 40 minutes or so with Leanne, asking all the questions I have never really had the chance to ask. After that conversation and a better understanding of how the bank operated, I went and sold half my shares (about 30,000 ish), in order to reduce my exposure. Heartland is not a real bank (it might soon be) or a fintec (what bullsh*t), it relies on a rolling deal with an Aussie bank (from memory it was Westpac) to use their banking infrastructure. In fairness she gave some good answers and it is hard to be put on the spot late at night. Overall, I was very impressed with her, but she is not the one pulling the strings. Jeff must be a smart guy, because he, like a certain prime minister, knows when to get out.
I feel very sorry for those who have lost money and who bought in at the $1.50 to $1.60 range (or higher). My only saving grace is that I bought a truckload in the depths of the pandemic, so have come out slightly up. As far as the cap raise goes, the steep discount to the market price has once again eroded shareholder value. Large funds may be able to buy up this garbage without worry and pump and dump it onto their retail clients, but retail investors will have to ride the lightning.
Can you make money in this stock? - I am sure you can, but I like to deal in companies. The shift towards Auzzie could be a long-term masterstroke, but for me, it is about trust, and when it is gone- it is gone.
The market is suffering at the moment, but there is much better quality out there with better long-term returns to be had. Basil may be able to move in and out (making money), but I want a company to hold for the long term, with management I can trust.
If you are new to Heartland, pick up an annual report from a quality company like Turners or Mainfreight and hold it next to an annual report from Heartland. Even better would be to go to all three meetings (online if you have to) and experience the difference for yourself. I am not an expert in banking, NIMs, etc and I defer to others' wisdom on this forum, but I have background in dealing with thousands of people at all levels and my "spidey senses" tell me that there is something not right with this company.
I'm out. I'll chalk this one up to experience and some lessons learned. Best luck to those holding and I am sure there is some money to made out of the cap raise, if you play your cards right. Long term- I don't want to ride this horse. Profits may be going up, but you will need to keep a close eye on that share count.
Discl: No longer a holder as of Tuesday. I saw a quick spike and I took the exit (not interested in a quick buck with this kind of animal). I like catching a sugar hit (getting in at a good price for a quick gain), like everybody else, but after the party, you are still left with a bad investment in a volatile company. Even though I can now buy back in at $1, there is no certainty that Aus will pay off and you won't get screwed in the future. I currently hold both MFT and Turners (so I am biased!).
Quote from: Alekhine on Apr 11, 2024, 10:57 AMI don't usually post unless I have something to say, but Monday was the final straw with Heartland.
I have followed this company for many years (at one stage it was my biggest position), listening to the story of its potential, while feeling uneasy about its annual reporting, online annual meetings, smoothed earnings, rapid cap raises, increasing share count, not passing full interest rate costs onto customers, provisioning and a bunch of excuses for why they treat retail investors like sh*t.
While I have to rely on my own instincts, and a bit of advice from the others on Stocktalk, I decided to hold on before making any hasty decisions, in order to have a chat with Leanne Lazarus (CEO Heartland NZ) at the NZSA Auckland Meeting about a month or so ago. I liked Leanne and really appreciated her fronting up (I haven't seen Jeff's face in person for years). Leanne, after being unable to answer a few tough questions from the floor, about Challenger being loss making and how they were going to fund the whole thing (she really played down the chance of a capital raise), really put the final nail in the coffin. I did see Ronaldson at the NZSA meeting, so he may have a different take on things.
I used the opportunity after the meeting to spend another 40 minutes or so with Leanne, asking all the questions I have never really had the chance to ask. After that conversation and a better understanding of how the bank operated, I went and sold half my shares (about 30,000 ish), in order to reduce my exposure. Heartland is not a real bank (it might soon be) or a fintec (what bullsh*t), it relies on a rolling deal with an Aussie bank (from memory it was Westpac) to use their banking infrastructure. In fairness she gave some good answers and it is hard to be put on the spot late at night. Overall, I was very impressed with her, but she is not the one pulling the strings. Jeff must be a smart guy, because he, like a certain prime minister, knows when to get out.
I feel very sorry for those who have lost money and who bought in at the $1.50 to $1.60 range (or higher). My only saving grace is that I bought a truckload in the depths of the pandemic, so have come out slightly up. As far as the cap raise goes, the steep discount to the market price has once again eroded shareholder value. Large funds may be able to buy up this garbage without worry and pump and dump it onto their retail clients, but retail investors will have to ride the lightning.
Can you make money in this stock? - I am sure you can, but I like to deal in companies. The shift towards Auzzie could be a long-term masterstroke, but for me, it is about trust, and when it is gone- it is gone.
The market is suffering at the moment, but there is much better quality out there with better long-term returns to be had. Basil may be able to move in and out (making money), but I want a company to hold for the long term, with management I can trust.
If you are new to Heartland, pick up an annual report from a quality company like Turners or Mainfreight and hold it next to an annual report from Heartland. Even better would be to go to all three meetings (online if you have to) and experience the difference for yourself. I am not an expert in banking, NIMs, etc and I defer to others' wisdom on this forum, but I have background in dealing with thousands of people at all levels and my "spidey senses" tell me that there is something not right with this company.
I'm out. I'll chalk this one up to experience and some lessons learned. Best luck to those holding and I am sure there is some money to made out of the cap raise, if you play your cards right. Long term- I don't want to ride this horse. Profits may be going up, but you will need to keep a close eye on that share count.
Discl: No longer a holder as of Tuesday. I saw a quick spike and I took the exit (not interested in a quick buck with this kind of animal). I like catching a sugar hit (getting in at a good price for a quick gain), like everybody else, but after the party, you are still left with a bad investment in a volatile company. Even though I can now buy back in at $1, there is no certainty that Aus will pay off and you won't get screwed in the future. I currently hold both MFT and Turners (so I am biased!).
Great, considered post there, Alekhine.
There are those of us who are all gung-ho about HGH (Basil) and those who are all doom and gloom (me), but I think you have encapsulated well the sense that HGH is no longer a company that one can reliably consider to be looking after it's smaller investors. Maybe it never was, but the last two CR's have really turned the screw. Like you I am a pretty conservative, buy-and-hold investor - my biggest holding is Infratil. I've become a fan of Turners as well.
There may be money to be made with this stock but the deck is stacked in favour of the big Institutions. With dividends being cut there's a lot riding on strong, consistent growth which to me looks like roll-of-the-dice stuff, and I'm damned sure that we haven't seen the last of the capital raises, which wipes away any SP gains everytime. Anyway, I'm not a holder, so I'll leave it to others to bang the drum on this one. ;)
Quote from: Alekhine on Apr 11, 2024, 10:57 AMI don't usually post unless I have something to say, but Monday was the final straw with Heartland.
I have followed this company for many years (at one stage it was my biggest position), listening to the story of its potential, while feeling uneasy about its annual reporting, online annual meetings, smoothed earnings, rapid cap raises, increasing share count, not passing full interest rate costs onto customers, provisioning and a bunch of excuses for why they treat retail investors like sh*t.
While I have to rely on my own instincts, and a bit of advice from the others on Stocktalk, I decided to hold on before making any hasty decisions, in order to have a chat with Leanne Lazarus (CEO Heartland NZ) at the NZSA Auckland Meeting about a month or so ago. I liked Leanne and really appreciated her fronting up (I haven't seen Jeff's face in person for years). Leanne, after being unable to answer a few tough questions from the floor, about Challenger being loss making and how they were going to fund the whole thing (she really played down the chance of a capital raise), really put the final nail in the coffin. I did see Ronaldson at the NZSA meeting, so he may have a different take on things.
I used the opportunity after the meeting to spend another 40 minutes or so with Leanne, asking all the questions I have never really had the chance to ask. After that conversation and a better understanding of how the bank operated, I went and sold half my shares (about 30,000 ish), in order to reduce my exposure. Heartland is not a real bank (it might soon be) or a fintec (what bullsh*t), it relies on a rolling deal with an Aussie bank (from memory it was Westpac) to use their banking infrastructure. In fairness she gave some good answers and it is hard to be put on the spot late at night. Overall, I was very impressed with her, but she is not the one pulling the strings. Jeff must be a smart guy, because he, like a certain prime minister, knows when to get out.
I feel very sorry for those who have lost money and who bought in at the $1.50 to $1.60 range (or higher). My only saving grace is that I bought a truckload in the depths of the pandemic, so have come out slightly up. As far as the cap raise goes, the steep discount to the market price has once again eroded shareholder value. Large funds may be able to buy up this garbage without worry and pump and dump it onto their retail clients, but retail investors will have to ride the lightning.
Can you make money in this stock? - I am sure you can, but I like to deal in companies. The shift towards Auzzie could be a long-term masterstroke, but for me, it is about trust, and when it is gone- it is gone.
The market is suffering at the moment, but there is much better quality out there with better long-term returns to be had. Basil may be able to move in and out (making money), but I want a company to hold for the long term, with management I can trust.
If you are new to Heartland, pick up an annual report from a quality company like Turners or Mainfreight and hold it next to an annual report from Heartland. Even better would be to go to all three meetings (online if you have to) and experience the difference for yourself. I am not an expert in banking, NIMs, etc and I defer to others' wisdom on this forum, but I have background in dealing with thousands of people at all levels and my "spidey senses" tell me that there is something not right with this company.
I'm out. I'll chalk this one up to experience and some lessons learned. Best luck to those holding and I am sure there is some money to made out of the cap raise, if you play your cards right. Long term- I don't want to ride this horse. Profits may be going up, but you will need to keep a close eye on that share count.
Discl: No longer a holder as of Tuesday. I saw a quick spike and I took the exit (not interested in a quick buck with this kind of animal). I like catching a sugar hit (getting in at a good price for a quick gain), like everybody else, but after the party, you are still left with a bad investment in a volatile company. Even though I can now buy back in at $1, there is no certainty that Aus will pay off and you won't get screwed in the future. I currently hold both MFT and Turners (so I am biased!).
Well written and well argued post. This is the stuff which improves forums like this.
Having said that - while I can see your perspective, if you look at it from other viewing angles, there is still a lot of long-term gain in HGH.
Just looked into my spreadsheet - average P/E over the last 10 years was 9.8 and this came with an EPS CAGR (10 years) of 8.3. Not bad, isn't it? - even if the company is currently in a dip. From a long term investor point of view, these are the times when buying is partiuclarly good.
I understand your points re treatment of retail investors. You are right - it is not good, and it does show a certain arrogance of board / management. That's a risk factor which clearly makes the retail investor journey less pleasant and beneficial, but I doubt it will bring the ship to sink (but sure, this is a risk as well). Anyway - clearly one of the factors to consider, but typically better to get out on a high (which is not now) if one sees that as a critical risk :) ;
The Reverse mortgage industry itself clearly has tailwind - and Heartland is the leading provider in this field. Would be a pity to give up this advantage.
And yes, Heartland's (online) banking procedures are not known for being particularly convenient or flash - mediocre at best. Clearly not one of their strengths ... but then, they share this mediocracy with a number of other banks I don't expect to go down either.
So - as with any other investment, there are pluses and minuses. I understand and applaud your research and analysis before you went out, but I see as well their past (and I think future) strengths. For what it is worth - I plan to stay in based on the solid fundamentals (s. above) and the in my view very favorable future of the industry.
Discl: hold and intend to contribute to the CR, i.e. clearly - I am biased as you are :) Ah yes, and holding (larger chunks of) MFT and TRA as well.
TRA and MFT.Great companies,however we must remember MFT stuffed up their first attempt at Aussie and also stuffed up their first European acquisition.Great company worked through them.
TRA.Well they really stuffed up their non recourse Motor Trade Finance company loans,as they did their Autosure mechanical breakdown insurance charging the same rates for European cars as Japanese.Great company worked through them.
HGH.Was often said putting together two building societies with a finance company would never work.As for getting a NZ
Banking licence.Would never happen.Then throwing good money for a REL business whose major market was Australia was sheer madness.And yet here we are looking at getting an Australian Banking licence. Great company worked through them.
I wonder whether Forbar's target price of $1.25 or Craigs' of $1.51 is correct.
I am happy with either,as I will collect the fully imputated divie in the meantime.
well I bailed as well, I suspect Jeff leaving is a good indicator that the "0ne off historical write downs" $15m are not going to be a "one off"
Also the caveats used when looking for possible escape goats why forecasts may not be met are more a reality than a possibility especially the one about unemployment increasing.
Also suspect underwriters are supporting the SP to keep retail investors interested in taking up the cap raise.
I am one of the lucky ones only losing 3 cps after factoring in the divi payment......suspect $1 will be tested
In their preso they mention Non-Strategic Assets and say they could realise $100m of capital.
Any idea what they are?
Harmoney stake? And other stuff
Whoops sounding like Oceania .....selling stuff to strengthen balançe sheet lol
T1 or T2 ...
Its the T2 SIR!!!
https://www.youtube.com/watch?v=74ztvm7nAg8
is this starting to look like a potential slow train wreck with this stock reverting to its inherited DNA?
The westpac backend at least lets them work on selling loans and not having to worry about tech ..
HGH projections.From HGH presentation;
"Projections based on growth in Reverse Mortgages, Livestock Finance and Home Loans5 only.5 Home Loans acquired through the acquisition of Challenger Bank and is assumed to be in run-off. "
Therefore HGH have not counted on any motor vehicle or asset financing profits in their Australian projections.
Also;Lenders such as HGH,TRA, etc made a lot of loans when interest rates were very loan.
I watched a Turners presentation where their finance man Aaron,Saunders said it would take another 18 months to 2 years for these loans to be recycled.ie paid back in full and the money relent at new rates.
HGH mentions this in passing,but again I do not think the analysts have taken this into account.
I therefore think HGH will exceed their [in my opinion modest] projections.
No issues with loan demand, reverse mortgages have strong tailwinds and they enjoy a dominant market position. 21% CAGR in Australia in recent years speaks for itself as does the lower funding costs achieved through this process which I believe will top 2% per annum savings rate within 18 months.
Analysts seem to be about $175m for FY28 and predicting a 60-65% dividend payout ratio in future years and no further capital raise between now and FY28.
I think HGH would do well to radically change the discount level of their dividend reinvestment scheme, currently 2%. Issuing new capital at an 18% discount to the last traded price in the manner they have, favoring institutions has really annoyed some retail investors, (and fair enough too), especially hard on the back of a $1.80 capital raise less than 2 years ago. If they're so capital hungry maybe a 5% discount on the DRIP would encourage a larger uptake and more fairly reward those who choose to support the company with ongoing reinvestment Certainly 5% is a lot less than 18% and that 18% was on a very depressed share price partly because the market was well aware a capital raise was coming. I think there are serious lessons for the company to learn from this. Perhaps I will make the effort to articulate my thoughts at the next annual meeting.
I suspect the analysts are slightly conservative with their forecast for FY28 but do note they see reducing the cost ratio to 35% as their hardest challenge and I tend to agree. Still, sticking with what analyst coverage there currently is, (Jarden won't publish as they're the underwriters), $175m in FY28 on say 975m shares issued (including guess of DRIP shares issued between now and then), and assuming no more capital raises is eps of 18 cents per share. Put a normal midpoint PE on that of about 13 and $2.34 seems like a plausible 4 year price target.
Whether the company's target of $200m is right or the analysts $175m, I am more focused on the fact that this is probably the lowest point of the economic cycle and probably around the lowest point for the share price. I think those that have sold here will come to regret their decision in the years ahead.
hard to believe we are at the bottom of the economic cycle with unemployment set to continue to rise
Hehe - there's an old joke about how do you make God laugh? Tell him your plans.
Substitute "God" for "The Market" and that pretty much sums up much of the analysis.
The first projection I heard Jeff Greenslade make was that HGH would increase their ROE from 4% to 10% in three years.
Think it was at their first AGM held in Ashburton many years ago.Yes achieved that.
As far as I am concerned HGH has achieved everything he said it would.
His record is better than any analyst's, .
Quote from: winner (n) on Apr 11, 2024, 07:20 PMIn their preso they mention Non-Strategic Assets and say they could realise $100m of capital.
Any idea what they are?
Harmoney stake? And other stuff
Whoops sounding like Oceania .....selling stuff to strengthen balançe sheet lol
Apart from Harmoney, they have investment properties (VPS properties ltd) and other investments which I think makes up the difference.
Quote from: LoungeLizard on Apr 12, 2024, 12:47 PMHehe - there's an old joke about how do you make God laugh? Tell him your plans.
Substitute "God" for "The Market" and that pretty much sums up much of the analysis.
But maybe it's a case of who laughs last laughs loudest
Quote from: LoungeLizard on Apr 12, 2024, 12:47 PMHehe - there's an old joke about how do you make God laugh? Tell him your plans.
Substitute "God" for "The Market" and that pretty much sums up much of the analysis.
Hey LoungeLizard I every time I read your posts I think of Dan the weather guy on TV
Can't fathom why but it's a weird feeling
Quote from: winner (n) on Apr 13, 2024, 07:48 AMHey LoungeLizard I every time I read your posts I think of Dan the weather guy on TV
Can't fathom why but it's a weird feeling
Hehe - fair enough, I'll take that ;D
Quote from: winner (n) on Apr 13, 2024, 07:48 AMHey LoungeLizard I every time I read your posts I think of Dan the weather guy on TV
Can't fathom why but it's a weird feeling
How reliable are Dan's forecasts.?
Quote from: lorraina on Apr 13, 2024, 10:31 AMHow reliable are Dan's forecasts.?
Lots of arm waving and gesticulating and gets excited about all the upcoming doom and gloom and generally forecasts not that reliable.
When was last time Dan said tomorrow is going to be sunny and fine .....and if he did he'd probably say we are going to die from heat stroke ...in a cheery way
Quote from: winner (n) on Apr 13, 2024, 10:46 AMLots of arm waving and gesticulating and gets excited about all the upcoming doom and gloom and generally forecasts not that reliable.
When was last time Dan said tomorrow is going to be sunny and fine .....and if he did he'd probably say we are going to die from heat stroke ...in a cheery way
My goodness, have we "outed" some reptile's day job ?
Anyway, markets closed and its the weekend so got to thinking....and speaking of arm waving, gesticulation and excitement, you a fan of going to greyhound racing meetings and having a flutter ? I imagine that's a lot of fun. never been to the dog's but have to some horse race meetings and that can be exciting.
Suppose like with horses, a good tactic is to review previous form, look for a favorable draw and try and pick the dog with the least flea's.
You could argue Greg Tomlinson has a couple of dog's both with poor recent form, OCA and HGH. Hope he has another $14m on standby in case the other one needs a trip to the vet.
Anyway...got thinking this morning, is it a coincidence that both his dog's are not performing well, both got nonperforming divisions they want to sell, both looking for a new CEO, both developing a keen obsession with all things ESG. Gosh is our man Greg part of the problem, surely not ?
Watched Wall Street the other day again...took note of the part where Gordon Gekko tells Bud Fox, "pick the dog with the least flea's"...got to pondering how I ended up picking both his dog's and which of his dog's has the least flea's ?
https://www.youtube.com/watch?v=WgPzYc0drv8
Google;Greg Tomlinson net worth.
Approx. $520 million
Approx. $520 million See all profiles, rankings and feature articles on The NBR List 2023 home page. When it comes to clinching big deals, Christchurch businessman Greg Tomlinson is in a class of his own following a string of $100 million-plus acquisitions .
I did read somewhere his net worth is now $750mil.
Choosing a new CEO.Well he managed to attract ex Silver Fern Farms outstanding CEO,Simon Limmer, to his Indevin Wine business,the biggest.grower and producer of NZ wine.
Old saying "Follow the money."
Quote from: lorraina on Apr 13, 2024, 11:31 AMOld saying "Follow the money."
A lot of people did exactly that when he bought up large at OCA @ $1.40
Maybe just a coincidence OCA and HGH share prices are both in the dog house.
Quote from: Basil on Apr 13, 2024, 11:46 AMA lot of people did exactly that when he bought up large at OCA @ $1.40
Maybe just a coincidence OCA and HGH share prices are both in the dog house.
He has made his wealth by being a long term investor.
Most probably has a longer attention span than most Sharetraders or Sharetalkers..
Quote from: lorraina on Apr 13, 2024, 11:50 AMHe has made his wealth by being a long term investor.
Most probably has a longer attention span than most Sharetraders or Sharetalkers..
Definitely a lesson there. Beagle's have a very short attention span...if there's no food in close proximity, they lose interest lol
All good with HGH....been to some dog obedience classes and should be good to hold until the magic 2028.
Apparently Heartland have $569m of non-performing legacy assets. Jeff said
"Our results are full of legacies, underlyings, one-offs, etc, etc, or accounting issues," and went on to call them 'distractions'.
Those 'distractions' showed negative compound growth of 14.2% since the 2020 financial year.
'Distractions' seem an apt description ....just shows that Jeff took his eye of the ball and seemed to be hoping that they would be all go away and not be an issue.
Seems these issues not going to go away quickly as they are now going to report things in three segments - NZ, Australia and a new division called 'Distractions'
Surely an indictment on how Heartland has been managed the last few years.
Shouldn't say it but these 'legacies' make Jeff and Heartland seem like Ross Taylor and Fletchers. That's pretty damning etc....and Jeff has done a Ross Taylor and said he's going ...leaving it some new person to sort out his mess
Quote from: lorraina on Apr 13, 2024, 10:31 AMHow reliable are Dan's forecasts.?
On the plus side Dan the weatherman seems to know what he's talking about.The others come across as nothing more that autocue readers.
Quote from: winner (n) on Apr 13, 2024, 12:42 PMApparently Heartland have $569m of non-performing legacy assets. Jeff said
"Our results are full of legacies, underlyings, one-offs, etc, etc, or accounting issues," and went on to call them 'distractions'.
Those 'distractions' showed negative compound growth of 14.2% since the 2020 financial year.
'Distractions' seem an apt description ....just shows that Jeff took his eye of the ball and seemed to be hoping that they would be all go away and not be an issue.
Seems these issues not going to go away quickly as they are now going to report things in three segments - NZ, Australia and a new division called 'Distractions'
Surely an indictment on how Heartland has been managed the last few years.
Shouldn't say it but these 'legacies' make Jeff and Heartland seem like Ross Taylor and Fletchers. That's pretty damning etc....and Jeff has done a Ross Taylor and said he's going ...leaving it some new person to sort out his mess
These distractions are of major concern as is the size of them.
Management certainly took their eye off the ball.
The problem has been identified,and now needs close attention.
When HGH was formed their were legacy issues that they successfully worked through.
Need to do the same with the current ones.
Easy to lend money, but to stay in business you need to have it repaid,and to be profitable you need to receive the interest payments.
Hope the new CEO sees Jeff's obsession with all things ESG as another distraction that needs to be sin binned.
Quote from: Basil on Apr 13, 2024, 01:38 PMHope the new CEO sees Jeff's obsession with all things ESG as another distraction that needs to be sin binned.
Hope they don't put Chris Flood in .....he's been around too long and tainted with the recent performance ...another one whose taken the eye of the ball.
I disagree.
Think he has done a great job organising Australian opportunities.Certainly has had his eye on the ball over there.
Would make a good replacement for Jeff.
Taking the eye of the ball and all those distractions have lead to this eps trend (Reported NPAT and weighted number of shares)
F20, 12.5 cents
F21. 14.9 cents
F22. 16.1 cents
F23. 14.0 cents
F24 12.3 cents (last guidance)
And unless F25 MPAT in $ terms is >25% up on F24 the downward trend will continue
Hardly inspiring eh ...no wonder share price where it is.
Obviously need a new CEO whose totally focused on executing the growth strategy ...no more taking the eye of the ball ....and hopefully like the Crusaders are thinking today things can't get any worse
Quote from: lorraina on Apr 13, 2024, 01:49 PMI disagree.
Think he has done a great job organising Australian opportunities.Certainly has had his eye on the ball over there.
Would make a good replacement for Jeff.
Leave him over there so he can focus on making it happen ...and let new eyes oversee the big picture
Sorry, I dont have access to the full article as its paywalled
https://justthebusinessjennyruth.substack.com/p/heartland-says-its-targetsd-arent
Analysts are clearly unconvinced that Heartland is going to achieve its goals for the 2028 financial year.
Quote from: winner (n) on Apr 13, 2024, 01:59 PMTaking the eye of the ball and all those distractions have lead to this eps trend (Reported NPAT and weighted number of shares)
F20, 12.5 cents
F21. 14.9 cents
F22. 16.1 cents
F23. 14.0 cents
F24 12.3 cents (last guidance) Average of Craigs and FB agree
FY25 11.8 cents
FY26 14.3 cents, (note, that's still less than 5 years earlier in FY21
And unless F25 MPAT in $ terms is >25% up on F24 the downward trend will continue
Hardly inspiring eh ...no wonder share price where it is.
Obviously need a new CEO whose totally focused on executing the growth strategy ...no more taking the eye of the ball ....and hopefully like the Crusaders are thinking today things can't get any worse
Added some content in blue with average of Forsyth Barr and Craigs eps forecasts. HGH really not going to get any meaningful traction until FY27 and into FY28 but for what its worth based on FY26 average broker estimates of eps and dps of 14.3 cps and 8.75 cps respectively it's on a FY26 forecast PE of 7.83 and gross yield assuming full imputation credits of 10.85% @ a share price of $1.12
Have to agree with your sentiment I highlighted in purple. It's going to take quite a while just to get back to the previous capital raise price of $1.80 and might not see north of $2 until FY28. Who's up for the "Challange", (you see what I did there) ;) of buying in gloom and having lots of patience to wait for sunnier days ahead. On an ex dividend and cum entitlement basis I am only a few cents underwater at present and up for the challenge of holding a reasonable quantity of this mutt in the years ahead. This dog definitely has a pretty serious flea infestation but with care and lots of flea treatment it should hopefully come right.
Quote from: lorraina on Apr 13, 2024, 10:31 AMHow reliable are Dan's forecasts.?
I recon this was winners point :) ;
Evening all.
We'll start with this high pressure system that's developing over the heartland of New Zealand tonight. We can see here this cold front coming through, bringing with it a lot of rain and unfortunately that's likely to leave a lot of residents underwater. Luckily, the Met office says that the system will be short-lived and things should return to normal in about three years.
There's also this strong wind pattern coming from the north, which doesn't help, but I'm told that it won't last and is likely to move on to other areas in about two weeks.
Now, I'm also told that one bank has set up a fund to help with the damage that the system is likely to cause. Not for residents of course - they can go to hell, ha ha! - but just to ensure that executive bonuses can be paid in this time of need. And to all those executive who have already pre-ordered the Audi A4 E-tron - our hopes and prayers go out to you.
Now, back to the news. Oh, sorry - there is none.
Heartland was on the Jarden Directs weekly clients top 10 buys for at least a couple of weeks prior to the capital raise announcement.
It certainly lost popularity since-it's now one of their top 10 sells for last week.
Probably selling some to buy them back under the capital raise at $1
Quote from: Bob50 on Apr 15, 2024, 08:19 AMHeartland was on the Jarden Directs weekly clients top 10 buys for at least a couple of weeks prior to the capital raise announcement.
It certainly lost popularity since-it's now one of their top 10 sells for last week.
Hardly surprising when you consider that many retail investors view HGH as a dividend yield investment and the CR will require many such 'dividend' investors to sell some of their shares to pick up their entitlements.
Remember that this CR is non-renounceable so any shareholder not taking up their entitlement will receive zero value for being diluted.
Certainly not expecting any 'informed' retail investors to be buying in the face of the 131m shares to be issued to institutions today (they can sell from today) and retail shareholders only have this week to take up their entitlements.
I wonder if the underwriters are propping up the SP ahead of retail offer....sold my shares but still illegible for cap raise.....will apply but can see some further weakness in SP given the CEO leaving, the uncertainty of Aus investment and divi being cut
Surprised nobody has mentioned this today:
https://www.heartland.co.nz/about-us/news/heartland-ceo-jeff-greenslade-announces-retirement
Oops, I see snapiti did. My bad.
Yep, it was announced to the NZX at the same time that Challenger was given its banking licence. I thought it was peculiar - and took it to be a bad sign - that the driving force behind the pivot to OZ would bail just as they were given the green light. Was he suffering from buyers regret? Time will tell ;)
More likely "JOB DONE".
I said at the time, getting the banking licence was the easy part. Far harder is to make it profitable and for investors to see a return on their investment. So far the consequences of Jeff's decision has been a cut in dividends and the SP tanking, again, as a result of yet another capital raise. Job done? I really don't think so.
no worries about SP for the next few days, underwriters will support at current levels to get the retail investors onboard with cap raise, after that maybe interesting times though.
Quote from: snapiti on Apr 18, 2024, 05:38 PMno worries about SP for the next few days, underwriters will support at current levels to get the retail investors onboard with cap raise, after that maybe interesting times though.
Agreed. In the last CR, the SP went down to the SPP price of $1.80 not long after all the entitlements had been taken up. Trouble is it went on a real slide after that. Think about that - people snapped up shares at $1.80 saying that they had got a bargain and it wouldn't go any lower. 18 months later we are talking about $1!
Sub-$1 is a possibility once the dust has settled. Might be a buy at that level, hard to say.
chart ....
W J ONeil... needs to form a BOTTOM .... thats what he would say...
Quote from: LoungeLizard on Apr 18, 2024, 05:48 PMAgreed. In the last CR, the SP went down to the SPP price of $1.80 not long after all the entitlements had been taken up. Trouble is it went on a real slide after that. Think about that - people snapped up shares at $1.80 saying that they had got a bargain and it wouldn't go any lower. 18 months later we are talking about $1!
Sub-$1 is a possibility once the dust has settled. Might be a buy at that level, hard to say.
After the last CR it briefly went higher than the 1.80 and that is probably where anyone who had supported the share exited. The price movements on HGH have been questionable of late. Post div it rose quickly off the mid teens which it was mentioned indicated a raise in the pipeline. It will be nice to watch what happens this time. I feel with the existing AUS business it has a foundation for a good future but sentiment will drive the share for a while I think. Id like to pick a few up around 90 cents but who knows.
I agree sentiment is a controlling factor on any share, but so is the macro environment.
Currently the macro environment is terrible as many struggle due to the cost of living, economy is slowing and unemployment is on the rise so I disagree with anyone who thinks we are at the bottom of the economic cycle.
Some say covid showed what a robust company HGH is, I call BS on that one as most got hand outs from the government to help make ends meet and poeple had less to spend their money on (stuck at home) as well as super cheap mortgage rates. In reality the covid lolly scramble was a tail wind for finance companies.
Not sure where the SP will bottom but one has to question why buy, plenty of reasons to sell, I will grab my allotment of cap raise @ $1 but that is all I will hold
Interesting read in the herald this morning from chief forecaster at Informetric reckons we got a bad 12 months ahead......I agree
Just as well HGH are in "growth mode" in Australia..
Quote from: snapiti on Apr 19, 2024, 10:18 AMInteresting read in the herald this morning from chief forecaster at Informetric reckons we got a bad 12 months ahead......I agree
Lets face it - there is no analyst who gets the future more often right than his (or her) statistical random share. So - quite pointless to throw forecasts around. I guess nobody can predict when the next pandemic hits, nobody can predict when WW3 starts (and who is participating), nobody can predict which octogenarian will run the US in a couple of years and how braindead his policies will be, nobody can predict the growing conditions for the coming season here or anywhere else and whether the price for oil will go up or down. They say that predicting the movement of already just 3 bodies interacting with each other is already nearly impossible. Predicting the movements of an in practical terms infinite number of bodies interacting with each other is.
NOBODY can predict the future!
I notice a number of our European shares (and not just the arms manufacturers) are doing quite well. What about the market is always right?
So - this turns the 12 months misery forecast into just another possible scenario based on assumptions which may be right or wrong. But sure, lets assume it eventuates - hey, it might. Wouldn't this be good for the Reverse Mortgage business? More and more oldies who own their home but needing some money to supplement their lifestyle?
Quote from: BlackPeter on Apr 19, 2024, 11:48 AMLets face it - there is no analyst who gets the future more often right than his (or her) statistical random share. So - quite pointless to throw forecasts around. I guess nobody can predict when the next pandemic hits, nobody can predict when WW3 starts (and who is participating), nobody can predict which octogenarian will run the US in a couple of years and how braindead his policies will be, nobody can predict the growing conditions for the coming season here or anybody else and whether the price for oil will go up or down.
NOBODY can predict the future!
I notice a number of our European shares (and not just the arms manufacturers) are doing quite well. What about the market is always right?
So - this turns the 12 months misery forecast into just another possible scenario based on assumptions which may be right or wrong. But sure, lets assume it eventuates - hey, it might. Wouldn't this be good for the Reverse Mortgage business? More and more oldies who own their home but needing some money to supplement their lifestyle?
No-one can predict completely random events, but outcomes based on scientific or economic data - eg a future of increasingly adverse climate events -
can be reliably predicted. It's not
all crystal ball stuff. Whether people want to believe those forecasts is another matter.
]
being able to see all the dots makes it easier to join them to form a picture.....of course much harder to see all the dots when one suffers from tunnel vision
Quote from: LoungeLizard on Apr 19, 2024, 12:32 PMNo-one can predict completely random events, but outcomes based on scientific or economic data - eg a future of increasingly adverse climate events - can be reliably predicted. It's not all crystal ball stuff. Whether people want to believe those forecasts is another matter.
Not wanting to rain on your parade ... but even when we accept e.g. the climate change forecasts which clearly spell out an increased likelihood of extreme weather events, than nobody can predict, whether they will happen in the coming growing season ... and how they will impact on the harvest in some particular place.
So - economic analysis is sometimes good to understand the past, and it can help as well to create a better framework for the future, but economic forecasts are as useless as anybody else forecast.
Just take the last ten years of economic forecasts from your favorite economist and check how often they got it right and how often they got it wrong. I have not yet seen anybody whose forecasts managed to be (given a statistically relevant sample) better than random distribution would give them ... and yes, I did some work in this area. Doe not say analysts are inept, it just says that it is not possible to predict the future of a chaotic system.
What you can do is trying to isolate individual parts of the system and describe what happens with them based on the established rules of physics (if you studied thermodynamics, you might know what I mean). However - this only works as long as you can neglect all external impacts on your system, which is typically only true for a very short time (like, you can predict the weather tomorrow, but not the weather in 2 weeks).
Hint: Both the weather as well as economies are chaotic systems, but economies are still more difficult to predict :), given that their elements change their behaviour dependent on the information they get from the system;
Quote from: BlackPeter on Apr 19, 2024, 12:55 PMNot wanting to rain on your parade ... but even when we accept e.g. the climate change forecasts which clearly spell out an increased likelihood of extreme weather events, than nobody can predict, whether they will happen in the coming growing season ... and how they will impact on the harvest in some particular place.
So - economic analysis is sometimes good to understand the past, and it can help as well to create a better framework for the future, but economic forecasts are as useless as anybody else forecast.
Just take the last ten years of economic forecasts from your favorite economist and check how often they got it right and how often they got it wrong. I have not yet seen anybody whose forecasts managed to be (given a statistically relevant sample) better than random distribution would give them ... and yes, I did some work in this area. Doe not say analysts are inept, it just says that it is not possible to predict the future of a chaotic system.
What you can do is trying to isolate individual parts of the system and describe what happens with them based on the established rules of physics (if you studied thermodynamics, you might know what I mean). However - this only works as long as you can neglect all external impacts on your system, which is typically only true for a very short time (like, you can predict the weather tomorrow, but not the weather in 2 weeks).
Hint: Both the weather as well as economies are chaotic systems, but economies are still more difficult to predict :), given that their elements change their behaviour dependent on the information they get from the system;
Respectively, I would have to disagree, and like you this my area. My degree is in economics not accounting, so I'm biased in valuing historical, statistical and trend analysis.
You don't have to know exactly when something is going to happen, you just have to know that, over time, the likelihood is that it will. Climate scientists say that if we continue to burn fossil fuels at the rate we are then the 1.5 celsius increase over global average temperature will happen. Cause and effect. They don't say exactly when and the effect on global regions will differ, but it
will happen and globally all will suffer. Sticking you head of the window and saying, well it hasn't happened today - again - so they are wrong - again - is dangerous as it leads to no-one believing anything experts say.
As far as investing goes, we play the odds, knowing that one can get all the facts straight but be proved wrong by the market. But over time, if you are consistent and apply first principles you will come out ahead over those who take an ad hoc, seat of their pants approach. And in investing, time counts. You can go to the casino and put money down on the equal number of red or black numbers, but the bank doesn't pay out on the zero. Over time the bank wins.
But, there's more than one way to make money in investing and whatever works, works. One can go with instinct honed over time, or on forecasting and data gathering. Ideally, a bit of both is best ;)
Quote from: BlackPeter on Apr 19, 2024, 11:48 AMSo - quite pointless to throw forecasts around. I guess nobody can predict when the next pandemic hits, nobody can predict when WW3 starts (and who is participating),
There eez no need to predict ze ztart of Vorld Var Three. Because eet has already ztarted, Eet is just that zhis man 'Vlad' eez ztill negotiating ze 'naming rights'.
RB
LL its great that with economic reason and maths one can come out ahead but we keep getting whacked by things like world wide obliteration scale events which means GOLD should be in every portfolio but its not...
GOLD ... who would have though....
better than money, honey and home...
The retail offer was 81% subscribed. Those who applied for extra shares got 'em all. The underwriter left holding the baby for 15 million shares. Probably a bit of selling pressure to come over the next week or so.
https://www.nzx.com/announcements/430075
Extract
QuoteThe approximately 15 million New Shares not taken up under the Retail Entitlement Offer have been allocated to the underwriter and/or to sub-underwriters procured by the underwriter, including institutional investors who participated in the Placement and wished to purchase more shares.
81% retail take-up is a bit underwhelming I feel. How many shares the underwriters were forced to take up we don't know, but I suspect they will be dumped in the weeks to come.
Quote from: LoungeLizard on Apr 24, 2024, 05:37 PM81% retail take-up is a bit underwhelming I feel. How many shares the underwriters were forced to take up we don't know, but I suspect they will be dumped in the weeks to come.
See post #1106.
Quote from: LoungeLizard on Apr 24, 2024, 05:37 PM81% retail take-up is a bit underwhelming I feel. How many shares the underwriters were forced to take up we don't know, but I suspect they will be dumped in the weeks to come.
They can dump them tomorrow for a free 5% in addition to their fees.
well one can expect a bit of selling coming up and buyers being somewhat exhausted.......me thinks you will be able to buy as many as you like on the open market for $1 soon
NZX closed tomorrow - ANZAC day.
Quote from: SCOTTY on Apr 24, 2024, 10:39 PMNZX closed tomorrow - ANZAC day.
Ah vell, I guess HGH zhareholders who 'vant out tomorrow' vill just have to trade their Heartland zhares on ze ASX then. :o
RB
Quote from: Red Baron on Apr 24, 2024, 11:25 PMAh vell, I guess HGH zhareholders who 'vant out tomorrow' vill just have to trade their Heartland zhares on ze ASX then. :o
RB
Ze ASX is closed also.
We need Anzac Day - it's the only thing that reminds the Aussies we're their mates. And therefore the defense of NZ is tied directly to this single day every year. Get out and pay your respects!
Quote from: Azz on Apr 25, 2024, 12:18 AMWe need Anzac Day - it's the only thing that reminds the Aussies we're their mates. And therefore the defense of NZ is tied directly to this single day every year. Get out and pay your respects!
Good point.
I'm out tomorrow at dawn.
Quote from: Clearasmud on Apr 25, 2024, 12:09 AMZe ASX is closed also.
Vot! On ANZAC day? who vould have thought :-X
Zeriously though, eet eez right ve take thees day to commemorate ze sacrifices past generations have made during vartime, especially those preserved as eternally young. Eet eez especially poignant vor a military man zuch as myself to remember ze sacrifices made by both zides by ze sailors, soldiers and airmen who all believed they were vighting vor their own commander's greater good. And yes I even include my arch nemesis Herr von Schnoopy een zhat respect leest!
Zo let thees be a day of remembrance. Vor tomorrow both zides vill be back plotting how to bring to an end thees now 110 year old 'Great Var.'
RB
Had five Harvard aircraft in formation fly directly overhead our house this morning. Was very loud and very cool.
I think if the underwriter lets some shares go at cost that's something for people to consider. If it falls back as low as, say 90 cents as some appear to think might happen, those with an eye to the future will realize that's only ~ 6 times average analyst forecast FY26 eps and might think about whether that's something of real opportunity to take advantage of. I've got plenty of dry powder for such a possible opportunity.
I think that HGH in the 0.90-0.95 range is pretty compelling even with the risk here. I am expecting a low of mid 90s in the coming months, waiting for that to dip my toe back in. I can see the appeal of getting in now though (I'm more ETF focused with my allocation these days). So glad I sold out at the last capital raise.
Here is my take, upon the ann of the CEO leaving and the cap raise at $1 and cutting of the divi as well as thinking this would compound the already long term weak sentiment towards the stock, I choose to sell, that looks like a wise decision as I sold at $1.14, however I did apply for my allocation of shares plus 100% more, so now hold a total of 25000 shares @ $1 ave thanks to the cap raise. I am reasonably comfortable at the purchase price as it is a very modest holding compared to what I did own.
Going forward I think the current CEO stepping aside is a good thing as he is obviously not up for the challenges ahead.
The cutting of the dividend annoys me and I believe is one of the main reason why the SP is falling further and there was a lack lustre interest from retail investors in the cap raise.
I disagree that we are at the bottom of the economic cycle as I think we have a sustained period of weakness ahead (12 months) as the reserve bank keeps the pressure on to tame inflation.
I find having a diverse range of friends helps one more acutely understand the financial pressures many are experiencing.
Now in the short term, given the current sentiment, macro environment, lower dividend and overhang of shares from the cap raise I am confident one will be able to get as many shares one would like at $1 soon and suspect picking up shares in the 90's is highly likely.
Long term prospects now rest on the success of the challenger bank in Aus, in saying that if they can return to say a 70% payout of divi and term deposits rates lower you will see some buying from divi hunters...thats a lot of if's though.
I do think a SP of $1 offers good value provided the current business does not get to beat up by the macro environment and at this level the SP certainly does not price in any value of challenger bank so a bit of risk versus reward on offer
Quote from: snapiti on Apr 25, 2024, 03:35 PMHere is my take, upon the ann of the CEO leaving and the cap raise at $1 and cutting of the divi as well as thinking this would compound the already long term weak sentiment towards the stock, I choose to sell, that looks like a wise decision as I sold at $1.14, however I did apply for my allocation of shares plus 100% more, so now hold a total of 25000 shares @ $1 ave thanks to the cap raise. I am reasonably comfortable at the purchase price as it is a very modest holding compared to what I did own.
Going forward I think the current CEO stepping aside is a good thing as he is obviously not up for the challenges ahead.
The cutting of the dividend annoys me and I believe is one of the main reason why the SP is falling further and there was a lack lustre interest from retail investors in the cap raise.
I disagree that we are at the bottom of the economic cycle as I think we have a sustained period of weakness ahead (12 months) as the reserve bank keeps the pressure on to tame inflation.
I find having a diverse range of friends helps one more acutely understand the financial pressures many are experiencing.
Now in the short term, given the current sentiment, macro environment, lower dividend and overhang of shares from the cap raise I am confident one will be able to get as many shares one would like at $1 soon and suspect picking up shares in the 90's is highly likely.
Long term prospects now rest on the success of the challenger bank in Aus, in saying that if they can return to say a 70% payout of divi and term deposits rates lower you will see some buying from divi hunters...thats a lot of if's though.
I do think a SP of $1 offers good value provided the current business does not get to beat up by the macro environment and at this level the SP certainly does not price in any value of challenger bank so a bit of risk versus reward on offer
Well said, and you're probably right - $1 is just around the corner, and could drop lower.
As you say, HGH are - and have been for sometime - out of favour with the market. Partly because of the macro economic picture but also I think because the penny finally dropped with investors that there would never be any sustained growth in the SP (it's declined 25% in the past 5 years) because the frequent capital raises kept under-cutting any gains that had been made in the interim. One risk with this stock is that there will be another CR in order to fund the reverse equity business and Challenger capital requirements. That risk is compounded now, because, unlike before, there won't be a particularly good yield to compensate for it.
Having said that, $1 could be point in which HGH becomes a tolerable punt, as long as investors recognise that it
is a punt. Personally, I will stick to my strategy - which has helped me again in not jumping in too soon - of waiting for the green shoots to appear. Going against the TA is, as they say, like bringing a knife to a gun fight.
I don't think either, that the end of year report will be a good one - just a hunch. NP, I feel, could drop again, the divvy will be cut for sure, and who knows, more Challenger provisions might be needed. If that's the case the market will be primed to respond very badly. So, still waiting and watching. :o
Quote from: LoungeLizard on Apr 25, 2024, 04:12 PMWell said, and you're probably right - $1 is just around the corner, and could drop lower.
As you say, HGH are - and have been for sometime - out of favour with the market. Partly because of the macro economic picture but also I think because the penny finally dropped with investors that there would never be any sustained growth in the SP (it's declined 25% in the past 5 years) because the frequent capital raises kept under-cutting any gains that had been made in the interim. One risk with this stock is that there will be another CR in order to fund the reverse equity business and Challenger capital requirements. That risk is compounded now, because, unlike before, there won't be a particularly good yield to compensate for it.
Having said that, $1 could be point in which HGH becomes a tolerable punt, as long as investors recognise that it is a punt. Personally, I will stick to my strategy - which has helped me again in not jumping in too soon - of waiting for the green shoots to appear. Going against the TA is, as they say, like bringing a knife to a gun fight.
I don't think either, that the end of year report will be a good one - just a hunch. NP, I feel, could drop again, the divvy will be cut for sure, and who knows, more Challenger provisions might be needed. If that's the case the market will be primed to respond very badly. So, still waiting and watching. :o
fairly confident I am right, but we all get it wrong sometimes.....even super smart savy beagles
Quote from: LoungeLizard on Apr 25, 2024, 04:12 PMWell said, and you're probably right - $1 is just around the corner, and could drop lower.
Quote from: snapiti on Apr 24, 2024, 07:50 PMwell one can expect a bit of selling coming up and buyers being somewhat exhausted.......me thinks you will be able to buy as many as you like on the open market for $1 soon
Still waiting - when do you experts think we get there ;) ??
Quote from: LoungeLizard on Mar 18, 2024, 06:16 PMProbably too early to tell where this is going, but maybe the rose tinted glasses might have to come off. If a cap raise comes in at this level then the discounting will push the SP towards $1. And those still at the table will face the same option as they did 18 months ago. Raise their stakes and hope for the best or fold and cut their losses. The cap raise is the real over-hang and until that is resolved the SP will stay in the doldrums.
Well, I wrote the above 6 weeks ago, yapping on, until people got well and truly fed up, about not to buy because of the looming cap-raise and how that would decimate the share price (again). And here we are at $1.03.
It may go under $1 in the next week or so, but the real test will be the end of year report. I don't see that being a good one and that may be when the SP takes its next step down the ladder. The risk outweighs the reward currently, in my view, but I can see why people might want to take a punt.
Quote from: BlackPeter on Apr 29, 2024, 01:11 PMStill waiting - when do you experts think we get there ;) ??
sooner rather than later me thinks.....lots of overhang shares from the cap raise to be sold for a quick profit and to take risk off the table
Quote from: snapiti on Apr 29, 2024, 03:26 PMsooner rather than later me thinks.....lots of overhang shares from the cap raise to be sold for a quick profit and to take risk off the table
Sure - but how do you make a "quick profit" if you buy for $1 and sell for the same price (or lower)?
Quote from: BlackPeter on Apr 29, 2024, 04:30 PMSure - but how do you make a "quick profit" if you buy for $1 and sell for the same price (or lower)?
sorry I shall simplify my post for those that struggle with my English!
I suspect once the opportunity of a quick profit is gone much of the overhang will then be sold to take risk off the table......do you comprehend this post BP
Heartland announces receipt of final regulatory approvals for Challenger Bank acquisition
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce that it has received the necessary regulatory approvals from the Australian Prudential Regulation Authority and the Reserve Bank of New Zealand for Heartland Bank Limited's (Heartland Bank) acquisition of Challenger Bank Limited (Challenger Bank) from Challenger Limited (ASX: CGF).
Heartland Bank expects to complete the acquisition of Challenger Bank today, 30 April 2024.
Good times ahead imo for those who hold.Was into HGH from the getgo thru having shares in CBS and now another step forward.
Quote from: snapiti on Apr 29, 2024, 05:46 PMsorry I shall simplify my post for those that struggle with my English!
I suspect once the opportunity of a quick profit is gone much of the overhang will then be sold to take risk off the table......do you comprehend this post BP
I hear what you are saying, if this is what you mean ;).
Hard, though to comprehend the world of traders and gamblers ...
More details on the completion of the Challenger acquisition today including personnel changes.
https://www.nzx.com/announcements/430294
Heartland Bank completes acquisition of Challenger Bank
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to confirm the completion of Heartland Bank Limited's (Heartland Bank's) acquisition of Challenger Bank Limited (Challenger Bank) from Challenger Limited (ASX: CGF).
Completing the acquisition makes Heartland Bank the first New Zealand registered bank to acquire an Australian authorised deposit-taking institution (ADI). The acquisition is a critical step in Heartland's strategy for achieving its long-term growth ambitions and expansion in the Australian market, where it is already well-established.
Heartland's Australian Reverse Mortgage business, Heartland Finance, is Australia's leading provider of reverse mortgages with 42% market share. Since 2004, Heartland Finance has helped more than 27,500 Australians to live a more comfortable retirement by releasing equity from their homes. Heartland's Livestock Finance business, StockCo Australia, is a leading specialist provider of livestock finance. StockCo Australia has been providing livestock finance solutions to food producers across Australia since 2014, with origins in New Zealand dating back to 1995. At 31 December 2023, Heartland Finance and StockCo Australia together had approximately NZ$2 billion of gross finance receivables.
On 2 May 2024, Heartland will transfer Heartland Australia Holdings Pty Limited and its subsidiaries (which include Heartland Finance and StockCo Australia) (together, Heartland Australia) to Challenger Bank.
The total consideration paid for the acquisition of Challenger Bank was AU$115.7 million and comprised:
1. the total purchase price of AU$46.4 million, reflecting the initial purchase price of AU$36.7 million plus AU$9.7 million of additional consideration due to the deposit raising programme undertaken by Challenger Bank prior to completion, and
2. an additional payment of AU$69.3 million, reflecting the increased capital being held by Challenger Bank following its pre-completion purchase of AU$574.3 million of reverse mortgages from Heartland Australia.
Challenger Bank's deposit raising programme, undertaken prior to completion, positions Heartland well for accelerated growth in Australia. Between 30 December 2023 and 26 April 2024, Challenger Bank achieved retail deposit growth of AU$891.2 million at a rate that is 172 bps lower than Heartland Australia's current cost of funds.
Introducing Heartland Bank (Australia)
From 1 May 2024, Challenger Bank will begin trading as Heartland Bank – a digital specialist bank (Heartland Bank (Australia)).
Drawing on Heartland's expertise in New Zealand, and its successful track-record in Australia, Heartland Bank (Australia) will focus on providing Australians with specialist banking products that are the best or only of their kind, through digital channels. Once Heartland Finance and StockCo become part of Heartland Bank (Australia), it will be Australia's only specialist bank provider of both reverse mortgages and livestock finance.
Expansion will be enabled through access to retail deposits, providing the advantage of a lower cost of funds. As such, Heartland Bank (Australia) will continue to actively raise deposits – its 6-, 9- and 12-month Term Deposit offers are currently market leading.
Leveraging retail deposit funding and Heartland's New Zealand product and distribution expertise, Heartland Bank (Australia) may pursue future opportunities to expand into new product segments, such as Motor Finance and Asset Finance. Heartland has a history of success with these products in New Zealand, and considers these sectors to be underserviced by larger banks in Australia.
Board and Management updates
Heartland Bank (Australia) Board
Heartland is pleased to announce the appointment of the new Heartland Bank (Australia) Board of Directors:
‒ Geoff Summerhayes has resigned from the Heartland Board and has been appointed Chair and Independent, Non-Executive Director of Heartland Bank (Australia)
‒ Shane Buggle, Lyn McGrath (who sat on the Challenger Bank Board prior to Heartland's acquisition), Vivienne Yu and Bruce Irvine (currently Chair and Independent Non-Executive Director of Heartland Bank) have been appointed Independent, Non-Executive Directors of Heartland Bank (Australia)
‒ Leanne Lazarus (currently Chief Executive Officer of Heartland Bank) and Jeff Greenslade (currently Chief Executive Officer and Executive Director of Heartland, and Non-Independent, Non-Executive Director of Heartland Bank) have been appointed Non-Independent, Non-Executive Directors of Heartland Bank (Australia).
The highly experienced Heartland Bank (Australia) Board has a strong level of independence and knowledge of prudential regulatory requirements to drive growth and expansion in Australia. For more information, go to heartlandgroup.info/about-heartland/board-of-directors.
Heartland Bank (Australia) Management
Heartland is pleased to confirm the appointment of Michelle Winzer as Chief Executive Officer of Heartland Bank (Australia) will be effective from 22 July 2024.
Chris Flood has been appointed Acting Chief Executive Officer of Heartland Bank (Australia), effective 1 May 2024 and ceased being a senior manager of Heartland. Chris is expected to return to his role as Deputy Chief Executive Officer of Heartland later in the 2024 calendar year, allowing time for a comprehensive handover with Michelle.
Michelle and Chris will be supported by a management team with extensive experience in banking and financial services. For more information, go to heartlandgroup.info/about-heartland/management.
Heartland Board
Heartland also confirms that John Harvey has been appointed to the Heartland Board as an Independent, Non-Executive Director. John remains on the Heartland Bank Board as a Non-Independent, Non-Executive Director.
Following the announcement on 8 April of her intention to resign, Heartland wishes to confirm that the resignation of Independent, Non-Executive Director, Ellie Comerford, will be effective from 26 June 2024. Ellie has served on Heartland Boards for more than seven years. Heartland Board Chair, Greg Tomlinson, wishes to thank Ellie on behalf of the Heartland Board for her significant contribution, dedication and commitment to Heartland throughout that period, particularly in relation to her experience and associated advice on the Australian market.
Heartland is well progressed in its recruitment of new Australian candidates for the Heartland Board and a further market update will be provided in due course.
Quote from: BlackPeter on Apr 30, 2024, 10:56 AMI hear what you are saying, if this is what you mean ;).
Hard, though to comprehend the world of traders and gamblers ...
I don't think it is that hard,
gamblers= fear + greed x fomo
institutional traders are not so easy to understand but the more you understand how they operate the easier the game becomes.......are we @ $1 yet.....not long to go now me thinks
Só 2 million or so shares crossed
I can hear 'the sell off has begun' echoing across town
I thought it was the start of "THE BIG BUY UP"as the result of NZ leading broker's target price of $1.72..
Quote from: winner (n) on May 02, 2024, 11:33 AMSó 2 million or so shares crossed
I can hear 'the sell off has begun' echoing across town
Very big volume for morning trade...good for shers to get overhang sold
Quote from: winner (n) on May 02, 2024, 11:33 AMSó 2 million or so shares crossed
I can hear 'the sell off has begun' echoing across town
Interesting - your town seems to have funny echoes. Maybe you should add a bit of grease, oil or spirits ...?
I can only see the depth - even after your cross I see nearly 600k bids of $1 or higher, while the whole sell stack is smaller than that (at an average price of $1.08).
Lots of buyers and less sellers Look like a sellers market to me :);
Have been a holder in Heartland since it listed. I have not added it up but confident to say that over that time have had my original cost price well in truely covered with the reliable dividend payments. In my opinion the departing ceo has done a fantastic job in growing and diversafying the business. The Australian opportunity is substantial. If Heartland can grow the Australian business as they have proven in NZ then shareholders will reap the rewards.
In Craig's latest note they say
The retail deposits raised so far are at an average rate that is 1.74% lower than HGH's current average cost of funds in Australia. If this cost of funds differential remains we think it should underpin at least a c$30m improvement in NPAT between FY24 and FY26.
On the earnings call it was stated the change in dividend policy was for this year only with the DRP to continue. Some have concluded (and they may be right) that the lower payout ratio will be continued.
Heartland already have a very strong profitable business in Australia. It's not like they are starting from scratch. Sure there is risks but at the current share price think it's good buying. Yes it could well go down a little more.... But not much I think.
Disc/ Took up all shares and applied for max in CR. Also brought on market today. One of my larger holdings.
2.5 m shares sold and the SP hasn't budged. Looks like selling/buying parity to me.
It does sound like long term holders are happy with the new SP level. Funny that, only a few weeks ago they might have been horrified... ;)
Looks like a good take up from insiders and then of course another $13m from the chair.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/430531/417838.pdf
As a long term shareholder with a good sized stake in HGH, I am very happy to be part of this well planned expansion into Australia. Although we have all suffered a big drop in the share price it has allowed us to buy into this long term growth strategy for only $1 per share. Sure, there will be a short term reduction in our dividend but we now have a well capitalised, established, trans Tasman business with I believe huge long term growth potential. Personally I'm very happy and excited to be part of it. :)
Quote from: Basil on Apr 08, 2024, 05:01 PMWinner told me privately It only goes under $1 if the Warriors draw their next three games in a row ;)
Its all good, we're now on our way to $200m+ in FY28.
Sheesh, they just
lost three in a row from when this was posted. That's worse than 3 draws, what does this mean for HGH tomorrow? Please advise urgently!
Quote from: Hectorplains on May 05, 2024, 09:50 PMSheesh, they just lost three in a row from when this was posted. That's worse than 3 draws, what does this mean for HGH tomorrow? Please advise urgently!
Who cares about the Warriers? Really?
As we all know from empiric observations - the only thing which counts for HLG is the milk price ... and that seems to firm up over the recent months :P ;
What ratings agency Fitch has to say
https://www.fitchratings.com/research/banks/fitch-revises-outlook-on-heartland-group-holdings-to-stable-affirms-at-bbb-01-05-2024
a good read beagle and quit a positive comprehensive report I thought
Interesting noting brokers' target prices for HGH range from $1.25,$1.51 and $1.72,or from current $1.03 up 21.35%,46.6%
and 66.99%.
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Average broker forecast for dps in FY25 is 8 cps. Fully imputed that's 11.11 cps gross and on $1.02 share price that's 10.89% gross yield with dividend growth to come in future years.
Not without risk, but nevertheless, not without huge potential returns from both dividends and capital gains.
crickey by my estimate only about 30% of the overhang shares sold into the market so far, still say owners of over hang shares will be happy to break even, sell for $1, to take risk off the table.
Questions is will this offer up a buying opportunity?
I put the truck in for a service and COF with specific instructions to make sure the reverse gear works properly ;) in case it goes to 90 cents and its needed.
Hope some desperate sellers make my day sometime soon.
Quote from: Basil on May 06, 2024, 05:22 PMI put the truck in for a service and COF with specific instructions to make sure the reverse gear works properly ;) in case it goes to 90 cents and its needed.
Hope some desperate sellers make my day sometime soon.
Surely if one can get in @ a 15% discount to what the very wise beagle did one will be well positioned right? For that reason I might have a dab @ $1
Quote from: snapiti on May 06, 2024, 05:27 PMSurely if one can get in @ a 15% discount to what the very wise beagle did one will be well positioned right? For that reason I might have a dab @ $1
Some dog might have started the chase a bit early with this one and he knows not all rabbits roll over / play dead and cough up a feed easily. Taking a "dogged" approach is what's important here.
Quote from: Basil on May 06, 2024, 05:32 PMSome dog might have started the chase a bit early with this one and he knows not all rabbits roll over / play dead and cough up a feed easily. Taking a "dogged" approach is what's important here.
The beagle is a very smart dog, just got a bit excited to early with this one.
To be honest I think you may have tripped over when thinking we are at the bottom of the economic cycle.
More pain to come if unemployment continues to rise.
I would say the next 6 monthly report will either reverse the slide or continue it.
Quote from: snapiti on May 06, 2024, 05:42 PMTo be honest I think you may have tripped over when thinking we are at the bottom of the economic cycle.
You're possibly right mate. I think with hindsight we'll probably scrape along the bottom of the economic cycle for the next 12 months or so. Have about $300K in the tin from previous forays with HGH so I'm philosophical about mistiming it a bit this time. Believe it not, Beagles can be patient animals when it comes to catching a feed.
Quote from: Basil on May 06, 2024, 05:32 PMSome dog might have started the chase a bit early with this one and he knows not all rabbits roll over / play dead and cough up a feed easily. Taking a "dogged" approach is what's important here.
Just remember that others are taking the same approach to other stocks that you don't believe in or have written off.
Quote from: Basil on May 06, 2024, 05:50 PMYou're possibly right mate. I think with hindsight we'll probably scrape along the bottom of the economic cycle for the next 12 months or so. Have about $300K in the tin from previous forays with HGH so I'm philosophical about mistiming it a bit this time. Believe it not, Beagles can be patient animals when it comes to catching a feed.
yep agree, good turnaround stock at some stage me thinks, certainly market not pricing in Aus going well
Quote from: snapiti on May 06, 2024, 06:55 PMyep agree, good turnaround stock at some stage me thinks, certainly market not pricing in Aus going well
Recession not normally good for banks but it's likely to create an exceptional demand for reverse home loans so the whole cost of living thing could really be good for loan demand...but possibly hard to see them keeping delinquent loans to their targeted 0.30% in this environment.
Quote from: Basil on May 06, 2024, 07:54 PMRecession not normally good for banks but it's likely to create an exceptional demand for reverse home loans ...[snip]
I like the compounding nature of reverse home loans but it is capital hungry. Interest earned is non-cash while interest expense is a cash outflow....until the loan is repaid. So managed growth is good for this part of their lending portfolio.
Quote from: Basil on May 06, 2024, 07:54 PMRecession not normally good for banks but it's likely to create an exceptional demand for reverse home loans so the whole cost of living thing could really be good for loan demand...but possibly hard to see them keeping delinquent loans to their targeted 0.30% in this environment.
Contact just took out a reverse mortgage late 2023 with Heartland in Australia. He needed the money to recapitalise his business after it was affected by Covid and the post covid economic blues.
He was initially quite frustrated with the requirements (including financial information, cashflow forecasts from an approved financial advisor, latest property valuation etc) but could not get the money elsewhere so he persevered. The trading banks did not want to know basically as they insisted on monthly repayments which his business could not sustain in the short term while he rebuilt the business.
In any case, he ended up getting $150k at 9% pa interest rate on his freehold property valued at $700k.
Basically, the loan will double every 8 years at that rate - so in 16 years, the loan will be $600k which is still fine if the property value stays at at least $700k. In practice, the property should at least (in a city like Sydney) keep pace with inflation. And I guess my contact and Heartland will know within 5 years whether the business has turned around - certainly will not be for lack of trying!
The good news for my contact and Heartland is that his business has started receiving quite sizeable orders from the Asian markets since the beginning of the year.
There's $1. Now how much lower? My bids are still in.
Quote from: entrep on May 07, 2024, 10:48 AMThere's $1. Now how much lower? My bids are still in.
Still a lot of the overhang to be sold, so downward pressure will continue I feel for a week or two more. Mid-90's is on the cards.
Interesting psychological moment for investors. Double down or pull-back? In the last CR, market fear triumphed and the SP went on a real slide. That's still a possibility here I feel. I don't think the reverse mortgage business is the silver bullet that some seem to think it is. Not in the short-term at any rate. NZ economy, and to a lesser degree, Australia's, are in a recessionary trough and bank lending and margins are feeling the squeeze. Macroeconomics sets the market tone and HGH, due to their business model, are out of favour. I don't see that changing and there's more of a chance of a further shift down than up.
Done some thinking about how things have panned out over the last year and come to conclusion that Heartland is going to it tough next few years and as such will be a frustration and disappointment for shareholders
I can see it becoming like Oceania ...full of promise, great future blah blah blah but failing to deliver....but punters will be inspired by talk of inflection points and transformation and remain optimistic ...but share price will remain low. I wouldn't be surprised it traded between 80 cents to $1 next couple years
I think Heartland has got into a rut of all talk and poor execution and been distracted from focusing on what matters. They have lost their way.
They will be under pressure for remainder of this year ....and betcha another profit warning coming up ...or at best full year result will be less than expected....and F25 won't be looking much better, maybe even lower profits.
Austrália won't be the saviour ...I fear that their execution of absorbing Challenger will be poor and the intent to become more digital to streamline things blah blah blah will be much more expensive than what they are indicating (Esp if NZ experience anything to go by)
Heartland now not the Heartland of old ...... Jeff knows that and maybe the cause ...needs a big refresh....and quick but speed doesn't seem to be one of their attributes these days.
So that's how I see it ..market won't like it and share price will still be about $1 in a years time at best ....maybe even less
Buckle up winner?
https://www.youtube.com/watch?v=UVoFR6qnA1E
And the raving about $200m npat in 2028 is just a pipedream
Come to conclusion just a ploy to keep punters happy and to seduce them into parting with cash in the capital raise.
My assessment is if things goes their way they might get to $145m ....and that's being optimistic.
Comparing OCA and HGH is like comparing chalk and cheese. At a village operational level I have real concerns how much money they are losing. Fixed weekly fees for life must be causing serious pain with inflation the way its been in recent years. Sure HGH faces challenges from a weak economy, but they are very different companies.
Quote from: winner (n) on May 08, 2024, 08:37 AMDone some thinking about how things have panned out over the last year and come to conclusion that Heartland is going to it tough next few years and as such will be a frustration and disappointment for shareholders
I can see it becoming like Oceania ...full of promise, great future blah blah blah but failing to deliver....but punters will be inspired by talk of inflection points and transformation and remain optimistic ...but share price will remain low. I wouldn't be surprised it traded between 80 cents to $1 next couple years
I think Heartland has got into a rut of all talk and poor execution and been distracted from focusing on what matters. They have lost their way.
They will be under pressure for remainder of this year ....and betcha another profit warning coming up ...or at best full year result will be less than expected....and F25 won't be looking much better, maybe even lower profits.
Austrália won't be the saviour ...I fear that their execution of absorbing Challenger will be poor and the intent to become more digital to streamline things blah blah blah will be much more expensive than what they are indicating (Esp if NZ experience anything to go by)
Heartland now not the Heartland of old ...... Jeff knows that and maybe the cause ...needs a big refresh....and quick but speed doesn't seem to be one of their attributes these days.
So that's how I see it ..market won't like it and share price will still be about $1 in a years time at best ....maybe even less
Oh dear.
Need to be careful with talking yourself into a depression. If we all get infected by that we well might ruin the economy :);
Do you want to share any tangible data supporting your dark thoughts and fears, or is this just from your mood-o-meter??
BTW - it appears other people see plenty of green shoots - hey, it is spring in the Northern hemisphere anyway:
https://www.wsj.com/finance/wall-street-banking-green-shoots-bf90f0d8
(probably paywalled)
Smile :); Life is good and the sun is shining (well at our place anyway) ...
Quote from: Basil on May 08, 2024, 10:08 AMComparing OCA and HGH is like comparing chalk and cheese. At a village operational level I have real concerns how much money they are losing. Fixed weekly fees for life must be causing serious pain with inflation the way its been in recent years. Sure HGH faces challenges from a weak economy, but they are very different companies.
Wasn't comparing them like that ..... more how the market per se views their performances and how they will price both.
We know how the market sees Oceania and I reckon that Heartland is going down that track .....punters hopeful but company performance not meeting expectations time and time again ...you know what happens then eh.
From that WSJ article BP linked
The phrase "green shoots" is an elegant way to hedge—another vegetational metaphor, which relates to the shielding of property. "Green shoots" suggests possibility rather than a guarantee.
And somebody wrote a paper "Someone forgot to water the green shoots"
Quote from: winner (n) on May 08, 2024, 08:37 AMDone some thinking about how things have panned out over the last year and come to conclusion that Heartland is going to it tough next few years and as such will be a frustration and disappointment for shareholders
I can see it becoming like Oceania ...full of promise, great future blah blah blah but failing to deliver....but punters will be inspired by talk of inflection points and transformation and remain optimistic ...but share price will remain low. I wouldn't be surprised it traded between 80 cents to $1 next couple years
I think Heartland has got into a rut of all talk and poor execution and been distracted from focusing on what matters. They have lost their way.
They will be under pressure for remainder of this year ....and betcha another profit warning coming up ...or at best full year result will be less than expected....and F25 won't be looking much better, maybe even lower profits.
Austrália won't be the saviour ...I fear that their execution of absorbing Challenger will be poor and the intent to become more digital to streamline things blah blah blah will be much more expensive than what they are indicating (Esp if NZ experience anything to go by)
Heartland now not the Heartland of old ...... Jeff knows that and maybe the cause ...needs a big refresh....and quick but speed doesn't seem to be one of their attributes these days.
So that's how I see it ..market won't like it and share price will still be about $1 in a years time at best ....maybe even less
Yep, I' afraid I too came to that conclusion at the cap raise before this one (starting to lose count) and exited after being a holder for a number of years. Prior to that I think I was holding on out of loyalty and, because I was still in the green, thinking I could afford to stay in and wait for the upswing. False logic of course but it was the shambolic, heavily discounted CR 18 months ago and the ill-timed expansion into Australia that did it for me.
The SP had been in decline for years, the high yield was really only being funded through regular capital raises and the pivot to Australia was fraught with danger. Sold out at $1.80, well below the peak, but now the SP is approaching half that value - in only 18 months. And Jeff, the architect of it all, has packed his bags, just as the hard work has begun.
It is still possible that HGH will come right again, the Aussie venture bear fruit etc etc, but the time frame of that (3-5 years) during which dividends will be cut and the SP probably will decline further doesn't make it a compelling buy. I think we are at a time again when their will be sluggish or no growth and either defensive (IFT) or yield stocks (HLG) will be back in favour.
It's times like these when I am again reminded of the great philosopher K.Rogers advice:
"You've got to know when to hold 'em. Know when to fold 'em. Know when to walk away - and know when to run."
Quote from: winner (n) on May 08, 2024, 10:24 AMFrom that WSJ article BP linked
The phrase "green shoots" is an elegant way to hedge—another vegetational metaphor, which relates to the shielding of property. "Green shoots" suggests possibility rather than a guarantee.
And somebody wrote a paper "Someone forgot to water the green shoots"
I thought you might pick that up :);
And yes - its like in spring ... green shoots can welt (with unsufficient water) or they can be killed off by a late frost.
Still - haven't yet seen a spring where growth didn't take off - even with some early resets. Have you ?
I can't believe we have these chats. This must be the time of maximum depression. Ideal time to invest :) ;
Just wondering at what point in the diagram we might be?
cycle-of-fear-greed.jpg
Quote from: Basil on May 08, 2024, 10:08 AMComparing OCA and HGH is like comparing chalk and cheese. At a village operational level I have real concerns how much money they are losing. Fixed weekly fees for life must be causing serious pain with inflation the way its been in recent years. Sure HGH faces challenges from a weak economy, but they are very different companies.
When your shares are down they are down no matter what the company is, as long as they are going to survive then down is down and it matters little. Most of my shares are down currently ranging from about 5% to near 50% and they are all in completely different sectors. The potential gain for OCA is just as great as HGH.
BP ...heavy frost here this morning but no worries as it's not spring
You place me on that diagram ...I'd place you about Denial
Weird ...it looks a bit like the HGH chart ...at least up to the FEAR bit ......with more downside coming
Jeez, you know the market is in trouble when BP sounds like an optimist...
Quote from: winner (n) on May 08, 2024, 11:51 AMBP ...heavy frost here this morning but no worries as it's not spring
You place me on that diagram ...I'd place you about Denial
Weird ...it looks a bit like the HGH chart ...at least up to the FEAR bit ......with more downside coming
The good thing about that diagram is that the start and finish end up at the same word.
Quote from: LoungeLizard on May 08, 2024, 11:58 AMJeez, you know the market is in trouble when BP sounds like an optimist...
Yes K Rogers was a great philosopher. Another one is W Nelson
Came across this the other day -
One day, well into Willie Nelson's long and illustrious career, a TV presenter asked the musician why he wasn't writing all the great classic songs like he used to.
"When I wrote those great songs I was cold and hungry," said Mr Nelson. "I'm not cold and hungry anymore."
Seemed to summ Greensleeves up nicely
Quote from: Breezy on May 08, 2024, 11:21 AMWhen your shares are down they are down no matter what the company is, as long as they are going to survive then down is down and it matters little. Most of my shares are down currently ranging from about 5% to near 50% and they are all in completely different sectors. The potential gain for OCA is just as great as HGH.
We'll see. The N.Z. economy is very weak and those companies bleeding cash from day to day operations are more vulnerable than others in my opinion. I'm just glad I have most of my money either offshore (Barramundi and Marlin), or in cash.
Quote from: Basil on May 08, 2024, 12:21 PMWe'll see. The N.Z. economy is very weak and those companies bleeding cash from day to day operations are more vulnerable than others in my opinion. I'm just glad I have most of my money either offshore (Barramundi and Marlin), or in cash.
Economic cycles are just that cyclical, they all cycle back around in time. The wheel in the sky keeps on turning.
Quote from: winner (n) on May 08, 2024, 11:51 AMBP ...heavy frost here this morning but no worries as it's not spring
You place me on that diagram ...I'd place you about Denial
Weird ...it looks a bit like the HGH chart ...at least up to the FEAR bit ......with more downside coming
I didn't place you ... the chart happened to come with this marker :) ;
But anyway - given that denial is on the chart only something like 1/3 down (i.e. 2/3 rds to go) ... are you saying that HLG share will move into negative territory :P ? This would be a first for any fully paid share ...
But look, we can spray the picture of the future with black / and or colourful sludge until the cows come home.
More interesting might be why you think that things might get still so much worse?
Do you really think our economy is getting crushed? 33% down and another 67% to go to the bottom?
Do you expect defaults to go through the roof and our money to loose all value? One loaf of really bad and tasteless NZ toast for $1 million like in the bad times of hyperinflation in post war Germany?
Do you expect share indices to drop to 10% of previous heights like after Black Friday in the US?
Do you expect world currencies to falter one after the other under the pressure of the debt bubble?
Well, I don't know - but sure - it all could happen and maybe Black Friday (Mach 2) is just waiting for us ... but even then, wouldn't HGH's securities (i.e. holding mortgages) be an advantage in the recovery phase?
Real Estate is one of the things which survived so far any economical crisis ...
Look, we might as well have a (sufficiently sized) comet hit planet earth next month (or next year) ... and none of us will need to worry about the future anymore.
However - I haven't yet seen any evidence for this comet, so I won't worry.
Do you have any evidence to support for your bleak predictions?
Good sign for HGH in a few months time was that dairy prices were up in overnight GDT auction ... third auction in a row
HGH is a classic buy in gloom, sell in boom stock. Currently, sentiment as gloomy as I can ever recall it on here or the other channel.
Quote from: Basil on May 08, 2024, 03:18 PMHGH is a classic buy in gloom, sell in boom stock. Currently, sentiment as gloomy as I can ever recall it on here or the other channel.
Well that can apply to any stock except longs just hold through gloom to boom and back to gloom again and so forth, I'd guess that 90% of the people on these type of forums are either traders or traders in essence not true longs.
Quote from: Breezy on May 08, 2024, 03:42 PMWell that can apply to any stock except longs just hold through gloom to boom and back to gloom again and so forth, I'd guess that 90% of the people on these type of forums are either traders or traders in essence not true longs.
I've got a few stocks that I've held for 10 years and accumulate in the dips, but I've recognised in recent years that if one can see the storm clouds building on the horizon for a particular stock, or even for the market in general, I don't see any reason why one shouldn't sell down or exit completely. That doesn't mean jumping with every blip in the market, but when macroeconomic forces align, a companies performance starts to waiver and market sentiment turns (not to mention a firm TA downtrend) then to continue to defend and hold the stock through a sustained downturn, well it just seems illogical. That isn't being a trader, just being flexible enough to change tack when required.
I've often thought that loyalty to a particular company or its CEO, even when said company and CEO is doing things contrary to one's interests, is a bit like having Stockholm Syndrome ie. investors form a psychological bond with their tormentor. Might be something in that...
bought yesterday for $1 that's 15% less than the clever Beagle, what could go wrong!
how is the reverse M market going? could it be that some people opt for this instead of the RV trend if that market is also a capital trap..
Since it uses Westpac tech stack it does not have a TECH development problem it just rents its TECH.
basically just a brand and broker therefore it could develop farther in this competitive market....
Has Jeff outsourced many jobs to India or Phillipines yet?
Quote from: winner (n) on May 09, 2024, 09:43 AMHas Jeff outsourced many jobs to India or Phillipines yet?
Why would they do that,as a heartland bank customer I can tell you they do not answer the phone
Quote from: snapiti on May 09, 2024, 11:35 AMWhy would they do that,as a heartland bank customer I can tell you they do not answer the phone
.......or reply to mail
Hopeless
Quote from: snapiti on May 09, 2024, 06:23 AMbought yesterday for $1 that's 15% less than the clever Beagle, what could go wrong!
Taking into account the recent dividend and the value of rights to subscribe to new shares and the extra rights to buy more at $1 I chose to take up, Jarden's system has my average entry price as $1.1024 so yes, you have outmaneuvered the dog on this occasion but not by 15%.
Nevertheless, your timing on this occasion was better than mine so well done to you mate.
Quote from: snapiti on May 09, 2024, 11:35 AMWhy would they do that,as a heartland bank customer I can tell you they do not answer the phone
Quote from: winner (n) on May 09, 2024, 11:48 AM.......or reply to mail
Hopeless
Zhis eez ze risk of not being Covid vaccinated. Neither of you got ze 5G chip zhat came vith ze vaccine did you? Vor me, Jeff just has to theenk, and then I get heez message ztraight away! You need to keep up vith ze times my vriends.
RB
Quote from: Basil on May 09, 2024, 12:07 PMTaking into account the recent dividend and the value of rights to subscribe to new shares and the extra rights to buy more at $1 I chose to take up, Jarden's system has my average entry price as $1.1024 so yes, you have outmaneuvered the dog on this occasion but not by 15%.
Nevertheless, your timing on this occasion was better than mine so well done to you mate.
Neither here nor there when the sp hits $2.00?
Crikey, unrelenting downward trend. Big crossings at .98c today.
Increasing pressure on the next update.
Sadly, there's a lot of stocks on the NZX with charts that look quite similar.
Yep - a sea of red today across the board, reflecting where we are in the economic cycle. Which is why companies should not expand when economies are weak...
Well, I think the fall in HGH's share price is overdone and anyone with the attention span longer than a knat is going to be very pleased they added here. Clear pathway to eps growth in the years ahead, and from a level where at present the metrics are truly compelling. A lot more than can be said about most other companies on the NZX. I note US. regional banks up 7% month to date, always a good lead indicator for HGH. I also note the peer group that I compare HGH against and have done for the last decade are at far more elevated multiples than HGH. Sentiment has never been worse which is also a good sign for very deep value. Disc: Added more today.
Quote from: Basil on May 16, 2024, 03:55 PMWell, I think the fall in HGH's share price is overdone and anyone with the attention span longer than a knat is going to be very pleased they added here. Clear pathway to eps growth in the years ahead, and from a level where at present the metrics are truly compelling. A lot more than can be said about most other companies on the NZX. I note US. regional banks up 7% month to date, always a good lead indicator for HGH. I also note the peer group that I compare HGH against and have done for the last decade are at far more elevated multiples than HGH. Sentiment has never been worse which is also a good sign for very deep value. Disc: Added more today.
I agree and have been doing the same.
At every point in the long decline of HGH's share price - usually at each Capital raise - people have insisted that the good times are just around the corner. Maybe they will be right at some point, but there's another long corner to be negotiated first, and there's absolutely no certainty that the pivot to Australia will come to anything. In fact there's a very high risk that it won't. The timing of the expansion, regardless of the details, was all wrong, and remains so. Still, good luck to punters, but I reckon there's a fine line between averaging down and throwing good money after bad.
Depends on your timeframe lizard. I am happy to hold for 4 years plus. In terms of the economy there's always sunshine after rain. I'm confident we'll hit the bottom of the economic cycle at some point this year or early 2015.
Quote from: Basil on May 16, 2024, 04:34 PMDepends on your timeframe lizard. I am happy to hold for 4 years plus. In terms of the economy there's always sunshine after rain. I'm confident we'll hit the bottom of the economic cycle at some point this year or early 2015.
Prediction eez difficult, ezpecially about ze future. But eet does become easier vith ze benefit of hindzight :P !
RB
Quote from: Basil on May 16, 2024, 04:34 PMDepends on your timeframe lizard. I am happy to hold for 4 years plus.
The people who bought HGH five years ago at $1.10 probably thought the same thing. They're still waiting .....
I think people buying at under $1.00 will see the share price more than double over the next 5 years.
And they will enjoy on average a net yield over those 5 years of 10 %.
Quote from: lorraina on May 17, 2024, 09:16 AMI think people buying at under $1.00 will see the share price more than double over the next 5 years.
And they will enjoy on average a net yield over those 5 years of 10 %.
Agree. There's a clear pathway to substantial earnings growth over that timeframe. Some people can see it, others are stuck with their eyes mired in the current economic gloom or busy looking backwards at their charts. TA not the be all and end all of investing by any means.
Quote from: lorraina on May 17, 2024, 09:16 AMI think people buying at under $1.00 will see the share price more than double over the next 5 years.
And they will enjoy on average a net yield over those 5 years of 10 %.
= Capital growth of 14.4% compound + dividends :)
Quote from: KW on May 16, 2024, 10:19 PMThe people who bought HGH five years ago at $1.10 probably thought the same thing. They're still waiting .....
The smart money sold at ~ $2 a while back and is buying back in. Could it go to $2 again in due course? Yes absolutely because its done it several times already. History has this funny habit of repeating....you can even see that in the charts if you have a decent look :P
Quote from: Basil on May 17, 2024, 10:00 AMThe smart money sold at ~ $2 a while back and is buying back in. Could it go to $2 again in due course? Yes absolutely because its done it several times already. History has this funny habit of repeating....you can even see that in the charts if you have a decent look :P
You could be right - or wrong.
This is last chance saloon stuff for Heartland, and it should be worrying for shareholders that Jeff decided to fold and leave the table, mid-game. HGH never had this element of risk attached to it and I guess that's part of the reason why the SP is so low - it could either way. I don't believe for one moment the projections for Net Profit - they are based on a lot of assumptions and back of the envelope calculations that don't take into account where we are in the economic cycle, the pressures on bank margins, market sentiment and, in the case of Australia, the huge climate issues facing livestock farmers. Let alone that the Challenger could have more skeltons in the closet than has been realised.
The share price is back to where it was 5 years ago. If it dips below 90c you'd have to go back TEN years when it was at that level. For long term holders, that is a huge fall in capital, in real terms. Dividends are going to be under real pressure with all the extra costs and expanded share registry, so, sorry - the only way you are going to see 10% return is if the SP falls off a cliff.
The smart money got out when they saw the writing on the wall. The smart money stayed out, ignored the lure of the capital raise and will stay out until there's a reason - other than just hoping - to get back in. The end of year report is the critical moment for HGH - if the mythical green shoots appear, all well and good. If not, the 10 year low beckons.
Quote from: LoungeLizard on May 17, 2024, 11:27 AMYou could be right - or wrong.
This is last chance saloon stuff for Heartland, and it should be worrying for shareholders that Jeff decided to fold and leave the table, mid-game. HGH never had this element of risk attached to it and I guess that's part of the reason why the SP is so low - it could either way. I don't believe for one moment the projections for Net Profit - they are based on a lot of assumptions and back of the envelope calculations that don't take into account where we are in the economic cycle, the pressures on bank margins, market sentiment and, in the case of Australia, the huge climate issues facing livestock farmers. Let alone that the Challenger could have more skeltons in the closet than has been realised.
The share price is back to where it was 5 years ago. If it dips below 90c you'd have to go back TEN years when it was at that level. For long term holders, that is a huge fall in capital, in real terms. Dividends are going to be under real pressure with all the extra costs and expanded share registry, so, sorry - the only way you are going to see 10% return is if the SP falls off a cliff.
The smart money got out when they saw the writing on the wall. The smart money stayed out, ignored the lure of the capital raise and will stay out until there's a reason - other than just hoping - to get back in. The end of year report is the critical moment for HGH - if the mythical green shoots appear, all well and good. If not, the 10 year low beckons.
way way way to pessimistic, Jeff standing aside after 15 years at the helm(30 years in senior banking roles) and a new growth challenge for the company is a good thing. I am really confident they will attract a very high caliber replacement.
I don't think many are expecting green shoots out of the next reporting, I am not, certainly the market is not. Next report may not show them either. I think the market is now pricing in a worsening in fortunes.
I don't agree with you that the next report is critical either, can you explain why you think it is so 'critical"
It's great you and the markets don't believe in the projections.....@ the current SP there is good value on offer if they don't get anywhere near those projection.
For me I would rather be investing now than when all was much rosier and the SP was much much higher.
Reality is the companies fortunes have to a large degree changed because of factors beyond their control so a lot of the noise you make is well just that
Quote from: snapiti on May 17, 2024, 11:54 AMway way way to pessimistic, Jeff standing aside after 15 years at the helm(30 years in senior banking roles) and a new growth challenge for the company is a good thing. I am really confident they will attract a very high caliber replacement.
I don't think many are expecting green shoots out of the next reporting, I am not, certainly the market is not. Next report may not show them either. I think the market is now pricing in a worsening in fortunes.
I don't agree with you that the next report is critical either, can you explain why you think it is so 'critical"
It's great you and the markets don't believe in the projections.....@ the current SP there is good value on offer if they don't get anywhere near those projection.
For me I would rather be investing now than when all was much rosier and the SP was much much higher.
Reality is the companies fortunes have to a large degree changed because of factors beyond their control so a lot of the noise you make is well just that
The FY report is critical because without any "green shoots" the market is primed to react badly. The HY report was bad - NP, EPS, NIM were all down whilst borrowings and impairments were up. And the dividend was cut. Basically if there's no good news the TA worm won't change - at best the SP will stay around the $1 mark. But there's a sizeable chance that the FY report won't be that flash either - and the dividend could be cut again. If that's the case then all bets are off as to where the SP will end up. 90c would be the minimum I would think.
For me, investing is a risk and reward assessment, pure and simple. At the moment there's a lot of good stocks (TRA, IFT, HLG, SPK) that are oversold and accumulating those stocks is a better option. More likelihood of the SP returning to normal levels, lower risk of further decline, and in many cases a better yield. Why roll the dice on HGH when there's better options elsewhere?
Quote from: Basil on May 17, 2024, 10:00 AMThe smart money sold at ~ $2 a while back and is buying back in. Could it go to $2 again in due course? Yes absolutely because its done it several times already. History has this funny habit of repeating....you can even see that in the charts if you have a decent look :P
That was just the Covid stock market insanity. That isnt going to repeat. Just like GME isnt going from $10 to $120 again, no matter what Roaring Kitty posts.
Quote from: KW on May 17, 2024, 02:32 PMThat was just the Covid stock market insanity. That isnt going to repeat. Just like GME isnt going from $10 to $120 again, no matter what Roaring Kitty posts.
Try harder KW. Bring up a 10 year chart. HGH has been to $2+ multiple times already...ask me how I know ;D
I think Lorriana's comment earlier today about this doubling in the next five years is actually VERY conservative.
Sure we're in the depth's of a recession now but things are hardly booming in Australia at present and a quick look at the peer group metrics I have followed for more than a decade, (and HGK almost always trades within 1-2 PE above or below shows FY25 PE's as follows
ANZ 12.6
WBC 14.2
NAB 15.3
BEN 12.2
BOQ 13.3
Average 13.5
HGH 7.3
HGH is so deeply out of favour its share price could increase 84% just to get back to the average multiple of its peer group as it currently stands right now....let than sink in for a minute or twoI have used that peer group comparison very successfully as a yardstick to assess fair value and look for extreme opportunities on the buy and sell side for HGH for over a decade and its currently a SCREAMING BUY. I have never before witnessed such an extreme divergence between HGH's metrics and its peer group. I couldn't care less if the usual suspect(s) thinks the peer group isn't relevant, I know it works from decade+ long experience).
In addition to the massive metrics anomaly, eps is forecast to grow very nicely in the years ahead, (consensus for FY26 which starts in less than 14 months time) is for 16 cps. Put a mid cycle normal PE of 13.5 on that and it could be ~ $2.16 late next year !
FY28 could see ~ $200m earnings for about 20 cps, assuming 1,000m shares on issue by then with DRIP and 20 cps x 13.5 PE gives $2.70.
I think all the end of the world talk is well and truly overdone. HGH already have a well proven business model in Australia, a dominant 43% share of the reverse home loan market and demand growth there is growing at ~ 20% per annum.
Quote from: Basil on May 17, 2024, 02:52 PMTry harder KW. Bring up a 10 year chart. HGH has been to $2+ multiple times already...ask me how I know ;D
10 year chart is even worse! HGH is the same price as it was in Sept 2014. It reached $2 once in 2017, then nothing until Covid.
To paraphrase Zuck, if it were a growth company, wouldnt it have grown? :D
Screenshot 2024-05-17 152549.png
For a start there's the high yield every year which isn't showing in that chart.
Been to $2+ twice, current price represents your best chance to jump on board and double your money + (assuming 8 cps fully imputed for FY25), 11% gross yield, with yield growing every year after that. From a fundamental analysis perspective, it's a truly compelling buy but if all you do is TA you'll miss out or pay quite a lot more when the squiggly line is clearly going up.
Consensus DPS for FY26, (starts only 14 months away) is 9.5 cps fully imputed = 13.2 cps gross = 13.3% gross based on 99 cent share price + further growth in the years after that. How many shares do you own with a yield like that ?
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
If you inflation adjust $1 in 2014, the share price should be $1.27 today. So its actually still lost 21% in real terms over that 10 year period.
No argument about that but frankly K, I've lost count of the number of times I've said this is a trader's stock not a buy and hold long term stock. Buy in gloom, sell in boom and a very healthy dividend carry while you own it. Date the stock, you don't have to marry it.
I use a very simple "deep value" strategy of buying in deep recession and / or when HGH is at "actionable level" of misalignment with the metrics of its peer group and selling in boom or when its significantly overpriced relative to its peers. It's never been this far out of whack with its peer group before, nothing even remotely like this has happened before. Lots of people are absolutely obsessed with hating on this stock so sentiment has never been worse.
Quote from: Basil on May 17, 2024, 06:01 PMNo argument about that but frankly K, I've lost count of the number of times I've said this is a trader's stock not a buy and hold long term stock.
If you want to swing trade it then you should be looking at the technicals. You buy the start of the upturn, not in the middle of the downtrend.
Quote from: Basil on May 17, 2024, 06:01 PMLots of people are absolutely obsessed with hating on this stock so sentiment has never been worse.
Oooo - you buying OCA too Bazza?
I like this game 😂
Quote from: LoungeLizard on May 17, 2024, 11:27 AMYou could be right - or wrong.
This is last chance saloon stuff for Heartland, and it should be worrying for shareholders that Jeff decided to fold and leave the table, mid-game. HGH never had this element of risk attached to it and I guess that's part of the reason why the SP is so low - it could either way. I don't believe for one moment the projections for Net Profit - they are based on a lot of assumptions and back of the envelope calculations that don't take into account where we are in the economic cycle, the pressures on bank margins, market sentiment and, in the case of Australia, the huge climate issues facing livestock farmers. Let alone that the Challenger could have more skeltons in the closet than has been realised.
The share price is back to where it was 5 years ago. If it dips below 90c you'd have to go back TEN years when it was at that level. For long term holders, that is a huge fall in capital, in real terms. Dividends are going to be under real pressure with all the extra costs and expanded share registry, so, sorry - the only way you are going to see 10% return is if the SP falls off a cliff.
The smart money got out when they saw the writing on the wall. The smart money stayed out, ignored the lure of the capital raise and will stay out until there's a reason - other than just hoping - to get back in. The end of year report is the critical moment for HGH - if the mythical green shoots appear, all well and good. If not, the 10 year low beckons.
lol.....do you really think investors are buying at current prices thinking green shoots are going to appear at the next reporting....there is no show that is going to happen....me thinks a modest deteraition in the fundamentals are priced in 90cps to $1.
Given the macro environment anyone expecting green shoots is a fool IMO.
Touche Crackity lol. I did buy some more TRA at $3.90 this week and HGH at 96 cents, (multi year low point).
Not pretending I know exactly where the low point is with either of those two but deep value abounds in spades so if I got it a bit wrong, time will fix that.
Consensus is FY24 11.7 cps, FY25 13.2 cps, FY26 16.05 cps.
Average 12 month price target $1.37 https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
Still plenty of dry powder for more HGH. Might wait for the chart to start looking a bit healthier for the other half. No harm in having a mixture of strategies. Buy about half in various tranches when you think its extreme value and the other half when the chart suggests support is there for a new uptrend.
Quote from: LoungeLizard on May 17, 2024, 12:43 PMThe FY report is critical because without any "green shoots" the market is primed to react badly. The HY report was bad - NP, EPS, NIM were all down whilst borrowings and impairments were up. And the dividend was cut. Basically if there's no good news the TA worm won't change - at best the SP will stay around the $1 mark. But there's a sizeable chance that the FY report won't be that flash either - and the dividend could be cut again. If that's the case then all bets are off as to where the SP will end up. 90c would be the minimum I would think.
For me, investing is a risk and reward assessment, pure and simple. At the moment there's a lot of good stocks (TRA, IFT, HLG, SPK) that are oversold and accumulating those stocks is a better option. More likelihood of the SP returning to normal levels, lower risk of further decline, and in many cases a better yield. Why roll the dice on HGH when there's better options elsewhere?
you indicate you think the SP might tank on a report with no green shoots and weaker fundamentals. If the SP weakens further on already highly predictable weakness in the results I will certainly be buying. I am certainly predicting some modest weakness in the report, I only hope the market over reacts
I think the thing is, that some people massively ramp their investments when they get in, and massively deride them when they get out. The contrast and hyperbole is quite profound. And that cycle is repeated, year after year. I think it's wasted here, the audience is so small it has no effect whatsoever. Maybe elsewhere but not here, yet.
No TA would buy this now, it's way too early to have any confidence in a momentum trade, that the stock will rebound. Nothing on the chart says it's the right time to take a punt, and HGH unfortunately has consistently demonstrated that, for many years it is imo nothing more than a cyclical for momentum traders who want a punt and happen to enjoy a dividend while they're in.
The FA doesn't look compelling either, to take the punt right now (timing again), except that it might be oversold on cap value, but that's straying into TA again. The detractors are just saying that there is more FA and TA risk here and now, than they themselves are prepared to entertain.
I agree with that, too early to call the next cycle upwards. When it happens it will be obvious, the chart will tell us. Meantime, it's not worth the capital risk or opportunity cost, imo, to move early.
Quote from: Buzz on May 17, 2024, 08:27 PMI think the thing is, that some people massively ramp their investments when they get in, and massively deride them when they get out. The contrast and hyperbole is quite profound. And that cycle is repeated, year after year. I think it's wasted here, the audience is so small it has no effect whatsoever. Maybe elsewhere but not here, yet.
No TA would buy this now, it's way too early to have any confidence in a momentum trade, that the stock will rebound. Nothing on the chart says it's the right time to take a punt, and HGH unfortunately has consistently demonstrated that, for many years it is imo nothing more than a cyclical for momentum traders who want a punt and happen to enjoy a dividend while they're in.
The FA doesn't look compelling either, to take the punt right now (timing again), except that it might be oversold on cap value, but that's straying into TA again. The detractors are just saying that there is more FA and TA risk here and now, than they themselves are prepared to entertain.
I agree with that, too early to call the next cycle upwards. When it happens it will be obvious, the chart will tell us. Meantime, it's not worth the capital risk or opportunity cost, imo, to move early.
Well said Buzz.
Quote from: Buzz on May 17, 2024, 08:27 PMI think the thing is, that some people massively ramp their investments when they get in, and massively deride them when they get out. The contrast and hyperbole is quite profound. And that cycle is repeated, year after year. I think it's wasted here, the audience is so small it has no effect whatsoever. Maybe elsewhere but not here, yet.
No TA would buy this now, it's way too early to have any confidence in a momentum trade, that the stock will rebound. Nothing on the chart says it's the right time to take a punt, and HGH unfortunately has consistently demonstrated that, for many years it is imo nothing more than a cyclical for momentum traders who want a punt and happen to enjoy a dividend while they're in.
The FA doesn't look compelling either, to take the punt right now (timing again), except that it might be oversold on cap value, but that's straying into TA again. The detractors are just saying that there is more FA and TA risk here and now, than they themselves are prepared to entertain.
I agree with that, too early to call the next cycle upwards. When it happens it will be obvious, the chart will tell us. Meantime, it's not worth the capital risk or opportunity cost, imo, to move early.
Would be very surprising if anyone buys a stock without feeling positive about it going up and sells a stock without feeling it is going to go down. As long as their rationale and reasons for buying or selling are shared. Up to each of us to decide whether or not to accept the rationale/reasons.
And as you very rightly pointed out, we are but little minnows here in the market to have real impact on the direction of a stock like HGH. The big biys are well and truly in charge.
I have been closely following HGH since I sold out at $1.78 (took a marginal 3c hit on the way out) and have just started buying back.
Have a look at the chart below of the banking stocks (WBC, ANZ, NAB, CBA and HGH) and one can observe that they move in unison overall, reflecting the dynamics at play (economic, interest rates and profitability) in the Australasian banking industry.
HGH was following the pattern until late 2023/early 2024 when it became clear to the market that the Challenger Bank acquisition was going ahead and HGH was going to have to do another CR ($200m was raised in 2022) to fund the acquisition. One can see that while the other banks' share prices started recovering, HGH's sp continued to drop.
Hardly surprising as two $200m CRs ($400m) within 18 months are beyond the appetite of shareholders to absorb.
So we are now in the post CR and post Challenger Bank acquisition trading period. There are the flippers who took up the rights and underwrote the CR at $1.00 who are selling out for a quick trade (good on them) or cutting their loss.
I do not expect the selling to continue for much longer (another week perhaps) as it makes little sense to sell out at under $1.00 although the underwriters' break-even price is more like 97c (3% underwriting fee).
I am calling 96c the bottom and expect HGH's sp to track back towards what the other banks are trading at in the next 12 months. I would be disappointed (and wrong) if the sp does not hit $1.25 by end of 2024.
Now fire away your arrows and throw your rocks. Just remember though that I sold at $1.78 and am buying back at $1.00 +/-.
https://nz.finance.yahoo.com/chart/HGH.NZ#eyJpbnRlcnZhbCI6IndlZWsiLCJwZXJpb2RpY2l0eSI6MSwidGltZVVuaXQiOm51bGwsImNhbmRsZVdpZHRoIjo2LjY5NzMxODAwNzY2MjgzNSwiZmxpcHBlZCI6ZmFsc2UsInZvbHVtZVVuZGVybGF5IjpmYWxzZSwiYWRqIjp0cnVlLCJjcm9zc2hhaXIiOnRydWUsImNoYXJ0VHlwZSI6ImxpbmUiLCJleHRlbmRlZCI6ZmFsc2UsIm1hcmtldFNlc3Npb25zIjp7fSwiYWdncmVnYXRpb25UeXBlIjoib2hsYyIsImNoYXJ0U2NhbGUiOiJwZXJjZW50IiwicGFuZWxzIjp7ImNoYXJ0Ijp7InBlcmNlbnQiOjEsImRpc3BsYXkiOiJIR0guTloiLCJjaGFydE5hbWUiOiJjaGFydCIsImluZGV4IjowLCJ5QXhpcyI6eyJuYW1lIjoiY2hhcnQiLCJwb3NpdGlvbiI6bnVsbH0sInlheGlzTEhTIjpbXSwieWF4aXNSSFMiOlsiY2hhcnQiXX19LCJsaW5lV2lkdGgiOjIsInN0cmlwZWRCYWNrZ3JvdW5kIjp0cnVlLCJldmVudHMiOnRydWUsImNvbG9yIjoiIzAwODFmMiIsInN0cmlwZWRCYWNrZ3JvdWQiOnRydWUsInN5bWJvbHMiOlt7InN5bWJvbCI6IkhHSC5OWiIsInN5bWJvbE9iamVjdCI6eyJzeW1ib2wiOiJIR0guTloiLCJxdW90ZVR5cGUiOiJFUVVJVFkiLCJleGNoYW5nZVRpbWVab25lIjoiUGFjaWZpYy9BdWNrbGFuZCJ9LCJwZXJpb2RpY2l0eSI6MSwiaW50ZXJ2YWwiOiJ3ZWVrIiwidGltZVVuaXQiOm51bGwsInNldFNwYW4iOnsibXVsdGlwbGllciI6NSwiYmFzZSI6InllYXIiLCJwZXJpb2RpY2l0eSI6eyJwZXJpb2QiOjEsImludGVydmFsIjoid2VlayJ9fX0seyJzeW1ib2wiOiJXQkMuQVgiLCJzeW1ib2xPYmplY3QiOnsic3ltYm9sIjoiV0JDLkFYIn0sInBlcmlvZGljaXR5IjoxLCJpbnRlcnZhbCI6IndlZWsiLCJ0aW1lVW5pdCI6bnVsbCwic2V0U3BhbiI6eyJtdWx0aXBsaWVyIjo1LCJiYXNlIjoieWVhciIsInBlcmlvZGljaXR5Ijp7InBlcmlvZCI6MSwiaW50ZXJ2YWwiOiJ3ZWVrIn19LCJpZCI6IldCQy5BWCIsInBhcmFtZXRlcnMiOnsiY29sb3IiOiIjNzJkM2ZmIiwid2lkdGgiOjIsImlzQ29tcGFyaXNvbiI6dHJ1ZSwic2hhcmVZQXhpcyI6dHJ1ZSwiY2hhcnROYW1lIjoiY2hhcnQiLCJzeW1ib2xPYmplY3QiOnsic3ltYm9sIjoiV0JDLkFYIn0sInBhbmVsIjoiY2hhcnQiLCJmaWxsR2FwcyI6ZmFsc2UsImFjdGlvbiI6ImFkZC1zZXJpZXMiLCJzeW1ib2wiOiJXQkMuQVgiLCJnYXBEaXNwbGF5U3R5bGUiOiJ0cmFuc3BhcmVudCIsIm5hbWUiOiJXQkMuQVgiLCJvdmVyQ2hhcnQiOnRydWUsInVzZUNoYXJ0TGVnZW5kIjp0cnVlLCJoZWlnaHRQZXJjZW50YWdlIjowLjcsIm9wYWNpdHkiOjEsImhpZ2hsaWdodGFibGUiOnRydWUsInR5cGUiOiJsaW5lIiwic3R5bGUiOiJzdHhfbGluZV9jaGFydCIsImhpZ2hsaWdodCI6ZmFsc2V9fSx7InN5bWJvbCI6IkFOWi5BWCIsInN5bWJvbE9iamVjdCI6eyJzeW1ib2wiOiJBTlouQVgifSwicGVyaW9kaWNpdHkiOjEsImludGVydmFsIjoid2VlayIsInRpbWVVbml0IjpudWxsLCJzZXRTcGFuIjp7Im11bHRpcGxpZXIiOjUsImJhc2UiOiJ5ZWFyIiwicGVyaW9kaWNpdHkiOnsicGVyaW9kIjoxLCJpbnRlcnZhbCI6IndlZWsifX0sImlkIjoiQU5aLkFYIiwicGFyYW1ldGVycyI6eyJjb2xvciI6IiNhZDZlZmYiLCJ3aWR0aCI6MiwiaXNDb21wYXJpc29uIjp0cnVlLCJzaGFyZVlBeGlzIjp0cnVlLCJjaGFydE5hbWUiOiJjaGFydCIsInN5bWJvbE9iamVjdCI6eyJzeW1ib2wiOiJBTlouQVgifSwicGFuZWwiOiJjaGFydCIsImZpbGxHYXBzIjpmYWxzZSwiYWN0aW9uIjoiYWRkLXNlcmllcyIsInN5bWJvbCI6IkFOWi5BWCIsImdhcERpc3BsYXlTdHlsZSI6InRyYW5zcGFyZW50IiwibmFtZSI6IkFOWi5BWCIsIm92ZXJDaGFydCI6dHJ1ZSwidXNlQ2hhcnRMZWdlbmQiOnRydWUsImhlaWdodFBlcmNlbnRhZ2UiOjAuNywib3BhY2l0eSI6MSwiaGlnaGxpZ2h0YWJsZSI6dHJ1ZSwidHlwZSI6ImxpbmUiLCJzdHlsZSI6InN0eF9saW5lX2NoYXJ0IiwiaGlnaGxpZ2h0IjpmYWxzZX19LHsic3ltYm9sIjoiTkFCLkFYIiwic3ltYm9sT2JqZWN0Ijp7InN5bWJvbCI6Ik5BQi5BWCJ9LCJwZXJpb2RpY2l0eSI6MSwiaW50ZXJ2YWwiOiJ3ZWVrIiwidGltZVVuaXQiOm51bGwsInNldFNwYW4iOnsibXVsdGlwbGllciI6NSwiYmFzZSI6InllYXIiLCJwZXJpb2RpY2l0eSI6eyJwZXJpb2QiOjEsImludGVydmFsIjoid2VlayJ9fSwiaWQiOiJOQUIuQVgiLCJwYXJhbWV0ZXJzIjp7ImNvbG9yIjoiI2ZmODBjNSIsIndpZHRoIjoyLCJpc0NvbXBhcmlzb24iOnRydWUsInNoYXJlWUF4aXMiOnRydWUsImNoYXJ0TmFtZSI6ImNoYXJ0Iiwic3ltYm9sT2JqZWN0Ijp7InN5bWJvbCI6Ik5BQi5BWCJ9LCJwYW5lbCI6ImNoYXJ0IiwiZmlsbEdhcHMiOmZhbHNlLCJhY3Rpb24iOiJhZGQtc2VyaWVzIiwic3ltYm9sIjoiTkFCLkFYIiwiZ2FwRGlzcGxheVN0eWxlIjoidHJhbnNwYXJlbnQiLCJuYW1lIjoiTkFCLkFYIiwib3ZlckNoYXJ0Ijp0cnVlLCJ1c2VDaGFydExlZ2VuZCI6dHJ1ZSwiaGVpZ2h0UGVyY2VudGFnZSI6MC43LCJvcGFjaXR5IjoxLCJoaWdobGlnaHRhYmxlIjp0cnVlLCJ0eXBlIjoibGluZSIsInN0eWxlIjoic3R4X2xpbmVfY2hhcnQiLCJoaWdobGlnaHQiOmZhbHNlfX0seyJzeW1ib2wiOiJDQkEuQVgiLCJzeW1ib2xPYmplY3QiOnsic3ltYm9sIjoiQ0JBLkFYIn0sInBlcmlvZGljaXR5IjoxLCJpbnRlcnZhbCI6IndlZWsiLCJ0aW1lVW5pdCI6bnVsbCwic2V0U3BhbiI6eyJtdWx0aXBsaWVyIjo1LCJiYXNlIjoieWVhciIsInBlcmlvZGljaXR5Ijp7InBlcmlvZCI6MSwiaW50ZXJ2YWwiOiJ3ZWVrIn19LCJpZCI6IkNCQS5BWCIsInBhcmFtZXRlcnMiOnsiY29sb3IiOiIjZmZiZDc0Iiwid2lkdGgiOjIsImlzQ29tcGFyaXNvbiI6dHJ1ZSwic2hhcmVZQXhpcyI6dHJ1ZSwiY2hhcnROYW1lIjoiY2hhcnQiLCJzeW1ib2xPYmplY3QiOnsic3ltYm9sIjoiQ0JBLkFYIn0sInBhbmVsIjoiY2hhcnQiLCJmaWxsR2FwcyI6ZmFsc2UsImFjdGlvbiI6ImFkZC1zZXJpZXMiLCJzeW1ib2wiOiJDQkEuQVgiLCJnYXBEaXNwbGF5U3R5bGUiOiJ0cmFuc3BhcmVudCIsIm5hbWUiOiJDQkEuQVgiLCJvdmVyQ2hhcnQiOnRydWUsInVzZUNoYXJ0TGVnZW5kIjp0cnVlLCJoZWlnaHRQZXJjZW50YWdlIjowLjcsIm9wYWNpdHkiOjEsImhpZ2hsaWdodGFibGUiOnRydWUsInR5cGUiOiJsaW5lIiwic3R5bGUiOiJzdHhfbGluZV9jaGFydCIsImhpZ2hsaWdodCI6ZmFsc2V9fV0sImV2ZW50TWFwIjp7ImNvcnBvcmF0ZSI6eyJkaXZzIjp0cnVlLCJzcGxpdHMiOnRydWV9LCJzaWdEZXYiOnt9fSwiY3VzdG9tUmFuZ2UiOm51bGwsInNldFNwYW4iOnsibXVsdGlwbGllciI6NSwiYmFzZSI6InllYXIiLCJwZXJpb2RpY2l0eSI6eyJwZXJpb2QiOjEsImludGVydmFsIjoid2VlayJ9fX0-
Nicely said Teitei. Blind Freddy can see the major divergence in recent months. Like you, I feel the underwriters selling is nearly done. Added more this week at 96 cents and not done yet by any means.
QuoteBuzz on May 17, 2024, 08:27 PM
The FA doesn't look compelling either,
That statement is laughable. The share price needs to go up 84% just to trade in line with the FY25 metrics of its peer group it has closely tracked for more than a decade.
Quote from: Teitei on May 18, 2024, 10:32 AMHave a look at the chart below of the banking stocks (WBC, ANZ, NAB, CBA and HGH) and one can observe that they move in unison overall, reflecting the dynamics at play (economic, interest rates and profitability) in the Australasian banking industry.
HGH was following the pattern until late 2023/early 2024 when it became clear to the market that the Challenger Bank acquisition was going ahead and HGH was going to have to do another CR ($200m was raised in 2022) to fund the acquisition. One can see that while the other banks' share prices started recovering, HGH's sp continued to drop.
That chart is just another reason why it's too early, for some (most?) to take a punt on a momentum trade,
right now. It's in free fall since Nov'23 with no TA signs indicating an acceptable risk entry price. I disagree though with another poster that this is Heartlands "peer group", that's a long bow to draw, these are the largest banks in Australia, and Heartland is no where near comparable, even with Challenger.
Anyway, as distasteful as it might be to have some objectors to the notion that buying HGH now is a good thing, you've already moved on it, so genuinely wish you all the best. I'm happy to watch for a bit longer and when my TA says move, I will, even though it will certainly leave a few cents on the table from wherever it bottoms.
I have been following various share chat sites for over a decade now, don't think I have ever seen ballance (tei tei) and beagle (basil) agree on a SP buy in point.....wow wow wow.
Been a few stocks , justifiably, beaten up this year, this one is well over done IMO.
Happy to buy more if the market over reacts to a modest decline in the numbers at next report
I've followed the alignment between HGH and the peer group I use for more than a decade and used that as one tool to successfully execute on a number of transactions at high and low points before. Frankly, it's been a very lucrative strategy.
I think Balance is quite correct...the stock has been simply unable to absorb two major capital raises within 2 years without a significant effect on its share price. Hopefully the board have taken some learnings from this. In terms of the rampant supply from the overhang the underwriters took, I feel that is quite close to being over and done with.
While I've already talked about consensus broker forecasts for FY26 (16 cps), I understand the full benefits in terms of NIM expansion from switching from wholesale to retail funding in Australia will not flow through for 2 years so it's really FY27 when they start to hit top gear with their Australian operations.
Looking forward to seeing the earnings growth in future years.
Still on track for $200m profit FY28
Quote from: winner (n) on May 19, 2024, 09:25 AMStill on track for $200m profit FY28
So could be a $2 billion to $2.8 billion stock then, depending on market multiples for banks.
4 years to double your money as well as receive a handsome dividend of 8%+ each year on the way there.
Good enough for me so here's hoping HGH's Australian operations do not grow so fast they need another capital raising in 2 years' time! Ouch!
Quote from: Basil on May 19, 2024, 08:40 AMI think Balance is quite correct...the stock has been simply unable to absorb two major capital raises within 2 years without a significant effect on its share price. Hopefully the board have taken some learnings from this. In terms of the rampant supply from the overhang the underwriters took, I feel that is quite close to being over and done with.
As they say in the old days, the pig is moving through the python!
Quote from: Teitei on May 19, 2024, 10:56 AMAs they say in the old days, the pig is moving through the python!
It's just that some of us are a tab concerned about indigestion and reflux!
(ps Balance I appreciate you posts here.)
With inflated house prices likely to stay in NZ for the future one would think perhaps the Reverse M would become a popular product....
Mortgage free houses with a million added to them and cash strapped seniors might say why not sell a quater early cheaper whats the maths on a RV DMF..
Quote from: Teitei on May 19, 2024, 10:40 AMSo could be a $2 billion to $2.8 billion stock then, depending on market multiples for banks.
4 years to double your money as well as receive a handsome dividend of 8%+ each year on the way there.
Good enough for me so here's hoping HGH's Australian operations do not grow so fast they need another capital raising in 2 years' time! Ouch!
Or they don't grow and need to meet capital requirements via another shareholder handout. Grow or not grow HGH have only ever been able to sustain their business and pay a dividend by doing periodic cap raises. That isn't going to change in my opinion as HGH's are an increasingly capital hungry business.
It's kind of amusing in a way, how the same bunch of people at each of the last two cap raises said
exactly the same thing as they are now. All that has changed are the amounts. $1.76 was a great buy and $2 was just around the corner. 18 months later they are saying $1 is a great buy and....$2 is just around the corner. And at the next cap raise in 2 years time it will be 80c, what a great buy etc etc. Maybe HGH stands for Hopeful Ground Hog?
Wow Man, Lizard , give it a rest you like a broken record and no skin in the game either ................endless negativity
there's a lot of holders including myself took a bath with this stock and they don't need reminding every 5 minutes .
Its onwards and upwards from here .
Disc : Holding & buying. 8)
Welcome to the forum Syd, great first post.
Average of professional analysts is for eps in FY24 of 11.7 cps, FY25 13.2 cps and FY26 16.05 cps.
There's a good saying, you either get bitter, or you get better. Well done on choosing the latter path.
https://hashimashi.com/bitter-or-better/
HGH reverse M could take off in the years ahead as people realise they have a new option when they reach a certain age and they are debt free...
More room in the NZ property market for the company that can manage to make money off this specific under marketed product cat...
Quote from: LoungeLizard on May 19, 2024, 04:28 PMOr they don't grow and need to meet capital requirements via another shareholder handout. Grow or not grow HGH have only ever been able to sustain their business and pay a dividend by doing periodic cap raises. That isn't going to change in my opinion as HGH's are an increasingly capital hungry business.
It's kind of amusing in a way, how the same bunch of people at each of the last two cap raises said exactly the same thing as they are now. All that has changed are the amounts. $1.76 was a great buy and $2 was just around the corner. 18 months later they are saying $1 is a great buy and....$2 is just around the corner. And at the next cap raise in 2 years time it will be 80c, what a great buy etc etc. Maybe HGH stands for Hopeful Ground Hog?
Which Australian bank (name any one) does not raise capital on a regular basis? It is the very nature of their business!
Comes down to how they use that money and that's for each investor to assess. I am comfortable HGH's CR this time round is entirely appropriate. More on that later.
I certainly enjoy & welcome reading posts like yours & others who question and challenge our views (keeps one's impulse to buy 'cheap' in check).
Remember the point of a discussion site and forum like ST should not be victory but progress.
Quote from: Waltzing on May 20, 2024, 09:26 AMHGH reverse M could take off in the years ahead as people realise they have a new option when they reach a certain age and they are debt free...
More room in the NZ property market for the company that can manage to make money off this specific under marketed product cat...
The issue is when do the other banks decide to hit this Reverse Mortgage market, targeting a very lucrative market. Lots of baby boomer keen to release capital for oversea trips.
Sir B has done the numbers and it looks like a time related decision as which wins , the RM or the DMF...
How much your borrow and the debt free CV of the property.
Big untapped market for sure with such high valuations likely to continue.
Quote from: Syd on May 19, 2024, 06:27 PMWow Man, Lizard , give it a rest you like a broken record and no skin in the game either ................endless negativity
there's a lot of holders including myself took a bath with this stock and they don't need reminding every 5 minutes .
Its onwards and upwards from here .
Disc : Holding & buying. 8)
You took a bath from HGH and you don't want others to comment that you risk taking another bath? Ok, got that.
Enjoy the suds.
Off Topic but related to BANKS and Stable economic conditions.
Long term the economy will hopefully recover into something where investors can over the long term relax a little more,,,
Two massive economy disturbances in just over a decade... GFC and the Biggest Global Financial BreakDown maybe ever...
Hopefully the next decade will be a bit better but if CHINA invades TW there is more to come...
Peace people...Peace.. is what we need...
Quote from: Basil on May 19, 2024, 09:44 PMAverage of professional analysts is for eps in FY24 of 11.7 cps, FY25 13.2 cps and FY26 16.05 cps.
You may need to keep up. HGH has had two significant downgrades in estimates in the last couple of months. Current analyst estimates (4 analysts) is 12c FY24, 12c FY25 and 15c FY26.
Quote from: Minimoke on May 20, 2024, 12:15 PMThe issue is when do the other banks decide to hit this Reverse Mortgage market, targeting a very lucrative market. Lots of baby boomer keen to release capital for oversea trips.
They won't. They exited this market for a reason. Also the Australian Govt provides a reverse mortgage service. Hard to compete with the Government.
Quote from: Basil on May 20, 2024, 10:20 AMI'm calling it, the bottom is in at 96 cents where I bought quite a few more last week. Onward and upward from here.
TBF you also called the previous bottom around $1.16 prior to the cap raise
Quote from: KW on May 20, 2024, 01:40 PMYou may need to keep up. HGH has had two significant downgrades in estimates in the last couple of months. Current analyst estimates (4 analysts) is 12c FY24, 12c FY25 and 15c FY26.
Got a link to that info ?
I'm going off market screener https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
re: RM market "Hard to compete with the Government. "
but is the local NZ GOVT likely to do the same? prob not?
Quote from: Basil on May 20, 2024, 03:00 PMGot a link to that info ?
I'm going off market screener https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
No, its the info Interactive Brokers provides in its trading software, not an external link.
Quote from: Waltzing on May 20, 2024, 03:06 PMre: RM market "Hard to compete with the Government. "
but is the local NZ GOVT likely to do the same? prob not?
Going by the number of retirees posts on "Kiwis Moving To Aussie" there won't be many pensioners left in NZ ;D
Screenshot 2024-05-20 155008.png
Who hasnt got cousins living there already and some for the last 40 years ...
In fact many european families may have had great grand parent come through AUS to the Colony of NZ.
Yes it looking like a place where you also want to do business,,,
Quote from: KW on May 20, 2024, 03:51 PMGoing by the number of retirees posts on "Kiwis Moving To Aussie" there won't be many pensioners left in NZ ;D
Screenshot 2024-05-20 155008.png
Do you realise that HGH already has a dominant 43% market share of the Australian reverse mortgage market so whether Jack and Jill or John and Jenny live here or there it makes no difference? The way some of the negative Nancie's ramble on endlessly on here, you'd think their acquisition of Challenger bank and expansion in Australia was a brand new venture.
YUP am NN for sure but for other reasons and those are global ones not local...
Quote from: KW on May 20, 2024, 01:42 PMAlso the Australian Govt provides a reverse mortgage service. Hard to compete with the Government.
Oz government RM competition vill do a regular pension. But not 'lump zum' like Heartland.
RB
Quote from: KW on May 20, 2024, 03:48 PMNo, its the info Interactive Brokers provides in its trading software, not an external link.
Which is how I believe Marketscreener obtains its information.
So Marketscreener is incorrect?
Market screener is an average of 3 analysts, interactive brokers 4, (suggests to me Market screener does not get their data from interactive brokers).
Looking at FY25 as an example, Market screener's 3 analysts projecting 13.23 cps earnings (total of 3 analysts 39.69 cps.
If interactive brokers are at 12.0 cps for 4 analysts, total 48 cps so that suggests whoever the fourth analyst is they are projecting eps of just 8.31 cps (48-39.69) eps for FY25 when the average of the other 3 analysts is 13.23 cps.
Doesn't make any sense or look in any way credible to me. Maybe the fourth analyst is Morningstar lol
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Further, using the same data sourced, (Market Screener) HGH share price can go up 84% from its current level just to trade in line with the peer group I have used for the last decade+. (Over more than a decade I have observed it normally trades within a 1-2 PE discount or premium to that peer group.)
I couldn't care less if others don't think the peer group I have chosen is relevant, I know from long experience it is.
I think HGH shares are not without risk for sure, but they are at an unprecedented discount to the peer group I track and that makes them a strong buy in my book. Buy in gloom, sell in boom, it's a very simple and highly effective strategy I have used for over a decade.
Quote from: Basil on May 21, 2024, 09:43 AMMarket screener is an average of 3 analysts, interactive brokers 4, (suggests to me Market screener does not get their data from interactive brokers).
Looking at FY25 as an example, Market screener's 3 analysts projecting 13.23 cps earnings (total of 3 analysts 39.69 cps.
If interactive brokers are at 12.0 cps for 4 analysts, total 48 cps so that suggests whoever the fourth analyst is they are projecting eps of just 8.31 cps (48-39.69) eps for FY25 when the average of the other 3 analysts is 13.23 cps.
Doesn't make any sense or look in any way credible to me. Maybe the fourth analyst is Morningstar lol
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Further, using the same data sourced, (Market Screener) HGH share price can go up 84% from its current level just to trade in line with the peer group I have used for the last decade+. (Over more than a decade I have observed it normally trades within a 1-2 PE discount or premium to that peer group.)
I couldn't care less if others don't think the peer group I have chosen is relevant, I know from long experience it is.
I think HGH shares are not without risk for sure, but they are at an unprecedented discount to the peer group I track and that makes them a strong buy in my book. Buy in gloom, sell in boom, it's a very simple and highly effective strategy I have used for over a decade.
HGH needs to bed in the last two acquisitions (Stockco and Challenger Bank) fully before the market will embrace the stock again and value it in line with its banking peer. Will be 2025/26 before that happens imo. Watch then for the PE and valuation multiple expansion which is of course the biggest driver of a share price.
Just an observation as well for those who are contemplating HGH as an investment - the real action does not start until ASX opens. Fair bit of the placement stock went to Australian institutions and they appear to be the flippers, selling the placement stock for a quick gain.
Quote from: Teitei on May 21, 2024, 10:36 AMHGH needs to bed in the last two acquisitions (Stockco and Challenger Bank) fully before the market will embrace the stock again and value it in line with its banking peer. Will be 2025/26 before that happens imo. Watch then for the PE and valuation multiple expansion which is of course the biggest driver of a share price.
Just an observation as well for those who are contemplating HGH as an investment - the real action does not start until ASX opens. Fair bit of the placement stock went to Australian institutions and they appear to be the flippers, selling the placement stock for a quick gain.
I think it maybe more simple when it comes to a positive market rerate of Hgh...me thinks the market has priced in a modest deterioration come next report so if that does not occur or is smaller decline than the market is participating up she goes also I suspect a meaningful reaction on Ann about quality of new CEO
Seriously? You both chose to go there
again after numerous warnings at the "other place" and here too I believe. You need to stop. It is nothing short of bullying and it shows you both up as nasty pieces of work, who have zero understanding of trauma and mental health. Breezy has been upfront and honest about the huge impact his decision had on his well-being, yet you continue to drag it up and use it for your own agenda.
I have hit the report button on both of you, and I seriously hope others will do the same. Your lack of empathy and compassion is blatantly obvious, as is your complete lack of integrity.
Quote from: Teitei on May 20, 2024, 08:37 AMBeagle and I tried very hard in unison to dissuade one poster to invest big on ATM ('go big or go home') when it was going through its downgrades.
Unfortunately we failed and the rest is history.
Quote from: Basil on May 20, 2024, 10:20 AMIt wasn't for lack of trying on our part, that's for sure mate !
HGH up 3 cents to $1.03 is very supportive of the contention that 96 cents was the bottom. Very pleased I bought lots more at that price.
"Some guy" said "Be fearful when others are greedy and greedy when others are fearful" Can anyone tell me who said that famous quote ?
Quote from: Basil on May 21, 2024, 01:39 PMHGH up 3 cents to $1.03 is very supportive of the contention that 96 cents was the bottom. Very pleased I bought lots more at that price.
"Some guy" said "Be greedy when others are fearful" Can anyone tell me who said that famous quote ?
Me?
Still selling around but the flippers are not panicking to get out now. Let's hope buyers do not pay up - allow the sellers to close out their positions at $1.00 and for HGH to build up a strong base at $1.00 to rise higher from.
Quote from: Untamed on May 21, 2024, 01:12 PMSeriously? You both chose to go there again after numerous warnings at the "other place" and here too I believe. You need to stop. It is nothing short of bullying and it shows you both up as nasty pieces of work, who have zero understanding of trauma and mental health. Breezy has been upfront and honest about the huge impact his decision had on his well-being, yet you continue to drag it up and use it for your own agenda.
I have hit the report button on both of you, and I seriously hope others will do the same. Your lack of empathy and compassion is blatantly obvious, as is your complete lack of integrity.
For fxxk's sake, I did not even know who Breezy is but now, I guess I do.
Also, it was in the context of Beagle and I ever agreeing on something.
Yep got a bit of overhang to get through yet.....about 5m shares by my count
Quote"Some guy" said "Be greedy when others are fearful" Can anyone tell me who said that famous quote ?
Me?
Warren Buffett
Quote from: snapiti on May 21, 2024, 01:53 PMYep got a bit of overhang to get through yet.....about 5m shares by my count
No need to pay up just yet.
Quote from: Basil on May 21, 2024, 02:01 PMWarren Buffett
But of course, Beagle.
He also said to make your investment decisions really matter - make it worthwhile as great investments are hard to find. So make them count.
Quote from: Teitei on May 21, 2024, 02:11 PMBut of course, Beagle.
He also said to make your investment decisions really matter - make it worthwhile as great investments are hard to find. So make them count.
Yeap, I bought a good sized extra amount at 96 cents the other day. Bought even more TRA the other day too @ $3.90. Be greedy when others are fearful.
and what did SOROS say? https://www.theatlantic.com/business/archive/2010/06/go-for-the-jugular/57696/
https://www.youtube.com/watch?v=q4k8SGmJqIA
NZ not likely to see normalisation of the OCR until 2027 unless you think the central bank has got it wrong...
Quote from: Waltzing on May 21, 2024, 03:03 PMand what did SOROS say? https://www.theatlantic.com/business/archive/2010/06/go-for-the-jugular/57696/
https://www.youtube.com/watch?v=q4k8SGmJqIA
NZ not likely to see normalisation of the OCR until 2027 unless you think the central bank has got it wrong...
Same front running George Soros who got his backside kicked by Mahathir of Malaysia? And ending losing billions of dollars for his mug followers?
Off TOPIC but related market pressures from GME's (global macro event thingees)
Dont not know about that one .. but the questions is will the global growth pull the NZX and ASX upwards putting a floor into the market this year making this the bottom for the likes of HGH and TRA and others...
https://www.abc.net.au/news/2006-12-15/malaysian-ex-premier-mahathir-and-billionaire/2154878
Quote from: Teitei on May 21, 2024, 02:11 PMBut of course, Beagle.
He also said to make your investment decisions really matter - make it worthwhile as great investments are hard to find. So make them count.
I see Bull just announced on the other channel that he's just got in. No wonder Heartland is rated BBB. The old team of Balance, Beagle and Bull is back !
Quote from: Teitei on May 21, 2024, 02:01 PMNo need to pay up just yet.
I have bought a chunk @ $1, not trying to bottom pick that's a mugs game, just think it's a good entry point created by a number of things that have created a oversold position.
Looking forward to the new CEO being announced (really think the caliber will be seen as a positive by the markets)also looking forward to the 6 monthly although a little circumspect about that
Quote from: Untamed on May 21, 2024, 01:12 PMSeriously? You both chose to go there again after numerous warnings at the "other place" and here too I believe. You need to stop. It is nothing short of bullying and it shows you both up as nasty pieces of work, who have zero understanding of trauma and mental health. Breezy has been upfront and honest about the huge impact his decision had on his well-being, yet you continue to drag it up and use it for your own agenda.
I have hit the report button on both of you, and I seriously hope others will do the same. Your lack of empathy and compassion is blatantly obvious, as is your complete lack of integrity.
I want to thank you publicly for having the guts and integrity to call this out. Of the 2 posters that commented on my situation yesterday one of them quite some time ago promised to never make reference to or mention this situation again, he has broken that promise and he knows who he is. Before making glib/smug/random comments about a situation that took someone right to the edge think about how you would feel in the same circumstances, some others that went through a similar level of loss to myself sadly did not make it out the other side. It may be historic in a time sense but its effects are still very real on a daily basis and will continue to be so and thats something I have to live with so please don't use someone else's tragedy to score brownie points and make yourselves look better.
Solid gains in dairy prices latest Global auctions
4th auction in a row we've seen rises after a series of decline
Bodes well for Heartland share price over next few months....there is a correlation between the two
Yeap, onward and upward from here, the metrics are truly compelling. Average analyst eps for FY26 is 16 cps.
That's a PE of only 6.25 at $1.00 which is nuts. Could rerate to $1.50 by mid next year and still only be on a forward PE of 9.4, which is still dirt cheap.
A license to print money for anyone with the gonads to see through to the other side of all the negativism and nonsense that's all pervasive with this stock.
Quote from: Basil on May 22, 2024, 10:43 AMYeap, onward and upward from here, the metrics are truly compelling. Average analyst eps for FY26 is 16 cps.
That's a PE of only 6.25 at $1.00 which is nuts. Could rerate to $1.50 by mid next year and still only be on a forward PE of 9.4, which is still dirt cheap.
A license to print money for anyone with the gonads to see through to the other side of all the negativism and nonsense that's all pervasive with this stock.
Says the man who ignored "the nonsense" and bought in before TWO cap raises that sent the SP plunging ::)
Had a good long chat about HGH with a friend last night, (former holder). There's a lot of bitterness about how things played out with the latest capital raise. I think many are struggling to get over their resentment of past losses. Sure, I'm down a bit recently but it's been such a rewarding stock to me before that, I can very easily get over that, unlike some people who are obviously struggling. Controlling your emotions is one of the hardest things with investing, so says Warren Buffett. Maybe it's easier for me being a numbers man or maybe it's the 40 years+ experience, but I am finding it much easier these days to rid myself of emotional baggage when making investment decisions. The numbers either make a compelling case for investment or they don't, it really is that simple.
TA a useful tool but it's not the be all and end all of investing that some make it out to be.
Quote from: Basil on May 22, 2024, 11:40 AMHad a good long chat about HGH with a friend last night, (former holder). There's a lot of bitterness about how things played out with the latest capital raise. I think many are struggling to get over their resentment of past losses. Sure, I'm down a bit recently but it's been such a rewarding stock to me before I can very easily get over that, unlike some people who are obviously struggling.
Not sure who you are referring to - maybe you're confusing constructive criticism with bitterness? Many of us who saw the writing on the wall at the cap raise of $1.76, decided not to participate and took our profits off the table. History shows that that was the right thing to do. If there is any bitterness I would have thought it would be from those who refused to read the writing on the wall, stayed in and participated and saw their capital decline by 35% in a matter of months. Then, as the SP stabilised at around $1.20-$1.30 (drawing some people in again) the latest cap raise brought us to where we are now - around $1. If you are a holder, then not being bitter at a decline in the SP of over 50% in 18 months would take some doing I would have thought.
As for HGH's future it still all lies in the balance. No stock is "a licence to print money" particularly a cyclical stock like a bank. We may or may not be at the bottom of the cycle, but I think we'll be in that trough for some time yet. If the Challenger gamble pays off then yes, eventually HGH will come right - in about 2-3 years. If it doesn't then the negative effect will be felt immediately. The risk is greater than the reward in other words.
I'll say it again - the next report will be crucial for HGH, on the back of a poor mid year report. Until then, keeping one's powder dry is the smart thing to do imo.
I've done exceptionally well over the last decade + with HGH after a number of correct calls involving significant volume. Very happy to keep backing myself. In time, the substantial extra number I bought the other day at 96 cents will prove to be an inspired decision, I think the likelihood of that is very high.
But yeah, nobody is good enough to get every call right so as they say, time will tell.
Quote from: Basil on May 22, 2024, 12:23 PMI've done exceptionally well over the last decade + with HGH after a number of correct calls involving significant volume. Very happy to keep backing myself. In time, the substantial extra number I bought the other day at 96 cents will prove to be an inspired decision, I think the likelihood of that is very high.
But yeah, nobody is good enough to get every call right so as they say, time will tell.
Pride comes before a fall. Like when the SP was "surging" and you topped at $1.23...
Quote from: Basil on May 22, 2024, 12:23 PMI've done exceptionally well over the last decade + with HGH after a number of correct calls involving significant volume. Very happy to keep backing myself. In time, the substantial extra number I bought the other day at 96 cents will prove to be an inspired decision, I think the likelihood of that is very high.
But yeah, nobody is good enough to get every call right so as they say, time will tell.
I suppose this depends on your timeline Basil. I do remember you called OCA as a long term hold and told others they didn't know what they were talking about.
Your Philosophy goes both ways Basil. Some see long term value when others don't. Personally if you hold HGH for next 5 years I suspect you will do very well and be proven to be correct given this is close to bottom assuming it hasn't already hit this.
I believe I will do very well in OCA over the next 5 years past Fridays result which will be blah again.
Good Luck with your Investment Philosophy.
Looking at the debate that goes on here, it's pretty clear that HGH has become a traders stock - declaring lows, ramping it up but always with one eye on either averaging down or heading for the exit door.
This doesn't appeal to me, but if that's your game then good luck. Just don't try and sell HGH 2.0 as a sure fire growth stock because it clearly isn't. Just ask any holder over the last 5 years.
As a conservative investor, the risk-reward ratio of HGH 2.0 is too high and because the risk is very much here and now, but the reward is somewhere over the rainbow. There's also the necessity - and insecurity - of watching what the next announcement may bring. Who needs to spend their day with a finger hovering over the sell button? Especially when there's blue chip stocks that have offered pretty much continuous - and in some cases, spectacular - growth over the last 10 years.
I just don't see the attraction of rolling the dice on HGH, at least not until the TA worm begins to turn.
Quote from: LoungeLizard on May 22, 2024, 12:55 PMPride comes before a fall. Like when the SP was "surging" and you topped at $1.23...
Talking from experience?
Look, we have heard your story - and in the meantime the discussion is not just moving in circles, but spiralling down to cheap personal shots.
Nobody can predict the future. Beagle outlined his view and backed it up with working assumptions - and you are highlighting some risks pointing to past events (linear extrapolations do have their limits though ;) ), which may or may not be around.
Weighing these risks vs these opportunities is what investing is about. All have certain likelihoods - and nobody can measure them in advance - so what's the fuzz about? All we know is with the benefit of hindsight whether they happened or not. Up to each individual how to rate the opportunities against the risks.
I don't know what makes you so bitter, but personal attacks prove nothing (apart from telling us about the attacker) and never improve the dialogue.
weighed up risks from points of view.. yes BP reminds us that sometime we get it right and sometimes ....
and probably even when the numbers look good it can all go to pot...
Quote from: BlackPeter on May 22, 2024, 01:30 PMTalking from experience?
Look, we have heard your story - and in the meantime the discussion is not just moving in circles, but spiralling down to cheap personal shots.
Nobody can predict the future. Beagle outlined his view and backed it up with working assumptions - and you are highlighting some risks pointing to past events (linear extrapolations do have their limits though ;) ), which may or may not be around.
Weighing these risks vs these opportunities is what investing is about. All have certain likelihoods - and nobody can measure them in advance - so what's the fuzz about? All we know is with the benefit of hindsight whether they happened or not. Up to each individual how to rate the opportunities against the risks.
I don't know what makes you so bitter, but personal attacks prove nothing (apart from telling us about the attacker) and never improve the dialogue.
Not bitter at all - that is my point. Just trying to provide some balance which, on a small forum, can become an echo chamber.
Cheap shots? Not really - just trying to prevent a bit of revisionism going on here. It's strange though that posters who are very assertive in their style, often telling others what they should and decrying them when they don't, tend to be very thin skinned themselves. Call it the Donald Trump effect...
Quote from: Greekwatchdog on May 22, 2024, 01:07 PMI suppose this depends on your timeline Basil. I do remember you called OCA as a long term hold and told others they didn't know what they were talking about.
Almost everyone bought the story early on so eloquently told by Earl Gasparich that their business transformation program was going to radically improve returns on care. It hasn't. I woke up and smelled the coffee more than 2 years ago and sold out, (mostly at $1.40), made six figures, (has anyone else on here done that well out of that stock), and the rest, so far is history. Good luck with it.
My average buy back in price with HGH currently sits at $1.07. I'm very confident over the next few years that I will do well out of it. Maybe a bit too confident based on very substantial success with the stock before...time will tell.
I think everyone's expressed their viewpoint in a very "robust" way for now. I'm happy to let the HGH share price do the talking for a while.
I did not know that DT had a track record of actually ADDING UP correctly...
and this a thread about a BANK....
back to bank NIMs in a high OCR town... what is the expected NIM in 25 for this BANK.
YUP more HIKES..maybe. we printied to much money on our money tree and you BANKS lent the lot ....
https://www.interest.co.nz/economy/127861/reserve-bank-has-left-official-cash-rate-unchanged-55-noting-domestic-inflation-slow
HIGHER FOR LONGER!!!!!
Quote from: Waltzing on May 22, 2024, 04:16 PMYUP more HIKES..maybe. we printied to much money on our money tree and you BANKS lent the lot ....
https://www.interest.co.nz/economy/127861/reserve-bank-has-left-official-cash-rate-unchanged-55-noting-domestic-inflation-slow
HIGHER FOR LONGER!!!!!
Had a chat with one of my banking contacts yesterday regarding interest rates outlook and as an aside, his view on HGH.
They (the bank which btw is an international bank, not one of the locals) believe that the RBNZ has well and truly misread the weak state of the NZ economy and is well behind the curve. They are observing many very weak points already apparent in the economy (financial stress, retail spending, recession despite record net migration, weak property prices, declining tax take, increased unemployment despite record migration to Australia and big increases in insolvencies and receiverships) and are concerned that the RB will overdo using high interest rates to crunch inflation.
Especially when inflation is already heading lower (annualized March quarter was 2.4%) and will continue to go lower due to the above weak points. Domestic inflation being targeted by the RB is unlikely to come down in a big hurry given it's ever increasing local council rates, government charges and household servicing costs like insurance driving costs increases.
Net net, they believe the RB is going to have to cut rates sooner than later and cut sharply. He likened the RB to a drunken driver in charge of the monetary policy car driving along a windy road!
AS for HGH, his view (not the bank) is that buying Challenger Bank makes a lot of sense for one strong and compelling reason - access to cheaper funds courtesy of the Australian FCS deposit guarantee scheme. Australians do place their funds up to $250,000 with different banks to take advantage of the guarantee, say $250k with 4 banks than $1m with 1 bank. He thinks that's something which has been missed by many in the market.
if the above banker is correct - thats a HARD LANDING
https://www.nzherald.co.nz/business/listen-live-finance-minister-nicola-willis-on-latest-ocr-decision/7GUJDGJUUNFU5K3Y3JYWZ3P3H4/
Found this interesting
https://www.afr.com/companies/financial-services/why-former-apra-exec-geoff-summerhayes-is-targeting-reverse-mortgages-20240519-p5jeqr
Jeez CBA.ASX trading on a PE of 22 ...and brokers have them as a sell
If HGH had a PE of 22 shares would be about $2.60 ...and I'd probably be selling
Interesting article though
https://www.marketindex.com.au/news/is-it-wise-to-buy-cba-shares-at-their-record-high
Same rational applies to HGH ...buy at low multiples and get excessive returns etc
175,0000 at $0.975 late Friday.
Maybe some news soon, like their shiny new CEO appointment..... or what they find in the Challenger bank cupboards etc.. or do we need to wait till August for their FY24 results announcement?
I just bought in also. No lazy reptile will convince me otherwise.
Quote from: raW tent Buffer on Jun 11, 2024, 05:49 PMI just bought in also. No lazy reptile will convince me otherwise.
Welcome to the forum ... and cheers for throwing all your mana behind HGH :) ;
Not sure though, I understand the lazy reptile bit ... but maybe you could enlarge on which of HGH's many strengths convinced you to buy in?
Craig's have HGH as number 3 on current high conviction list income/defensive.
Say trading below fair value.
Quote from: Shareguy on Jun 12, 2024, 11:35 AMCraig's have HGH as number 3 on current high conviction list income/defensive.
Say trading below fair value.
What's one and two on the list please
Quote from: BlackPeter on Jun 12, 2024, 08:46 AMWelcome to the forum ... and cheers for throwing all your mana behind HGH :) ;
Not sure though, I understand the lazy reptile bit ... but maybe you could enlarge on which of HGH's many strengths convinced you to buy in?
They have the same NZX code as my favorite dietary supplement.
It was a reference to LoungeLizard.
Heartland to the moon!
Joking aside I first bought in at the COVID dip, sold at the first CR and now consider it a good value buy for the long term. I managed to buy shares at 97c in the mid 5 figures. I bought because I like their acquisition of CB and the opportunities that presents. How that goes I'm excited to see.
Thanks for the posts all, was good to read through the comments both for and against dipping into HGH now, as with the other forum topics (coming from an unfortunate ATM holder at DCA ~$9).
Quote from: snapiti on Jun 12, 2024, 12:15 PMWhat's one and two on the list please
(1)MCY (2) CEN
Top growth
(1) SKO (2) ATM (3) SKL (4)VGL (5) FPH
Quote from: raW tent Buffer on Jun 12, 2024, 01:20 PMThey have the same NZX code as my favorite dietary supplement.
I see. You have a background in molecular biology? This would help as well to understand your avatar ...
Quote from: raW tent Buffer on Jun 12, 2024, 01:20 PMJoking aside I first bought in at the COVID dip, sold at the first CR and now consider it a good value buy for the long term. I managed to buy shares at 97c in the mid 5 figures. I bought because I like their acquisition of CB and the opportunities that presents. How that goes I'm excited to see.
Sounds like the first part of your strategy worked quite well ... and I can understand the excitement looking into the future. While no investment is without risks, assuming there are no hidden skeletons surfacing in the Challenger acquisition - I am pretty sure HGH won't have to complain about lack of demand for their REM products.
Discl: holding (and participated in the recent CR).
Quote from: BlackPeter on Jun 12, 2024, 03:59 PMThis would help as well to understand your avatar ...
It's an anagram.
This thread is the most viewed one on the forum, with over 66,000 views :o
Lots to discuss and consider with HGH while Stocktalk has existed. It seems to avoid derailing like other threads :-X
In another forum this person had this to say about Heartland
-+-+-+-+-
"If you are concerned about bank stability check out the Reserve Bank Dahboard.
https://bankdashboard.ronz.govt.nz/summary
I have concerns about the financial stability of Heart Land bank at the moment."
Then someone asked this poster to expand on this comment.
His reply
"They have non-performing loans of 3.8%. These are loans that people may not pay back.
That number is high.
Their reserve asset ratio has dropped to 13.8%. That is how much money they have to actually back deposits people have made. This is low.
If those loans go bad then their backing is only 10%.
At 9% the Reserve Bank will be required to step in and place them under administration.
This is when it gets really bad. This would be the last chance to try and save the bank before it fails.
If even 1% of their customers tried to withdraw funds they would be in a very pre-carious situation.
This is all my opinion. You need to do your own due diligence."
-+-+-+-+-
Not a lot of positive energy for this company at the moment.
https://bankdashboard.rbnz.govt.nz/summary
Quote from: Bob50 on Jun 15, 2024, 08:38 AMIn another forum this person had this to say about Heartland
-+-+-+-+-
"If you are concerned about bank stability check out the Reserve Bank Dahboard.
https://bankdashboard.ronz.govt.nz/summary
I have concerns about the financial stability of Heart Land bank at the moment."
Then someone asked this poster to expand on this comment.
His reply
"They have non-performing loans of 3.8%. These are loans that people may not pay back.
That number is high.
Their reserve asset ratio has dropped to 13.8%. That is how much money they have to actually back deposits people have made. This is low.
If those loans go bad then their backing is only 10%.
At 9% the Reserve Bank will be required to step in and place them under administration.
This is when it gets really bad. This would be the last chance to try and save the bank before it fails.
If even 1% of their customers tried to withdraw funds they would be in a very pre-carious situation.
This is all my opinion. You need to do your own due diligence."
-+-+-+-+-
Not a lot of positive energy for this company at the moment.
Why are you hiding behind an anonymous poster on some "other forum"? What do you think?
I assume you realize that "non-performing" loans are not equivalent to losses. It just means that whoever took the loan is late with at least one repayment. It certainly does not mean that the bank will lose everything, and it does not mean either the bank will lose anything. I am sure you are aware that banks tend to ask for securities if they give you money. They use these securities later to recover the money. Sure - sometimes this does not work (or does not cover everything), but the average loss will be significantly less than 100%
Not sure about this other statement of this anonymous poster you choose to repeat either.
A good bank makes sure that the terms of any credits are aligned with the terms of deposits - and long term credits are covered by long term deposits.
So - what exactly is the argument - that people with long term deposits want their money back before it is due?????
Maybe you should ask you mysterious anonymous source from the other channel whether they checked the ratio of short term to long term borrowing and lending? If that's out of kilter, than we should be worried, but I am not aware of that. Could you please clarify?
Quote from: Bob50 on Jun 15, 2024, 09:24 AMhttps://bankdashboard.rbnz.govt.nz/summary
I think points to note are:-
In general I agree with the general thrust of BP's post above. Additionally,
Those metrics were as at 31 March 2024 and there's been a capital raise since then.
It's interesting and probably much more than a coincidence that Rabobank who are a specialist rural lender have a very similar level of nonperforming loans.
Feedback from clients suggests it's been a very tough year on the farm with substantial increases in input costs.
My understanding is that a lot of Heartland's rural loans are secured over livestock.
Livestock are a very readily sellable commodity.
I remain of the view the metrics on Heartland make a robust case for investment and I am positioned accordingly with a ~ 5% portfolio position. When we start to get some green shoots and with TA support, I am favorably inclined towards increasing this. Yes, we're scraping along the bottom of the economic cycle and probably will be for at least the rest of this year and perhaps some of 2025, but we're not going to be in the doldrums forever.
The quote is from the Reddit financial forum. I doubt if he is any form of expert,
I posted it as an example of the negativity currently surrounding this stock.
The poster clearly got his talking points from the rbnz site.
I am curious what the more experienced investors here think of his view and can discredit them as I am somewhat sour on this stock with its collapse in value.
My view is that this bank survived the 2007 financial meltdown and is in a better position now.
Investors have poured money into them recently with the capital raises. Making it secure and showing faith for the future.
I believe now is a good buying and have been doing so. It now makes up 11% of my portfolio and I have term deposits with them as well.
Quote from: Basil on Jun 15, 2024, 01:00 PMIt's interesting and probably much more than a coincidence that Rabobank who are a specialist rural lender have a very similar level of nonperforming loans.
Feedback from clients suggests it's been a very tough year on the farm with substantial increases in input costs.
My understanding is that a lot of Heartland's rural loans are secured over livestock.
Livestock are a very readily sellable commodity.
AAC recently reported they had to write down the value of their livestock by 20%. This will be industry wide.
"Cattle prices hit a four year low in FY24, leading to a downward unrealised mark-to-market fair value adjustment in the herd of $149.4m. This resulted in a Statutory Net Loss After Tax of $94.6m and a negative statutory EBITDA of $87.9m, both down on pcp."
Quote from: KW on Jun 15, 2024, 02:16 PMAAC recently reported they had to write down the value of their livestock by 20%. This will be industry wide.
"Cattle prices hit a four year low in FY24, leading to a downward unrealised mark-to-market fair value adjustment in the herd of $149.4m. This resulted in a Statutory Net Loss After Tax of $94.6m and a negative statutory EBITDA of $87.9m, both down on pcp."
Ze reason a varmer borrows to buy livestock, eez because a varmer eez an expert at 'vattening up animals'.
If zhey eencrease ze veight of a bobby calf by vifty percent een six months BUT ze price of cattle valls by twenty percent over zhat same timeframe, THEN ze net gain vill be:
1.5 x (1-0.2) = 1.2
Zo ze zecurity of ze livestock lender has gone
up by 20%,
not down by 20% as a zuperficial reading of ze headline numbers might lead you to expect.
RB
Quote from: Bob50 on Jun 15, 2024, 01:02 PMThe quote is from the Reddit financial forum. I doubt if he is any form of expert,
I posted it as an example of the negativity currently surrounding this stock.
The poster clearly got his talking points from the rbnz site.
I am curious what the more experienced investors here think of his view and can discredit them as I am somewhat sour on this stock with its collapse in value.
My view is that this bank survived the 2007 financial meltdown and is in a better position now.
Investors have poured money into them recently with the capital raises. Making it secure and showing faith for the future.
I believe now is a good buying and have been doing so. It now makes up 11% of my portfolio and I have term deposits with them as well.
Investors poured money into at least 5 capital raises. For their show of faith they saw, each time, their capital being eroded. This is how HGH have operated - and facilitated dividends - for donkeys years. I rather suspect we haven't seen the last of the CR's either.
HGH is like any other stock - it has its supporters and its detractors. Each can point towards "metrics" to support their views. What is unarguable is that the market as a whole has become very wary of it and suspicious of the claims that "this time it's different." The TA doesn't lie. Nor does the share price - stuck just below or above the CR price, and less than half of what it was a couple of years ago.
Until Jeffs profit projections start to come true, I don't see any reason to invest in HGH. I can't see the upside in rolling the dice on such an erratic stock with such a terrible history of capital raises that destroy shareholder wealth, when there's much better and safer blue chip stocks that are currently seriously undervalued.
Quote from: KW on Jun 15, 2024, 02:16 PMAAC recently reported they had to write down the value of their livestock by 20%. This will be industry wide.
"Cattle prices hit a four year low in FY24, leading to a downward unrealised mark-to-market fair value adjustment in the herd of $149.4m. This resulted in a Statutory Net Loss After Tax of $94.6m and a negative statutory EBITDA of $87.9m, both down on pcp."
I heard from a cocky that they are only getting $60/lamb compared to $120+ over the last few years. Holding security of stock that has halved in value will be putting pressure on things... also the banks are also starting to put some real pressure on farmers.
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
FY25 starts in a couple of weeks. Average analyst view is PE of 7.5% and yield of 11.2% (I have grossed this up for imputation credits which most people find useful)
FY26 average forecast is PE of only 6.2 and gross yield of 13.3% (Average PE over the last 5 years is 12.1)
Not suggesting its without risk by any means but I am struggling to recall the last time I saw a company on the NZX with genuine growth prospects in the years ahead trading on such compelling metrics.
HGH has a long history of high beta and its prospects are inextricably tied to the economy. A well-used cliche, but seems appropriate here, it's always darkest before the dawn. Sentiment here and elsewhere and the economic indicators suggest to me we are trading through the darkest period at present.
I'm still hopeful of some emerging green shoots early in 2025. Average broker target price is $1.37
If they achieve the FY26 eps target of 16 cps and the economy is improving, we might see this recover to a normal PE of 12.1 on 16 cps = $1.94 by 2026.
I can understand why others might want to wait until TA suggests it's a buy.
Those numbers on RBNZ website are for Heartland Bank only ........ not Heartland Group Ltd which they are part off
Mind you Heartland Group would want Hesrtland Bank to go broke
RBO is big on farming...
note the high NZ capital ratio's are those T1? and MS Hellen Dervan still wants deposit insurance ....
Quote from: Ricky Bobby on Jun 16, 2024, 11:02 AMI heard from a cocky that they are only getting $60/lamb compared to $120+ over the last few years. Holding security of stock that has halved in value will be putting pressure on things... also the banks are also starting to put some real pressure on farmers.
How can an animal that vas not even born at ze last valuation date have 'halved in value'?
RB
Quote from: LoungeLizard on Jun 15, 2024, 05:01 PM...
HGH is like any other stock - it has its supporters and its detractors. Each can point towards "metrics" to support their views. What is unarguable is that the market as a whole has become very wary of it and suspicious of the claims that "this time it's different." The TA doesn't lie. Nor does the share price - stuck just below or above the CR price, and less than half of what it was a couple of years ago.
...
Sure - nobody, neither me, nor Beagle nor you has any clue how the stock will develop. This is the thing with trying to predict the future, its just a fools game.
However reading your comments re trend and TA with - hmm - interest. Are you sure you don't want to rethink that? What you are saying is that one should buy stocks when they are dear (in order to agree with the market) and sell them when they are low (just to keep this market agreement aligned), which is clearly non-sense, but so often postulated in share forums.
Lets face it - the market demonstrated often enough that it has no clue how it will move either. Just look at all these once have been market darlings and wonder how right the market was for the people who bought e.g. ATM or SML or MPG or FBU or ... at a premium (hey, market used to agree that $12 is a really good price for SML, didn't it? Just imagine - that's what the infallible market said. Lets face it - market is not made up of super intelligent people, but out of a bunch of random people controlled as much by chemistry and reptile brain than by intelligence. Quite random, actually.
Your argument is absolutely pointless and just designed to rise the fear for unexperienced investors. TA describes the historical movements of a stampeding flock of sheep. Not more, and not less. Yes, it tells you what these sheep used to do over the last handful of moves, but it does not know more about where they are going from here than the guts of a freshly slaughtered lamb.
So - yes, there are risks with HGH (as well as with any other stock) and there are opportunities. If you look into the past (as you seem to like to do) you will find that most investors with HGH had a quite satisfactory return. Not stellar, but quite satisfactory. Well, this is what I got so far from HGH. And yes, I typically sold some (or even all) when they have been dear and bought some more when they have been cheap (like now). Obviously - you, me or anybody else can find time windows where investors made losses with HGH as well as time windows, where investors made significant gains. Not different to any other investment.
I guess it all depends on our investment strategy. Some (e.g. momentum investors) like to chase the herd - and yes, some of them even make money that way. Some like to invest based on fundamentals - and many make a satisfactory return that way. Some like to leave the investment decision to the market (index investors) - and they make as well (over time) a quite reasonable return ... and some like to follow the voices on some anonymous internet forum ... and I better don't share my view of how they are doing unless they add a ton of salt to the views.
HGH is currently cheap. So - sorry for not following your advise of buying dear and selling cheap, but hey - it works better for me to do it the other way around. Buffet would agree, but what would he know?
Quote from: BlackPeter on Jun 16, 2024, 04:33 PMSure - nobody, neither me, nor Beagle nor you has any clue how the stock will develop. This is the thing with trying to predict the future, its just a fools game.
However reading your comments re trend and TA with - hmm - interest. Are you sure you don't want to rethink that? What you are saying is that one should buy stocks when they are dear (in order to agree with the market) and sell them when they are low (just to keep this market agreement aligned), which is clearly non-sense, but so often postulated in share forums.
Lets face it - the market demonstrated often enough that it has no clue how it will move either. Just look at all these once have been market darlings and wonder how right the market was for the people who bought e.g. ATM or SML or MPG or FBU or ... at a premium (hey, market used to agree that $12 is a really good price for SML, didn't it? Just imagine - that's what the infallible market said. Lets face it - market is not made up of super intelligent people, but out of a bunch of random people controlled as much by chemistry and reptile brain than by intelligence. Quite random, actually.
Your argument is absolutely pointless and just designed to rise the fear for unexperienced investors. TA describes the historical movements of a stampeding flock of sheep. Not more, and not less. Yes, it tells you what these sheep used to do over the last handful of moves, but it does not know more about where they are going from here than the guts of a freshly slaughtered lamb.
So - yes, there are risks with HGH (as well as with any other stock) and there are opportunities. If you look into the past (as you seem to like to do) you will find that most investors with HGH had a quite satisfactory return. Not stellar, but quite satisfactory. Well, this is what I got so far from HGH. And yes, I typically sold some (or even all) when they have been dear and bought some more when they have been cheap (like now). Obviously - you, me or anybody else can find time windows where investors made losses with HGH as well as time windows, where investors made significant gains. Not different to any other investment.
I guess it all depends on our investment strategy. Some (e.g. momentum investors) like to chase the herd - and yes, some of them even make money that way. Some like to invest based on fundamentals - and many make a satisfactory return that way. Some like to leave the investment decision to the market (index investors) - and they make as well (over time) a quite reasonable return ... and some like to follow the voices on some anonymous internet forum ... and I better don't share my view of how they are doing unless they add a ton of salt to the views.
HGH is currently cheap. So - sorry for not following your advise of buying dear and selling cheap, but hey - it works better for me to do it the other way around. Buffet would agree, but what would he know?
I thought it was pretty obvious that all I was saying is "don't buy in a downtrend." - which HGH clearly is. TA isn't about a particular price point, cheap or dear. Those that tried to pick the bottom based on what they considered "value" but in doing so ignored the trend, have already been caught out. Staying out until the upswing is confirmed proved to be the right option. It still is.
Buffet's method is about assessing value, which I guess is your preferred method. Fair enough, over time perhaps HGH will prove itself to be undervalued. Just at the moment the market, as demonstrated by the TA doesn't believe that story. That's why I'm not interested in tie-ing up funds in a stock that is clearly stuck in a trough.
I've said it before - the end of year report is critical to get a sense of where HGH 2.0 is heading - it will either be a springboard for buying or it will deepen the trough. Happy to wait it out until then.
Just for another perspective. There is probably no global stock market that is more invested in banks than the ASX. Every analyst in Australia is effectively a bank analyst, simply because of the dominance of the banks in the ASX indices. If you want to know where the stock market is going, you have to know where the banks are going. And nobody loves their banks as much as ASX investors. Which is why they are always overpriced.
https://www.morningstar.com.au/insights/stocks/247374/is-cba-the-most-expensive-bank-in-the-world
So you have to wonder, considering that HGH is ASX listed, why Australian investors are steering clear of it. Why are Australian analysts not seeing what NZ retail investors are thinking they are seeing? Why arent the Aussies buying it with bells on if its such a good prospect.
Cant put it down to being a NZ company (like Turners or the retirement villages which also get no love on the ASX) as its primary business is now in Australia. Its an Australian bank. And in an overpriced and FOMO'd bank market, its being shunned. Why? I suspect we'll find out soon enough.
Quote from: KW on Jun 17, 2024, 03:03 PMJust for another perspective. There is probably no global stock market that is more invested in banks than the ASX. Every analyst in Australia is effectively a bank analyst, simply because of the dominance of the banks in the ASX indices. If you want to know where the stock market is going, you have to know where the banks are going. And nobody loves their banks as much as ASX investors. Which is why they are always overpriced.
https://www.morningstar.com.au/insights/stocks/247374/is-cba-the-most-expensive-bank-in-the-world
So you have to wonder, considering that HGH is ASX listed, why Australian investors are steering clear of it. Why are Australian analysts not seeing what NZ retail investors are thinking they are seeing? Why arent the Aussies buying it with bells on if its such a good prospect.
Cant put it down to being a NZ company (like Turners or the retirement villages which also get no love on the ASX) as its primary business is now in Australia. Its an Australian bank. And in an overpriced and FOMO'd bank market, its being shunned. Why? I suspect we'll find out soon enough.
The reverse mortgage business aside, it may be that OZ investors are a bit wary of another digital bank given that a few have gone under and the SP of listed one's like Judo doesn't inspire much confidence (IPO of $2.10 in 2021 and currently trading around $1.40)
Plus there is quite a few digital banks already on the scene, some offering better rates than HGH. It's an extremely competitive business and it's going to take time for HGH to prove itself as anything different to what is already there.
Shareprice tanking today
Maybe LayBuy going broke having an impact on sentiment
Quote from: LoungeLizard on Jun 17, 2024, 03:30 PMThe reverse mortgage business aside, it may be that OZ investors are a bit wary of another digital bank given that a few have gone under and the SP of listed one's like Judo doesn't inspire much confidence (IPO of $2.10 in 2021 and currently trading around $1.40)
Plus there is quite a few digital banks already on the scene, some offering better rates than HGH. It's an extremely competitive business and it's going to take time for HGH to prove itself as anything different to what is already there.
Even JDO is trading around 52 week highs, not lows. Its feeling the love ;)
Quote from: KW on Jun 17, 2024, 03:03 PMJust for another perspective. There is probably no global stock market that is more invested in banks than the ASX. Every analyst in Australia is effectively a bank analyst, simply because of the dominance of the banks in the ASX indices. If you want to know where the stock market is going, you have to know where the banks are going. And nobody loves their banks as much as ASX investors. Which is why they are always overpriced.
https://www.morningstar.com.au/insights/stocks/247374/is-cba-the-most-expensive-bank-in-the-world
So you have to wonder, considering that HGH is ASX listed, why Australian investors are steering clear of it. Why are Australian analysts not seeing what NZ retail investors are thinking they are seeing? Why arent the Aussies buying it with bells on if its such a good prospect.
Cant put it down to being a NZ company (like Turners or the retirement villages which also get no love on the ASX) as its primary business is now in Australia. Its an Australian bank. And in an overpriced and FOMO'd bank market, its being shunned. Why? I suspect we'll find out soon enough.
Not quite sure your comparison with the big four holds any water. HGH is a finance business, operating in some banking niches (reverse mortgages, business and agricultural finance) ... and yes, to supply the loans, they offer some savings accounts.
Apart from that - they are much smaller, they got their Australian banking licence only a handful of weeks ago - and they are still Kiwi based.
Clearly - anybody who holds ANZ, NAB and similar will immediately sell and run to HGH?
Not even sure - are they already in the ASX200?
Quote from: BlackPeter on Jun 16, 2024, 04:33 PMHGH is currently cheap. So - sorry for not following your advise of buying dear and selling cheap, but hey - it works better for me to do it the other way around. Buffet would agree, but what would he know?
On the same page with you on this one. HGH has a well-established pattern of highs and lows in sync with how the economy is performing. Its not rocket science, buy in gloom and sell in boom. It's been a very successful strategy so far, ask me how I know lol
ACC has been buying the dip
Does anyone know why heartland has changed the holding of harmony shares.
Money in the bank.....
https://www.nzx.com/announcements/433688
Last week's substantial shareholder notification - ACC becoming a substantial shareholder.
My thoughts. Interesting that ACC bought 34m shares at an average price of $1.05 between February and June 2024. They have VERY deep pockets and have been very successful investors over the years. I think 96 cents may have been the bottom, but time will tell.
So ACC been buying 34 million shares at $1.05 average.
Most of the directors and CEO have been buying including its chair who added another 13.8 million shares, giving him control of 83m shares.
Gives me comfort holding this stock and think great buying under a $1. Time will tell and not long to wait for results.
Disc/Have been buying for family trust.
Almost like you read my mind mate. Been thinking today, this is one of the few stocks that have not caught the tailwind of RBNZ announcement and the lower inflation announcement today (3.3% annual), adds to prospects of an earlier interest rate cut.
Interestingly, noted on CNBC this morning the US regional bank index is up just on 50% since the October 2023 low. Talk of great prospects ahead with average PE in that sector in the very low teens but I wryly noted HGH is on a forward PE of only about half that.
Makes me wonder how much more selling can there be under $1? Maybe an opportunity for those to think about that don't already have a decent sized allocation.....or wait for TA support.
Quote from: Basil on Jul 17, 2024, 06:38 PMAlmost like you read my mind mate. Been thinking today, this is one of the few stocks that have not caught the tailwind of RBNZ announcement and the lower inflation announcement today (3.3% annual), adds to prospects of an earlier interest rate cut.
Interestingly, noted on CNBC this morning the US regional bank index is up just on 50% since the October 2023 low. Talk of great prospects ahead with average PE in that sector in the very low teens but I wryly noted HGH is on a forward PE of only about half that.
Makes me wonder how much more selling can there be under $1? Maybe an opportunity for those to think about that don't already have a decent sized allocation.....or wait for TA support.
Australian banks are also on a tear. Which means there are good reasons for HGH to be priced the way it is. Wait until the Aussie bank analysts put a buy rec on it, and the funds start buying in.
Quote from: KW on Jul 17, 2024, 07:00 PMAustralian banks are also on a tear. Which means there are good reasons for HGH to be priced the way it is. Wait until the Aussie bank analysts put a buy rec on it, and the funds start buying in.
Yes hopefully it gets more coverage. Given how small a company it is in Australia I suspect will need to get some runs on the board first. Share price has been holding up between a tight range for a while.
In NZ we are seeing banks dropping interest rates with possibly two cuts in the OCR this year, which will have a lot more funds coming into the markets. I'm picking the NZ market will have a great second half.
Can also understand being cautious and waiting for the results as there is some I think warranted concern. However I just think there is limited downside from here and will sleep well knowing our chair has 83 million shares to make sure this company is successful.
Quote from: Basil on Jul 17, 2024, 06:38 PMAlmost like you read my mind mate. Been thinking today, this is one of the few stocks that have not caught the tailwind of RBNZ announcement and the lower inflation announcement today (3.3% annual), adds to prospects of an earlier interest rate cut.
Interestingly, noted on CNBC this morning the US regional bank index is up just on 50% since the October 2023 low. Talk of great prospects ahead with average PE in that sector in the very low teens but I wryly noted HGH is on a forward PE of only about half that.
Makes me wonder how much more selling can there be under $1? Maybe an opportunity for those to think about that don't already have a decent sized allocation.....or wait for TA support.
Yes HGH not feeling the love like the rest of the market. Gosh what a great week. Heartland already have a good business in Australia so it's not like a lot of NZ companies that have struggled in the lucky country. I think you picked it at $.96
Off the top of my head I'm stoll a bit underwater on this one but as the old Mainland cheese advertisement jingle goes, good things take time.
Grabbed a few more today, I'm sure when I'm old I will thank myself.
There is a lot resting on the Aus/International fundies recognising HGH, which none of them will do until HGH is in the appropriate market cap to be within their portfolio allocations. Same in NZ imo.
If you believe this will happen, along with the inevitable re-rate if it happens, then now is a good time to load up. It then becomes a question of HGH execution in market and the time before it is realised.
Solid day for HGH today. 2.487m traded, VWAP 98.753cps - last trade 289,794 @ $1.00. Very light on the sell side at close
Quote from: Basil on Jul 17, 2024, 06:38 PMMakes me wonder how much more selling can there be under $1?
Posed that question only 2 days ago. Now look, it appears we have a breakout. Bugger...I was just thinking this morning I should get some more under $1.
Not even old yet and I'm thanking myself. Also wishing I had grabbed a few more but OCA wasn't a bad shout either :o
Yes, my buy order at 97c didn't fill yesterday which is a bit disappointing... Any idea what has prompted this morning's surge?
Cpi data and banks starting to lower those interest rates. Patience being rewarded here.
I'm bound to say that we've seen these false dawns and blips in HGH many times, some very recently. This may be the start of the recovery but we won't know whether it is real or speculative until the end of year results.
Quote from: LoungeLizard on Jul 19, 2024, 12:46 PMI'm bound to say that we've seen these false dawns and blips in HGH many times, some very recently. This may be the start of the recovery but we won't know whether it is real or speculative until the end of year results.
While that's fair comment, it's also fair to say many parts of the market, especially interest rate sensitive stocks, have appreciated markedly in recent days on nothing more than a wing and a prayer of hope that green shoots might start emerging this spring. It seems quite evident we're at, or very, very close to the bottom of this economic cycle and also food for thought on your other comment about end of year financial results, HGH is by no means the only company with potentially has some skeletons that might be lurking in the closet. Plenty of risk evident elsewhere in the market including in some stocks that have made a complete and utter hash of things in recent years and yet have appreciated nearly 20% in recent days :o (I'm looking at you RYM as a classic case in point).
Quote from: LoungeLizard on Jul 19, 2024, 12:46 PMI'm bound to say that we've seen these false dawns and blips in HGH many times, some very recently. This may be the start of the recovery but we won't know whether it is real or speculative until the end of year results.
Pig (the CR with the underwriting overhang) is still moving through the python.
HGH's sp performance lags the other banks by a long way - plenty of catching up to do when the pig is fully digested.
Nailed it with that comment mate, I couldn't agree more.
Quote from: Teitei on Jul 19, 2024, 01:38 PMPig (the CR with the underwriting overhang) is still moving through the python.
HGH's sp performance lags the other banks by a long way - plenty of catching up to do when the pig is fully digested.
Comparing HGH's metrics/ performance with a high street bank is indeed like comparing a pig with a python.
Quote from: Basil on Jul 19, 2024, 01:20 PMWhile that's fair comment, it's also fair to say many parts of the market, especially interest rate sensitive stocks, have appreciated markedly in recent days on nothing more than a wing and a prayer of hope that green shoots might start emerging this spring. It seems quite evident we're at, or very, very close to the bottom of this economic cycle and also food for thought on your other comment about end of year financial results, HGH is by no means the only company with potentially has some skeletons that might be lurking in the closet. Plenty of risk evident elsewhere in the market including in some stocks that have made a complete and utter hash of things in recent years and yet have appreciated nearly 20% in recent days :o (I'm looking at you RYM as a classic case in point).
True what you say, but the big banks have a scale and resiliency which makes them a breed apart from HGH. There's no correlation at all between the graphs of say, ANZ, and HGH. You could be looking at totally different industries for all they are worth.
Maybe the banking industry as a whole is at the bottom of the cycle as you say, but there are risks attached to HGH that are peculiar to it - the whole Challenger deal (and what lies beneath) and the capital intensive nature of both Challenger and the reverse mortgage business. The risk profile of HGH is higher so it needs to outperform the big banks in order to compensate for that risk. Other-wise, if the banking industry is on the up, why not invest in ANZ or banking/finance funds and reduce that risk whilst still getting the gains.
Maybe the end of term report card will be a beauty, in which case I might get on board myself. But not before.
Fool me once....
Quote from: LoungeLizard on Jul 19, 2024, 02:22 PMComparing HGH's metrics/ performance with a high street bank is indeed like comparing a pig with a python.
That's not what the analogy is about but hi, pigs when they get moving actually move a lot faster than pythons!
HGH has a Beta of 1.03 while ANZ Beta is 0.8 (5 year monthly)
Implies HGH share price is going to perform in line with the market while ANZ is likely to move less than the market
For mine, confession season is almost over. If HGH were going to update their FY24 forecast it would have happened by now.
The correlation between HGH and the peer group I follow has been surprisingly close over the last decade. notwithstanding the significant differences in their business models. The last year or so has been unprecedented in terms of the vast divergence of their respective share prices and metrics. (Like 5 standard deviations different)
BRM already have a sizeable allocation to Australian financials, so I don't need to replicate that elsewhere in my portfolio.
Quote from: winner (n) on Jul 19, 2024, 03:52 PMHGH has a Beta of 1.03 while ANZ Beta is 0.8 (5 year monthly)
Implies HGH share price is going to perform in line with the market while ANZ is likely to move less than the market
HGH is a slow burner - slowly heading towards the runway for liftoff.
As long as HGH's results are in line with market, fully expecting HGH to outperform the other banks from hereon in.
Quote from: Teitei on Jul 19, 2024, 04:29 PMHGH is a slow burner - slowly heading towards the runway for liftoff.
When it does take off it might do so in this manner, skip ahead to the 2.00-minute mark
https://www.youtube.com/watch?v=2jHVTy_V_e0&t=2s
Strong closing with circa 2 mill shares crossing at $1.03
TA looking much improved too. Both MACD and RSI looking encouraging.
Basil might be right that $0.97 was the 'bottom'......(mind you I think he had 2 earlier less successful attempts. lol. )
GLH.
96 cents, bought lots more there and yes I did lol.
Not that I follow it at all - but all those that follow TA/Charting probably noticed HGH had a big break above the 50 day moving average, the first time this year it has managed to move above it.
Quote from: LoungeLizard on Jul 19, 2024, 03:07 PMTrue what you say, but the big banks have a scale and resiliency which makes them a breed apart from HGH. There's no correlation at all between the graphs of say, ANZ, and HGH. You could be looking at totally different industries for all they are worth.
Maybe the banking industry as a whole is at the bottom of the cycle as you say, but there are risks attached to HGH that are peculiar to it - the whole Challenger deal (and what lies beneath) and the capital intensive nature of both Challenger and the reverse mortgage business. The risk profile of HGH is higher so it needs to outperform the big banks in order to compensate for that risk. Other-wise, if the banking industry is on the up, why not invest in ANZ or banking/finance funds and reduce that risk whilst still getting the gains.
Maybe the end of term report card will be a beauty, in which case I might get on board myself. But not before.
Fool me once....
Isn't HGH far leaner and more efficient than those bloated whales and their hundreds of branches and tens of thousands of branch/call centre staff?
Down channel doing its thing, 1.28 breakout price to top trendline, big double trix cross suggests will hit upper trendline, AVWAP cross suggests price will hover for a bit.HGH_2024-07-20_09-08-49.png
Quote from: Cod on Jul 20, 2024, 09:13 AMDown channel doing its thing, 1.28 breakout price to top trendline, big double trix cross suggests will hit upper trendline, AVWAP cross suggests price will hover for a bit.HGH_2024-07-20_09-08-49.png
Some say that once broken out of a channel it's form a new channel just as wide
Channel amplitude about 40 wide which implies 170 on cards
While the HGH TA indicators are improving...... it's taking place with no new information.
A bullish update will ensure HGH's long awaited resurrection.
(but on the other hand...... yes well... don't go there.)
Quote from: LaserEyeKiwi on Jul 19, 2024, 11:27 PMIsn't HGH far leaner and more efficient than those bloated whales and their hundreds of branches and tens of thousands of branch/call centre staff?
I guess, but these whales provide a much broader range of services and communities still want their banks to have a high street presence. HGH is a niche digital bank appealing to a much narrower section of the community. Which is why their risk profile is much higher - they only need one aspect of their business to fail and things go south rapidly. Which is why Challenger is pretty much a make or break thing for HGH. I'd want to see that bear fruit before I invest in HGH, but that's just me.
Quote from: Left Field on Jul 20, 2024, 10:02 AMWhile the HGH TA indicators are improving...... it's taking place with no new information.
A bullish update will ensure HGH's long awaited resurrection.
(but on the other hand...... yes well... don't go there.)
not sure they need to provide a bullish statement to have the SP go up from here, I think the SP has priced in a very modest result and outlook. My biggest concern with the economy like it is was we got a downgrade prior to the results, however I believe we would have seen that by now.
Big trades going through last thing Friday shows we are still filtering through weak holders from the cap raise. Going forward I suspect there will be a heap of profit taking $1.08 $1.10 ish level, but confident we will see this price soon.
Anyways nice to see green on my purchase price for a change
Quote from: winner (n) on Jul 20, 2024, 09:17 AMSome say that once broken out of a channel it's form a new channel just as wide
Channel amplitude about 40 wide which implies 170 on cards
Tend to agree that a breakout is imminent prior to the result. I expect a modest result but the outlook if satisfactory, will be the key. We could then see a significant rerate.
Quote from: Basil on Jul 20, 2024, 02:06 PMTend to agree that a breakout is imminent prior to the result. I expect a modest result but the outlook if satisfactory, will be the key. We could then see a significant rerate.
Quote from: snapiti on Jul 20, 2024, 11:12 AMnot sure they need to provide a bullish statement to have the SP go up from here, I think the SP has priced in a very modest result and outlook. My biggest concern with the economy like it is was we got a downgrade prior to the results, however I believe we would have seen that by now.
Big trades going through last thing Friday shows we are still filtering through weak holders from the cap raise. Going forward I suspect there will be a heap of profit taking $1.08 $1.10 ish level, but confident we will see this price soon.
Anyways nice to see green on my purchase price for a change
Two CRs in 18 months are a huge ask for any company, let alone a high dividend yield stock like HGH in the equity unfavourable settings over the same time. I sense however that the market is not that far off from leaving the CRs indigestion behind.
Meanwhile, I am very comfortable with HGH's reverse mortgage business from a business and risk perspective based upon the experience of a Melbourne contact last year.
He had to raise funds to revitalise his business post Covid and despite having a mortgage free home, he could not get a mortgage or funding from the other banks. So he went to HGH via my recommendation and after putting him through hoops and loops (the paperwork! The compliance! The credit checks!), he obtained funding last year. It was expensive funding compared to other mortgages and the LVR allowed was only 40%. So relative low risk lending at high rates - great combination for a lender!
His business has since recovered and he has paid back more than half the reverse mortgage back. He said he would only use reverse mortgage again under similar circumstances but would prefer not to as it is expensive (yet low risk for HGH!).
The capital intensive nature of the reverse mortgage business can be alleviated via second tier funding (subordinated notes) and of course, when the business reaches scale so there's only a small lag between repayments and new lendings.
Cannot see HGH needing to CR again for a while and if it does, it will be because business is booming and there would be strong institutional support for a placement.
HGH imo is set to perform.
Quote from: LaserEyeKiwi on Jul 19, 2024, 11:26 PMNot that I follow it at all - but all those that follow TA/Charting probably noticed HGH had a big break above the 50 day moving average, the first time this year it has managed to move above it.
Those of us that follow TA realise that is completely meaningless. Wake me when its the 200 day MA.
Okay, wakey wakey KW. TRA just broke up through their 200 day MA.
On HGH - I'm no TA expert but looking at the chart it looks suspiciously like it has built a bottom in the last 3 months. That said, I can understand why some people want to see more TA evidence. I am a buyer in the late 90's if it goes there again as the FA at that price is truly compelling. I think this winter is the trough in this economic cycle and I also think the performance of HGH is inextricably linked to the performance of the economy.
Quote from: KW on Jul 21, 2024, 05:14 PMThose of us that follow TA realise that is completely meaningless. Wake me when its the 200 day MA.
Interesting - are you saying that TA is a faith based religion with its followers having believes which are separated from the laws of mathematics?
If it would be based on maths, then obviously for any trend change the SP would first go through MA50 and then it may or may not go through MA200, which means the MA50 (or any other of your favourite MA's) is not "meaningless", it just has a lower reliability in indicating a trend change than a MA based on a longer time frame.
Quite standard risk vs reward balance. The earlier your indicator, the higher the risk you get the prediction of a trend change wrong, but the higher the reward if you get it right.
There is nothing magic about the MA200.
Looks to me that a fund is building a stake in HGH, the high volume will hopefully take care of the quick 10% profit takers around the 1.07 to 1.10 range although that will be a lot of shares.
Quote from: snapiti on Jul 22, 2024, 01:01 PMLooks to me that a fund is building a stake in HGH, the high volume will hopefully take care of the quick 10% profit takers around the 1.07 to 1.10 range although that will be a lot of shares.
Yeah, I have also been noticing the very large increase in volumes in the last few days.
Maybe the guys at Discovery funds have discovered this and are actioning a new position based on the extreme deep value on offer ?
Quote from: KW on Jul 21, 2024, 05:14 PMThose of us that follow TA realise that is completely meaningless. Wake me when its the 200 day MA.
So you would only buy in after it hit $1.30 (current 200 day)?
Could you even tell anyone that after missing 30% upside?
Quote from: Basil on Jul 22, 2024, 01:05 PMYeah, I have also been noticing the very large increase in volumes in the last few days.
Maybe the guys at Discovery funds have discovered this and are actioning a new position based on the extreme deep value on offer ?
yep and whatever fund is buying knows they can pick up a sizable stake being profit taking first time since it bottomed @ 96 and circa cap raise at $1
HGH Book Value about $1.30 so at $1.06 still pretty cheap
Say P/B of 1.3 is share price about $1.70
Something to look forward to
We'll never see $1 again ;D
Quote from: Basil on Jul 22, 2024, 02:28 PMWe'll never see $1 again ;D
I hope not. Would be very surprised. Tempting to buy more but already have plenty.
Quote from: Shareguy on Jul 22, 2024, 02:42 PMI hope not. Would be very surprised. Tempting to buy more but already have plenty.
Same, but would happily back the truck up for a LOT more at $1.
Best, extreme deep value stock left on the NZX in my opinion that hasn't already jumped up.
I thought the same but temptation got the better of me. Couldn't help myself :)
Saw this on Bloomberg Asia email - should (already) be good for HGH...
Retirement Cash
The number of Australians tapping a reverse mortgage-style product to help fund retirement is up almost 40% in the past year as calls increase for retirees to monetize the A$1.3 trillion ($870 billion) they have tied up in property. The nation's Home Equity Access Scheme was used by more than 13,000 people in the year to June. Under the program, people who have reached the pension age of 67 can borrow against the equity in their property and take out a government loan. Those loans are generally recovered when the secured property is sold or from the person's estate.
5.2m shares so far today, FAR above average. 1.6m shares just went through at $1.07. Train leaving the station, all aboard, toot toot lol
Great to see HGH holders getting enthusiastic again.
Call me crazy but I can't help comparing HGH and TWR
Both Finance sector stocks. Both much beaten down in recent times. Both undergoing considerable changes and both possibly overdue for rerating etc etc
Here's a SP comparison of the two based on both 6 months and 1 month.
Going to be interesting to see how the comparison fares in the months ahead. (Disc have so far chosen TWR for my portfolio (up 22%) but may change my mind and switch to HGH at any stage!!)
Crickey, big divergence in the 6 month chart. Back the truck up, you know you want too ;)
Quote from: Basil on Jul 22, 2024, 04:16 PMCrickey, big divergence in the 6 month chart. Back the truck up, you know you want too ;)
Yes I do and I did Basil this afternoon. Part of my Arvida proceeds allocated.
Quote from: Shareguy on Jul 22, 2024, 05:09 PMYes I do and I did Basil this afternoon. Part of my Arvida proceeds allocated.
Great minds think alike mate, I bought some more today too. Dived into them like a hungry Beagle.
This time next year we'll be patting ourselves on the back thinking what a cunning move this was...
I have bought back in today @ $1.06. Nice long term hold. I hope they have stop spending and get that portfolio humming for future returns. Surely they can't buy anything else can they?
I had to smile at all the good cheer and talks of backing the truck. Nothing like a 5% uplift to get the pack salivating. ;D
Seriously, I hope things have turned the corner, but so far this is just sentiment, which might just be enough to get things moving in the short term, but will need to be backed up by fundamentals, the first inkling of which could come in a few months time. "Could" being the operative word.
TWR, for me, remains the better option as there is more likelihood of a big payday in a couple of months time, with the clock ticking on that unused large event provision. Or maybe a fiver each way on TWR and HGH?
was it not sentiment that took the SP into oversold territory, one needs to recognize this so one can put themselves in a position to capitalize when sentiment changes, I only hope it's not a dead cat bounce but the volume suggests it is not......happy holding and in the green......a lot of profit taking to get through
Interesting looking at the chart, someone can hopefully post an image year to date. Definitely looks like a bottoming process over the last 3 months. Like a frying pan shape on one side in April 2024, flat-ish for 3 months and its now climbing up the other side on huge volume.
Last time I saw a clear bottoming process / frying pan type image like that was $4.20 with MET just before the takeover offer.
I think the volume is a key here. Someone building a big position. How much more selling volume can there be at this ludicrously low level ?
https://stocknessmonster.com/charts/hgh.nzx
https://yhoo.it/49kuFyL
and 3 month chart
https://yhoo.it/49kuFyL
Note RS is a high 70
Quote from: snapiti on Jul 22, 2024, 08:05 PMwas it not sentiment that took the SP into oversold territory, one needs to recognize this so one can put themselves in a position to capitalize when sentiment changes, I only hope it's not a dead cat bounce but the volume suggests it is not......happy holding and in the green......a lot of profit taking to get through
Yep, spot on - the market sentiment was against HGH ever since two value destructive capital raises. It was like the market suddenly saw that they were being taken for a ride.
But my point is that there were those that refused to see the writing on the wall and ignore that sentiment but then when the sentiment shifted slightly ( as we see now) they are all of a sudden gung ho. I guess we are all guilty of that - selective reasoning - but until the fundamentals change it's all just speculative chatter.
Maybe buying in early - like participating in the CR at $1 or buying in now at $1.06 - may turn out to be the best time to maximise gains, but it is also the time that maximises risk, because there's nothing to back the upswing other than a few overenthusiastic punters. It just could be a classic blip that we see all the time. I've said it before - I'd rather miss the potential early gains and wait until the genuine green shoots appear. And if I want to take a punt - Tower has proved (and in my opinion will continue to prove) to be a better option
(TWR :up 63% in 12 months, HGH ; down 39% !!)
Quote from: LoungeLizard on Jul 22, 2024, 11:23 PMYep, spot on - the market sentiment was against HGH ever since two value destructive capital raises. It was like the market suddenly saw that they were being taken for a ride.
But my point is that there were those that refused to see the writing on the wall and ignore that sentiment but then when the sentiment shifted slightly ( as we see now) they are all of a sudden gung ho. I guess we are all guilty of that - selective reasoning - but until the fundamentals change it's all just speculative chatter.
Maybe buying in early - like participating in the CR at $1 or buying in now at $1.06 - may turn out to be the best time to maximise gains, but it is also the time that maximises risk, because there's nothing to back the upswing other than a few overenthusiastic punters. It just could be a classic blip that we see all the time. I've said it before - I'd rather miss the potential early gains and wait until the genuine green shoots appear. And if I want to take a punt - Tower has proved (and in my opinion will continue to prove) to be a better option
(TWR :up 63% in 12 months, HGH ; down 39% !!)
No one knows where the bottom is in a share price, just like no one knows when the next disaster will happen. The thing with Tower, is that its all benign on the claims front, also premiums have sky rocketed.
It will only take 1 weather bomb or disaster to change that
Quote from: Greekwatchdog on Jul 23, 2024, 04:36 AMNo one knows where the bottom is in a share price, just like no one knows when the next disaster will happen. The thing with Tower, is that its all benign on the claims front, also premiums have sky rocketed.
It will only take 1 weather bomb or disaster to change that
Yes true, but TWR have a substantial (45m) large event provision that 10 months into the reporting year has gone unused. Even if that provision is all used up by some catastrophic weather event in the next couple of months, guidance is still for $40m profit. So I think the risk is manageable and to some extent it's more transparent than HGH's, which needs Challenger to be profitable from day 1.
But, horses for courses. In the last 12 months Towers SP has rocketed and HGHS has continued on its death spiral. Lets see how the next 12 months go.
Quote from: LoungeLizard on Jul 22, 2024, 11:23 PMYep, spot on - the market sentiment was against HGH ever since two value destructive capital raises. It was like the market suddenly saw that they were being taken for a ride.
But my point is that there were those that refused to see the writing on the wall and ignore that sentiment but then when the sentiment shifted slightly ( as we see now) they are all of a sudden gung ho. I guess we are all guilty of that - selective reasoning - but until the fundamentals change it's all just speculative chatter.
Maybe buying in early - like participating in the CR at $1 or buying in now at $1.06 - may turn out to be the best time to maximise gains, but it is also the time that maximises risk, because there's nothing to back the upswing other than a few overenthusiastic punters. It just could be a classic blip that we see all the time. I've said it before - I'd rather miss the potential early gains and wait until the genuine green shoots appear. And if I want to take a punt - Tower has proved (and in my opinion will continue to prove) to be a better option
(TWR :up 63% in 12 months, HGH ; down 39% !!)
Is this Lizard a snakeoil merchant?
Look - I don't follow Tower and am not interested. Pretty annoying to have these constant shameless and baseless promotions for an irrelevant theme polluting the good Heartland thread.
I only remember that many people lost a lot of money with Tower and other insurance companies. Pure speculation. But again - this is the Heartland thread, so I suggest you put your TWR up-ramps / "promotions" for anybody interested in gambling with the insurance lottery into the appropriate thread.
Quote from: Greekwatchdog on Jul 23, 2024, 04:36 AMNo one knows where the bottom is in a share price, just like no one knows when the next disaster will happen. The thing with Tower, is that its all benign on the claims front, also premiums have sky rocketed.
It will only take 1 weather bomb or disaster to change that
not exactly true, Tower has a maximum exposure to anyone event, last year was $12m this year will be higher maybe $15m per event
Pretty clear looking at the chart the bottom is in at 96 cents, but you stick with it being in a death spiral if you like because that suits your narrative. By all means join KW and wait for a break up through the 200 day MA at about $1.30 and leave the first 35% recovery on the table for me and others.
One day you will wake up and realize that HGH already have a lucrative reverse home mortgage business in Australia with demand growing at a 20% CAGR and they are backing this highly profitable business into Challenger from day 1, so yes, guess what...it is profitable from day 1.
Quote from: BlackPeter on Jul 23, 2024, 09:44 AMIs this Lizard a snakeoil merchant?
Look - I don't follow Tower and am not interested. Pretty annoying to have these constant shameless and baseless promotions for an irrelevant theme polluting the good Heartland thread.
I only remember that many people lost a lot of money with Tower and other insurance companies. Pure speculation. But again - this is the Heartland thread, so I suggest you put your TWR up-ramps / "promotions" for anybody interested in gambling with the insurance lottery into the appropriate thread.
Well said. Tower is a highly cyclical business highly susceptible to earnings shocks from insuring homes and other stuff venerable to weather events in an environment of extreme global warming. What could possibly go wrong in future years lol
now back to HGH, it will be good to see high volume for a few days in a row, normally when an insto is taking a stake in any company they will go hard then take a day or two off to keep everyone guessing. I reckon a total of 25m shares need to be bought @ current levels to get through the profit takers, we have seen about 10m
Quote from: Basil on Jul 23, 2024, 09:49 AMPretty clear looking at the chart the bottom is in at 96 cents, but you stick with it being in a death spiral if you like because that suits your narrative. By all means join KW and wait for a break up through the 200 day MA at about $1.30 and leave the first 35% recovery on the table for me and others.
One day you will wake up and realize that HGH already have a lucrative reverse home mortgage business in Australia with demand growing at a 20% CAGR and they are backing this highly profitable business into Challenger from day 1, so yes, guess what...it is profitable from day 1.
I would suggest it maybe sometime before we are at $1.30 in the meantime the 200 DMA will continue to decrease, in 30 days if the SP is around current levels the 200DMA will be more like $1.20, that aside buying under or at $1 was to irresistible to me
Quote from: snapiti on Jul 23, 2024, 10:02 AMI would suggest it maybe sometime before we are at $1.30 in the meantime the 200 DMA will continue to decrease, in 30 days if the SP is around current levels the 200DMA will be more like $1.20, that aside buying under or at $1 was to irresistible to me
Fair comment. Maybe it will come down to about $1.25 in the weeks ahead and they will only miss the first 30% upside.
RBNZ to start cutting in August ?
Quote from: BlackPeter on Jul 23, 2024, 09:44 AMLook - I don't follow Tower and am not interested. Pretty annoying to have these constant shameless and baseless promotions for an irrelevant theme polluting the good Heartland thread.
When looking to make an investment in the financial sector it is sensible investing to compare a company with its peers. Comparable P/E's and EPS within a sector are valid and widely used FA comparisons.
As pointed out in post #1369 on this thread there are more similarities that make comparisons between TWR and HGH relevant. Both HGH and TWR are Finance sector stocks. Both much beaten down in recent times. Both undergoing considerable changes and both possibly overdue for rerating etc etc.
So at the risk of annoying your personal sensitivities, it is perfectly relevant to discuss the HGH/TWR comparisons.... and the charts in post #1369 highlight the rewards (to date) of not having your head stuck in the sand.
Those with an open mind should check out ForBars latest research on the sector. $1.50 value seen in TWR. https://www.forsythbarr.co.nz/assets/publications/TWR-2024-06-12-Calm-Claims-Help-Elevate-Profit-Projections.pdf
You are drawing a very long bow and making a very spurious argument saying TWR and HGH are comparable companies. Please stick to the TWR thread skiting about your profits there. I am sure the vast majority of posters on this thread would prefer that.
Hey Snapper. Maybe sellers are running out of shares to sell ?
Quote from: Basil on Jul 23, 2024, 11:17 AMYou are drawing a very long bow and making a very spurious argument saying TWR and HGH are comparable companies. Please stick to the TWR thread skiting about your profits there. I am sure the vast majority of posters on this thread would prefer that.
Hey Snapper. Maybe sellers are running out of shares to sell ?
hope your right Basil brush, but I am still thinking we are stuck at this level for sometime unless they come out with a stellar report (unlikely), afternoon is when the big traders step in
Quote from: snapiti on Jul 23, 2024, 11:50 AMhope your right Basil brush, but I am still thinking we are stuck at this level for sometime unless they come out with a stellar report (unlikely), afternoon is when the big traders step in
Suits me mate, I want more and I am happy to take a "dogged" approach ;)
Quote from: BlackPeter on Jul 23, 2024, 09:44 AMIs this Lizard a snakeoil merchant?
Look - I don't follow Tower and am not interested. Pretty annoying to have these constant shameless and baseless promotions for an irrelevant theme polluting the good Heartland thread.
I only remember that many people lost a lot of money with Tower and other insurance companies. Pure speculation. But again - this is the Heartland thread, so I suggest you put your TWR up-ramps / "promotions" for anybody interested in gambling with the insurance lottery into the appropriate thread.
Jeez, relax mate. People compare companies performance all the time. Comparison is not promotion. As for :constant" - I think there's been probably three references. I'd hardly call that ramping. Anyway, the point has been made - there's more than one way to bring home the bacon.
Well, I'm glad to finally be out of "underwater purgatory" with this one. HGH has a very long history of performance tied inextricably to the N.Z. economy and I feel we're past the darkest days of winter, both figuratively and metaphorically.
Onwards and upwards from here. I'm hoping for 60-70% gains from here in the next 2-3 years plus I note average broker forecast of 8 cps in dividends fully imputed (11.1% gross yield) for FY25. I can foresee that yield growing very strongly in the years ahead as dividends revert to their historical level.
Huge growth in reverse home loans on both sides of the Tasman.
If we get 70% SP gains in three years and 11% per annum in gross yield each year over 3 years shareholders will double their money. Yeah...NAH, can't happen...or could it even happen sooner ?
Average broker forecast for FY25 is 13.23 cps. Put a normal mid cycle (for HGH) PE of 13 on that and we could easily see $1.72 as early as next year !
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
I'm going to get some more. "Some guy" said "Be Greedy when others are fearful" Hmmm, I wonder who that was ;)
It's been called the best-kept secret for older Australians, but the deep discount offered by the government's reverse mortgage scheme (https://www.theaustralian.com.au/business/wealth/government-reverse-mortgage-scheme-more-attractive-than-commercial-rivals/news-story/7e1154f41417cea8a4fe0be87ab485e7) is now so blatantly obvious it's more like an open secret – participation in the scheme has boomed tenfold since 2019.
New data shows that the Home Equity Scheme – where the government offers reverse mortgages at less than half commercial rates – has changed from an obscure scheme to a mainstream product with participation figures reported in the year to March at more than 12,000 people, up from 700 in 2019.
And why not? Any older person looking to tap into the value of their family home can get the government mortgage at a set rate of 3.95 per cent (unchanged in the last budget).
Meanwhile, commercial rates are more than twice this level, with rates climbing towards 10 per cent. Commercial mortgages have fewer restrictions, but the effectively discounted rate the government offers is clearly a powerful trade-off.
The boom in reverse mortgages (where the applicant generally sells part of their home to an institution in return for regular income) was always going to happen with the escalation of house prices occurring while owner-occupiers on fixed incomes were facing inflation.
But the take-up has been accelerated by a change of regulations, which allowed financial advisers to recommend the government scheme alongside commercial products.
Commercial reverse mortgages have also been growing quickly, but nothing like the pace of the government scheme.
https://www.theaustralian.com.au/business/wealth/older-australians-have-rushed-the-governments-cutprice-reverse-mortgage-scheme/news-story/078bbc965063057ca05c8a71a2af07ff?amp
New data shows that the Home Equity Scheme – has changed from an obscure scheme to a mainstream product .
Certainly benefitting HGH.
Continued strong growth Australian Reverse Mortgages (up 20.0%).
My understanding is there's lots of restrictions around what the Govt scheme can be used for.
Try asking them for funds for a new car or world trip and see what happens lol
Heartland will be happy to oblige. Yes Percy, 20% CAGR over the years is HUGE and Heartland Australia have a dominant 42% of the reverse home loan market.
Looks like Australians have an ever growing line of credit to tap into as well, unlike here recently.
https://www.abc.net.au/news/2024-07-25/property-prices-remain-strong/104136878?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+25+July+2024
ha ha I see the big boys were back in buying today after a couple of days off, I think their games are fairly predictable
Quote from: snapiti on Jul 25, 2024, 05:33 PMha ha I see the big boys were back in buying today after a couple of days off, I think their games are fairly predictable
Need to do some work at the $1.10 level before the next leg up. Looking very promising with volume going through so institutions appear willing to pay up.
Pretty sure the pig has nearly been digested by the python. For those that don't understand this what I mean is the market has nearly put the capital raise behind it.
Quote from: Basil on Jul 26, 2024, 02:29 PMPretty sure the pig has nearly been digested by the python. For those that don't understand this what I mean is the market has nearly put the capital raise behind it.
Have to say that the python has been rather ravenous in the last 18 months, swallowing two pigs and rather fat ones at that.
But just imagine how energised and strong the python will be after fully digesting the two pigs!
Quote from: Basil on Jul 26, 2024, 02:29 PMPretty sure the pig has nearly been digested by the python. For those that don't understand this what I mean is the market has nearly put the capital raise behind it.
IMO got to break out above $1.10 before the pig is digested
Quote from: Teitei on Jul 26, 2024, 03:27 PMHave to say that the python has been rather ravenous in the last 18 months, swallowing two pigs and rather fat ones at that.
But just imagine how energised and strong the python will be after fully digesting the two pigs!
Some Beagle has been licking his chops at the prospect of that. Could spring back to $1.70 faster than a lot of people realize.
The important thing is to be well positioned before that happens. Pretty well positioned already but there's definitely room in my portfolio for more.
When to buy more.... hmmm...tick tock.... Think Snapper is right...bit more work to do at $1.10 and then...
Yes, certainly looking better. At $1.10 back to a billion dollar capitalisation 😋
So, is Heartland attracting the hot money? we asked.
"We are" Winzer confirmed.
https://www.bankingday.com/heartland-bank-looks-to-broader-horizons
Quote from: Shareguy on Jul 29, 2024, 02:50 PMSo, is Heartland attracting the hot money? we asked.
"We are" Winzer confirmed.
https://www.bankingday.com/heartland-bank-looks-to-broader-horizons
The government guaranteed $250,000 deposit in Oz is a major advantage that HGH can and is tapping into.
Note that the guarantee applies up to a maximum of $250k per bank so somebody with $500k needs to deposit with two banks to benefit from the guarantee.
Any guesses on Full Year Result and dividend in 3 or so weeks. What are you all looking for from the Team?
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Average of 3 analysts forecasting FY24 $93m, FY25 $117m, FY26 $150m
Looks like average expectation of 2.8 cps for final divvy, (HGH have foreshadowed it will be lower) and 8 cps next year fully imputed = 11.11 cps gross = 10.1% gross FY25 yield @ $1.10
Quote from: Greekwatchdog on Aug 01, 2024, 02:01 PMAny guesses on Full Year Result and dividend in 3 or so weeks. What are you all looking for from the Team?
With the dilution 2.5 cents for the final. 4 cents was the interim. At the cr they announced a change to 50 percent of npat from 70/75. %
Quote from: Shareguy on Aug 01, 2024, 02:28 PMWith the dilution 2.5 cents for the final. 4 cents was the interim. At the cr they announced a change to 50 percent of npat from 70/75. %
Pretty sure that payout ratio change is just for the FY24 final, if my memory serves me correctly?
Quote from: Basil on Aug 01, 2024, 02:30 PMPretty sure that payout ratio change is just for the FY24 final, if my memory serves me correctly?
Yes you are right. This is about FY25 onwards
HGH share price on fire today
Quote from: winner (n) on Aug 14, 2024, 04:22 PMHGH share price on fire today
I think your post above is true for nearly any NZX stock today. Just had a look through my portfolio - and plenty of stocks moved from reddisch (below MA200) to greenish (above MA200 or at least above MA 100). What difference a wee OCR reduction can make ....
Quote from: winner (n) on Aug 14, 2024, 04:22 PMHGH share price on fire today
Even bigger rise in Aussie today. Up 9.95% to A$1.05 currently
2nd biggest holdings for me, happy to have been very patient and purchased under $1
Looks like we may have gotten through the profit takers from cap raise
Really looking forward to the coming report, given the poor climate they have just been through the results will be most interesting
We have HGH reporting for FY24 on 29th of August
What are we expecting.
There has been no change to guidance issued in December 23 of npat of $93m to $97m. So that's what I'm expecting.
Craigs have forecast eps of 13.1 cps and FY divi of 6.5 cps. Note 4c was paid as the interim so final 2.5cps.
It was noted by HGH that the reduction of the divi payout from 70/75 percent to 50 percent of npat is for FY24 only. What will it be going forward.
Our Jeff set an aspirational target of $200m npat for FY28. Jeff also leaves us at the end of this year. News on his replacement would be good. Chris Flood maybe......
Craigs say that they forecast $30m improvement in npat between FY24 and FY26 just from the retail deposits raised by challenger aka hgh Australia.
Current share price is $1.12. When you consider the growth opportunities the share price looks attractive. I suggest the concern over the economy and any fish hooks in the integration of Challenger is weighing on the share price.
Not long to results.
Quote from: Shareguy on Aug 18, 2024, 08:16 AMWe have HGH reporting for FY24 on 29th of August
What are we expecting.
There has been no change to guidance issued in December 23 of npat of $93m to $97m. So that's what I'm expecting.
Craigs have forecast eps of 13.1 cps and FY divi of 6.5 cps. Note 4c was paid as the interim so final 2.5cps.
It was noted by HGH that the reduction of the divi payout from 70/75 percent to 50 percent of npat is for FY24 only. What will it be going forward.
Our Jeff set an aspirational target of $200m npat for FY28. Jeff also leaves us at the end of this year. News on his replacement would be good. Chris Flood maybe......
Craigs say that they forecast $30m improvement in npat between FY24 and FY26 just from the retail deposits raised by challenger aka hgh Australia.
Current share price is $1.12. When you consider the growth opportunities the share price looks attractive. I suggest the concern over the economy and any fish hooks in the integration of Challenger is weighing on the share price.
Not long to results.
great post and I agree that we should expect them to meet guidance.
However watch for any commentary around a build in bad loans.
Failing that and if they meet guidance I suspect a meaningful rise to the SP
on the bottom ? ... if no decrease in DIV...
5 year chart ...
I'm looking forward to selling at about $2.50 again
I hope Flood not next CEO ...nice guy but he's been there too long and entrenched in Heartland way of doing things ...they need somebody who can bring new vibrancy to the business.
Bit of philosophical thinking posted earlier -
One day, well into Jeff's long and illustrious career, a journalist asked the banker why he wasn't driving great Heartland performance like he used to.
"When Heartland was growing profits I was cold and hungry," said Jeff. "I'm not cold and hungry anymore."
Let's call this "The Jeff Greenslade Problem". How does a person or an organization keep its creative vitality once they have already become successful, already become comfortable?
This, I think, is one of the cardinal problems of any type of successful business that has seen a lot of growth. How do we keep the hunger? The sexy?
T
Quote from: winner (n) on Aug 18, 2024, 10:44 AMI'm looking forward to selling at about $2.50 again
I'm looking forward to doubling of the SP and a return to dividends of around 11-12cps.
Great last 6 posts and I agree with all of them.
While we wait for the turning of the cycle to hopefully generate significant capital gains, (like it has before with every other turn of the economic cycle), I can't help noting consensus is for 8 cps in divvies in FY25 fully imputed which is 11.11 cps gross and a gross yield of ~ 10% @ $1.12
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
I can't speak for others, but for me, I find it much easier to have patience when being paid handsomely like that. Over time, I expect dividends to return to 11-12 cps (@11.5 cps = 15.97 cps gross = 14.24% gross yield @ $1.12) but note at this stage average divvy forecast for FY26 is 9.47 cps = 11.74% gross...not too shabby when term deposits will likely be paying less than 4% by then.
I think the bottom is well and truly in @ 96 cents and its onward and upward from here and those with lots of patience will be very well rewarded.
I'll leave it to someone with better TA skills to comment but the chart set-up looks solid to me. More than 3 months of base building at just under $1 and now a clear break up through the 100 day MA.
Average eps forecast for FY26 is 16.05 cps, FY26 PE 6.98 and I understand the full benefits of retail v wholesale funding for Heartland Australia don't flow through until FY27 so I expect further growth in eps from there. If the annual report looks satisfactory on 29 August, I will be looking at significantly increasing my position. It's nice to be back solidly in the green with this one now but I think there's a LOT more to come.
Quote from: Basil on Aug 18, 2024, 11:13 AM... I'll leave it to someone with better TA skills to comment but the chart set-up looks solid to me. More than 3 months of base building at just under $1 and now a clear break up through the 100 day MA.
Basil being modest about his TA skills.
A simple 1 yr chart FWIW..... TA looking auspicious IMO (tho still hasn't broken through the 200 MA.)
All looking good for HGH to fly on a positive report due 29 Aug.
Quick look at peer group metrics too, (from average broker forecast off market screener). This is the same group I have used for over a decade and about 90% of the time HGH is within 1-2 PE either side of the average, (acknowledging all are bigger banks) but as noted, I have more than a decade of experience to validate my comparison methodology.
FY26 PE
ANZ 12.5
WBC 15.1
BEN 13.5
BOQ 12.1
NAB 15.2
Average 13.68
HGH 6.98
Conclusion. HGH's share price could double (FY26 PE becoming 13.96) and it would still be well within the normal range in terms of price relativity to its peer group on an earnings metrics basis. Sure, there are risks, but there is quite an opportunity here too and I am struggling to see much of a downside now we have an easing cycle underway, and the bottom of the economic cycle is probably in.
Quote from: Basil on Aug 18, 2024, 03:49 PMQuick look at peer group metrics too, (from average broker forecast off market screener). This is the same group I have used for over a decade and about 90% of the time HGH is within 1-2 PE either side of the average, (acknowledging all are bigger banks) but as noted, I have more than a decade of experience to validate my comparison methodology.
FY26 PE
ANZ 12.5
WBC 15.1
BEN 13.5
BOQ 12.1
NAB 15.2
Average 13.68
HGH 6.98
Conclusion. HGH's share price could double (FY26 PE becoming 13.96) and it would still be well within the normal range in terms of price relativity to its peer group on an earnings metrics basis. Sure, there are risks, but there is quite an opportunity here too and I am struggling to see much of a downside now we have an easing cycle underway, and the bottom of the economic cycle is probably in.
Yes HGH stands out. Metrics screaming well under valued.
Quote from: winner (n) on Aug 18, 2024, 10:53 AMI hope Flood not next CEO ...nice guy but he's been there too long and entrenched in Heartland way of doing things ...they need somebody who can bring new vibrancy to the business.
Bit of philosophical thinking posted earlier -
One day, well into Jeff's long and illustrious career, a journalist asked the banker why he wasn't driving great Heartland performance like he used to.
"When Heartland was growing profits I was cold and hungry," said Jeff. "I'm not cold and hungry anymore."
Let's call this "The Jeff Greenslade Problem". How does a person or an organization keep its creative vitality once they have already become successful, already become comfortable?
This, I think, is one of the cardinal problems of any type of successful business that has seen a lot of growth. How do we keep the hunger? The sexy?
T
Understand your concerns. I just think as a general rule internal promotions do better, especially if the replacement lacks industry experience.
Quote from: Shareguy on Aug 18, 2024, 05:20 PMscreaming well under valued.
Screams "cheep" louder that a cage full of budgies lol
Quote from: snapiti on Aug 18, 2024, 10:33 AMgreat post and I agree that we should expect them to meet guidance.
However watch for any commentary around a build in bad loans.
Failing that and if they meet guidance I suspect a meaningful rise to the SP
Don't worry if there is a build in bad loans .... These days they are set aside and called things like Overlays blah blah abnormal and not counted in Underlying Profit
So no worries
:I'm looking forward to selling at about $2.50 again:
were all those posts today? is this the next hot stock ?
2.50?
right .... aaahh ....
I trust loan collections are back on track,after the issues they commented on in their interim result.
The arrears experienced in a subset of longer dated Motor Finance loans are a
result of operational issues in Heartland Bank's Collections & Recoveries
area and do not reflect any underlying issues with the credit quality of the
book. This is primarily a resourcing issue caused by illness, employee
turnover due to overseas travel, and a focus on Heartland Bank's core banking
system upgrade (which is now complete). This is being addressed through a
specialised recruitment strategy and automation. Underlying impairments are
otherwise performing as expected given the challenging economic conditions.
Heartland's asset quality continues to shift towards loans with lower risk
exposures.
Quote from: winner (n) on Aug 18, 2024, 07:03 PMDon't worry if there is a build in bad loans .... These days they are set aside and called things like Overlays blah blah abnormal and not counted in Underlying Profit
So no worries
facetious as usual I see
Quote from: lorraina on Aug 19, 2024, 08:36 AMI trust loan collections are back on track,after the issues they commented on in their interim result.
The arrears experienced in a subset of longer dated Motor Finance loans are a
result of operational issues in Heartland Bank's Collections & Recoveries
area and do not reflect any underlying issues with the credit quality of the
book. This is primarily a resourcing issue caused by illness, employee
turnover due to overseas travel, and a focus on Heartland Bank's core banking
system upgrade (which is now complete). This is being addressed through a
specialised recruitment strategy and automation. Underlying impairments are
otherwise performing as expected given the challenging economic conditions.
Heartland's asset quality continues to shift towards loans with lower risk
exposures.
yes and now looking like a good move to stop making loans for utes IMO,
yup ... its those dang tradies and those construction sector liquidations...
Great start to the week, looking forward to the 29th. When I refixed my mortgage in March I got a 10k cashback from BNZ which I bought some more of these at 98c.
Looking forward to reinvesting future divvies.
Pig is moving through the python.
Just about digested - volume of trades since July suggests underwrite shortfall shares gone.
Quote from: Waltzing on Aug 19, 2024, 10:14 AMyup ... its those dang tradies and those construction sector liquidations...
yep that's what I was thinking just did not want to say it
Global Dairy Trade auction over night .... Whole Milk Powder up 7.2% ...... 2nd rise in a row after a sustained decline this year
Good sign for HGH share price over next few months
They do say HGH shares are inextricably linked to the performance of the economy...and gosh haven't we seen ample evidence of that in the last year ! Hopefully the darkest days of the economy are behind us now and we can look forward to Spring, both literally in terms of the weather and metaphorically in terms of the economy.
Quote from: Basil on Aug 21, 2024, 09:39 AMThey do say HGH shares are inextricably linked to the performance of the economy...and gosh haven't we seen ample evidence of that in the last year ! Hopefully the darkest days of the economy are behind us now and we can look forward to Spring, both literally in terms of the weather and metaphorically in terms of the economy.
Disc: Bought a few more yesterday.
NZ economy basically tied to 3 Cs ....... Climate / Currency / Commodity Prices
You can forecast a lot by running a multiple regression model using inputs such as Soil Moisture Deficit / Commidity Price Index / NZD.
Believe it not it was a very good indicator of how much paint is going to be used in the next year ...... and dairy prices alone a good indicator of which direction the Heartland share price going
Quote from: Teitei on Jul 26, 2024, 03:27 PMHave to say that the python has been rather ravenous in the last 18 months, swallowing two pigs and rather fat ones at that.
But just imagine how energised and strong the python will be after fully digesting the two pigs!
Just the second pigs trotters left to digest now. I had some yesterday. Can be very tasty if done right.
https://www.bing.com/images/search?view=detailV2&ccid=bM8D8JdQ&id=AE7F0B71506B35E893D3C236281BEB6808327359&thid=OIP.bM8D8JdQ8KjXdKNSbkqQggHaLH&mediaurl=https%3A%2F%2Fizzycooking.com%2Fwp-content%2Fuploads%2F2020%2F11%2FPig-Feet-1.jpg&cdnurl=https%3A%2F%2Fth.bing.com%2Fth%2Fid%2FR.6ccf03f09750f0a8d774a3526e4a9082%3Frik%3DWXMyCGjrGyg2wg%26pid%3DImgRaw%26r%3D0&exph=1800&expw=1200&q=pig%27s+trotter&simid=608012575043509968&FORM=IRPRST&ck=768359895A963EEA1B2AE9931FE34F1C&selectedIndex=18&itb=0&cw=1763&ch=892&ajaxhist=0&ajaxserp=0
Quote from: Basil on Aug 21, 2024, 09:39 AMThey do say HGH shares are inextricably linked to the performance of the economy...and gosh haven't we seen ample evidence of that in the last year ! Hopefully the darkest days of the economy are behind us now and we can look forward to Spring, both literally in terms of the weather and metaphorically in terms of the economy.
Looking forward to results next week.
If HGH affirms that provisionings are under control and the integration of Challenger Bank is on track, am expecting the sp to track towards $1.25 as a first move.
Bring on 29th August!
Quote from: Teitei on Aug 21, 2024, 11:57 AMLooking forward to results next week.
If HGH affirms that provisionings are under control and the integration of Challenger Bank is on track, am expecting the sp to track towards $1.25 as a first move.
Bring on 29th August!
get out of my head tt, literally word for word my thoughts
Open banking should be a game changer for Heartland.
https://comcom.govt.nz/news-and-media/media-releases/2024/a-stronger-kiwibank-and-open-banking-could-shake-up-nz-banking-sector
Quote from: Teitei on Aug 21, 2024, 11:57 AMLooking forward to results next week.
If HGH affirms that provisionings are under control and the integration of Challenger Bank is on track, am expecting the sp to track towards $1.25 as a first move.
Bring on 29th August!
And the flip-side of that coin is??
Quote from: LoungeLizard on Aug 21, 2024, 04:07 PMAnd the flip-side of that coin is??
If they were not on track to meet the FY24 guidance, they would have already made an announcement.
Quote from: Basil on Aug 21, 2024, 04:18 PMIf they were not on track to meet the FY24 guidance, they would have already made an announcement.
Well, we all now khow provisions can be made below the line, as can many other things that may point to troubled waters ahead. The devils in the detail. One way or another 29th August will either give substance to the SP recovery or it may throw a curve ball. I'm hoping for some substance at which point I might throw some $ at HGH.
I concur that the FY25 guidance will be a crucial factor, yet I am fully aware that the complete advantages of funding Australian reverse mortgage loans with retail deposits won't materialize until FY27, owing to existing hedges and contracts related to wholesale funding until that time.
From my perspective, investing in HGH involves looking beyond the present economic downturn, projecting 2-3 years ahead, and hoping that in the interim, there won't be a significant unexpected impact from delinquent loans.
It's our Jeff's last results. Would expect that he will be raiding any provisions to make this result look good.
Tempting to add more but going to wait for the result. One of my brokers has been buying for clients and for himself. Said "well under valued". Not long to wait.
As has been noted on the TWR thread, the Suncorp CEO justified getting out of banking saying that they were too small to viably meet the increasing costs and capital requirements. HGH are a slightly different beast with their reverse mortgage business but I'm still nervous about Challengers prospects in the long run. Will the next 2-3 years be good for the small banks?. I'm still unconvinced at this stage, but willing to be proved wrong.
Quote from: Shareguy on Aug 21, 2024, 04:45 PMIt's our Jeff's last results. Would expect that he will be raiding any provisions to make this result look good.
Tempting to add more but going to wait for the result. One of my brokers has been buying for clients and for himself. Said "well under valued". Not long to wait.
Certainly, there's deep value and it's not without risk—though that's true for any market area. I believe all the risks are more than accounted for in the price, so I purchased some more today. After all, fortune favors the brave. 😊
2 interesting charts, top one price to book according to Tradingview, second one by the rocketman on X from Westpac.
Looks very cheap when you add in some option value of the retail herd returning and a repricing to 1.5+ P/B, hope all you guys do well.
Screenshot 2024-08-21 201312.png
GVVd7xPaUAAAh9H.jpg
Harmoney down to $0.40. HGH might have to write down the value again.
Quote from: Shareguy on Aug 23, 2024, 01:03 PMHarmoney down to $0.40. HGH might have to write down the value again.
Booked a $1.9m gain December half year
HMY gone from 48 at December to 38 as at June so decent write down coming in full year results. No worries as doesn't count as it's a 'non-cash technical adjustment'
Soulf get a positive gain in F25 eh
Quote from: winner (n) on Aug 23, 2024, 01:36 PMBooked a $1.9m gain December half year
HMY gone from 48 at December to 38 as at June so decent write down coming in full year results. No worries as doesn't count as it's a 'non-cash technical adjustment'
Soulf get a positive gain in F25 eh
Expect a lot of "technical adjustments" to keep the headline figures looking healthy.
Future share price direction. Its all going to be about the forecast for FY25. Market is a forward-looking beast, always has been and always will be.
Quote from: LoungeLizard on Aug 23, 2024, 05:13 PMExpect a lot of "technical adjustments" to keep the headline figures looking healthy.
Quote from: LoungeLizard on Aug 21, 2024, 04:07 PMAnd the flip-side of that coin is??
And here's the contrarian Lizard for another bite, I don't know why you guys give him oxygen .
Quote from: Syd on Aug 24, 2024, 03:31 PMAnd here's the contrarian Lizard for another bite, I don't know why you guys give him oxygen .
Sometimes pictures or video's are better than words 😉
https://www.youtube.com/shorts/_XTNXRvkBYA
Quote from: Syd on Aug 24, 2024, 03:31 PMAnd here's the contrarian Lizard for another bite, I don't know why you guys give him oxygen .
It's a free country, brother.
Heartland profit announcement next week
FY23 underlying was $110.2 (Real $95.9m)
In August 23 gave Guidance F24 underlying $116m to $122m
In December said $108m/$112m. (Real $93m to $97m)
So likely to make less than F23 and maybe even less than F22 ...goodness knows what Real NPAT will be
So as Basil says F25 guidance is key part of announcement
Could even come out with underlying $110m ....what a disaster that would be
Even underlying $120m would be disappointing ...seeing that would likely be changed downwards early next year.
Not looking too good in my opinion ....and hate to say the lizard might have been right
Quote from: LoungeLizard on Aug 24, 2024, 04:49 PMIt's a free country, brother.
No its not, maybe for some that live in NZ, but you are allowed to share your opinion. Just be careful how you come accross.
The adage 'it's always darkest before the dawn' rings loud and clear here, Winner. The chart looks promising. I'm content to let others chase after the market's favorites with their sky-high valuations while I choose to invest in value stocks that boast compelling metrics and excellent prospects for earnings growth in the coming years. To each their own. The future prospects of HGH are closely linked to the economy, and I believe we have passed the darkest days.
Quote from: Basil on Aug 24, 2024, 05:19 PMThe adage 'it's always darkest before the dawn' rings loud and clear here, Winner. The chart looks promising. I'm content to let others chase after the market's favorites with their sky-high valuations while I choose to invest in value stocks that boast compelling metrics and excellent prospects for earnings growth in the coming years. To each their own. The future prospects of HGH are closely linked to the economy, and I believe we have passed the darkest days.
You could well be right regarding HGH, but I'm not sure about the NZ economy as a whole. A lot of economists aren't sure either. Many people are struggling with inflation baked in, interest rates still high, the construction industry - a reasonable barometer of the countries mood - is "challenging." Public spending is being cut so there's that as well. In the last business survey 65% expected a continued deterioration in NZ's economic circumstances. The companies that have exposure to OZ - like HGH and HLG - may do better. But for HGH to do well, Challenger has to do well and that is still yet to be determined, although we will know soon enough on that I guess.
There is risks, so it's good to have the good and bad opinions. We have not had any disclosures so I expect FY24 to be as per guidance. I see the risk's already built into the share price. Still not at terp of $1.17. When you compare price to book HGH is nearly half the Aust sector average.
I agree this is all about FY25 onwards. The reduction in the divi to 50 percent was for FY24 only from 70/75%. I'm expecting an increase to perhaps 60 %.
Open banking with account portability has the potential to be a game changer for the smaller banks including HGH. The future is bright, very bright in my opinion.
I have a regular coffee with an 80yr old retiree who is in the hands of a Jardens 'wealth manager' who has been giving my mate some questionable advice recently (eg recently recommending AIR, FBU and THL as companies to buy because they will benefit from the coming low interest environment!?)
He was rung last week and recommended to sell his Westpac shares and buy HGH.
Question is...... is this advice a HGH sell signal or a HGH buy signal.. !!??
Watching this week with interest.
Quote from: Left Field on Aug 25, 2024, 09:41 AMI have a regular coffee with an 80yr old retiree who is in the hands of a Jardens 'wealth manager' who has been giving my mate some questionable advice recently (eg recommending AIR, FBU and THL as companies to buy because they will benefit from the coming low interest environment!?)
He was rung last week and recommended to sell his Westpac shares and buy HGH.
Question is...... is this advice a HGH sell signal or a HGH buy signal.. !!??
Watching this week with interest.
I understand analysts are all a bit at sea with HGH because the bank has not been interacting with them much since the Challenger acquisition.
And nothing make analysts nervous than not getting their forecast and assumptions verified by companies!
And imo with HGH in a way, rightly so as management have their hands full integrating Challenger into HGH. Plus, would have been premature to indicate anything until at least 6 months into the integration process.
Hence, much nervousness heading into the results on Thursday.
One way or the other, we will find out on 29th August.
I have a gut feeling that all is not right with Heartland these days.
Things don't seem to be like they used to be. In the past I've been confident in their ability to perform but no more do I have that feeling. Too many things 'just don't gel' in my opinion.
Yeah I know they have this multi year strategy to generate ever increasing profits. In light of their recent track record iI think one should take their plans as hopeful intent. That doesn't mean they are lying, just that we really don't necessarily know what they can or cannot do. There is a particular danger that be using language that resonates with man it's almost certain to happen. But saying the right things can lull one into believing that ....but I've learnt in the past that things that haven't worked out recently often don't work out in the future.
That's how I see Heartland today. Ive acted on that gut feel ...OK they say you shouldn't act on gut feel but I reckon it's often more right than wrong.
Next week will be interesting ......and I hope I'm wrong
Quote from: winner (n) on Aug 25, 2024, 10:50 AMI have a gut feeling that all is not right with Heartland these days.
Things don't seem to be like they used to be. In the past I've been confident in their ability to perform but no more do I have that feeling. Too many things 'just don't gel' in my opinion.
Yeah I know they have this multi year strategy to generate ever increasing profits. In light of their recent track record iI think one should take their plans as hopeful intent. That doesn't mean they are lying, just that we really don't necessarily know what they can or cannot do. There is a particular danger that be using language that resonates with man it's almost certain to happen. But saying the right things can lull one into believing that ....but I've learnt in the past that things that haven't worked out recently often don't work out in the future.
That's how I see Heartland today. Ive acted on that gut feel ...OK they say you shouldn't act on gut feel but I reckon it's often more right than wrong.
Next week will be interesting ......and I hope I'm wrong
Market shares your view W69.
That's why HGH's sp is where it is.
Limited downside but plenty of upside imo.
QuoteLimited downside but plenty of upside imo.
That's how I see it too. Let's flip this coin...seeing as I have quite a bit on coin invested here. Heads you win and over the next few years earnings grow nicely, and the metrics return to some sort of normality, (PE expansion plus earnings growth could quite plausibly see a doubling in the share price over the next few years or somewhere around that level), or tails, despite the well know 20% CAGR in Reverse home loan mortgage demand, for some reason unknown to me neither growth in eps nor a reversion to a normal PE of about 13 or anywhere around that level doesn't happen and the shares stay around the current level, perhaps only head a little bit higher as their circa 10% gross yield for FY25 and beyond becomes more attractive as interest rates fall.
Food for thought for the naysayers. If tails occur, (i.e. the bearish outcome) is that really a loss?
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/finances/
Market expectations.
FY24 $93m
FY25 $118m
FY26 $150m
Analysts forecast $150m ....I think they've been seduced by a glossy presentation with all the words they wanted to hear
Even that F25:looks rather hopeful ....but we should know cone Thursday
~ $30m per annum extra NIM just with lower costs from funding reverse home loans with retail deposits rather than wholesale funding and that's before you consider they have a multiyear track record of 20% CAGR in those low-risk loans. One morning soon you'll wake up and smell the coffee that HGH have never traded on such a deep discount to NTA or PE relative to Australian banks before.
Keep in mind there's now 930.56m shares on issue so FY26's average analyst forecast of $150m is 16.1 cps. Put a normal mid cycle PE of 13 on that and $2.10 is on the cards for late 2025. Mate, you snooze, you lose😉
Quote from: Basil on Aug 25, 2024, 05:02 PM...... you snooze, you lose😉
No snoozing here.....no losing.....no naysayers.... just differing investing priorities and keeping an open mind.
The attached chart compares some differing investing priorities (including Turners and HGH) over the last 12 months. (The chart is based on SP changes and excludes divvies, however the relativity remains largely unchanged.)
Best to keep an open mind on HGH. I hope this week's report goes well for holders.
Quote from: Left Field on Aug 26, 2024, 08:01 AMNo snoozing here.....no losing.....no naysayers.... just differing investing priorities and keeping an open mind.
The attached chart compares some differing investing priorities (including Turners and HGH) over the last 12 months. (The chart is based on SP changes and excludes divvies, however the relativity remains largely unchanged.)
Best to keep an open mind on HGH. I hope this week's report goes well for holders.
Lesson to be learnt - never get too negative (or too positive) about any stock!
HBL's accounts to June and other associated banking metrics have been available on the RBNZ banking dashboard for a while now.
Quote from: Fiordland Moose on Aug 26, 2024, 09:01 AMHBL's accounts to June and other associated banking metrics have been available on the RBNZ banking dashboard for a while now.
30 June 2023?
Quote from: Left Field on Aug 26, 2024, 08:01 AMNo snoozing here.....no losing.....no naysayers.... just differing investing priorities and keeping an open mind.
The attached chart compares some differing investing priorities (including Turners and HGH) over the last 12 months. (The chart is based on SP changes and excludes divvies, however the relativity remains largely unchanged.)
Best to keep an open mind on HGH. I hope this week's report goes well for holders.
Says it all really. You can only back so many horses and HGH have been at the back of the field for a while now. Will need an impressive finishing spurt to make up the ground.
Quote from: Teitei on Aug 26, 2024, 09:29 AM30 June 2023?
No 30 June 2024.
Licensed banks must report P&L, balance sheet, and credit metrics quarterly to the RBNZ.
The RBNZ uploads the quarterly performances to the dashboard 40 working days after the end of each quarter. So the March quarter has been available for many months now, and the June quarter more recent. You can see the impaired asset expense, liquidity ratios, equity position, Nim $ and NIM %, npat, etc. Note its just for the NZ business.
Quote from: Fiordland Moose on Aug 26, 2024, 09:01 AMHBL's accounts to June and other associated banking metrics have been available on the RBNZ banking dashboard for a while now.
thats an excellent link and a good reason to be on these forums.
So according to the RBNZ website HBL bad loans decreased slightly over the previous 1/4......still up from this time last year but a great performance given the climate
Topping my shareholding up today, HBL my largest single holding apart from BRM
has anyone else checked the numbers on the RBNZ website
Just had a look now, HBL figures stand out on many of the charts but the % changes over the same periods are better compared to the big boys.
so I spent the last hour drilling into HGH 1/4 numbers for June available for all to see on the RBNZ website, not sure how long they have been available but the smart money would have seen this and now explains the solid 15% rise in SP over the last few weeks.
All the metrics are there including asset class allocations, comparisons with other banks over the last 4 1/4's.
Many metric's to research however this is my top 4 metric's I want to know.
NIM increased a whopping 10% 1/4 on 1/4
Loan book continued to grow yoy however decreased 1/4 on 1/4. A breakdown of the numbers indicates a move away from riskier loans. (like given the circumstances)
Impaired assets decreased 1/4 on 1/4 (this is huge IMO given the climate)
Home loans increased but the rate of increase continued to slow
All in all a lot better than expected and IMO these numbers show a well run bank during the hardest of times........suspect we will get a good response come reporting day
Quote from: snapiti on Aug 26, 2024, 02:51 PMso I spent the last hour drilling into HGH 1/4 numbers for June available for all to see on the RBNZ website, not sure how long they have been available but the smart money would have seen this and now explains the solid 15% rise in SP over the last few weeks.
All the metrics are there including asset class allocations, comparisons with other banks over the last 4 1/4's.
Many metric's to research however this is my top 4 metric's I want to know.
NIM increased a whopping 10% 1/4 on 1/4
Loan book continued to grow yoy however decreased 1/4 on 1/4. A breakdown of the numbers indicates a move away from riskier loans. (like given the circumstances)
Impaired assets decreased 1/4 on 1/4 (this is huge IMO given the climate)
Home loans increased but the rate of increase continued to slow
All in all a lot better than expected and IMO these numbers show a well run bank during the hardest of times........suspect we will get a good response come reporting day
Good stuff Snapiti
Hope Grouo results are just as robust
Good stuff Snapper. I'm already very well positioned for reporting day on Thursday.
Quote from: Fiordland Moose on Aug 26, 2024, 09:01 AMHBL's accounts to June and other associated banking metrics have been available on the RBNZ banking dashboard for a while now.
Thanks, FM!
Learnt something new.
Quote from: Basil on Aug 26, 2024, 04:06 PMGood stuff Snapper. I'm already very well positioned for reporting day on Thursday.
well after reading the numbers on RBNZ website I doubled my holdings today.
I think the market is still pricing in a decline of NIM and a decline in bad loans, both are shown to be the opposite in the HGH supplied RBNZ site figures.
Now I know a few are awaiting the 2025 outlook including challenger bank but for me that is rather meaningless given it is just "guidance" and they could both over promise or under promise.
For me the bigger news was how have they manage riskier lending during an extremely bad economic cycle.
I will say the only area I could see of concern was the slower growth in mortgage lending.(reverse mortgages)
I am going to take a pragmatic approach to this and say if the market got to big Tier one banks would start offering a competing product, so some modesty in this sector is a good thing.
I expect the companies ann later this week to confirm RBNZ website numbers.
Like I said in an earlier posts if the RBNZ numbers are accurate HGH has proven to be a very well run bank in very difficult times.
Now another consideration is their rural lending portfolio.
There has been a major decrease in the cost of fertilizer inputs over the last 3 months, milk payout has risen to a very healthy $9 and beef cattle and deer prices are close to an all time highs.
I can see $1.25 by weeks end
correction HGH reporting to RBNZ shows NIM up 8.5% not 10% as stated.
More importantly this shows a meaningful reversal of a previously declining NIM
Quote from: Fiordland Moose on Aug 26, 2024, 10:09 AMNo 30 June 2024.
Licensed banks must report P&L, balance sheet, and credit metrics quarterly to the RBNZ.
The RBNZ uploads the quarterly performances to the dashboard 40 working days after the end of each quarter. So the March quarter has been available for many months now, and the June quarter more recent. You can see the impaired asset expense, liquidity ratios, equity position, Nim $ and NIM %, npat, etc. Note its just for the NZ business.
Thanks FM. If only we could get the Australian info.
thl today scrapped their $100m by 2006 target ....all too hard and unrealistic
Suppose Jeff will scrap his $200m by 2008 target on Thursday ....all too hard and unrealistic
Quote from: winner (n) on Aug 27, 2024, 09:11 AMthl today scrapped their $100m by 2006 target ....all too hard and unrealistic
Suppose Jeff will scrap his $200m by 2008 target on Thursday ....all too hard and unrealistic
Assuming you mean 2026 and 2028 W69.
Jeff will look to go out on a high.
Quote from: Greekwatchdog on Aug 27, 2024, 09:26 AMAssuming you mean 2026 and 2028 W69.
Jeff will look to go out on a high.
It's $200m+ in 2028
Jeff probably looks at that slide and says to himself what the heck was I thinking back then
[/quote]
Quote from: snapiti on Aug 26, 2024, 02:51 PMso I spent the last hour drilling into HGH 1/4 numbers for June available for all to see on the RBNZ website, not sure how long they have been available but the smart money would have seen this and now explains the solid 15% rise in SP over the last few weeks.
All the metrics are there including asset class allocations, comparisons with other banks over the last 4 1/4's.
Many metric's to research however this is my top 4 metric's I want to know.
NIM increased a whopping 10% 1/4 on 1/4
Loan book continued to grow yoy however decreased 1/4 on 1/4. A breakdown of the numbers indicates a move away from riskier loans. (like given the circumstances)
Impaired assets decreased 1/4 on 1/4 (this is huge IMO given the climate)
Home loans increased but the rate of increase continued to slow
All in all a lot better than expected and IMO these numbers show a well run bank during the hardest of times........suspect we will get a good response come reporting day
A few interesting numbers :
Profitability HBL's H2 NPAT = $32.4m, 26.5% up on H1's $25.6m.
Impaired asset expense = $18.3m, down 24% on H1's $24m.
Asset Quality as at 30 June 2024Impaired loans $61m vs $64.3m in 2023
Total non-performing loans $180.5m vs $136.6m in 2023
August 2027, HGH forecasts $185m in FY28, the shares hit $2.50 and Winner thinks, what the heck was I thinking back then, I could have more than doubled my money in 3 years.
Aye non performing loans that are unprovisioned have crept up. So fair to question how well provisioned the business (non rm) book is.
Credit metrics look mostly good as well as they should after the cap raise as they kept it I recall correctly 25m for the NZ business. But the liquidity ratio has come down and sticks out - illustrates the company isnt really producing much cash and much of the reverse mortgage earnings is something being capitalised and added to existing balances. Hgh need the housing market to speed up to kick start voluntary repayments.
I think the reporting format is going to look a lot different this year end. Ie will section off legacy assets in one subgroup and the other divisions seperate
Expect it will be messy per normal with new divisional accounts, non recurring transaction expenses from the cap raise and challenger acquisition, etc. and shouldnt expect much from challenger as it will take some time to raise all the deposits to completely refinance the australian wholesale funding. So probably something for everyone (bears and bulls) to argue over when revealed this week.
Quote from: Left Field on Aug 25, 2024, 09:41 AMI have a regular coffee with an 80yr old retiree who is in the hands of a Jardens 'wealth manager' who has been giving my mate some questionable advice recently (eg recently recommending AIR, FBU and THL as companies to buy because they will benefit from the coming low interest environment!?)
He was rung last week and recommended to sell his Westpac shares and buy HGH.
Question is...... is this advice a HGH sell signal or a HGH buy signal.. !!??
Watching this week with interest.
ps THL was another of the shares a broker recommended to my mate 2-3 weeks ago..... along with HGH more recently.
Today he's glad he didn't buy FBU/THL......still waiting for HGH.
With lower interest rates and an economy that's hopefully on the mend, I hope they can rehabilitate the vast majority of those non performing loans.
A week or so back I bought more Tower, Heartland and Argosy shares, all at $1.12 each. I expect to do well out of at least 2 of them and one will probably not do much other than pay a decent dividend yield and that's okay. We'll see which is which over the next few years.
All 3 have one thing in common, they're value stocks supported by very attractive metrics and a very decent dividend yield so even if all three go sideways i still get highly attractive income to support my hobbies and interests in my semi-retirement years. I'm happy for others who buy the market darlings on super lofty PE's or tech stocks on no earnings at all and do well out of them but that's not my gig and never will be. Each to their own.
Quote from: Fiordland Moose on Aug 27, 2024, 10:45 AMAye non performing loans that are unprovisioned have crept up. So fair to question how well provisioned the business (non rm) book is.
Credit metrics look mostly good as well as they should after the cap raise as they kept it I recall correctly 25m for the NZ business. But the liquidity ratio has come down and sticks out - illustrates the company isnt really producing much cash and much of the reverse mortgage earnings is something being capitalised and added to existing balances. Hgh need the housing market to speed up to kick start voluntary repayments.
I think the reporting format is going to look a lot different this year end. Ie will section off legacy assets in one subgroup and the other divisions seperate
Expect it will be messy per normal with new divisional accounts, non recurring transaction expenses from the cap raise and challenger acquisition, etc. and shouldnt expect much from challenger as it will take some time to raise all the deposits to completely refinance the australian wholesale funding. So probably something for everyone (bears and bulls) to argue over when revealed this week.
I tend too Agree about the bull/bear debate, SP reaction, after Ann, will say a lot
Quote from: snapiti on Aug 27, 2024, 12:34 PMI tend too Agree about the bull/bear debate, SP reaction, after Ann, will say a lot
Looks like Mexican standoff at around $1.15 until results.
Who dares, wins!
Comes across well.
https://www.mpamag.com/au/mortgage-industry/business-growth/heartland-bank-australia-ceo-outlines-growth-plans/502956
From that Dash Board thingie HBL ROE looks a bit sad ..... as A2 would say it's mid single digit
Quote from: Shareguy on Aug 27, 2024, 12:47 PMComes across well.
https://www.mpamag.com/au/mortgage-industry/business-growth/heartland-bank-australia-ceo-outlines-growth-plans/502956
Highly experienced with a clear vision for the growth of the company. Very good hire. I am confident she will lead the team well and drive awesome growth in the business in the years ahead. I am also confident the naysayers will keep saying nothing is proven yet despite Heartland already having the market dominant position of 40% of the reverse home loan market in Australia lol
Quote from: snapiti on Aug 26, 2024, 06:00 PMLike I said in an earlier posts if the RBNZ numbers are accurate HGH has proven to be a very well run bank in very difficult times.
Now another consideration is their rural lending portfolio.
There has been a major decrease in the cost of fertilizer inputs over the last 3 months, milk payout has risen to a very healthy $9 and beef cattle and deer prices are close to an all time highs.
I can see $1.25 by weeks end
Attempting to break above the $1.15 level ... excellent chance it will go through to $1.25 if the $1.15 holds today.
TA looking VERY robust. Just touched the 180 day moving average @ $1.17... Primed and ready for a breakout. Volume on the offer side looking very thin.
Quote from: Basil on Aug 27, 2024, 04:44 PMTA looking VERY robust. Just touched the 180 day moving average @ $1.17... Primed and ready for a breakout. Volume on the offer side looking very thin.
Now why would a holder sell at current levels when it is heading towards $1.25 on Thursday?
Written jokingly of course!
Quote from: Teitei on Aug 27, 2024, 04:56 PMNow why would a holder sell at current levels when it is heading towards $1.25 on Thursday?
Written jokingly of course!
I'll see your rhetorical question and raise you with another ;)
Why would a holder sell on Thursday @ $1.25 when there's a very good chance it will be double that @ $2.50 three years hence in 2027?
I got AI to tell me about Winzer's leadership style -
Michelle Winzer describes her leadership style as "genuine, authentic, visionary," focusing on creating a positive culture where people can achieve their potential. She emphasizes a strong commitment to the people in the business, believing that this approach leads to better outcomes for customers. Winzer aims to deliver strong growth through her leadership and the impact she has on the organization.
Shame no mention of supporting the indigenous people /culture of Australia
Quote from: Basil on Aug 27, 2024, 05:57 PMI'll see your rhetorical question and raise you with another ;)
Why would a holder sell on Thursday @ $1.25 when there's a very good chance it will be double that @ $2.50 three years hence in 2027?
Sell side looking very thin indeed. Reckon I should move my top up 'buy' to $1.20 to help the sp along?
I reckon HGH will give Jeff a good send off with an excellent result, given he has definitely been instrumental in building the bank to what it is today. And has the self awareness and confidence to hand it over to another, knowing that the bank now needs another CEO to take it to the next level of growth.
Quote from: winner (n) on Aug 28, 2024, 07:56 AMI got AI to tell me about Winzer's leadership style -
Michelle Winzer describes her leadership style as "genuine, authentic, visionary," focusing on creating a positive culture where people can achieve their potential. She emphasizes a strong commitment to the people in the business, believing that this approach leads to better outcomes for customers. Winzer aims to deliver strong growth through her leadership and the impact she has on the organization.
Shame no mention of supporting the indigenous people /culture of Australia
You mean like that buffoon Adrian Orr adopting the Maori mythological financial system to fxxk the NZ economy over?
Quote from: Teitei on Aug 28, 2024, 09:40 AMYou mean like that buffoon Adrian Orr adopting the Maori mythological financial system to fxxk the NZ economy over?
I was relieved that Basil won't need to learn a new language to read heartlands reports ..took him a while to grasp Te Reo Maori
Need to embrace all things Australian culture eh Winner. Here, this will help ;)
https://www.youtube.com/watch?v=yG9ZX1FS20A
Looking forward to tomorrow's results.
We know NZ is doing fine (based on RBNZ disclosure & data) and Australia reverse mortgage book should be doing very well.
As the commentary below shows, the reverse mortgage business is low risk (but cashflow and capital intensive in the short term).
So really, the one area which could disappoint would be the livestock financing business. Meat prices have been increasing in recent times.
https://www.bankingday.com/reverse-mortgage-market-growth-spurt
The average Australian reverse mortgage loan size is $190,849, at an average loan-to-valuation ratio of 11.9 per cent at origination. The average age of borrowers is 77.
Quote from: Teitei on Aug 28, 2024, 02:33 PMLooking forward to tomorrow's results.
We know NZ is doing fine (based on RBNZ disclosure & data) and Australia reverse mortgage book should be doing very well.
As the commentary below shows, the reverse mortgage business is low risk (but cashflow and capital intensive in the short term).
So really, the one area which could disappoint would be the livestock financing business. Meat prices have been increasing in recent times.
https://www.bankingday.com/reverse-mortgage-market-growth-spurt
The average Australian reverse mortgage loan size is $190,849, at an average loan-to-valuation ratio of 11.9 per cent at origination. The average age of borrowers is 77.
I concur but think the market is also concerned about any issues with the Challenger purchase that have come to light. Levels of deposits to replace wholesale funding will be interesting.
Not long to wait.....
Quote from: Shareguy on Aug 28, 2024, 03:01 PMI concur but think the market is also concerned about any issues with the Challenger purchase that have come to light. Levels of deposits to replace wholesale funding will be interesting.
Not long to wait.....
Given the long lead time HGH had to finalise the Challenger acquisition, there better NOT be any issues!
If there are, then HGH is unworthy of the faith that shareholders have placed in the group in swallowing the two CRs.
Quote from: Shareguy on Aug 26, 2024, 08:23 PMThanks FM. If only we could get the Australian info.
check out APRA
Quote from: Basil on Aug 28, 2024, 11:08 AMNeed to embrace all things Australian culture eh Winner. Here, this will help ;)
https://www.youtube.com/watch?v=yG9ZX1FS20A
Gurrumul is an amazing aboriginal musician ...blind and plays the right handed guitar left handed and has an amazing voice.
People often ask what's that song about and once Gurrumul responded make what of it whst you will...let your imagination run loose.
One of his pieces is Warwu ...I reckon the translation goes like this ....there's a young bank in this country but it's going to be a great bank one day after Winzer gets it up and running and so in
Here's a great piece
https://www.youtube.com/watch?v=zQ9c-TOpCSI
Big day for holders tomorrow. Should at least give a snapshot of how things are progressing over the ditch. Will NP be tracking along as Jeff foretold? Any more skeletons in the Challenger closet? Will NIM be as good as some are forecasting? Will the dividend hounds be happy if it's cut again? Answers very soon...
going to be good and not so good in the ann.
Certainly looking good today for all that could see the value @ $1 or under not so long ago.
Dont think Mr markets has priced in an upbeat result but hard to imagine the report will be all roses given the macro environment so sure to be stuff in there for winner and lizard to squawk about.
Quote from: LoungeLizard on Aug 28, 2024, 07:47 PMBig day for holders tomorrow. Should at least give a snapshot of how things are progressing over the ditch. Will NP be tracking along as Jeff foretold? Any more skeletons in the Challenger closet? Will NIM be as good as some are forecasting? Will the dividend hounds be happy if it's cut again? Answers very soon...
With respect LL it appears you are purposely setting a bar for HGH so high that it all but guarantees the results relative to your expectation will be missed tomorrow. HGH only acquired Challenger on 30th April so only 2 months will be recorded in tomorrows year end result. More importantly, it was acquired with only a portion of the (cheaper) retail deposits required to retire the (more expensive) wholesale funding of the existing Heartland Australian business. It will take time and won't be until probably ~FY26 until the whole book is fully retail. So literally no one, including the Board, management, or institutional investors will be expecting to see anywhere near the full potential in Australian NIM expansion coming from the shift.
We know the result will be messy given the number of transaction expenses, final movements in that swap dedesignation, movements in HMY stake mkt value, and most likely a change in how they report divisional results. And shareholders are already on notice full year dividend payout will be decreased this year as they needed capital. Re dividend the more important issue is not the final dividend but any clue as to their intentions regarding future dividend payout. As they build the Australian RM business that will consume tremendous capital, and the NZ bank has higher capital requirements to meet by FY29...those two items, together with the RM business being a significant cash consumer driving the company to material operational cashflow losses ($640m cumulative operating cashflow losses from FY14-2023), highlight the dividend policy ought to come under review less the company raise yet more capital for the NZ business prior to 2028. The RM business has had 820m of cumulative cash outflows since FY18.
I think they will present results in the best possible light (ie may get a bit cute with how they calculate underlying earnings) so they can maybe eek into the guidance range. and even if they do it will be a well flagged decline on the prior period. So the question is in my view not how they've done vs last year but at this rebased price how does it compare to the expectations baked into the current price.
Jarden, having looked at the most recent APRA stats to 30 June 2024, noted good progress in the Australian bank transition. HBA lifted deposits by A$300m since the 30 April transaction bringing the total to $A1.4bn and relative to its FY25 target of $2.4bn. Additionally they note HGH has been progressively transferring its existing Australian assets into the new Australian bank but still had some way to go at 1H FY24.
So with all that said, I don't think the Board, Mgmt, or most shareholders who have recently purchased shares are saying the thing is going to the moon or anywhere near reaching its potential with challenger. There are obvious exceptions to that statement with a poster here but that is what it is.
Quote from: snapiti on Aug 28, 2024, 09:50 PMgoing to be good and not so good in the ann.
Certainly looking good today for all that could see the value @ $1 or under not so long ago.
Dont think Mr markets has priced in an upbeat result but hard to imagine the report will be all roses given the macro environment so sure to be stuff in there for winner and lizard to squawk about.
Totally agree. Expect to see more bickering between the bulls and the bears which I've got no interest in participating in.
A side note...sentiment and the banking cycle is an interesting thing to behold. Traditionally, for overseas banks, the prospect of slowly and modestly rising interest rates are usually positively perceived by investors. If the climb is modest enough there is no hard landing and material increase in credit losses, but the prize is in what happens to the vast holdings of interest rate linked securities they hold as collateral for the deposits they've taken. Banks hold huge sums of capital, and when interest rates are at historic lows like they have been for most of the last 10 years, they earn bugger all. But when they go up, even by small amounts, its a meaningful contributor to interest income, EPS and DPS and SP's tend to appreciate so as long as credit outlook doesn't get out of control. and some have argued banks are traditionally best positioned to expand NIM during a slowly rising interest rate environment (though I'm not sure that has borne out in this cycle in Australia).
The above didn't really happen in this cycle for HGH (or last for as long as would have been expected) as interest rates rose far faster and higher than most expected which crunched sentiment re credit losses. Lots of other issues at play with the SP (cap raise overhangs, and the fact that RM NIM actually compressed because HGH were unwilling to pass the full interest rates through, plus other items) but the perception was that as interest rates rose bad debts would explode and financial stability be threatened. Interest rates now trending back down and a tailwind to the SP, but ironically from a credit perspective heartland is at its most exposed and that could continue (or even increase) over the coming year as unemployment rises and businesses fail in greater numbers. Falling interest rates are an intoxicating and powerful tailwind to high beta equities and markets are forward looking, just got to be mindful not to look too far ahead.
Will the NZ reverse mortgage NIM% stabilise or improve as interest rates fall (keeping in mind the compression experienced last year when HGH declined to pass on all their costs)? But one thing that is clear is that the interest earned from heartlands capital (usually bonds) will fall as interest rates fall and the business is in a heightened credit risk environment and will be in FY25. but with the SP so depressed how much of that is already baked in (or more than baked in) from a fundamental perspective and at the end of the day is the direction more driven by sentiment around falling interest rates? [so as long as there isn't another big write down like in 1H 24]
Random musings, without a purpose or particular point.
Quote from: Fiordland Moose on Aug 28, 2024, 10:23 PMTotally agree. Expect to see more bickering between the bulls and the bears which I've got no interest in participating in.
A side note...sentiment and the banking cycle is an interesting thing to behold. Traditionally, for overseas banks, the prospect of slowly and modestly rising interest rates are usually positively perceived by investors. If the climb is modest enough there is no hard landing and material increase in credit losses, but the prize is in what happens to the vast holdings of interest rate linked securities they hold as collateral for the deposits they've taken. Banks hold huge sums of capital, and when interest rates are at historic lows like they have been for most of the last 10 years, they earn bugger all. But when they go up, even by small amounts, its a meaningful contributor to interest income, EPS and DPS and SP's tend to appreciate so as long as credit outlook doesn't get out of control. and some have argued banks are traditionally best positioned to expand NIM during a slowly rising interest rate environment (though I'm not sure that has borne out in this cycle in Australia).
The above didn't really happen in this cycle for HGH (or last for as long as would have been expected) as interest rates rose far faster and higher than most expected which crunched sentiment re credit losses. Lots of other issues at play with the SP (cap raise overhangs, and the fact that RM NIM actually compressed because HGH were unwilling to pass the full interest rates through, plus other items) but the perception was that as interest rates rose bad debts would explode and financial stability be threatened. Interest rates now trending back down and a tailwind to the SP, but ironically from a credit perspective heartland is at its most exposed and that could continue (or even increase) over the coming year as unemployment rises and businesses fail in greater numbers. Falling interest rates are an intoxicating and powerful tailwind to high beta equities and markets are forward looking, just got to be mindful not to look too far ahead.
Will the NZ reverse mortgage NIM% stabilise or improve as interest rates fall (keeping in mind the compression experienced last year when HGH declined to pass on all their costs)? But one thing that is clear is that the interest earned from heartlands capital (usually bonds) will fall as interest rates fall and the business is in a heightened credit risk environment and will be in FY25. but with the SP so depressed how much of that is already baked in (or more than baked in) from a fundamental perspective and at the end of the day is the direction more driven by sentiment around falling interest rates? [so as long as there isn't another big write down like in 1H 24]
Random musings, without a purpose or particular point.
Great posts FM. I think guidance is what most of us are expecting. Even then it's not a great result when you consider the highly dilutive cap raise. This is more about a beaten down share price, any lurking bad stuff and the future. $A1.4bn of retail deposits is a great start relative to its FY25 target of $2.4bn. I suspect the market will look at this very favourably. Nim expansion alone should be a real catalyst and hopefully a game changer, even though we are in a falling interest rate environment.
Waiting... long breakfest somewhere down on the water front maybe...
someone hit the AI button marked publish...
time all these glossie junk was dumped in favour of saving trees and simple pdf standard format adopted...
'
that way AI can read it and then your favourite avatar can chat to you as a hologram...
its just so 1929....
oh it just flew in by pigeon....
Bugger about the emergence of $10m debt provisioning ...would have been within guidance if that hadn't happened
Never mind, that's the way the cookie crumbles ...and makes F25 result look better lol
Jeez NIM down 58 basis pointhttps://announcements.nzx.com/detail/437072s on last years and CTI (costs) up 311 basis points
That NIM was getting better. ...sorry can't contain myself but looking. For the good bits
The number of adjustments to 'normalise' things on a par with Fletchers
Mmmmmmm best leave this for holders to digest......
https://www.nzx.com/announcements/437072
Full investor presentation here; https://api.nzx.com/public/announcement/437072/attachment/426005/437072-426005.pdf
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) has announced a net profit after tax (NPAT) of $74.5 million for the financial year ended 30 June 2024 (FY2024). On an underlying basis, FY2024 NPAT was $102.7 million.
In a challenging economic environment, Heartland achieved solid gross finance receivables (Receivables) growth, up 6.4% on the financial year ended 30 June 2023 (FY2023). While some volatility is expected to continue through the remainder of the 2024 calendar year, the longer-term outlook for Heartland is positive. Having executed significant strategic milestones in FY2024, further growth is anticipated in the financial year ending 30 June 2025 (FY2025) as Heartland continues towards its ambitions for the financial year ending 30 June 2028 (FY2028).
Heartland's FY2024 result was impacted by the rapidly deteriorating economic conditions in May and June 2024 which saw the emergence of additional provisions primarily in Heartland Bank Limited's (Heartland Bank's) Asset Finance, Motor Finance and Rural portfolios. This resulted in a 4.9% shortfall to guidance. This late increase in provisions reflects (amongst other things) enhancements to Heartland Bank's Motor Finance provisioning model, a more conservative provisioning approach on certain Rural exposures, and the effect of the sustained inflationary environment on some consumer and business borrowers.
Highlights
‒ Solid FY2024 result achieved in a challenging economic environment.
-- One-off or non-cash technical items had a $28.2 million impact on NPAT.
-- The shortfall to guidance was largely due to the late increase of $10.1 million of provisions, primarily in Heartland Bank's Asset Finance, Motor Finance and Rural portfolios (without which Heartland would have seen a result within guidance).
‒ Growth in Receivables of 6.4% ($432.1 million) on FY2023 to $7.2 billion in FY2024.
-- Reverse Mortgages up 20.2% in New Zealand and 19.7% in Australia.
-- Asset Finance up 8.0% in a market with difficult trading conditions.
-- Motor Finance up 3.8% in a market where total new and used car sales by dealers were down by 12.7%.
‒ Significant strategic milestones set the foundation to achieve FY2028 growth ambitions.
-- Completed the acquisition of Challenger Bank Limited (Challenger Bank) and subsequently rebranded the authorised deposit taking institution (ADI) to Heartland Bank Australia Limited (Heartland Bank Australia).
-- Successfully completed a $210 million equity raise to fund the acquisition, with strong investor support.
-- Heartland Bank's core banking system was successfully upgraded, enabling increased digitalisation and automation.
Presentation. https://api.nzx.com/public/announcement/437072/attachment/426005/437072-426005.pdf
Quote from: winner (n) on Aug 29, 2024, 09:19 AMBugger about the emergence of $10m debt provisioning ...would have been within guidance if that hadn't happened
Never mind, that's the way the cookie crumbles ...and makes F25 result look better lol
Impaired asset expense $46.4m.
Data provided to RBNZ to June 2024 showed 42.3m (which excluded Australia).
https://bankdashboard.rbnz.govt.nz/orgs/HEART-BK
Well within expectations for anyone who follows the stock.
I better stop snoozing ..... and wake up so I don't miss out on some cheap shares later this morning
At first glance the results look pretty underwhelming, bordering on negative (not meeting guidance) but it'll be up to those with skin in the game to delve into the details. The acid test of course will be how Mr.Market will see it.
Happy to hold and see what happens. Always have been thinking that I've recently been investing on a "look through" the bottom of the economic cycle basis.
Disc 7.3% portfolio position all bought with prior realised profits made on HGH, so "free carry", at an average price of $1.07
FY 25 cloudy. FY26 should be a ripper.
I've enjoyed following this thread last few months..reading the pros vs the cons
There was a lot of talk about a pig still swallowing the python re cap raise but did I just see a lizard swallow a beagle...lol
Disc. Have a very small holding on asx....been waiting for results and guidance and I happy to sit and watch. Market could be interesting today. Will buy more of these one day...see what the market says.
Hard to believe management comment that shit only hit the fan in June/july eh
Bit like I nearly won powerball but missed by 1 number
He certainly took a bite out of my tail but as noted above, my holding is all free carry from past successful investing in HGH so I will certainly live to see another day. It's all about growth in the years ahead. Business conditions were very ugly in May and June but I think we have hit the bottom, and spring is around the corner, literally and metaphorically.
Could be a buying opportunity once the weak hands have "spat the dummy"
Good spirit there Basil.
Seriously appreciate everyone putting their views out there...it's not about who right or wrong.
I still think this a good share but not sure I want anymore just yet.
Quote from: Basil on Aug 29, 2024, 09:52 AMHappy to hold and see what happens. Always have been thinking that I've recently been investing on a "look through" the bottom of the economic cycle basis.
Disc 7.3% portfolio position all bought with prior realised profits made on HGH, so "free carry", at an average price of $1.07
FY 25 cloudy. FY26 should be a ripper.
Remember others feel the same way about their chosen stocks eg SPK but we don't do random negative and trash talk on stocks we don't hold just for the sake of it.
The arrears experienced in a subset of longer dated Motor Finance loans are a
result of operational issues in Heartland Bank's Collections & Recoveries
area and do not reflect any underlying issues with the credit quality of the
book. This is primarily a resourcing issue caused by illness, employee
turnover due to overseas travel, and a focus on Heartland Bank's core banking
system upgrade (which is now complete). This is being addressed through a
specialised recruitment strategy and automation. Underlying impairments are
otherwise performing as expected given the challenging economic conditions.
Heartland's asset quality continues to shift towards loans with lower risk
exposures.
The above was from their interim result.
More attention in this area is required,as things have got worse since then.
Quote from: Perky on Aug 29, 2024, 10:01 AMI've enjoyed following this thread last few months..reading the pros vs the cons
There was a lot of talk about a pig still swallowing the python re cap raise but did I just see a lizard swallow a beagle...lol
Disc. Have a very small holding on asx....been waiting for results and guidance and I happy to sit and watch. Market could be interesting today. Will buy more of these one day...see what the market says.
Hard to believe management comment that shit only hit the fan in June/july eh
Bit like I nearly won powerball but missed by 1 number
yeah it was pretty bogus to imply that it was a bit of a surprise and recent development. If you go back to the equity raise presentation dated 8 april 2024 (hyperlinked below) and go to page 19 they had some graphs showing the increase in NZ motor finance and asset finance non performing loans and provision coverage for january-march (so post the last balance date). that graph showed NPL% continuing to climb and a widening delta between the provision coverage and NPL rate. It was also a bit amusing then on the same page they showed a graph with their expectation that NPL% rates would come down from December 2023. Me thinks they were being cute then with some under provisioning but with their bum already sore from having to add an economic overlay provision in December and right in the middle of a cap raise they didn't go as far as they otherwise would have.
https://api.nzx.com/public/announcement/429163/attachment/416304/429163-416304.pdf
and then watching the RBNZ banking dashboard over the last few months clear NPLs did continue to creep up so some of the graphs on the left hand side of page 19 look particularly silly now.
The provisions on the balance sheet relate to the non reverse mortgage business. Looking at the provision rate as a % of gross non RM receivables it is now 1.76%. Wouldn't be surprised to see that number approach 2% which if it had in this result been an additional $7.5m post tax hit. 2% is where the provision level sat back in 30 June 2020 when the world was looking pretty shaky.
Quote from: LoungeLizard on Aug 29, 2024, 09:47 AMAt first glance the results look pretty underwhelming, bordering on negative (not meeting guidance) but it'll be up to those with skin in the game to delve into the details. The acid test of course will be how Mr.Market will see it.
Mr. Market no likey
Yes, good-spirited debate is what this forum is all about!
And, with that in mind, I'm finding it difficult to see the upside in this report, apart from the poised-for-growth, somewhere-over-rainbow angle. The only good thing is that the inevitable hit to the SP might present a buying opportunity.
Everything an investor looks for to guide their decisions appears to be going in the wrong direction. NPAT down, borrowings up, EPS and dividends way down. Technical indicators - NIM/CTI/ROE - are all significantly down. Needless to say, provisions and "technical adjustments" appear to be a growth area!
So what's left? I had to laugh when HGH seemed to trumpet their lower dividend as still being a compelling yield. Forgetting of course that the yield is only moderate compared to risk and is based on a share price that has been decimated in recent years. They did say that divvy might be cut again, so at least they are being honest there.
The reverse equity business is still performing well, but there's an element of all the eggs being in one basket. And that business is all front loaded and capital intensive. I would have liked to have seen some reporting around Challenger even though it is integrated into the Australian banking business? The decision to purchase Challenger needs to be assessed against how it is performing, even though it is early days.
Oh well, the SP is getting a hammering and presenting the true believers with an opportunity to average down or throw more good money after bad, depending on how you see it ;D
Oh well, the SP is getting a hammering and presenting the true believers with an opportunity to average down or throw more good money after bad, depending on how you see it ;D
[/quote]
Your last comment is short sighted at best. We can review that in 2/3 years where the share price is up and those shareholders are will be happy to throw it back at you I am sure.
The result was as expected given macro. It was always about looking forward and from 2nd half 2025 the economy will improve and get more assured.
The Aust. acquisitions will take to to be in bedded.
I bought in @ $1.05 6 weeks ago and will look to add sometime next week as I see real value in the next 5 years coming thru and a healthy yield in divvies at these levels.
Quote from: Greekwatchdog on Aug 29, 2024, 10:48 AMYour last comment is short sighted at best. We can review that in 2/3 years where the share price is up and those shareholders are will be happy to throw it back at you I am sure.
And take a good bite out of the Lizards tail :P
The positives I can see include very good NIM expansion forecast for FY25 and more will flow through in FY26 as a full year's trading is encapsulated with enhanced Australian NIM from retail deposit funding which is more than 2% lower than wholesale channels.
20% CAGR in reverse mortgage lending continues.
Quote from: LoungeLizard on Aug 29, 2024, 10:34 AMThe reverse equity business is still performing well, but there's an element of all the eggs being in one basket. And that business is all front loaded and capital intensive. I would have liked to have seen some reporting around Challenger even though it is integrated into the Australian banking business? The decision to purchase Challenger needs to be assessed against how it is performing, even though it is early days.
RM growth good but a lot of that is optics....interest earned from the RM book is capitalised to the RM book rather paid in cold hard cash each month like a normal mortgage would be. So a good deal of the growth is simply interest income being added to existing balance and much lower voluntary repayments. New RM loans originations slowing/falling.
The biggest sin HGH committed was not raising capital in a position of strength. They were totally committed to an Aussie transaction so they should have raised capital well before settling Challenger. The risk was okay what if the transaction doesn't actually complete but its not like they wouldn't have a use for that capital. Instead they waited far too long and everyone started selling in anticipation of a cap raise. The economic cycle will correct but the impact on EPS is permanent as the shares were issued at a low price and the dilution significant.
Only had a quick glance but I'm not happy. To say they found some stuff last minute does not wash. Divi kept at 50 percent and no guidance.
Quote from: Shareguy on Aug 29, 2024, 10:57 AMOnly had a quick glance but I'm not happy. To say they found some stuff last minute does not wash. Divi kept at 50 percent and no guidance.
Future dividends
at least 50% of underlying profit.
Quote from: Basil on Aug 29, 2024, 11:04 AMFuture dividends at least 50% of underlying profit.
Yes. Well the 3cps divi was better than I expected (2.5cps)
The result was much as I expected with only 2 Months trading on the diluted capital after the last capital raise and pleasantly surprised with the 3c divi as was expecting only 2.5c. Great time to be signed up for the dividend reinvestment plan. Feeling pretty excited for the future growth of the business with the successful expansion into Australia through the Challenger purchase 😎.
Quote from: Fiordland Moose on Aug 29, 2024, 10:53 AMRM growth good but a lot of that is optics....interest earned from the RM book is capitalised to the RM book rather paid in cold hard cash each month like a normal mortgage would be. So a good deal of the growth is simply interest income being added to existing balance and much lower voluntary repayments. New RM loans originations slowing/falling.
The biggest sin HGH committed was not raising capital in a position of strength. They were totally committed to an Aussie transaction so they should have raised capital well before settling Challenger. The risk was okay what if the transaction doesn't actually complete but it's not like they wouldn't have a use for that capital. Instead they waited far too long and everyone started selling in anticipation of a cap raise. The economic cycle will correct but the impact on EPS is permanent as the shares were issued at a low price and the dilution significant.
Good point about the RM growth.
One of my bugbears about HGH has been exactly as you mentioned - the ill-timed and ill-conceived capital raises that have had without exception a devastating effect on shareholder wealth. There's an argument to be made that they were never running a self-sustaining business and hence they have had to perform regular CR's to run/expand operations. The latest CR is going to struggle to be earnings accretive. EPS has gone from 14 to 9.8cps (reported). That's a lot of ground to make up. I disliked how Jeff seemed to be oblivious to the negative effect his CR's had on the smaller shareholder - they were always structured so Institutions got in first and make a quick buck. And I'm afraid to say it, but I don't believe we've seen the last of HGH's capital raises.
My other well-documented concern was the timing of the pivot to Oz and perhaps if it was necessary at all, apart from the reverse mortgage business. I get the argument that the wholesale/retail rates difference there provided an opportunity, but there was a lot of potential growth in NZ if they had focussed on being more of a general high street bank. Certainly, this Government might have supported them in trying to increase their footprint.
Anyway, the die is cast, Jeff has gone and the HGH's future is anything investors want to make of it. I'm in the negative camp, obviously. I would have bought in if this report had been more promising, but even at these levels, the risk of HGH struggling for years to make any headway at all is too great imo. Good luck to holders.
Craig's thoughts
HGH – STOP PRESS – The Heartland result was weaker than expected with the higher cost to income ratio, lower NIM and higher bad debt provisions all impacting underlying profit. The final dividend at 3cps was marginally better than CIP at 2.5cps. With respect to the outlook HGH expects further volatility in the markets within which it operates for the remainder of the 2024 calendar year as rate reductions bed in and the New Zealand and Australian economies recover. This creates too much uncertainty at this stage to provide an accurate underlying NPAT guidance range for FY2025. We expect them to revisit this through the year (CIPe currently at NZ$110m for FY25e). HGH currently trading -9% ... more from Wade Gardiner shortly
Got an order in to my broker this morning to increase my holdings by 33% - hopefully price stays down long enough today for my trade to be placed.
Underlying growth continues to be extremely good, digging into fine print NIM already improving at end of reporting period.
This is one for the long term holders who aren't after a quick trade - you are buying at the bottom of the cycle and will reap the long term rewards if you engage diamond hands (to borrow a phrase from Gen Z)
At least the $74.5m NPAT is higher than the $72.0m reported in F20 ...just
For what's it worth Segment profitability is interesting
By Segment Profit TY v Ly $m
NZ Motor 49 to 35 ......Down 14
NZ RM 37 to 43 ..........Up 6
NZ personal 1 to -2 .....Down 3
NZ Business 57 to 40 Down 17
NZ Rural 31 to 29 ........Down 2
Australia 44 to 28 ......Down 16
Other -125 to -100 .....Better off by 25
NZ Reverse Mortgages only segment to improve ...along with Others (HQ) spending less.
Quote from: LaserEyeKiwi on Aug 29, 2024, 12:37 PMGot an order in to my broker this morning to increase my holdings by 33% - hopefully price stays down long enough today for my trade to be placed.
Underlying growth continues to be extremely good, digging into fine print NIM already improving at end of reporting period.
This is one for the long term holders who aren't after a quick trade - you are buying at the bottom of the cycle and will reap the long term rewards if you engage diamond hands (to borrow a phrase from Gen Z)
I'd buy into that if this was a blue chip stock that is currently undervalued for whatever reason. HGH doesn't fall into that camp. It is not a safe stock to put one's money in, over any term. It may have a higher return potential, but the risk is high as well. Look at the SP graph over the last few years. Does that fill you with confidence?
Banks are a cyclical stock at the best of times, but Heartlands addiction to capital raises, and the added risk of their Oz expansion going south doesn't make for a safe stock to park one's money. This latest report, in my opinion, doesn't change that equation.
Ironically, I was dithering between HGH and TWR and in the end decided to go all in on TWR which one could say was the riskier option to take. But timing is everything and the wind was, and still is, at TWR's back. HGH imo have got some headwinds to contend with for some time.
Quote from: winner (n) on Aug 29, 2024, 02:20 PMAt least the $74.5m NPAT is higher than the $72.0m reported in F20 ...just
To be fair a lot of cost associated with the Challenger bank acquisition and becoming an accredited deposit taker in Australia which surely needs to be removed on any objective comparison. Adjusted NPAT of $87.9m is not too bad in my opinion, page 8. https://api.nzx.com/public/announcement/437072/attachment/426005/437072-426005.pdf
Already over $1.4 Billion in retail deposits at just over 2% lower than wholesale cost giving an annualized saving of over $28m going forward based on deposits to date with plenty more to come as the size of the Australian retail deposit book grows over FY25.
So, they missed profit guidance by 4.9% and the market has smacked them back ~ 10% which seems a bit harsh.
Obviously, some of this is fresh concerns about performance for the rest of CY24 given lack of forward guidance but I think the long-term growth prognosis is sound as is the case to hold across the bottom of the economic cycle which we are surely traversing now.
Lot of hype talk about this stock over the last few months but as has been proven a lowering tide sinks all boats and our economy is very much still in low tide mode.
Low tide alright. Chart datum https://en.wikipedia.org/wiki/Chart_datum by the look of this result. Probably the best time to buy for anyone with the medium to long term perspective because we know the tide always comes in after its completely out.
Book Value $1.33
Might be guide to where share price might head to in medium term
Quote from: winner (n) on Aug 29, 2024, 05:01 PMBook Value $1.33
Might be guide to where share price might head to in medium term
Maybe - but book value or NTA don't take into account a myriad of factors that exist in the real world, all of which probably tell more about true market value. OCA has an NTA of $1.41 but the market values it at 84c.
With its increasing exposure in Australia there's a danger that HGH could be seen as a 'small bank' and valued accordingly
Like BOQ (Bank of Queensland) and BEN (Bendigo & Adelaide) who over time have traded at about 0.8 Book Value
Ouch ...that would be about $1.06 ....oops that is spooky eh possums
Quote from: winner (n) on Aug 29, 2024, 06:17 PMWith its increasing exposure in Australia there's a danger that HGH could be seen as a 'small bank' and valued accordingly
Like BOQ (Bank of Queensland) and BEN (Bendigo & Adelaide) who over time have traded at about 0.8 Book Value
Ouch ...that would be about $1.06 ....oops that is spooky eh possums
Preliminary estimate by Craigs of $110m for FY25 on 930.56m shares gives eps of 11.82 cps.
BEN currently trades on 13 times FY25 average eps estimate and BOQ 14.2 times, (source Market Screener)
Average of those small banks is 13.6. 11.82 cps x 13.6 PE = $1.61 possible price target once we get out of this recession.
There's always sunshine after rain...my Mum used to tell me that and she was always right.
Quote from: Basil on Aug 29, 2024, 09:36 PMPreliminary estimate by Craigs of $110m for FY25 on 930.56m shares gives eps of 11.82 cps.
BEN currently trades on 13 times FY25 average eps estimate and BOQ 14.2 times, (source Market Screener)
Average of those small banks is 13.6. 11.82 cps x 13.6 PE = $1.61 possible price target once we get out of this recession.
There's always sunshine after rain...my Mum used to tell me that and she was always right.
As Dire Straits said -
Why worry
There should be laughter after pain
There should be sunshine after rain
These things have always been the same
So why worry now
Why worry now
For Bars Review
Heartland Group Holdings (HGH) reported a weak FY24 result, which was characterised by compressed net interest margins (NIM) and higher impairments. Importantly, progress has been made on key strategic initiatives, with the completion of the Challenger Bank acquisition, having its Australian authorised deposit-taker license granted, and completing work on its core banking system upgrade in NZ. The operating backdrop remains challenging, particularly for the motor and business lending portfolios, which is expected to continue into FY25. Despite this, HGH has reiterated its FY28 target of NZ$200m NPAT and 12%–14% return on equity. We need proof of both an improving macro backdrop and operational efficiencies to get more comfort around targets. NEUTRAL.
What's changed?
Earnings: Lowered FY25 on ongoing near-term uncertainty, and assume a longer period to recover earnings
Target price: Trimmed -9cps (-7.2%) to NZ$1.16.
Messy result with receivables growth offset by impairments
HGH reported a characteristically messy FY24 result, with underlying NPAT of NZ$103m (down -7% on the prior year) despite +7% receivable growth versus FY23. The two major contributors were: (1) underlying NIM falling -36 bps on the prior year to 3.64%, and (2) a +NZ$7.2m increase in impairment expenses, with underlying impairment ratios increasing +12 bps to 0.44%. This was marginally offset by a +NZ$3.4m increase in other operating income, and underlying operating expenses falling -NZ$1.3m.
Recurring one-offs
One-off items have become the modus operandi for HGH in recent years, and FY24 was no exception. In fact, the NZ$28m spread between reported and underlying NPAT in FY24 was more than double the prior year, with reported NPAT back at FY20 levels. While there is some merit to removing one-offs from earnings to get a view on the underlying profitability of the business, the growing level of one-offs reported does muddy earnings transparency. HGH expects one-off items to continue in FY25, albeit at a much lower level.
No FY25 guidance provided, but volatility expected to continue
No quantitative FY25 earnings guidance was provided, with HGH citing the volatile economic conditions. HGH did provide guidance for NIM to rise +16 bps to 3.81% (FBe FY25: 3.74%), with expansion supported by lower cost of funds as interest rates fall, while benefitting from its fixed loan books in particular. Cost to income (CTI) guidance of 45.2% was provided for Heartland Bank, and 45.4% for Heartland Bank Australia (FBe FY25 Group CTI: 47.1%). HGH remains committed to its FY28 targets of NZ$200m of NPAT, based on +10% receivables CAGR, NIM >4%, CTI <35%, and impairment expense ratios <0.3%. Our FY28 forecast is NZ$170m.
Summary forecast changes
The soft FY24 result and ongoing uncertain near-term conditions has resulted in a -7% reduction of our FY25 Underlying NPAT forecast to NZ$102m. Slower receivables growth, a low NIM assumption and higher assumed impairments are the three main factors lowering our profit expectations. We do expect economic conditions to improve. After a transition year, as HGH beds down its Australian business, the benefits of its strategy will be seen in FY26 and beyond.
HGH FY24 dividend represented a payout ratio of 55% of Underlying NPAT. Its dividend guidance is that it will pay at least 50%. We have targeted an ongoing payout ratio of ~55% for the next three financial years, which when combined with a lower earnings outlook reduces our dividend path -1.5cps per annum.
FY24 result summary
HGH has reported FY24 NPAT of NZ$75m, which was -NZ$21m below FY23. Underlying NPAT, the number HGH guides to and focusses on was NZ$103m, vs our forecast of NZ$108m and its guidance range of NZ$108m–NZ$112m, which was reiterated at its April 2024 equity raise. Loan receivables were up +6.4%, driven by +20% growth in both reverse mortgage books, but was offset by lower business (-3%) and AU livestock finance (-27%) receivables. Underlying opex was down -NZ$1.3m, with the cost to income ratio falling -10 bps to 41.9%. Reported impairment expense ratio rose +30 bps (+NZ$23m) to 0.66% or 0.44% on an underlying basis, adjusting for the NZ$16m provision related to legacy lending in December 2023.
Very disappointing, but I guess it's still paying a good divi and the future is bright, If it all goes well. We can expect better in 2026 but it might not be.
Winner. FB Ausi bank valuation comparisons including Bendigo (13.4} have average PE for 2025 of 16.1
HGH 9.5
Gotta love forbar language..." a messy result"...that's Friday humour right there
With banking being such a highly regulated industry with complicated compliance formulas and having to be very careful you get the decimal point in the right place...I'm not sure having your result called, sloppy, confusion or disorder is a badge of honour....
messy
adjective
ˈme-sē
messier; messiest
Synonyms of messy
1
: marked by confusion, disorder, or dirt : UNTIDY
a messy room
2
: lacking neatness or precision : CARELESS, SLOVENLY
Perky ...not just messy' but ' characteristically messy' says Forbar
I note Forbar see HGH's eps gathering 27.77% momentum from 10.8cps in 2025 to 13.8 cps in 2026 ,and a further 17.39% growth to 16.2cps in 2027.
Therefore HGH have laid solid foundations for future growth.
I trust they will concentrate their capital on higher margin lending to avoid further capital raises,which have in the past destroyed so much shareholder wealth.
Quote from: Shareguy on Aug 30, 2024, 07:12 AMVery disappointing, but I guess it's still paying a good divi and the future is bright, If it all goes well. We can expect better in 2026 but it might not be.
Winner. FB Ausi bank valuation comparisons including Bendigo (13.4} have average PE for 2025 of 16.1
HGH 9.5
I did say BEN generally trades at 0.8 Book Value .....based on this chart from Marketscreener
And the ASX banking index (on a bit of a roll lately so most on elevated multiples
Never mind ...it's all OK
✅
IMG_5904.jpeg
Quote from: lorraina on Aug 30, 2024, 08:16 AMI note Forbar see HGH's eps gathering 27.77% momentum from 10.8cps in 2025 to 13.8 cps in 2026 ,and a further 17.39% growth to 16.2cps in 2027.
Therefore HGH have laid solid foundations for future growth.
I trust they will concentrate their capital on higher margin lending to avoid further capital raises,which have in the past destroyed so much shareholder wealth.
HGH has reiterated its FY28 target of NZ$200m NPAT and 12%–14% return on equity.
If they get to 14% ROE and $200m profit in 2028 probably won't need another capital raise as long as they retain a decent chunk of profits and good DRP uptakes
Achieve 12% ROE and $200m profit implies Equity nearly $1.7 billion (currently $1.2billion) and I'd say need a decent chunk of new capital in a few years
That's how I see it
...EPS...........2024....................2025...........................2026...........................2027
Craigs.cps.........9.........................11...............................13...............................16
growth. ............ .....22.22%.......................18.18.%......................23%..
Forbar cps ....11......................10.8............................13.8............................16.2.
growth.......................-[1.82%].....................27.78%.........................17.39%..
The Ozzie banks do a CR every 3 years or so - it is the nature of the industry.
As long as they show that they are using the new capital for the right growth, the market has not had any problem supporting the CR.
That's the challenge ahead for HGH, now that the two CR pigs have passed through the python but the python is exhibiting constipation!
Achieve 12% ROE and $200m profit implies Equity nearly $1.7 billion (currently $1.2billion) and I'd say need a decent chunk of new capital in a few years
Winner that is how I also see it. HGH having a ambition of 200m profit is meaningless if there is not a forecast of the quantity of shares at the same time.
It is even possible (maybe not likely) that in 2028 the ambition of 200m profit is reached and the profit and dividend per share are less than we have seen in the past. One thing is very likely, unless there is a share consolidation in 2028 more shares will be on issue than we have today. >:(
Craigs quite a bit more positive than Forbar. Price target $1.39. Forecasting 7 cps dividends fully imputed = 9.4% gross yield. Both Craigs and Forbar expecting decent eps growth going forward. https://www.youtube.com/watch?v=_03uXQiz6eY
Hey Winner, I might play this on repeat loop for a while today and then take Tony the Pony for a walk and have the rest of the day off. Might as well just try and be happy eh.
Sunnier weather ahead? Very iteresting survey result. https://www.nzherald.co.nz/business/business-confidence-soars-to-highest-in-a-decade-in-latest-anz-business-outlook/DZYZSW74JZFIXARSAYKI3YNQHE/?lid=nv3fqlmn2uiz
Quote from: Basil on Aug 30, 2024, 09:55 AMCraigs quite a bit more positive than Forbar. Price target $1.39. Forecasting 7 cps dividends fully imputed = 9.4% gross yield. Both Craigs and Forbar expecting decent eps growth going forward. https://www.youtube.com/watch?v=_03uXQiz6eY
Hey Winner, I might play this on repeat loop for a while today and then take Tony the Pony for a walk and have the rest of the day off. Might as well just try and be happy eh.
Sunnier weather ahead? Very iteresting survey result. https://www.nzherald.co.nz/business/business-confidence-soars-to-highest-in-a-decade-in-latest-anz-business-outlook/DZYZSW74JZFIXARSAYKI3YNQHE/?lid=nv3fqlmn2uiz
Just as well the ratings agencies are duty bound to be objective, eh Basil?
Interesting stat on US banks that may give some hope for the asian banking markets..
""While we acknowledge that historically, bank stocks have sold off for a short period following the first rate cut, banks can outperform in a soft landing scenario, increasing 21% from the post-cut low, based on data from rate cut cycles in 1995, 1998 and 2019 (pre-COVID)," Wells Fargo analyst Mike Mayo wrote. "We estimate banks outperformed the S&P 500 by nearly 10% from trough to peak during the quarter following the first rate cut (next Fed meeting 9/17-18).""
CNBC
Quote from: Greekwatchdog on Aug 30, 2024, 07:09 AMFor Bars Review
We need proof of both an improving macro backdrop and operational efficiencies to get more comfort around targets. NEUTRAL.
Good word 'Neutral'. The words above sum up my thoughts on HGH very well.
Quote from: LoungeLizard on Aug 30, 2024, 11:04 AMJust as well the ratings agencies are duty bound to be objective, eh Basil?
I'm too busy at the Vet getting my bitten tail attended too to think about it much lol
My Vet reckons the capital ratio's are fine...she's pretty smart.😉
Quote from: Fiordland Moose on Aug 29, 2024, 10:53 AMNew RM loans originations slowing/falling.
As a comparison, new applications for the Govt RM scheme are growing at 40% per annum. In the July budget the interest rate was kept unchanged, and is still 3.95% making it half that of commercial RM rates. Recent reforms have also meant the Govt scheme has just been allowed to be promoted through the financial planner network, boosting its reach.
As financial planners are now pointing out .....Government reverse mortgage scheme more attractive than commercial rivalsDespite inflation, a budget decision by the government to keep the rate for the Home Equity Access scheme unchanged makes it a great option for older Australians.Financial advisers often call it the best-kept investment secret for older Australians.It's the super low rate offered by the government's reverse mortgage scheme, and in this week's budget the gift from the federal Treasurer just got better.
Despite strong inflation, the government has left the rate for the Home Equity Access scheme (the former pension loan scheme) unchanged.
In common with the budget decision to not go near the deeming rate which determines access to the pension, it's a case of no news is good news.
In fact, the terms of the government reverse mortgage scheme are now nothing short of a giveaway.
A reverse mortgage in the commercial market will pay about 8 per cent. But if you go with the government's increasingly generous scheme the rate is less than half that figure at 3.95 per cent.
And you don't need to be receiving pension income to access the scheme; you simply must be over 67.
The applications for the home equity access scheme are growing at 40 per cent a year and the decision to leave it alone in the budget will only boost this growth further.
Dr Sam Wylie, Melbourne Business School associate professor who runs the Windlestone Education group, calls it "brilliant".
"Anyone who owns their own home should consider this scheme," he says.
The scheme falls under the portfolio of Government Services Minister Bill Shorten. Picture: Martin Ollman
In fact there are advisers out there who make the point that you could take out a loan at 3.95 per cent and then invest it in just about anything and you would be in the money – after all, the RBA cash rate is 4.25 per cent.
Meanwhile, annual returns in super are running close to 8 per cent so you could double your money by simply contributing the money to super and get tax benefits at the same time.
The rate of dividend return on the ASX is about the same as the RBA cash rate – and that gets paid regardless of the direction of the sharemarket.
A reverse mortgage – where the applicant generally sells part of their home to an institution in return for regular income – is not risk free. Home prices may fall in the future.
More commonly, users of such schemes can be surprised as the amount owing on the loan mounts, leaving less scope to pay future costs such as aged care.
Reverse mortgages are a key option for asset-rich, cash-poor Australians who find themselves in a very valuable home with very limited income.
It was only following a range of recent reforms that the government program could be formally recommended by financial advisers. This rule change is another reason why they have been growing in popularity.
The key restriction of the government scheme versus private commercial reverse mortgages is that there are caps; the amount that can be borrowed annually is linked to the total assets of the borrower although it can increase every year.
Nonetheless, the government scheme, which comes under the Minister for Government Services Bill Shorten, is exceptional and open to just about anyone.
The only financial criteria is to have $20,000 equity in the home.https://www.theaustralian.com.au/business/wealth/government-reverse-mortgage-scheme-more-attractive-than-commercial-rivals/news-story/7e1154f41417cea8a4fe0be87ab485e7?amp
100% guarantee that the inability to provide forward guidance means that things are getting worse not better. If things were getting better then they would issue soft guidance, in the knowledge that its likely be upgraded.
Other small banks are having no problems issuing guidance whilst operating under the exact same conditions. Judo for instance provided very specific guidance.
Lack of guidance and "messy" reporting is just another reason for Australian bank analysts to not bother covering it, and thus Australian fund managers to not bother buying it. Therefore the share price will likely continue to wither in the wilderness.
For those willing to wait 2-3 years to get your money back (maybe) why are you not simply investing in things that will provide a good return right now? Plenty of companies delivering good results in this crappy business environment, imagine how much more upside a good business has in a good environment, vs a poor business.
Quote from: KW on Aug 30, 2024, 11:45 AMAs a comparison, new applications for the Govt RM scheme are growing at 40% per annum. In the July budget the interest rate was kept unchanged, and is still 3.95% making it half that of commercial RM rates. Recent reforms have also meant the Govt scheme has just been allowed to be promoted through the financial planner network, boosting its reach.
As financial planners are now pointing out .....
Government reverse mortgage scheme more attractive than commercial rivals
Despite inflation, a budget decision by the government to keep the rate for the Home Equity Access scheme unchanged makes it a great option for older Australians.
Financial advisers often call it the best-kept investment secret for older Australians.
It's the super low rate offered by the government's reverse mortgage scheme, and in this week's budget the gift from the federal Treasurer just got better.
Despite strong inflation, the government has left the rate for the Home Equity Access scheme (the former pension loan scheme) unchanged.
In common with the budget decision to not go near the deeming rate which determines access to the pension, it's a case of no news is good news.
In fact, the terms of the government reverse mortgage scheme are now nothing short of a giveaway.
A reverse mortgage in the commercial market will pay about 8 per cent. But if you go with the government's increasingly generous scheme the rate is less than half that figure at 3.95 per cent.
And you don't need to be receiving pension income to access the scheme; you simply must be over 67.
The applications for the home equity access scheme are growing at 40 per cent a year and the decision to leave it alone in the budget will only boost this growth further.
Dr Sam Wylie, Melbourne Business School associate professor who runs the Windlestone Education group, calls it "brilliant".
"Anyone who owns their own home should consider this scheme," he says.
The scheme falls under the portfolio of Government Services Minister Bill Shorten. Picture: Martin Ollman
In fact there are advisers out there who make the point that you could take out a loan at 3.95 per cent and then invest it in just about anything and you would be in the money – after all, the RBA cash rate is 4.25 per cent.
Meanwhile, annual returns in super are running close to 8 per cent so you could double your money by simply contributing the money to super and get tax benefits at the same time.
The rate of dividend return on the ASX is about the same as the RBA cash rate – and that gets paid regardless of the direction of the sharemarket.
A reverse mortgage – where the applicant generally sells part of their home to an institution in return for regular income – is not risk free. Home prices may fall in the future.
More commonly, users of such schemes can be surprised as the amount owing on the loan mounts, leaving less scope to pay future costs such as aged care.
Reverse mortgages are a key option for asset-rich, cash-poor Australians who find themselves in a very valuable home with very limited income.
It was only following a range of recent reforms that the government program could be formally recommended by financial advisers. This rule change is another reason why they have been growing in popularity.
The key restriction of the government scheme versus private commercial reverse mortgages is that there are caps; the amount that can be borrowed annually is linked to the total assets of the borrower although it can increase every year.
Nonetheless, the government scheme, which comes under the Minister for Government Services Bill Shorten, is exceptional and open to just about anyone.
The only financial criteria is to have $20,000 equity in the home.
https://www.theaustralian.com.au/business/wealth/government-reverse-mortgage-scheme-more-attractive-than-commercial-rivals/news-story/7e1154f41417cea8a4fe0be87ab485e7?amp
Good post. If the RM market dries up then it's game over for HGH's incursion into OZ. More than anything this should give HGH investors pause for thought.
I don't think you'll find any shortage of people who agree with you KW but a lot of people, myself included, are investing for income and I note Craigs are forecasting 7.0, 8.0 and 9.5 cps forecasted dividends for the next three years plus imputation credits. @ $1.05 that's 9.26%, 10.6% and 12.6% gross yields respectively over the next few years + solid eps growth forecasted over the medium term, (acknowledging the first half of FY25 could be challenging). You're not going to get anything like that sort of yield with Australian banks.
That scheme has been around for quite a while now and yet Heartland have a dominant RM market position, (40% share) in Australia and a proven track record of 20% CAGR in RM business on both sides of the Tasman. As FM correctly points out, some of this is compound interest accruing but nevertheless that's an impressive growth rate and frankly I don't think Heartland shareholders would want it growing any faster, lest they be asked for more capital yet again!
Agree with KW when she says "100% guarantee that the inability to provide forward guidance means that things are getting worse not better. If things were getting better then they would issue soft guidance, in the knowledge that its likely be upgraded. "
I'd go beyond things getting worse as the reason for no guidance
I sense that management have really taken their eyes of the ball and have lost touch with reality ....probably all because Jeff leaving so no real leadership ...recall my post a while ago about "The Jeff Greenslade Problem" .... he robably lost the hunger to keep the success coming.
Quote from: Basil on Aug 30, 2024, 12:15 PMI don't think you'll find any shortage of people who agree with you KW but a lot of people, myself included, are investing for income and I note Craigs are forecasting 7.0, 8.0 and 9.5 cps forecasted dividends for the next three years plus imputation credits. @ $1.05 that's 9.26%, 10.6% and 12.6% gross yields respectively over the next few years + solid eps growth forecasted over the medium term, (acknowledging the first half of FY25 could be challenging). You're not going to get anything like that sort of yield with Australian banks.
No, but you can probably get it elsewhere. As an example, I am heavily invested in AREITs and in 8 months have had a total return of 16% with more dividends still to come later in the year. The easiest (and most obvious) dollar to be made on the market at the moment is in property, as falling interest rates lowers cap rates and asset valuations rebound. Along with higher FFO in the future as debt becomes cheaper, which flows straight into the dividend payout.
Just because you are an income investor (of which I am too) doesnt mean you have to stay invested in crap stocks. There are plenty of options out there.
" not a high quality stock "
well it does service a sector of the market that might not get credit as easily as from the big banks.
but who is to say that really they are any better.
once you have seen hundreds of balance sheets going past your desk and the rules for how those balance sheets (mostly just tax accounting) you realise how well based an economy is balanced even the bigger banks...
its a card board house....
HGH is prehaps no better or worse than many stocks on the NZX and ASX...
but to say its a JUNK stock one needs to look in depth at the rating agencies methods for valuing the stock..
Quote from: KW on Aug 30, 2024, 12:29 PMNo, but you can probably get it elsewhere. As an example, I am heavily invested in AREITs and in 8 months have had a total return of 16% with more dividends still to come later in the year. The easiest (and most obvious) dollar to be made on the market at the moment is in property, as falling interest rates lowers cap rates and asset valuations rebound. Along with higher FFO in the future as debt becomes cheaper, which flows straight into the dividend payout.
Just because you are an income investor (of which I am too) doesnt mean you have to stay invested in crap stocks. There are plenty of options out there.
By 16% "total" return you are obviously including unrealized capital gains to date as no REIT's pay that level of dividend in 8 months. I'm already doing that with a sizeable stake in Argosy bought only a couple of months ago at $1.02 and currently priced at $1.17, due to go ex another 1.66 cps tax free PIE quarterly dividend next week. That's a 15% capital gain in a couple of months plus a running yield of 6.52% per annum tax free in my hands.
I think HGH is a very cheap cyclical bank which has just incurred major expansion costs and is priced accordingly with all the attendant risks baked in, and its priced right at the bottom of the economic cycle.
Also, its disingenuous to compare actual yield expected to other yield opportunities with assumptions about future capital gains baked in as though they are a certainty. What are the actual net yields to a me with those Australian REIT's after I have paid 33% tax on dividends remitted to N.Z. ? (Lets just ignore the high exchange rate conversion fees to keep it simple)
Quote from: KW on Aug 30, 2024, 12:29 PMNo, but you can probably get it elsewhere. As an example, I am heavily invested in AREITs and in 8 months have had a total return of 16% with more dividends still to come later in the year. The easiest (and most obvious) dollar to be made on the market at the moment is in property, as falling interest rates lowers cap rates and asset valuations rebound. Along with higher FFO in the future as debt becomes cheaper, which flows straight into the dividend payout.
Just because you are an income investor (of which I am too) doesnt mean you have to stay invested in crap stocks. There are plenty of options out there.
Well yes but crap stocks often become good stocks and good stocks often become crap stocks.
Quote from: Breezy on Aug 30, 2024, 01:26 PMWell yes but crap stocks often become good stocks and good stocks often become crap stocks.
Now that's something I can definitely agree with you on !
Quote from: KW on Aug 30, 2024, 11:45 AMAs financial planners are now pointing out .....
Government reverse mortgage scheme more attractive than commercial rivals
Zhis 'Government backed RM scheme' eez not competing vith Heartland RMs directly. Eet has many more reztrictions.
https://www.dss.gov.au/our-responsibilities/seniors/benefits-payments/home-equity-access-scheme
----------------
How can you receive the loan
The Scheme allows a person to access fortnightly loan payments to 'top up' any pension payment they receive to a maximum of 150% of the maximum fortnightly rate of Age Pension (including the pension and energy supplements, and Rent Assistance, where applicable). Maximum-rate pensioners can receive up to an extra 50% on top of their fortnightly Age Pension payment. Self-funded retirees can receive the whole 150% of the pension rate. Part-pensioners can receive an amount in between.
Participants can also access up to 2 lump sum advances in any 26-fortnight period, to a combined total of no more than 50% of the maximum annual rate of Age Pension. Any lump sum advance will reduce the maximum fortnightly loan amount a participant can take over the subsequent 26-fortnight period.
------------------
As a zingle person homeowner een Oz, you are not eligible for a pension if you own more than $686,250 in assets outside of your home.
https://rest.com.au/retirement/learn/super-and-age-pension
Zhat vould mean you are not eligible vor zhis 'government scheme' at all.
A zingle pension in Australia eez currently $29,082 per year, vhich equates to $14,541 over six months. That $14,541m is the maximum that can be advanced over six months and eet can only be borrowed een two zeparate tranches of $14,541 / 2 = $7270.50.
$7270.50 eez not enough to buy a new car, nor do any zerious house renovations.
Vor a 'vixed lump zum' ze Oz government zcheme vill offer ze retiree 'far less than the amount able to be borrowed from Heartland.' Vor 'lump sum borrowing' Heartland vins hands down.
RB
Yeah, it's a very different, minimalist cost of living scheme with very tight eligibility criteria which is why Heartland have the dominant 40% market share.
Quote from: Basil on Aug 30, 2024, 04:42 PMYeah, it's a very different, minimalist cost of living scheme with very tight eligibility criteria which is why Heartland have the dominant 40% market share.
For now.
Quote from: LoungeLizard on Aug 30, 2024, 04:59 PMFor now.
Well earlier you implied it was imminent major threat to Heartland Australia's viability but now it's just an existential threat in the making eh. ::)
Quote from: Red Baron on Aug 30, 2024, 03:29 PMAs a zingle person homeowner een Oz, you are not eligible for a pension if you own more than $686,250 in assets outside of your home.
https://rest.com.au/retirement/learn/super-and-age-pension
Zhat vould mean you are not eligible vor zhis 'government scheme' at all.
That is incorrect. Anyone is eligible, whether you get a pension or not.
You can get the loan if either of the following apply:- you currently get a qualifying pension
- you meet the rules for a qualifying pension but don't get a payment, for example, your rate is zero because your income or assets are over the threshold.
https://www.servicesaustralia.gov.au/who-can-get-loan-under-home-equity-access-scheme?context=22546[/list]
Rich people with assets and incomes outside of the pension probably dont need to be borrowing money against their house anyway.
"Katja Hanewald, associate professor in the School of Risk and Actuarial Studies at UNSW, says that in September this year, about 75 per cent of the participants were receiving the full-age pension, about 20 per cent were receiving a part age pension. Only 5 per cent were fully self-funded."
Quote from: Basil on Aug 30, 2024, 05:44 PMWell earlier you implied it was imminent major threat to Heartland Australia's viability but now it's just an existential threat in the making eh. ::)
I'm of the opinion that HGH are not a secure place to park one's money in the time frame you suggest you are investing in (2-3 years). Too much risk for too little return in my book. Unless you still believe Jeff's prediction of underlying NPAT of $200m for FY2028?
Quote from: Basil on Aug 30, 2024, 05:44 PMWell earlier you implied it was imminent major threat to Heartland Australia's viability but now it's just an existential threat in the making eh. ::)
Illogical and just weird!
What happens when someone can only think in the negative frame of mind about a stock.
Quote from: LoungeLizard on Aug 30, 2024, 06:54 PMI'm of the opinion that HGH are not a secure place to park one's money in the time frame you suggest you are investing in (2-3 years). Too much risk for too little return in my book. Unless you still believe Jeff's prediction of underlying NPAT of $200m for FY2028?
Look, You've made that absolutely definitively crystal clear already, many times . If you are wondering, how I see it is its mainly a FY25 risk and probably most of that is in the first half of which we're a third way through already. Frankly, risk abounds in this market and nowhere is safe from a major exogenous shock, except perhaps Kiwi bonds but I think the risk is already fully baked into the price. Obviously, you see it differently and that's fine.
All I can say I am confident of at this stage is F26's profits are going to be a fair way north of where they are now and most likely FY27 and FY28 further north again and its already on, from a historical perspective over more than a decade I have been following it, right at the bottom of the normal 9-18 PE range.
Very unusual to have a cyclical company trading at a cyclical low PE ratio at the time of a super low point of the economic cycle in the economy. Yeah, delinquent loans could bite again in FY25 but as the economy recovers, and eps expands as well as the PE returning to a normal early teens level, the opportunity for market outperformance when the economy eventually gathers genuine momentum is definitely there.
Economic recovery begins when people start feeling better about their financial prospects and start spending. Very interesting ANZ business opinion survey I posted recently on this thread. What a sea change that was and that was before the RBNZ cut interest rates. I'm calling it. Extreme chart datum low tide for the economy was June 2024 and the tide has started coming back in. Interestingly, July new vehicle sales were up 45% on the same month in 2023, (source Turners monthly statistics data).
Quote from: Teitei on Aug 30, 2024, 07:15 PMIllogical and just weird!
What happens when someone can only think in the negative frame of mind about a stock.
Actually its quite common mate. Confirmation bias is the most common form of cognitive bias.
People have limited time and attention so form an opinion and then latch onto absolutely anything that validates their viewpoint and often completely dismiss anything that contradicts their point of view.
Fascinating subject. Of course, I never suffer from any of these forms of bias lol
https://www.verywellmind.com/cognitive-biases-distort-thinking-2794763
Quote from: Teitei on Aug 30, 2024, 07:15 PMIllogical and just weird!
What happens when someone can only think in the negative frame of mind about a stock.
And, you do realise, the reverse is more often true. People who have invested heavily in a stock and repeatedly assert how clever they are to do so, refuse to see the writing on the wall. And get rather irritated when others draw their attention to it!
Quote from: LoungeLizard on Aug 31, 2024, 10:54 AMAnd, you do realise, the reverse is more often true. People who have invested heavily in a stock and repeatedly assert how clever they are to do so, refuse to see the writing on the wall. And get rather irritated when others draw their attention to it!
Not at all, LL.
I for one am most appreciative for the checks and balances inherent in the market - where buyers and sellers participate everyday with their differing views.
I certainly would have added more to to my HGH holding on Wednesday (after considering the HBL RBNZ data) but for the cautionary posts here - saved myself quite a few thousand dollars by buying on Thursday instead.
Quote from: Basil on Aug 30, 2024, 07:23 PMActually its quite common mate. Confirmation bias is the most common form of cognitive bias.
People have limited time and attention so form an opinion and then latch onto absolutely anything that validates their viewpoint and often completely dismiss anything that contradicts their point of view.
Fascinating subject. Of course, I never suffer from any of these forms of bias lol
https://www.verywellmind.com/cognitive-biases-distort-thinking-2794763
Never fall in love with a stock.
Likewise, never write off a stock until it is truly written off as a listed entity!
A good time to be in dividend reinvestment scheme and collect a few more while the price is low :)
Quote from: KW on Aug 30, 2024, 11:57 AM100% guarantee that the inability to provide forward guidance means that things are getting worse not better. If things were getting better then they would issue soft guidance, in the knowledge that its likely be upgraded.
Other small banks are having no problems issuing guidance whilst operating under the exact same conditions. Judo for instance provided very specific guidance.
Lack of guidance and "messy" reporting is just another reason for Australian bank analysts to not bother covering it, and thus Australian fund managers to not bother buying it. Therefore the share price will likely continue to wither in the wilderness.
For those willing to wait 2-3 years to get your money back (maybe) why are you not simply investing in things that will provide a good return right now? Plenty of companies delivering good results in this crappy business environment, imagine how much more upside a good business has in a good environment, vs a poor business.
I think KW has some valid points. I'm going to continue to hold at this stage.
What would you say if someone offered you an investment with a promised return of close to 14%?
You might say: "How much can I buy?"
Alternatively, you might say: "What is the catch?"
Sensible people must take the latter view. If you thought that you were being offered a reliable real return at such an exalted level, you would buy as much as you could.
Well, Heartland offering 14% .....that's it ROE target isn't it.
So what is the catch? The obvious answer has to be that maybe that return is subject to elevated levels of risk ...but what can go wrong...not much by sounds of it.
Quote from: winner (n) on Aug 31, 2024, 05:14 PMWhat would you say if someone offered you an investment with a promised return of close to 14%?
You might say: "How much can I buy?"
Alternatively, you might say: "What is the catch?"
Sensible people must take the latter view. If you thought that you were being offered a reliable real return at such an exalted level, you would buy as much as you could.
Well, Heartland offering 14% .....that's it ROE target isn't it.
So what is the catch? The obvious answer has to be that maybe that return is subject to elevated levels of risk ...but what can go wrong...not much by sounds of it.
I think the term you're looking for is dividend trap. Investors in HGH in recent years have lost a lot more money from their capital than they ever got back from dividends. As I said, it's hugely ironic that HGH seemed to be proud of the current yield even though that is entirely due to their share price having collapsed.
Quote from: LoungeLizard on Aug 31, 2024, 05:23 PMI think the term you're looking for is dividend trap. Investors in HGH in recent years have lost a lot more money from their capital than they ever got back from dividends. As I said, it's hugely ironic that HGH seemed to be proud of the current yield even though that is entirely due to their share price having collapsed.
It is in the nature of markets that when a company is doing well that the market prices in ever better scenarios - ATM being the best case in point in recent years.
It is also in the nature of things that when a company is not doing so well that the market prices in ever worse scenarios - TWR being an excellent case in point.
Don't ever allow yourself to be caught in that perception trap.
Buy high, sell low!
Quote from: Shareguy on Aug 31, 2024, 12:57 PMI think KW has some valid points. I'm going to continue to hold at this stage.
Management said net margins were already improving by the end of the reporting period, implying things are already improving from that perspective.
You'd be forgiven for thinking Heartland had undershot guidance by 49% not 4.9% with the degree of negativity on here this week. So the recession was a bit deeper than many of us thought, so what. That doesn't change the investment case on a forward economic recovery basis or the dirt-cheap forward metrics either. "Blind Freddy" can see we're entering an interest rate easing cycle which will help with the economic recovery. Those with their rampant negative confirmation bias are conveniently overlooking the very positive business confidence survey out this week and the recovering consumer confidence survey too. New vehicle sales up 45% in July 2024 compared to the same month last year didn't make the headlines either and is more positive news that people with a fixed negative viewpoint dismiss out of hand. Let's just dismiss all the emerging forward looking economic green shoots and pretend Spring isn't here and it's going to keep pelting down with rain like it did mid winter, the pessimists say. Bugger that, I'd rather taker a forward looking view.
Interesting article, paywalled https://www.nzherald.co.nz/business/liam-dann-the-economy-sucks-why-is-business-confidence-so-high/CIZCPJC7RVF2TKFI3LK5I7ZLZA/?lid=x2sif6xxrzkc&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=Premium_Daily_Wrap&uuid=ae2dd95d629344ca8119b12a0d7d7338
Excerpt. Spring has sprung and almost as if on cue, economic sentiment has turned. Weird, right?
Business confidence hasn't just turned either, it's gone through the roof. It has soared.
According to the August ANZ Business Outlook survey, topline economic confidence has rocketed to its highest level in a decade.
And firms' expectations for their own business in the next year have surged to the highest level in seven years....
...if you are worried about how bad the economy is right now there is some real confidence to be found in the renewed optimism of the business community.
There's always sunshine after rain, these things have always been the same. You didn't have to walk your dog all the way up One Tree Hill in Auckland today to admire the panoramic view while basking in 19 degrees warmth and sunshine to realise Spring was here but those who did seemed to be having a very good time. Sometimes on a sunny day the view from a mountain top gives you more perspective. Today was one of those days. Heartland will grow its earnings per share nicely in the years ahead. All you need to do is have patience and give it plenty of time.
Quote from: Basil on Sep 01, 2024, 09:03 PMYou'd be forgiven for thinking Heartland had undershot guidance by 49% not 4.9% with the degree of negativity on here this week. So the recession was a bit deeper than many of us thought, so what. That doesn't change the investment case on a forward economic recovery basis or the dirt-cheap forward metrics either. "Blind Freddy" can see we're entering an interest rate easing cycle which will help with the economic recovery. Those with their rampant negative confirmation bias are conveniently overlooking the very positive business confidence survey out this week and the recovering consumer confidence survey too. New vehicle sales up 45% in July 2024 compared to the same month last year didn't make the headlines either and is more positive news that people with a fixed negative viewpoint dismiss out of hand. Let's just dismiss all the emerging forward looking economic green shoots and pretend Spring isn't here and it's going to keep pelting down with rain like it did mid winter, the pessimists say. Bugger that, I'd rather taker a forward looking view.
Interesting article, paywalled https://www.nzherald.co.nz/business/liam-dann-the-economy-sucks-why-is-business-confidence-so-high/CIZCPJC7RVF2TKFI3LK5I7ZLZA/?lid=x2sif6xxrzkc&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=Premium_Daily_Wrap&uuid=ae2dd95d629344ca8119b12a0d7d7338
Excerpt. Spring has sprung and almost as if on cue, economic sentiment has turned. Weird, right?
Business confidence hasn't just turned either, it's gone through the roof. It has soared.
According to the August ANZ Business Outlook survey, topline economic confidence has rocketed to its highest level in a decade.
And firms' expectations for their own business in the next year have surged to the highest level in seven years....
...if you are worried about how bad the economy is right now there is some real confidence to be found in the renewed optimism of the business community.
There's always sunshine after rain, these things have always been the same. You didn't have to walk your dog all the way up One Tree Hill in Auckland today to admire the panoramic view while basking in 19 degrees warmth and sunshine to realise Spring was here but those who did seemed to be having a very good time. Sometimes on a sunny day the view from a mountain top gives you more perspective. Today was one of those days. Heartland will grow its earnings per share nicely in the years ahead. All you need to do is have patience and give it plenty of time.
Well said Basil
Basil's right in saying that the time to buy is when multiples (PE or P/B) are low and then hope for any rerating but have comfort of a dividend stream if the rerating doesn't happen. The other bit of this strategy is to sell when multiples get excessively high. This has worked well with HGH in the past
The impact of significant capital raises is shown in the table below
Whereas Normalised NPAT has grown at 7.3%pa over the last 6 years EPS has only 1.4% pa (hardly staggering eh)
The capital raises and retained earnings have seen Book Value (Shareholder Equity) increase by $574m in those 6 years ....CAGR of 10.9% pa but on a per share basis CAGR of 1.9% pa.
Those low per share CAGR %ages have a drag on share price performance.
Dividend in FY18 was 9 cents/share ...in FY24 its 7 cent so dividend is lower. Over the last 6 years dividends have totalled 57.5 cents
Also to highlight the impact of the increase in the number of shares the value of the the dividend paid in FY18 and FY24 was the same $57m ..just less per share eh
In spite of what the likes of Craig's say I expect per share growth in the future to remain anaemic. Capital raises are inevitable.Per share numbers drive the share price along with market sentiment (reratings) só one needs to factor this into one's thinking.
I've woken from my snoozing (never really was asleep) and followed Basil into getting more and benefitting from a likely rerating from the current low multiples and hopefully collecting some dividends until the rerating is over (say 1,5 BV whatever that be) and realising the gains ...and waiting to do it all over again one day.
Is a punt really because I'm not that confident that Heartland are going to do what they say they wil do and I can't join in with enthusiasm many on here have at the moment.
That $200m by 2008 Plan is a master stroke. When they needed a pile of cash they said let's come up with a cool story and put it in a cool presentation with plenty of cool graphics.
Maybe a fairy tale (or one of fantasy) but it surely has worked for them eh ...got $200m new cash and telling the story again has kept 'investors' happy. But will it ever come true?
That's how I see it anyway. Wish me good fortune please
Here's the interesting table of ratios compared to 2018
IMG_5905.png
just need to add the div and the SP rows on the bottom W(*DIV/?SP)
nice prezzo....
Quote from: Basil on Sep 01, 2024, 09:03 PMYou'd be forgiven for thinking Heartland had undershot guidance by 49% not 4.9% with the degree of negativity on here this week. So the recession was a bit deeper than many of us thought, so what. That doesn't change the investment case on a forward economic recovery basis or the dirt-cheap forward metrics either. "Blind Freddy" can see we're entering an interest rate easing cycle which will help with the economic recovery. Those with their rampant negative confirmation bias are conveniently overlooking the very positive business confidence survey out this week and the recovering consumer confidence survey too. New vehicle sales up 45% in July 2024 compared to the same month last year didn't make the headlines either and is more positive news that people with a fixed negative viewpoint dismiss out of hand. Let's just dismiss all the emerging forward looking economic green shoots and pretend Spring isn't here and it's going to keep pelting down with rain like it did mid winter, the pessimists say. Bugger that, I'd rather taker a forward looking view.
Interesting article, paywalled https://www.nzherald.co.nz/business/liam-dann-the-economy-sucks-why-is-business-confidence-so-high/CIZCPJC7RVF2TKFI3LK5I7ZLZA/?lid=x2sif6xxrzkc&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=Premium_Daily_Wrap&uuid=ae2dd95d629344ca8119b12a0d7d7338
Excerpt. Spring has sprung and almost as if on cue, economic sentiment has turned. Weird, right?
Business confidence hasn't just turned either, it's gone through the roof. It has soared.
According to the August ANZ Business Outlook survey, topline economic confidence has rocketed to its highest level in a decade.
And firms' expectations for their own business in the next year have surged to the highest level in seven years....
...if you are worried about how bad the economy is right now there is some real confidence to be found in the renewed optimism of the business community.
There's always sunshine after rain, these things have always been the same. You didn't have to walk your dog all the way up One Tree Hill in Auckland today to admire the panoramic view while basking in 19 degrees warmth and sunshine to realise Spring was here but those who did seemed to be having a very good time. Sometimes on a sunny day the view from a mountain top gives you more perspective. Today was one of those days. Heartland will grow its earnings per share nicely in the years ahead. All you need to do is have patience and give it plenty of time.
And what a glorious day it was too at One Tree Hill/Cornwall Park yesterday!
A perfect sunny warm 1st day of Spring 2024.
Might have crossed path with you as I was there yesterday afternoon. Getting a carpark was the biggest issue with so many people there celebrating Father's Day at the BBQs.
Quote from: winner (n) on Sep 02, 2024, 09:37 AMBasil's right in saying that the time to buy is when multiples (PE or P/B) are low and then hope for any rerating but have comfort of a dividend stream if the rerating doesn't happen. The other bit of this strategy is to sell when multiples get excessively high. This has worked well with HGH in the past
The impact of significant capital raises is shown in the table below
Whereas Normalised NPAT has grown at 7.3%pa over the last 6 years EPS has only 1.4% pa (hardly staggering eh)
The capital raises and retained earnings have seen Book Value (Shareholder Equity) increase by $574m in those 6 years ....CAGR of 10.9% pa but on a per share basis CAGR of 1.9% pa.
Those low per share CAGR %ages have a drag on share price performance.
Dividend in FY18 was 9 cents/share ...in FY24 its 7 cent so dividend is lower. Over the last 6 years dividends have totalled 57.5 cents
Also to highlight the impact of the increase in the number of shares the value of the the dividend paid in FY18 and FY24 was the same $57m ..just less per share eh
In spite of what the likes of Craig's say I expect per share growth in the future to remain anaemic. Capital raises are inevitable.Per share numbers drive the share price along with market sentiment (reratings) só one needs to factor this into one's thinking.
I've woken from my snoozing (never really was asleep) and followed Basil into getting more and benefitting from a likely rerating from the current low multiples and hopefully collecting some dividends until the rerating is over (say 1,5 BV whatever that be) and realising the gains ...and waiting to do it all over again one day.
Is a punt really because I'm not that confident that Heartland are going to do what they say they wil do and I can't join in with enthusiasm many on here have at the moment.
That $200m by 2008 Plan is a master stroke. When they needed a pile of cash they said let's come up with a cool story and put it in a cool presentation with plenty of cool graphics.
Maybe a fairy tale (or one of fantasy) but it surely has worked for them eh ...got $200m new cash and telling the story again has kept 'investors' happy. But will it ever come true?
That's how I see it anyway. Wish me good fortune please
Here's the interesting table of ratios compared to 2018
IMG_5905.png
Do we think more large capital raises are inevitable? If they are retaining up to 50% of earnings instead of paying out as dividends, surely that is a significant source of funds for growth?
Yes, in my opinion, I think the probability is very high of another cap raise in 12-36 months.
Quote from: Fiordland Moose on Sep 02, 2024, 10:25 AMYes, in my opinion, I think the probability is very high of another cap raise in 12-36 months.
Why do you think that? What is the math behind your prediction?
Not being critical, just interested to know what people are using for their models as to why and how much more capital will be needed.
I understand that banks need to maintain capital ratios as they grow their businesses, and the two ways to do that are by capital raises or retaining earnings.
At present HGH is now retaining a significant portion of earnings.
Quote from: LaserEyeKiwi on Sep 02, 2024, 10:44 AMWhy do you think that? What is the math behind your prediction?
Not being critical, just interested to know what people are using for their models as to why and how much more capital will be needed.
I understand that banks need to maintain capital ratios as they grow their businesses, and the two ways to do that are by capital raises or retaining earnings.
At present HGH is now retaining a significant portion of earnings.
Back of envelope sums look like this
Equity start F25 is 1,200
10% ROE gives 120 profit / 60% Retained 72
Means Equity start F26 is 1272
11% ROE gives 140 profit / 60% Retained 84
Means Equity start F27 is 1,356
12% ROE gives 162 profit / 60% Retained 98
Means Equity start F28 is 1,454
12% ROE gives 174 profit for F28
Bit short of $200m npat in 2028 eh
Profit is Normalised so might be more but probably less this and this impacts Equity etc
Retained amount includes est for DRP
ROE my estimates ....have it increasing to 12% but that ambition of 14% is a pipe dream
So if to get to $200m need more capital and make dosh on that new capital
But they could just plod along steadily with what they've currently got (no new capital) and report something like $150m in 2028
$103m, $128m, $153m Craigs targets for FY25, FY26 and FY27. Extrapolate that trend out for FY28 if you want too.
Quote from: Basil on Sep 02, 2024, 01:36 PM$103m, $128m, $153m Craigs targets for FY25, FY26 and FY27. Extrapolate that trend out for FY28 if you want too.
My worked example for laser eye showing why it's likely a cap raise sometime wasn't a profit forecast
But hey it produced higher numbers than Craigs profit forecasts lol
Just shows you that even gurus can be seduced by amazing stories and glossy slides.... Jeff done an amazing job coming up with that.
Marketscreener has 3 analyst targets ...hi 1.68 lo 1.09 average 1.31
At least they've stopped lowering their targets which is a good sign ...and let's hope that the share price keeps going up so they have to increase targets
Cynically it seeks share price leads analyst thinking ....make the spreadsheet come up with something that looks like reality
IMG_5909.jpeg
Teitei mentioned the other day that a lot of the increase in the reverse mortgage book was capitalized interest
I wondered how much so looked at preso
NZ saw $197m originations and $113m repayments gives increase $84m. The total portfolio grew by 20% or $180m. I assume that the difference of $96m is capitalized interest......interest being 54% of the portfolio growth
For Oz numbers were $333m new and $200 repaid giving $133m. Total portfolio growth was $276m implying capitalized interest was $143m or 52% of the growth.
So it appears as if just over a half the growth in the portfolio came from capitalized interest
Could say that "real growth" was 10% and not the touted 20%
Think this is how it works ..logically anyway ...but it doesn't seem to be correct or make sense when originations in $ terms hardly grew ...like $2m across both countries
.
Maybe need to think about it differently
.
Quote from: winner (n) on Sep 03, 2024, 06:29 PMMaybe need to think about it differently
Nice work but as I pointed out in an earlier post, it doesn't really matter how it grows and if the RM book was growing any faster, we'd need another capital raise sooner rather than later. Maybe another way to think about is this, some people reckon compounding interest is the eighth wonder of the world.
Fascinating chart in post #1610, thanks.. Speaks for itself in terms of the reliability of consensus forecast and that forecasts follow, rather than leading the share price.
Quote from: Basil on Sep 03, 2024, 07:32 PMNice work but as I pointed out in an earlier post, it doesn't really matter how it grows and if the RM book was growing any faster, we'd need another capital raise sooner rather than later. Maybe another way to think about is this, some people reckon compounding interest is the eighth wonder of the world.
Fascinating chart in post #1610, thanks.. Speaks for itself in terms of the reliability of consensus forecast and that forecasts follow, rather than leading the share price.
Yea basil ..I forgot they charge interest on interest ...real compounding stuff that is eh
Quote from: winner (n) on Sep 04, 2024, 08:00 AMYea basil ..I forgot they charge interest on interest ...real compounding stuff that is eh
That's the beauty of the reverse mortgage business I guess, people aren't required to make any payments so the loan amount just keeps growing faster and faster every year (at 10%+ interest rate) until they sell or die.
What would be good to know is the number of mortgages there are and how many new ones and how many paid out
Quote from: LaserEyeKiwi on Sep 04, 2024, 10:25 AMThat's the beauty of the reverse mortgage business I guess, people aren't required to make any payments so the loan amount just keeps growing faster and faster every year (at 10%+ interest rate) until they sell or die.
With interest compounding
monthly.
Being a bank most probably compounding daily....lol
Doesn't matter that much if its a per annum interest rate....
https://www.heartland.co.nz/Uploads/Seniors/Resources/reverse-mortgage-fact-sheet.pdf?2
Thanks Shareguy. Lots of juicy fees in there on top of the 10.5% interest rate. Looks highly lucrative :)
As a matter of interest -
Heartland's variable interest rate on reverse mortgages in NZ is 10.5%pa
Australian Govt advertising reverse mortgages, to approved Au. pensioners, at 3.95%pa.
The calculator is interesting
Couple and youngest one aged 70 take on 30% of $1m house ...ie mortgage $300,000
Calculator says after 10 years equity likely to be $490,000 ....after property increases in value
After 16 years your $300,000 mortgage has grown to $1,600,000 and if you are lucky that's what the house is worth ....after that it seems you get further and further into debt and probably hope that Heartland won't kick you out and make you homeless.
https://www.heartland.co.nz/reverse-mortgage/reverse-mortgage-calculator#
lets hope for investors they have an accurate financial model for how much they require to cap raise to balance the required growth in lending (RVM) to balance increasing divides and SP .....
Quote from: Bev on Sep 04, 2024, 12:16 PMAs a matter of interest -
Heartland's variable interest rate on reverse mortgages in NZ is 10.5%pa
Australian Govt advertising reverse mortgages, to approved Au. pensioners, at 3.95%pa.
You forgot to mention that the lending conditions are quite different :) - the Govt mortgages might have lower interest rates, but there are just many things they won't give you any money for.
Costs for House renovations? - HGH - yes, Government - NO
Costs for an important surgery? HGH - yes, Government - no
Need money for an overseas travel to visit the family? HGH - yes, Government - NO.
... the list of things for which the government Reverse Mortgage does not pay is endless, it basically only can be used for some modest increase of ones monthly pension. Anybody needing a lumpsum needs to go to HGH or they just won't get the money.
Not sure either about the repayment conditions for the government loans - HGH's conditions are extremely flexible. What about the government?
Anyway - looking at the growth rate of HGH's Australian loan book (17.8% CAGR since 2020, check page 28 of their recent investor presentation) it looks like that there are enough customers who understand the benefits of the HGH Reverse Mortgage. Can't make everybody happy, can they?
Quote from: winner (n) on Sep 04, 2024, 12:18 PMThe calculator is interesting
Couple and youngest one aged 70 take on 30% of $1m house ...ie mortgage $300,000
Calculator says after 10 years equity likely to be $490,000 ....after property increases in value
After 16 years your $300,000 mortgage has grown to $1,600,000 and if you are lucky that's what the house is worth ....after that it seems you get further and further into debt and probably hope that Heartland won't kick you out and make you homeless.
https://www.heartland.co.nz/reverse-mortgage/reverse-mortgage-calculator#
Looks like you didn't read the conditions, didn't you?
This is taken from the same website:
QuoteWe take our duty of care seriously and have a range of safeguards in place to ensure you make an informed decision and are well protected*.
Lifetime occupancy promise
You continue to own and live in your home for as long as you choose.
No negative equity guarantee
The amount required to repay the loan will never exceed the net sale proceeds of the property.
Loan repayment promise
You do not need to make any loan repayments until the end of the loan. Although you can choose to make repayments at any time with no penalty.
As you easily can see - the bank can't kick the owners out - no matter whether the loan sum is growing above the house value. All the bank will get at the end is whatever the house is worth when the residents / owners die.
No need to hope for the banks mercy :) ;
Quote from: winner (n) on Sep 04, 2024, 11:14 AMWhat would be good to know is the number of mortgages there are and how many new ones and how many paid out
Not sure I see the relevance of the number of mortgages. Interesting is the sum of money they loaned out.
Page 27 and 28 of their investor presentation https://api.nzx.com/public/announcement/437072/attachment/426005/437072-426005.pdf
provide plenty of data in that regard.
Quote from: BlackPeter on Sep 04, 2024, 01:24 PMYou forgot to mention that the lending conditions are quite different :) - the Govt mortgages might have lower interest rates, but there are just many things they won't give you any money for.
Costs for House renovations? - HGH - yes, Government - NO
Costs for an important surgery? HGH - yes, Government - no
Need money for an overseas travel to visit the family? HGH - yes, Government - NO.
... the list of things for which the government Reverse Mortgage does not pay is endless, it basically only can be used for some modest increase of ones monthly pension. Anybody needing a lumpsum needs to go to HGH or they just won't get the money.
Not sure either about the repayment conditions for the government loans - HGH's conditions are extremely flexible. What about the government?
Anyway - looking at the growth rate of HGH's Australian loan book (17.8% CAGR since 2020, check page 28 of their recent investor presentation) it looks like that there are enough customers who understand the benefits of the HGH Reverse Mortgage. Can't make everybody happy, can they?
Thank you Black Peter.
Actually, I see HGH provided a glossary at the end of the presentation to help those of us who are challenged by some of the accounting language.
once you have the money .. and you invest it in mining on mars with elon will HGH know ?
Quote from: Waltzing on Sep 04, 2024, 02:01 PMonce you have the money .. and you invest it in mining on mars will HGH know ?
elon will only accept BC if you want to invest in his new mining company on Mars...
now you may say this is silly... but the production shed for knocking out star lifters is !00 a year...
thats right you read it correctly... 100 big rockets to take stuff up into space.. a year... just to start with...
I doubt they (HGH) would mind if you really want to throw your loan money away ... as long as you don't transfer their security to the Mars as well :)
Having said that ... any of Musks investments are at best a play for traders specialised in exploiting the bigger fool theory, and I recon he is now with all of his investments well past the hype peak. He has a lot of similarities with his buddy Trump, and he could as well easily commit suicide just by jumping from the height of his ego down to his IQ level :) ;
Anyway - better go back to HGH, shall we?
I wonder if Heartland has decided to get out of homeloan mortgages, they haven't adjusted any rates for long time and now have some of the highest rates in the sector.
Thank goodness.
Waste of good capital.
Better margins elsewhere.
Quote from: lorraina on Sep 05, 2024, 10:42 AMThank goodness.
Waste of good capital.
Better margins elsewhere.
Motor car loans for example?
1957
MARAC Finance opens to support the growth of small to medium sized businesses.
Been core business of HGH since PGC days.
Quote from: lorraina on Sep 05, 2024, 10:42 AMThank goodness.
Waste of good capital.
Better margins elsewhere.
If you mean motor and assets they have been provisioning lots of losses, think I would prefer lower margin with pretty much no losses.
Wonder what DRP price will be this time?
Probably will be cheapest DRP shares ever.
Since 2019 DRP been
1.47
1.54
1.59
1.25
1.80
2.27
2.11
1.64
1.69
1.27
Só 1.10 would be cool
Reverse mortgages at 10.5%
Quote from: winner (n) on Sep 05, 2024, 11:20 AMWonder what DRP price will be this time?
Probably will be cheapest DRP shares ever.
Since 2019 DRP been
1.47
1.54
1.59
1.25
1.80
2.27
2.11
1.64
1.69
1.27
Só 1.10 would be cool
Maybe a bit less than $1.10. I'm fully subscribed to the dividend reinvestment plan.
On that note - Sharesies now has DRP for HGH
Quote from: Basil on Sep 06, 2024, 11:06 AMMaybe a bit less than $1.10. I'm fully subscribed to the dividend reinvestment plan.
Might even get DTP for $1.00
We'll see mate. Market screener consensus estimates for FY25, FY26 and FY27:
FY24 eps 9.8 dps 7 cps
FY25 eps 12.16 dps 7cps (gross yield at $1.07 9.1%)
FY26 eps 15.34 dps 8 cps (gross yield 10.4%
FY27 eps 17.22 dps 9 cps (gross yield 11.7%)
CAGR in earnings per share ~ 21% per annum over the next 3 years. Forward FY25 PE presently only 8.8
The economic worm has turned and the bottom of the cycle is in. Retaining close to 50% of earnings each year and probably a little over that level with DRP should see them have sufficient capital to grow without another capital raise. That's how I see it.
Quote from: Basil on Sep 10, 2024, 11:36 AMWe'll see mate. Market screener consensus estimates for FY25, FY26 and FY27:
FY24 eps 9.8 dps 7 cps
FY25 eps 12.16 dps 7cps (gross yield at $1.07 9.1%)
FY26 eps 15.34 dps 8 cps (gross yield 10.4%
FY27 eps 17.22 dps 9 cps (gross yield 11.7%)
CAGR in earnings per share ~ 21% per annum over the next 3 years. Forward FY25 PE presently only 8.8
The economic worm has turned and the bottom of the cycle is in. Retaining close to 50% of earnings each year and probably a little over that level with DRP should see them have sufficient capital to grow without another capital raise. That's how I see it.
Not sure how fresh the Mktsrnr forecasts are. I've got the 3 reports all post announcement - ave is as follows.
EPS: 11, 14.1, 16.3....for FY25-FY27
DPS: 6.7, 8.2, 9.5
pretty chunky revisions post full year to fcst period.
for what its worth.
Bigger dividends, very nice!
Jeez, HGH share price having a bad week'
I hope market isn't doubting Heartlans ability to execute its ambitious plans ...but I'm getting feeling they are
I think share price will be about where it is now come Christmas ....and they'll be saying reduced dividend
All these guru analysts are in cuckoo land with their forecasts
Not a good move waking up from my snooze
Quote from: winner (n) on Sep 11, 2024, 07:27 PMJeez, HGH share price having a bad week'....
.....I hope market isn't doubting Heartlans ability to execute its ambitious plans ...but I'm getting feeling they are.....
.....All these guru analysts are in cuckoo land with their forecasts
Crikey.....careful Winner...... next minute you'll be called a 'Naysayer' or even worse, a ...... 'loser'
Winner one of the good guys, no malice in him On the other hand, some make their intentions perfectly clear.
Don't worry Winner me old mate, we'll get some really cheap DRP shares.
Just on $1.04. Very nice. https://api.nzx.com/public/announcement/438057/attachment/427252/438057-427252.pdf
Sounds like Heartland was lending money to "Landwork Civil", a company run by a manager with (according ot his employees) unorthodox management methods and a history of receiverships. Company is now in liquidation and Heartland repossessed the vehicles it had as security.
https://www.nzherald.co.nz/business/heartland-bank-repossess-heavy-machinery-amid-liquidation-of-landwork-civil/BZ5NU25KMRBZZF4XONQISGAAKU/?lid=wgm80mwh0xyi
(probably paywalled)
"According to their first liquidators' report, the business owes at least $1.26 million to creditors, including about $65,000 to Inland Revenue."
Heartland is one of the creditors, but their share of the overall debts is not disclosed, nor which part is covered by the machines they repossessed.
Lets hope for a strong market for earthmoving machines and utes.
Looking at the sums overall - any loss (if any) should not be material for Heartland, but the event might be a sign for things to come in the industry.
One of that last minute provision of $10m that meant they didn't meet guidance
Oh dear... lucky the drp already set..lol
https://www.nzx.com/announcements/438179
Quote from: Perky on Sep 17, 2024, 10:53 AMOh dear... lucky the drp already set..lol
https://www.nzx.com/announcements/438179
FMA says person traded while holding material information that was not generally available to the public. The individual also disclosed material information that was not generally available to the public to others.
So a 'junior' employee has access to 'material information' ....... hmmm
Probably just somebody who did the photocopying
Good time to be trading HGH shares .....all the way up and sell at a top?
Quote from: Perky on Sep 17, 2024, 10:53 AMOh dear... lucky the drp already set..lol
https://www.nzx.com/announcements/438179
From the announcement it sounds a junior staff member did some share trading using Insider knowledge.
Obviously - at this stage only allegations, but independent from how the story unfolds could I not see how any company could protect itself against a staff member either dealing him/herself with shares or conveying their insider knowledge to somebody else. Of course they can educate and warn their people (and I assume they do this as matter of course).
Of course its illegal, but hey - so is theft.
I can't see how this case would impact on HGH's share price.
ASB looking at the potential for AI to replace thousands of call center staff. Paywalled.
https://www.nzherald.co.nz/business/ai-could-take-thousands-of-call-centre-jobs-at-asbs-australian-parent-how-about-here/YYSV7YZYFBB3NLL6AHGMAK4EEA/
Excerpt "Commonwealth Bank of Australia - owner of ASB - is exploring the possibility of replacing thousands of its call centre staff with AI, according to an AFR report. The bank, which has some 2400 local call centre staff, announced on Tuesday it's conducting trials with a generative AI chatbot called "Hey CommBank", testing the technology on employees of the bank who are also customers. Could it happen on this side of the ditch?"
HGH could do with some cost out programs too.
Quote from: Basil on Sep 18, 2024, 06:42 PMASB looking at the potential for AI to replace thousands of call center staff. Paywalled.
https://www.nzherald.co.nz/business/ai-could-take-thousands-of-call-centre-jobs-at-asbs-australian-parent-how-about-here/YYSV7YZYFBB3NLL6AHGMAK4EEA/
Excerpt "Commonwealth Bank of Australia - owner of ASB - is exploring the possibility of replacing thousands of its call centre staff with AI, according to an AFR report. The bank, which has some 2400 local call centre staff, announced on Tuesday it's conducting trials with a generative AI chatbot called "Hey CommBank", testing the technology on employees of the bank who are also customers. Could it happen on this side of the ditch?"
HGH could do with some cost out programs too.
Had in the past (on the client side) already lots (too much) exposure to chatbots - both in NZ and overseas.
To be honest - the most useful feature of these chatbots I so far could find is that some of them are able to transfer you to a real human if they get stuck - and the latter is something they are really great in.
But hey - never give up hope, one day they even might be better in solving existing customer problems than in creating new ones.
Quote from: BlackPeter on Sep 19, 2024, 08:42 AMHad in the past (on the client side) already lots (too much) exposure to chatbots - both in NZ and overseas.
To be honest - the most useful feature of these chatbots I so far could find is that some of them are able to transfer you to a real human if they get stuck - and the latter is something they are really great in.
But hey - never give up hope, one day they even might be better in solving existing customer problems than in creating new ones.
Generative AI bots are somewhat different to the fairly stupid chatbots that are just running scripts, and like you say are often just giving the simplest of responses that you might find on a FAQ page, and anything more complex transferring you to a human.
Gen AI bots can interpret questions and provide answers not previously scripted. However still a long way to go to ultimately remove humans altogether for everything.
The latest "o1" product from OpenAI unveiled last week is much more interesting, and definitely shows a path to a service that can equal or surpass human operators.
Quote from: LaserEyeKiwi on Sep 19, 2024, 10:47 AMGenerative AI bots are somewhat different to the fairly stupid chatbots that are just running scripts, and like you say are often just giving the simplest of responses that you might find on a FAQ page, and anything more complex transferring you to a human.
Gen AI bots can interpret questions and provide answers not previously scripted. However still a long way to go to ultimately remove humans altogether for everything.
The latest "o1" product from OpenAI unveiled last week is much more interesting, and definitely shows a path to a service that can equal or surpass human operators.
TPW are already seeing huge cost out through AI deployment.
AI "Solutions in a box" already delivering results • Conversion improvements being driven by product content generation and recommendations (9% ) and live chat (3% ) • ~40% of customer pre/post sales support interactions now handled by AI and technology resulting in ~$4m in annualised CODB savings
Heartland appoints CEO, advises of change to senior manager
23/09/2024, 08:30 NZST, GENERAL
NZX/ASX release
23 September 2024
Heartland appoints CEO, advises of change to senior manager
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce the appointment of Andrew Dixson as Chief Executive Officer (CEO), subject to Reserve Bank of New Zealand non-objection, effective 1 October 2024.
In April 2024, Jeff Greenslade indicated to the Board his intention to step down from his role as CEO of Heartland by the end of this calendar year. Andrew's appointment enables a thorough handover to be completed sooner, allowing Jeff to retire earlier.
Jeff will retire from his role and all Heartland directorships on 30 September 2024. Andrew will succeed Jeff as CEO of Heartland and be appointed a Non-Independent Non-Executive Director of Heartland Bank Limited (Heartland Bank), effective 1 October 2024. Andrew joins strong leadership across the group, which includes Heartland Bank CEO Leanne Lazarus and Heartland Bank Australia Limited (Heartland Bank Australia) CEO Michelle Winzer.
Andrew, currently Group Chief Financial Officer, has been with Heartland since 2010. In his time at Heartland, Andrew has been involved in all key parts of Heartland's evolution, including the initial merger in 2011, New Zealand bank registration in 2012 and Heartland's listing on the NZX and ASX. Andrew has also played a critical role in the execution of several major strategic acquisitions, including the acquisition of the Reverse Mortgage businesses in 2014, StockCo Australia in 2022 and Challenger Bank Limited (Challenger Bank) in 2024.
Heartland Chair, Greg Tomlinson, said Andrew's appointment reflects the evolution of the business since Heartland Bank's acquisition of Challenger Bank – subsequently rebranded to Heartland Bank Australia.
"The Board is confident in Andrew's ability to lead Heartland in the next stage of its journey. This next stage will be focused on capital allocation and an improved return on equity, of which Andrew has proven his leadership in shaping Heartland's funding strategy in both countries, and through his involvement in complex structured finance transactions and a number of successful material capital raises."
Andrew's focus as CEO will be on group strategy, investor relations, corporate finance, capital allocation, and strategic and risk management oversight of each bank. The Group Chief Financial Officer role will not be replaced.
This reflects a significant evolution of Heartland's role as the parent company of two banks. Heartland's operations as parent company are now focused on those matters described above, and a number of responsibilities have moved from Heartland to the respective banks. As such, the Deputy Group CEO role has been disestablished and Chris Flood will finish with Heartland on 31 October 2024.
Chris first joined Heartland through a predecessor entity in 1997 and has held a number of senior management positions at Heartland, including as CEO of Heartland Bank before he was appointed Deputy Group CEO in August 2022.
Chris' significant contribution to Heartland has included successfully leading the Motor Finance business during Heartland's establishment in 2011, the integration and growth of Heartland's Reverse Mortgage businesses in New Zealand and Australia, the development of Heartland Bank's Livestock and Asset Finance divisions and the development of the Australian Livestock Finance business following the StockCo Australia acquisition. For the past year, Chris has, alongside other activities, led the integration planning of the Australian business and was briefly Acting CEO of Heartland Bank Australia.
Greg Tomlinson said, "on behalf of the Board, I would like to express our sincere thanks to Chris for his service to Heartland and acknowledge the value he has created for our shareholders. We wish him all the best in his next endeavours".
Pursuant to the NZX Listing Rules, Chris Flood will cease to be a senior manager of Heartland on 31 October 2024.
– ENDS –
The person who authorised this announcement:
Greg Tomlinson
Chair
No real comment yet from me re leadership........but a bit disappointing / underwhelming
Quote from: winner (n) on Sep 23, 2024, 08:51 AMNo real comment yet from me re leadership........but a bit disappointing / underwhelming
Actually - always good if an organisation is able to grow their talent internally.
Board was so far quite capable to pick good people, and with somebody they know already for 14 years the risk to get it wrong is much lower than with somebody new whose only talent might be to sell him/herself.
As well, Andrew obviously knows the organisation and won't need to be afraid to find buried skeletons in hidden closets :)
I prefer a competent and quiet achiever anyday over a colourful conmen.
One good thing about Flood not being wanted anymore and the CFO role not being necessary any more is that is EPS accretive ...almost immediately
Makes you wonder how many more hangers on there are at HQ
Quote from: winner (n) on Sep 24, 2024, 07:57 AMMakes you wonder how many more hangers on there are at HQ
Funny you mention that. I was just pondering earlier this morning how many senior managers they have in charge of their comprehensive ESG programs? A lot of old dead wood in there I reckon. Might go along to the ASM and stir things up a bit and do some barking.
Quote from: Basil on Sep 24, 2024, 09:26 AMFunny you mention that. I was just pondering earlier this morning how many senior managers they have in charge of their comprehensive ESG programs? A lot of old dead wood in there I reckon. Might go along to the ASM and stir things up a bit and do some barking.
Two stand alone companies/banks with a 'parent' company
Bound to be more 'dead wood' in the parent .....don't seem to have much to do at HQ with all the real hard work being done by the two CEOs of the banks
Has been some not too kind comments about Lazarus on these forums.
Quote from: winner (n) on Sep 24, 2024, 10:22 AMHas been some not too kind comments about Lazarus on these forums.
Yeah, I had a few guests out on my boat last summer who had attended the NZSA meeting she presented at last year and they were not shy in sharing their opinion of her. To be fair, she couldn't comment on the possible need for a capital raise at the time as that decision was above her pay grade and taken at a board level.
Not much fun seeing the share price languishing where it is. Too many loan delinquencies. I think those responsible for writing those bad loans need to be held accountable. Perhaps to some extent some of them have been already. Going forward, I want to hear a LOT more about how they are going to improve returns on capital and tighten up on loan assessment criteria to ensure a much lower level of loan defaults going forward and a lot less about their endless ESG greenwashing. The plain fact of the matter is Turners have done a MUCH better job with their loan assessment criteria in this recession and management of bad and doubtful debtors than HGH have.
Oh dear ...... announcement re leadership changes gone down like a lead balloon ....
..... market underwhelmed like me?
Quote from: winner (n) on Sep 24, 2024, 05:55 PMOh dear ...... announcement re leadership changes gone down like a lead balloon ....
..... market underwhelmed like me?
OR is it selling to take part in FBU or AIA CR. I see opportunity..........
Quote from: Shareguy on Sep 25, 2024, 06:13 AMOR is it selling to take part in FBU or AIA CR. I see opportunity..........
Just over 50% of average daily volume so doubt selling to buy FBU
But just as a good reason as any eh
As you say the optimists see opportunity
Under a buck screams "CHEAP" louder than a cage full of budgies.
It is very easy to overlook as to what you are buying with your sub $1 ps including 2 banks for the price of one :)
Better update your peer review thingie basil to highlight how 'cheap' cheap really is
I see one if the few focus areas in new CEO role is 'investor relations' ......way things are going he better get his act together pretty quick and produce some cool glossy presentations to seduce 'investors' and get them really keen ...esp new Aussie ones and a few new NZ instos
Quote from: winner (n) on Sep 25, 2024, 09:32 AMBetter update your peer review thingie basil to highlight how 'cheap' cheap really is
Good idea mate. Important to look forward as first quarter of FY25 is almost over anyway so comparing FY26 forward PE's, one of these is definitely not like the others, (all figures from market screener average of analyst estimates).
BEN 13.2
BOQ 12.2
WBC 16.5
ANZ 13.3
NAB 16.1
Average of peer group 14.3
HGH 6.4
HGH share price could double and it would still be on a lower forward PE than the average.
Cue the usual response from naysayers that this peer group comparison isn't relevant...like we haven't heard that many times already ::)
There have been too many Capital Raises to my mine. I have lost count how many they have had since they listed all those years ago.
I just want to see the businesses integrate and see if they can grow there market share outside HGH's core strengths, thus achieving the HGH's magic number over next 3/4 years.
Question is to achieve that do they need to raise more capital??
Quote from: Greekwatchdog on Sep 25, 2024, 10:35 AMQuestion is to achieve that do they need to raise more capital??
Who knows for sure, but they have certainly dialed right back on their expectations of dividend payout ratio to somewhere above 50% and analysts are forecasting it very close to that percentage in the years ahead so that's a big change, and will be a big help. In addition, there's the dividend reinvestment plan which based on my calculations has about a 26% uptake. In effect they are likely to be paying out less than half their future earnings in cash. I think they just need to stick to their core strengths and the more low risk reverse home loan mortgages the better.
I find it somewhat concerning that HGH are about to cut their interest rates to compete for more mortgages, their new 1 year mortgage rate is lower than my current 1 year term deposit rate and only 0.90 % above the current 1 year on offer......crickey they already been suffering from decreasing margin(NIM)
Quote from: Greekwatchdog on Sep 25, 2024, 10:35 AMThere have been too many Capital Raises to my mine. I have lost count how many they have had since they listed all those years ago.
[snip]
Question is to achieve that do they need to raise more capital??
Issuing shares seems to be a necessary evil for HGH - a lot of their interest income on reverse mortgages is not actually received in cash. But they still have to pay those making deposits and staff.
Issued shares have gone from 470m in 2015 to 931m in 2024. An increase of 98% or put another way 7.1% CAGR over 10 years. Some of this will be from the DRIP.
But it is having a negative impact on EPS for sure....$ sales have grown at 9.3% CAGR for the past 10 years, but when you overlay the share count increase, sales per share has grown at 2.1% CAGR. Overlay an expanding middle line, and EPS doesn't look good on a 10 year graph.
HGH-2024 - Copy.JPG
Thanks for posting that Ferg. I was very disappointed with the last result. Slim nim, higher impairments and costs. So disappointed that after holding since it listed its on my possible bail list.
The reverse mortgage business is a gem but needs lots of cash so further cap raises is a possibility if it keeps growing like it has I would have thought?
Its stock business I also think will come right and is a great segment to be in.
I'm picking it's upwards and onwards from here and do see opportunity, Will continue to hold based on the potential with Australia but if I don't see some improvement I will sell the lot.
Hey Ferguson, nice chart
The EPS line pretty unimpressive eh ......almost sad looking .... esp in the context of the hype over the years
Our economy has been extremely weak since Covid. The company performance reflects the underlying weakness as well as some mismanagement of risks and an excessive focus on ESG.
Things should improve in the years ahead for those with the patience to hold...well that's the theory I am working on.
Here it is ....HEARTLAND CLIMATE REPORT 2024
All 51 pages of it ...cool eh
And PWC have audited it
Please read thoroughly ...exam later in week
Will have a proper read, I recently subscribed to Claude AI professional so for entertainment value here's what it's produced when asked what are the key considerations from the report for an investor:
Acquisition of Challenger Bank Limited: Heartland completed the acquisition of Challenger Bank Limited (now Heartland Bank Australia) on April 30, 2024. This gives Heartland an Australian banking license and expands its presence in Australia. The integration and performance of this acquisition will be important to watch.
Financial Performance:
Reported NPAT decreased to $74.5 million in FY2024 from $95.9 million in FY2023.
Underlying NPAT (excluding one-offs) was $102.7 million, down from $110.2 million in FY2023.
Gross finance receivables grew 6.4% to $7.2 billion.
Credit Quality: There was some deterioration in credit quality, with impairment expenses increasing to $46.4 million from $23.2 million the previous year. The non-performing loans ratio increased from 2.56% to 3.66%.
Strategic Focus Areas:
Expanding in Australia through the newly acquired banking license
Accelerating digitalization to improve efficiency and customer experience
Focusing on "best or only" product strategy in niche areas
Long-Term Targets: Heartland has set ambitious targets for FY2028, including:
Underlying NPAT of over $200 million
Underlying cost-to-income ratio below 35%
Underlying ROE of 12-14%
Reverse Mortgages: This remains a key growth area, with receivables up 20.2% in New Zealand and 19.7% in Australia.
Economic Headwinds: The company noted challenging economic conditions impacting performance, particularly in the last two months of the fiscal year.
Dividend: A final dividend of 3 cents per share was declared, bringing the full year dividend to 7 cents per share.
Leadership Changes: Jeff Greenslade retired as CEO on September 30, 2024, with Andrew Dixson taking over as the new CEO.
Regulatory Environment: As a bank operating in both New Zealand and Australia, regulatory changes and capital requirements in both countries could impact the business.
Investors should monitor the company's progress on integrating its Australian acquisition, its ability to meet long-term targets, credit quality trends, and how it navigates the current economic environment. The success of its digitalization efforts and performance of key products like reverse mortgages will also be important factors to watch.
Quote from: winner (n) on Sep 30, 2024, 10:09 AMHere it is ....HEARTLAND CLIMATE REPORT 2024
All 51 pages of it ...cool eh
And PWC have audited it
Please read thoroughly ...exam later in week
Where's the Te Reo version ;)
Quote from: Basil on Sep 30, 2024, 10:21 AMWhere's the Te Reo version ;)
Its got plenty of the te reo. Goit the rainbow Tick. Got the gender diversity. Got the Climate Change. Got all the key elements of a business I stay well clear of.
Annual report https://api.nzx.com/public/announcement/439086/attachment/428392/439086-428392.pdf Plenty of Te Reo in here.
All this talk of massive shorting of Spark got me wondering how much shorting was / is still in play with HGH especially with the recent cash issue at $1 ? Doggy wonders if some of those shorts are like a dog with a bone and won't let go considering for the first time in years there was no forward guidance given.
What happens if at the annual meeting on 30 October a half reasonable amount of guidance is forthcoming, (not quite the nightmare level of bad debt provisioning it appears some are expecting in FY25)? Maybe some of those shorts might need to cover their position. Does seem a little strange that the share price is hugging the recent capital raise price of $1 pretty closely...or maybe the dog is just indulging in wishful thinking...who knows...it was a slow day at work and I had to ponder something lol
I will cling on "doggedly" and see what happens. Lets just say I really like Turners chances of them hitting their $65m profit target but in my opinion the jury is well and truly out on the chances of HGH hitting their $200m FY28 target. Might attend the meeting and ask them, seeing as Jeff is going , if they still stand by the veracity of the underpinnings of that objective. Might follow that up with asking them instead of focusing on all things ESG like your life depends on it and there's some tangible benefit in terms of eps to shareholders, maybe focus a lot more attention on tightening up your loan approval process to reduce bad debts going forward is a good idea. See what reaction that gets from them.
https://www.heartlandgroup.info/newsroom/updates/introducing-heartland-bank-australia
An old work mate asked me to critique an entry he was working on for this years Deloittes Top 200 Awards.
I had to laugh and when I told him why I was laughing he got it.
Remember they were the awards last year where Comvita edged out Heartland for BEST GROWTH STRATEGY section .....what a laugh
Both masters of producing screeds of awesome slides full of buzzwords and cool diagrams ...things that both judges and investors love to see ...and are seduced by them.
Good piece of advice (that sums both up) -
"In the absence of a track record of accomplishment, you should take a CEO's plans as hopeful intent. That doesn't mean they are lying, just that we really don't necessarily know what they can or cannot do. There is a particular danger if they use language that resonates with you. More than once in my investment career did I fall for someone who said all the right things, except that they hadn't done them — in the past, or as it turned out, in the future."
Agree, a lot of work ahead for management to prove their expansion strategy is eps accretive. Where the market is pricing the shares, it's basically giving them no chance of success but maybe their strategy does start working over the next few years?
They're certainly not a completely hopeless. zombie. company like Convita, that's for sure.
Very limited downside and potentially quite a lot of upside is how I see it and holders are being paid a gross yield of circa 10% while they wait and see what happens.
I've got a few curly questions lined up for them at the annual meeting. Even if I don't like their answers I'll probably hang around and collect 10%, try and tolerate all their endless woke BS and see what happens next year with their FY26 forecast. They reckon by the end of FY25 90% of their loan book in Australia will be funded from retail deposits at circa 2% lower cost of funds. That should be strongly eps accretive in FY26 but we will see.
I would encourage all shareholders to vote against resolution 5 at the forthcoming annual meeting or online.
Under the listing rules they are allowed to issue up to 15% new shares in a placement in any one period, and subsequently ratify that issue at the next annual meeting, (on 30/10/2024). If the last issue, (arguably at desperation pricing and heavily favoring institutions), is not ratified, there is no effect on the issue already made but it blocks their ability to make another placement in the next 12-month period. In my opinion they made such a mess of the last issue they should be blocked from having the ability to make another one in the next 12 months.
Haven't we all had enough of them sledgehammering the price down with repeated capital raises? I voted against this resolution online and will also make my thoughts well known at the annual meeting in person on this and other points.
Re that resolution
Will 'provide flexibility to raise money through issue of new shares' ...good practice
But believe it or not 'There is no guarantee that any further issue will be undertaken or to the terms and timing for any such issue'
I'd say more money will be needed in next year or two .....esp if they are going to get anywhere near that touted $200 profit
Basil asking questions ...I might pop in a few as well
Could be a good HUI eh
I've suggested to a media guy that the upcoming HUI n could make for a good story
Hope they make the effort to attend ;) 8) 8)
Need others to turn up and ask really hard question of the board to. Really give them a grilling. Shares languishing close to a decade low, they need to be held accountable for their actions.
Quote from: Basil on Oct 14, 2024, 10:46 AMI would encourage all shareholders to vote against resolution 5 at the forthcoming annual meeting or online.
Under the listing rules they are allowed to issue up to 15% new shares in a placement in any one period, and subsequently ratify that issue at the next annual meeting, (on 30/10/2024). If the last issue, (arguably at desperation pricing and heavily favoring institutions), is not ratified, there is no effect on the issue already made but it blocks their ability to make another placement in the next 12-month period. In my opinion they made such a mess of the last issue they should be blocked from having the ability to make another one in the next 12 months.
Haven't we all had enough of them sledgehammering the price down with repeated capital raises? I voted against this resolution online and will also make my thoughts well known at the annual meeting in person on this and other points.
Zomething odd in ze fine print of zees motion.
"In accordance with NZX listing rule 6.3.1, Heartland will
disregard any votes cast in favour of Resolution 5 (Ratification of Placement) by any shareholder who acquired shares under the placement."
Zo only those who
did not participate in ze last placement can vote for another one? However, every zhareholder can vote
against eet happening again?
Eef zhey had done ze placement at a higher share price, zhey may have not needed to issue zo many zhares, and zees whole motion vould have been unnecessary? I vill be voting against ze motion like you Basil. Let us get ze board to reflect on their reckless timing of zees placement, and virst digest ze cash mountain zhey have raised vor a vew months, before zhey greedily come back to zhareholders vor more!
RB
Quote from: Red Baron on Oct 22, 2024, 09:05 AMZomething odd in ze fine print of zees motion.
"In accordance with NZX listing rule 6.3.1, Heartland will disregard any votes cast in favour of Resolution 5 (Ratification of Placement) by any shareholder who acquired shares under the placement."
Zo only those who did not participate in ze last placement can vote for another one? However, every zhareholder can vote against eet happening again?
Eef zhey had done ze placement at a higher share price, zhey may have not needed to issue zo many zhares, and zees whole motion vould have been unnecessary? I vill be voting against ze motion like you Basil. Let us get ze board to reflect on their reckless timing of zees placement, and virst digest ze cash mountain zhey have raised vor a vew months, before zhey greedily come back to zhareholders vor more!
RB
Does seem strange
I'm led to understand that Placement only refers to the insto raising and it's only those beneficiaries who can't vote for the resolution
That's what I got told but could be wrong
Interestingly the placement was at an 18% discount to the prevailing price. How does this compare with others? Right up there with the level of discount RYM, (with all their egregious mismanagement of debt) had to offer to get their deal done, 21.9% and was higher than Fletchers (with all their endless fiasco's), 17%, (13.9% on a theoretical ex rights price).
Why is there so little apparent confidence in the market in Heartland such that you had to discount the share issue to desperation pricing? (A good question to ask at the annual meeting). Do you accept that there is an enormous amount of work to do to restore confidence such that the shares might lift a bit from their decade low?
Reading through their book of excuses, Opps sorry, annual report yesterday, it was pleasing to see Geoff received no short-term incentives and took a big pay cut this year compared to last. I suspect he was pushed by the board. I wonder if he will be at the annual meeting to be held accountable for some of the reckless lending that led to such a poor result?
Disc: I reduced my portfolio allocation yesterday at break even on cost from ~6% to ~3%. I think they have wasted an enormous amount of management time and energy on woke agenda's and taken their eye of their core responsibility to maximize shareholder returns. "Go woke, go broke"
My conviction level with this company is now much lower than it once was. I'd wager many other shareholders feel much the same.
Quote from: Basil on Oct 22, 2024, 10:24 AM...
"Go woke, go broke"
...
Not disagreeing with the gist of your post, but is it really necessary to include above frequently debunked statement?
https://www.rnz.co.nz/news/national/529342/is-there-any-truth-to-go-woke-go-broke
Many companies doing better for being "woke"- but yes, it doesn't safe you if you forget to look as well after your major stakeholders and your core business.
Well yes, it's a cliche but it definitely was one of Geoff's very strong points of focus, (read about the highlights of his career in the annual report).
Interesting comparing this finance company, Opps sorry, Bank with Turners loan book, (they both run large motor vehicle loan books). You'll read in Turners annual report how they tightened lending criteria several times during the year to mitigate against the level of expected loan delinquencies in tougher economic times.
On the other hand, there's endless pages of ESG material to wade through in Heartland's report but I have yet to read one reference to them tightening lending criteria in a proactive manner to guard against bad and doubtful debt levels. Focus in the wrong area? I think so.
Jeff,Jeff,Jeff.
Geoff died.
Opps sorry, my bad. With both Geoff and Jeff gone, maybe things will get better, or maybe not, best to wait and see.
Quote from: Basil on Oct 22, 2024, 10:24 AMInterestingly the placement was at an 18% discount to the prevailing price. How does this compare with others? Right up there with the level of discount RYM, (with all their egregious mismanagement of debt) had to offer to get their deal done, 21.9% and was higher than Fletchers (with all their endless fiasco's), 17%, (13.9% on a theoretical ex rights price).
Why is there so little apparent confidence in the market in Heartland such that you had to discount the share issue to desperation pricing? (A good question to ask at the annual meeting). Do you accept that there is an enormous amount of work to do to restore confidence such that the shares might lift a bit from their decade low?
Reading through their book of excuses, Opps sorry, annual report yesterday, it was pleasing to see Geoff received no short-term incentives and took a big pay cut this year compared to last. I suspect he was pushed by the board. I wonder if he will be at the annual meeting to be held accountable for some of the reckless lending that led to such a poor result?
Disc: I reduced my portfolio allocation yesterday at break even on cost from ~6% to ~3%. I think they have wasted an enormous amount of management time and energy on woke agenda's and taken their eye of their core responsibility to maximize shareholder returns. "Go woke, go broke"
My conviction level with this company is now much lower than it once was. I'd wager many other shareholders feel much the same.
Some good points you have raised Basil. I can't attend the meeting but I'm sure us holders appreciate you asking the hard questions. I am hoping that they will release some guidance, which I reckon the lack of is holding the SP where it is. The current share price would suggest to me that the market is not expecting good news.
We need proof of both an improving macro backdrop and operational efficiencies to get more comfort around targets. On saying that I'm not expecting the first half of FY25 to be that flash and a repeat of the last 6 months, given the state of the economy.
Will they continue with the $200m NPAT target by FY28. How is Australia going for both livestock and Challenger.
Craig's lowered their FY25 NPAT forecast from $111.0m to $103.3.
Quote from: Basil on Oct 22, 2024, 10:24 AMInterestingly the placement was at an 18% discount to the prevailing price. How does this compare with others? Right up there with the level of discount RYM, (with all their egregious mismanagement of debt) had to offer to get their deal done, 21.9% and was higher than Fletchers (with all their endless fiasco's), 17%, (13.9% on a theoretical ex rights price).
Why is there so little apparent confidence in the market in Heartland such that you had to discount the share issue to desperation pricing? (A good question to ask at the annual meeting). Do you accept that there is an enormous amount of work to do to restore confidence such that the shares might lift a bit from their decade low?
Reading through their book of excuses, Opps sorry, annual report yesterday, it was pleasing to see Geoff received no short-term incentives and took a big pay cut this year compared to last. I suspect he was pushed by the board. I wonder if he will be at the annual meeting to be held accountable for some of the reckless lending that led to such a poor result?
Disc: I reduced my portfolio allocation yesterday at break even on cost from ~6% to ~3%. I think they have wasted an enormous amount of management time and energy on woke agenda's and taken their eye of their core responsibility to maximize shareholder returns. "Go woke, go broke"
My conviction level with this company is now much lower than it once was. I'd wager many other shareholders feel much the same.
so a wee bit of a confession on why I sold out about 8 weeks ago, apart from lame company excuses.
We recently found out that my son had taken out a car loan with heartland bank, the amount he applied for was was for the full car value amount 20k plus 2 k extra for a new set of mag wheels. Now my son did have a job at the time but is unfortunately one of the worst money managers I have ever experienced.
Cut a long story short the car got repoed and was sold for 5k.
My issue is why the hell did heartland give him all the money(more than the car was even worth) when he could not even show that he could save for a deposit. Not making excuses for my son but surely this is irresponsible lending....suspect much more bad news to come from the company because of this sort of lending
Quote from: snapiti on Oct 26, 2024, 08:19 AMMy issue is why the hell did heartland give him all the money(more than the car was even worth) when he could not even show that he could save for a deposit. Not making excuses for my son but surely this is irresponsible lending....suspect much more bad news to come from the company because of this sort of lending
Makes you wonder that's for sure. I read from Turners they tightened their lending criteria several times last year to preempt untoward losses from lending. Meanwhile HGH spend forever and a day on ESG garbage and fiddle around while Rome burns.
Kids learn best from the school of hard knocks. I am sure you could easily have stepped in and enabled him to keep his car but good on you for making sure he learnt a valuable lesson.
I see in the annual report they have ringfenced certain assets, called "Non-Strategic assets" they even have an acronym for them NSA's, how 'cute", see page 9. These include equity investments $13.5m, investment properties $3.7m, property of $12.6m, business lending receivables of $74.4m and rural lending receivables of $113.7m, total, $217.9m. Balance has reported on the other channel they have warehouses full of plant and machinery that's been repossessed. They go on that NSA's will be managed and reported separately in FY25 to provide greater transparency and enable more focused resolution strategies to be adopted.
I'm sorry but this sent my Beagle nose for corporate B.S into complete overdrive. More to come on this when I have time.
Submitted 4 questions
Say they will endeavour to answer ann questions submitted on ....yeah right .... Betcha no response
Most didn't want to know when I posted this a while ago but seems some a now agreeing. Seems Heartland has had bad leadership for a year or so now and this has flowed through the organisation.
I mentioned Flood in that post ...but the guy they've appointed has been there too long so things won't change. Opportunity lost.
My earlier post -
One day, well into Jeff's long and illustrious career, a journalist asked the banker why he wasn't driving great Heartland performance like he used to.
"When Heartland was growing profits I was cold and hungry," said Jeff. "I'm not cold and hungry anymore."
Let's call this "The Jeff Greenslade Problem". How does a person or an organization keep its creative vitality once they have already become successful, already become comfortable?
This, we think, is one of the cardinal problems of any type of successful business that has seen a lot of growth.
Good that Jeff is 'retiring' and definitely a time for new blood and renewed dynamism in Heartland ....from outside the organisation ...be a bad move if they take the easy route and 'promote' Chris Flood
Quote from: Basil on Oct 26, 2024, 09:57 AMMakes you wonder that's for sure. I read from Turners they tightened their lending criteria several times last year to preempt untoward losses from lending. Meanwhile HGH spend forever and a day on ESG garbage and fiddle around while Rome burns.
Kids learn best from the school of hard knocks. I am sure you could easily have stepped in and enabled him to keep his car but good on you for making sure he learnt a valuable lesson.
I see in the annual report they have ringfenced certain assets, called "Non-Strategic assets" they even have an acronym for them NSA's, how 'cute", see page 9. These include equity investments $13.5m, investment properties $3.7m, property of $12.6m, business lending receivables of $74.4m and rural lending receivables of $113.7m, total, $217.9m. Balance has reported on the other channel they have warehouses full of plant and machinery that's been repossessed. They go on that NSA's will be managed and reported separately in FY25 to provide greater transparency and enable more focused resolution strategies to be adopted.
I'm sorry but this sent my Beagle nose for corporate B.S into complete overdrive. More to come on this when I have time.
well it was not that simple, as he had also racked up 20k on an unsecured loan with harmony @ 19% interest as well, I did bail him out of that one but he now has a written loan agreement with DAD, 0% interest $30 a week until paid
Quote from: snapiti on Oct 26, 2024, 08:19 AMso a wee bit of a confession on why I sold out about 8 weeks ago, apart from lame company excuses.
We recently found out that my son had taken out a car loan with heartland bank, the amount he applied for was was for the full car value amount 20k plus 2 k extra for a new set of mag wheels. Now my son did have a job at the time but is unfortunately one of the worst money managers I have ever experienced.
Cut a long story short the car got repoed and was sold for 5k.
My issue is why the hell did heartland give him all the money(more than the car was even worth) when he could not even show that he could save for a deposit. Not making excuses for my son but surely this is irresponsible lending....suspect much more bad news to come from the company because of this sort of lending
Is your son still liable for the outstanding amount.?
Quote from: lorraina on Oct 26, 2024, 12:09 PMIs your son still liable for the outstanding amount.?
I assume so, that's been left up to him to deal with as he is to old for me to wipe his butt, the last letter I seen from Heartlands was the repo man is coming and the debt will be handed over to a collections agency for recovery, I know the repo man came and took the car.
I suspect his credit rating will be shot to pieces
QuoteI see in the annual report they have ringfenced certain assets, called "Non-Strategic assets" they even have an acronym for them NSA's, how 'cute", see page 9. These include equity investments $13.5m, investment properties $3.7m, property of $12.6m, business lending receivables of $74.4m and rural lending receivables of $113.7m, total, $217.9m. Balance has reported on the other channel they have warehouses full of plant and machinery that's been repossessed. They go on that NSA's will be managed and reported separately in FY25 to provide greater transparency and enable more focused resolution strategies to be adopted.
I'm sorry but this sent my Beagle nose for corporate B.S into complete overdrive. More to come on this when I have time. from above
It appears to me they are trying to creatively ringfence these assets separately from normal provisioning and try and they appear to be trying to make the argument they are separate special cases. This has all the hallmarks of creative accounting in that:-
1. They are not being provisioned within normal bad and doubtful debt parameters
2. They say they will be working to resolve these matters in an orderly and responsible manner. This is simply B.S. code speak for, we don't want to take a massive haircut and ruin our regular reporting at the bottom of the economic cycle but want to spread these losses over a number of years and report them separately to try and create the illusion they are extraordinary items. AKA Do a Fletcher's and report substantial extraordinary items year after year after year and try and pretend they're not recurring.
3. By holding more than $200m on doubtful assets on the balance sheet at face value they are misrepresenting both their operational profitability and balance sheet ratio's and simply hoping for a better outcome on realizations as the economy recovers.
No worries though...if these so-called special case losses eat away at the capital ratio over time, they could do another capital raise at $1 and shareholders would be "really thrilled" for the opportunity to show further support, (sarcasm).
Hey Basil. ..when Harmoney share price gets to 2 bucks that'll put a dent in those ring fenced assets
LOL. I called Harmoney a flawed business model and warned others many times, loudly and clearly to stay away years ago on the other channel when they were north of $2.
38 cents now. That's not been a very harmonious investment has it!
Jeff didn't give guidance for FY25 before he left
F24 NPAT was $75m ...normalised $103m lol
No doubt guidance will be provided on Wednesday
Methinks if it normalised NPAT is say $95m the share price could go to the 80's. ...even lower if Andrew says the $200m target was only a pipe dream dreamt up by Jeff to seduce punters into putting cash in the collection plate
I very much suspect with unemployment rising that you will get the normal cheerleading followed up with a minimal but very meaningful we are not in the best of times caveat.
At least the SP has priced in the current situation and the company will be aware the SP is priced as a divi stock with not a lot of growth priced in
It's very disappointing to see the share price still languishing around a decade low, close to the desperation pricing of the last capital raise many months ago.
One lesson all should take on board from this mess is that 'normalisation' of profits is a bad practice.
Often as in the case of Heartland the abnormals turn out to be real and not abnormal after all
The start of this practice was a red flag ......especially iafter years of Jeff always doing what he said he would do.
The start of normalising b
It was a sad day when Jeff started 'normalising' to smooth profits ...like Jack Welch at GE it all catches up with them.
Hope new guy stops the practice
Leopards not going to change its spots. For one thing, you can see they are smoothing the losses on their newly classified $217m of non Stategic assets over the next few years. Even going to report on them separately as if to suggest they have learned their lesson from certain types of lending and these sorts of losses will not be recurring in the future. It's just plain unadulterated creative accounting AKA "fudging the books"
Did you sell out Basil? I have not followed this thread for some months
OK - sounds like HGH is currently in the bad books of some of our gurus. Bashing time?
And fair enough ... normalized profit (like underlying earnings or EBITDAFXY) might be useful to point the torch on a certain aspect of the financial system based on a whole lot of working assumptions (which may - or more often - may not be right), but it is more often used to fudge the big picture (which is always wrong). So, yes they clearly turned into the wide and comfy way leading to reporting hell instead of choosing the steep and narrow path to reporting heaven.
And clearly - buying into Harmoney was not one of their better decision either (and in hindsight easy to see) - even if this is long time back and it has not really any material impact anymore.
Not sure about their car loan lending criteria ... but if I take minimoke's story at face value, then it sounds as well quite concerning if they loan 100% of the value of a security which starts to loose value before the ink under the purchase contract is dry to any warm body without evidence of prudent money skills. Actually - I think this is one of the more concerning stories - but lets face it, the last financials didn't look that concerning, didn't they?
On the other hand - their big business contributors are reverse mortgages and farm lending. Reverse mortgages can only grow (and are safe) and farming seems to be at the bottom of the cycle, green shoots are clearly visible (like horticulture and recently sheep) - and hey - farming won't go away anytime soon - will it?
If I look at the IFR earnings - they made over the last 10 years an average of 13 cents per year, and analysts predict the same average for the three years to come (plus 2024). So - lets call this a non growth company and they should be worth (8.5 times earnings) something like $1.10 per share. If they don't grow, they are fairly priced with a bit of headroom.
Obviously - analysts think that they are currently at the bottom of an earnings cycle (but hey, analysts are normally optimistic and can't tell the future either) - and all up from here, which means, if they are right, there might be significant upside potential.
So - I guess the real question is - is HGH like one of these finance companies which didn't survive the GFC, or do they have enough of a bank to pull themselves through and thrive?
So far I have nobody heard making a case for their Exitus (and lets face it, I have seen no supporting data either) - i.e. the chance for them of thriving in the coming upturn appears to be significantly higher than the alternative ...
Might be a case of always good to buy around $1 :) ;
Quote from: BlackPeter on Oct 28, 2024, 09:17 AMIf I look at the IFR earnings - they made over the last 10 years an average of 13 cents per year, and analysts predict the same average for the three years to come (plus 2024). So - lets call this a non growth company and they should be worth (8.5 times earnings) something like $1.10 per share. If they don't grow, they are fairly priced with a bit of headroom.
I think that's a fair synopsis and probably a good way to look at it across different economic cycles. You could even argue that with lower equity risk premiums these days, (although whether that's applicable to a finance company / bank is highly debatable), a fair no growth PE is 10 and fair value is $1.30. I think it will take quite some time to get there but in theory patience should be rewarded. I say in theory because if they are fudging their books and disguising massive losses on their $217m of non-strategic assets, NSA's (more than 2 years profits), then what they really made across the bottom of the economic cycle could have been such a depressing number they might not have got the capital raise done. I'm going to focus a fair bit of my questioning at the annual meeting on these so-called NSA's and if I don't like the answers to questions, my shareholding in HGH will become a NSA to me.
entrp, I've sold half at break even on cost and my remaining stake in HGH now represents just under 3% of my portfolio. This move reflects my concerns noted above and a lower level of confidence in HGH than I used to have.
Selling mine off today, looking at buying a business and I'd rather take $1.04 today than risk bad news tomorrow and have SP drop away.
Well, that AGM was a great display of self indulgence from the top table
Nonetheless one shareholder rattled Chairman Greg when he questioned about these Non-Strategic Assets ...think he got grumpy with them being described as assets put in the naughty boys cornet. Anyway he didn't answer the question and had to revert to the 'I'm mindful of time' trick to avoid further questions from that shareholder.
You get the impression big problems ahead with these. Laughed when one manager said they had to restock a farm so they get a good price for it ...or something like that.
Pretty poor meeting really ...gave shareholders no confidence of things going well in short/medium term.
farm
Quote from: winner (n) on Oct 30, 2024, 03:40 PMWell, that AGM was a great display of self indulgence from the top table
Nonetheless one shareholder rattled Chairman Greg when he questioned about these Non-Strategic Assets ...think he got grumpy with them being described as assets put in the naughty boys cornet. Anyway he didn't answer the question and had to revert to the 'I'm mindful of time' trick to avoid further questions from that shareholder.
You get the impression big problems ahead with these. Laughed when one manager said they had to restock a farm so they get a good price for it ...or something like that.
Pretty poor meeting really ...gave shareholders no confidence of things going well in short/medium term.
farm
Hmm - interesting. Just wondering whether they had two different meetings on to make sure everybody gets to hear what they expect (hey - this would be stakeholder service, wouldn't it?)?
Anyway - I heard a lot about a refreshing focus on shareholders value ... and the session didn't require me either to pull out my Te Reo dictionary in order to follow. This was good.
I saw a significantly refreshed leadership team, and it sounded that they acknowledged and understood the problems of the recent past.
So - to me it felt they made the right noises. Obviously - whether they manage as well to convert them into the right deeds, we need to see. Project 2028, isn't it? - but I think we can expect gradual improvements before.
PS: In case nobody noticed - the shareholder question you referred to had been discussed on this very thread before. Just wondering whether we might know the shareholder who asked the question?
Quote from: winner (n) on Oct 30, 2024, 03:40 PMPretty poor meeting really ...gave shareholders no confidence of things going well in short/medium term.
I think that sums it up in a nutshell pretty well. Apparently, there will be a recording of the meeting available on HGH's website tomorrow. If you watch closely, the clues about FY25's performance are there if you go looking for them and then you can make your own mind up.. Keep in mind the hugely increased number of shares on issue now and impairments in future years on those $217.9m of NSA's which are really EPA's (Especially problematic assets).
oh dear, usually easy to walk away from AGM's feeling upbeat having listened to the cheerleading, certainly appears to be some creative accounting as well, big red flag right there.
Quote from: Basil on Oct 28, 2024, 09:53 AMentrp, I've sold half at break even on cost and my remaining stake in HGH now represents just under 3% of my portfolio. This move reflects my concerns noted above and a lower level of confidence in HGH than I used to have.
Will you be keeping your remaining shares after that lacklustre meeting yesterday?
Greg Tomlinson didn't seem to like that shareholder descibe these non-strategic things as "Corral the bad stuff and put them in the naughty boys corner" and hope for the best
Couldn't help think that sounds like Oceania and their dud assets they call assets for sale.
Greg's modus operandi
Wasn't sure what to post this under, but with HGH asm yesterday stimulating plenty of discussion, it seemed appropriate.
This is an invitation to all posters to meet, gratefully organised by Ronaldson as follows per his notice:
Hi everyone. The forward weather forecast for Sunday mid-afternoon is 19 degrees, sunny, minimal wind, so great for the Terrace at Oyster and Chop. Put it in your diary and make a point of attending. The event/Happy hour starts at 3.00pm for drinks, and oysters too if that is your taste. All welcome so don't miss out on meeting fellow forum posters/readers, not to mention insights into what to choose for the 2025 Competition!
See you then.
I wasn't happy with the answers to the questions I was allowed to ask yesterday and frankly it was a crock of s**t that shareholders question time was cut so short. Most shareholders only have one chance a year to question the board and management and the manner in which the time was cut short showed scant respect for shareholders rights to communicate with them.
All the 2028 aspirational talk doesn't fit with what scant information was provided in terms of FY25 trading. The company would know full well what their first quarter profit was to 30 Sept as this is required to be disclosed to the RBNZ but chose not to share this information.
The $217.9m of EPA's (especially problematic assets) will prove a major challenge in the years ahead to realise at anything like book value. In discussions after the meeting Leanne Lazuraus CEO of Heartland N.Z. was adamant they had not segregated out a bad bank from the good bank, but that's exactly what they have done in my opinion. $217.9m is more than two years of total normal operating profit, so yes, this is very material.
They are going to report on the bad bank separately going forward but its important to understand that losses going forward are not exceptional items, this is simply a process of realizing what is mainly extremely doubtful loans incurred over the bottom of the economic cycle, over a period when hopefully the economy recovers.
Quite surprisingly after the intense questioning I gave them at the meeting I thought I would be persona non grata after the meeting, but I had good discussions with several directors who came up to me and thanked me for my questions, including Greg Tomlinson.
I might share a bit more about what was discussed next week after I have reflected on everything yesterday and reworked my expectations on earnings and dividends for the next 3 years.
In terms of my shareholding, I have taken steps to reduce this further and the remaining shares are now classified as...you guessed it, a non-strategic asset :)
Basil, cheers for your report - and cheers for attending the AGM and asking relevant questions. Consider yourself lucky - I asked an online question and only got back that they will respond to that question later in email (here is hoping ...).
Nevertheless, as indicated - my impression of the meeting was a bit better than yours, I saw a new team trying to fix the issues of the past, but I can see the issues you are worried about. And sure - them just acknowledging them does not mean that they will succeed in resolving them as well. Talk is cheap.
No matter whether one considers the stock currently as NSA - or otherwise, I would I expect that their margin will go up in the mid term with interest rates going down. That's what happens, if you've got a captive clientele (on fixed term interest) as borrowers and are able to lend the money you need for lending to them with dropping interest rates at a lower price.
What I am saying is, I expect their EPS to go up in the midterm and sort of expect the SP to follow, unless the reserve banks of the world do a turnaround ... and plan to earmark their shares for review to sell (together with various real estate stocks) when the interest rates start to approach the next bottom.
Anyway - good info, cheers.
Some further reflections from yesterday's meeting while they are still fresh in my mind.
In no particular order I recall
1.The banking system computer upgrade will result in an additional depreciation charge of ~ $6m per annum and that's quite a headwind for future profits.
2. Leanne Lazurus said company and business insolvencies had increased in FY25 to date compared to last year
3. She also said that Heartland N.Z. costs had increased year on year, (this despite my recollection of a substantial jump in the cost to income ratio (CTI) in FY24. Comment:- This simply doesn't fit with their goal of reducing CTI to 35% by FY28 and increasingly in my opinion their FY28 targets, (all of them) look like pie in the sky aspirational targets that are simply not achievable)
4. She also said she expects the unemployment rate to continue to increase in FY25. Comment: As do almost all economists. She also told me after the meeting that their default loss rate on motor vehicle lending was circa 2% and she expected that would increase. I encouraged her to do the minimum possible no deposit lending as vehicles depreciate circa 25-30% the minute they are driven off the car lot but she said the practice was endemic in the industry.
5. Greg Tomlinson acknowledged to me after the meeting they had done "Too many capital raises". Comment. I think its very unlikely there will be another one anytime soon.
6. Its clear they are targeting a 55% dividend rate or close to that level.
7. There was a lot of talk about the 2% extra margin they would get on reverse home loan lending in Australia and they acknowledged to me after the meeting that their intention was not to pass any of this saving onto the customers. Comment. They really accentuated the positive but there was no talk about the extra staff costs in Australia.
Taking into account clear indications of significant extra costs in FY25 and extra bad and doubtful debts I think normalized profit will be somewhat lower in FY25 than FY24. Taking into account all the extra shares on issue of just over 956m I think eps will be about 10 cps in FY25, less any losses on the bad bank. With a 55% targeted divvy payout ratio I think another dividend cut is very much on the cards, indeed there was mention in the meeting of 6 cps in passing, at one point. It could even be as low as 5.5 cps. This simply doesn't fit with my earlier expectations of 7 cps and really undermines the investment case for holding as far as I am concerned. Frankly, you can get better yield elsewhere.
My preliminary revised view of earnings growth in FY26 and FY27 is this will be substantially obliterated by heavy losses on their $217.9m bad bank. It would not surprise me in the slightest if they only got somewhere around 50 cents on the dollar for the assets in that bad bank. Perhaps as much as $120m in losses to come spread over a number of years is how I see it. That's just a guess on my part but a lot of those business loans are secured over plant and equipment that's simply not sellable in this market and might only attract very lowball offers in the future. (For example, a client of mine recently sold a heavy trailer unit through Turners in good working order. He was told there's such a vast amount of plant and equipment on the market they would only take it to auction if it was no reserve. It was surplus to his requirements, and he only got just on 5 cents on the dollar of depreciated book value) Comment. Its a real bloodbath environment out there for selling construction equipment, there are literally so few buyers, they offer mere cents on the dollar.
Additionally, although they are absolutely adamant that no further delinquent loans in FY25 will be added to the bad bank, transferring another tranche of especially problematic assets in there this year, would not surprise me in the slightest.
Its not hard at all to find better managed companies than HGH so I completed the sell down of my remaining shares today.
I acknowledge Lounge Lizard was right, owning a small bank at this stage of the economic cycle is not a good idea. The length and depth of the recession, (which I am insulated from), and its effects on their receivables is something that I believe has really surprised HGH and also surprised me.
There's a very long road ahead, many years, for management to build credibility and earnings growth back and I don't have the patience for that. No investor on this planet gets every decision right so I am philosophical. I completed my exit at very close to break even counting back in the last 2 dividends I've received. If you can recover from the odd poor decision at break even on cost or very close, that's a cheap and valuable lesson.
Good luck to holders, I think you are going to need it. My Beagle nose for corporate B.S. and double speak, registered a very high reading yesterday.
Watched the agm and was disappointed that no guidance was issued. My take on that is FY25 has not started well. The comments that Nim to date has increased is good, and the comments re retail deposits in Australia exceeding expectations is another positive. However the comments from the NZ ceo that business liquidations are high. With increased unemployment and concerns re the non strategic assets and future impairments leave me with the impression that FY25 is going to be tough, very tough.
Pleased to hear that part of my question was answered re non strategic assets . The chair confirmed that valuation's were undertaken by third partys. The NZ ceo did mention that they were waiting for farm values to improve which is the bulk at $114m.
Craig's note says that retail deposits raised so far are at an average rate that is 1.74% lower than HGH's current average cost of funds in Australia. If this cost of funds differential remains we think it should underpin at least a c$30m improvement in NPAT between FY24 and FY26. This is a game changer if it happens.
$30m is a big number but this will not happen straight away and will be spread out with 90 percent in retail funds by the end of FY25. Craig's note states it expects 1H25 to be similar to 2H24.
Over all I think a lot is riding on an improved economy but I personally think that the new ceos will want to start with a fresh slate so FY25 is going to be possibly another tough year and perhaps even less NPAT than FY24.
FY24 actual adjusted NPAT was $87.9 m
Latest forecasts from brokers.
Jardens $105m eps 11.2
Craig's $103m eps 11.0
Fbar $102m eps 10.8
Note. All brokers expecting higher NPAT in FY25 but lower EPS Due to the cap raise (increase in shares)
A lot of these non strategic assets have been on the disposal list for some time so I think it's valid to conclude that further write downs and impairments are a real possibility. The chair did say there was going to be no fire sales but I believe until we see some resolution that the share price is going to stay in the doldrums.
On saying all this I see the prize being Australia and with the share price being below asset value and with declining interest rates still think at around the dollar is good value. I'm going to hold but can understand traders/investors selling out or reducing positions. All brokers are forecasting big increases FY26 onwards which is what I'm holding out for.
Big congrats to Basil for going to the meeting and his take on things and for fantastic questions asked.
Cheers Basil for the time and effort taken in exposing HGH's particular brand of corporate B.S.
The continued lack of guidance speaks volumes about just how uncertain HGH are about "what lies beneath" their own business and indeed, the economic backdrop they are working under. Trying to re-assure investors that things will all be good in 2028, without knowing how the business is going right now, is treating shareholders like idiots. There is, to my mind, a huge credibility and trust gap between shareholders and management, and really - who needs to put up with that when there's much better run companies, with much better prospects, to invest in?
My feeling too, is that the dividend will be cut further, and I don't see any movement upwards in the SP in the medium term. There's obviously still a few that are keeping the faith, so good luck to all.
Interesting chart shows what happens when a company becomes slack and looses its way ....from the top down.
Now we don't believe in the normalisation thing these are real reported NPAT numbers and weighted average number of shares.
If F24 NPAT is another $75m year EPS and we use the number of shares including last capital raise EPS will continue its downward slide to 8 cents (half of a few years ago)
No wonder share price is where it is today .....and not surprising sone really disillusioned shareholders are getting out
IMG_5964.png
Great discussion - stocktalk at its finest.
Cheers basil for your very useful report and your effort in communicating your concerns loud and clear. I do think that the scenario you paint is close to worst case, but absolutely - if our economies keep stuck at the current bottom for the next three years, than I think you nailed it.
From a personal perspective I expect all major economies to pick up ... with a turning point around now (well, some - like US - are already quite nicely on the uptrend), and this would mean that the value in their bad bank would rise as well in proportion.
So - lets say worst case - they stick for some time around with their 10 cents EPS.
Best case would be in my view their project 2028 (and yes, I say best case, not most likely case), which would mean something like 20 cents EPS (in 2028).
From experience - most things end up somewhere between worst and best case, so lets say something like 15 cents EPS in 2028 would be middle of the road. Not stellar (for a share which used to be above $2), but not bad either for a share you currently can buy around $1.
Ah yes, and then there is this dropping interest rate effect I mentioned in an earlier post. Interest rates down means inevitably higher lending margins for lenders with a captive clientele. As well - interest rates down means higher stock prices for dividend payers, even if they don't raise their dividend (obviously only if they don't drop their dividends). Win - win.
I stick in this discussion with shareguy ... and will keep my holding - but yes, I reinvested recently some free cash, and no, this money didn't went into additional HGH shares, i.e. I rate them currently as HOLD, not as BUY.
thanks winner, SP also reflected in your chart, shows what happens to a company with solid growth when that stops.
Interesting Beagle you raised the 100% lending on cars issue and the company says that is the norm for the industry.......I see it as reckless lending.....surely during this economic down turn some form of caution should have been applied.
From the sounds of it they still practice the same sort of lending.
To me it also looks like their rural lending book is in real trouble, as they have to wait for rural farm prices to rise before being in a position to recover debt.
Still not the worst investment at current levels, in saying that happy to be on the sidelines as I believe there is more pain to come especially with rising unemployment
Headlines of last two years results announcements -
Heartland announces solid FY2024 result
Heartland's FY2023 result demonstrates resilience
So all good
Quote from: winner (n) on Nov 01, 2024, 09:18 AMHeadlines of last two years results announcements -
Heartland announces solid FY2024 result
Heartland's FY2023 result demonstrates resilience
So all good
interesting.... I wonder what one could say about the share price over the same corresponding periods
Quote from: snapiti on Nov 01, 2024, 09:10 AMthanks winner, SP also reflected in your chart, shows what happens to a company with solid growth when that stops.
Interesting Beagle you raised the 100% lending on cars issue and the company says that is the norm for the industry.......I see it as reckless lending.....surely during this economic down turn some form of caution should have been applied.
From the sounds of it they still practice the same sort of lending.
To me it also looks like their rural lending book is in real trouble, as they have to wait for rural farm prices to rise before being in a position to recover debt.
Still not the worst investment at current levels, in saying that happy to be on the sidelines as I believe there is more pain to come especially with rising unemployment
Just on the subject on rural farm prices. Man in radio (Radio NZ, I think in the rural report) said this morning that dairy farm prices increased by 20% over the last 12 months. Green shoots?
Is there a recording of the meeting anywhere? I cannot find it on their website and would like to view the Q&A section. I had to check out halfway through due to work commitments.
I'm still holding but with some trepidation. From what I heard I still have some optimism about the Aussie RM side of things but that's about it.
Quote from: BlackPeter on Nov 01, 2024, 09:04 AMCheers basil for your very useful report and your effort in communicating your concerns loud and clear. I do think that the scenario you paint is close to worst case, but absolutely - if our economies keep stuck at the current bottom for the next three years, than I think you nailed it.
Een case you have not noticed, Basil has a tendency to gravitate towards ze vorst case zcenario. Zees eez not meant to be a criticism of Basil. Eet eez just a recognition of heez investment style. Zniff trouble and get out early, vhich leaves you vith ze problem of vhat to do vith your money. OK for zome but an investment ztyle zhat leaves you in a constant state of nervousness - zo not vor me.
Quote from: BlackPeter on Nov 01, 2024, 09:04 AMFrom a personal perspective I expect all major economies to pick up ... with a turning point around now (well, some - like US - are already quite nicely on the uptrend), and this would mean that the value in their bad bank would rise as well in proportion.
So - lets say worst case - they stick for some time around with their 10 cents EPS.
Best case would be in my view their project 2028 (and yes, I say best case, not most likely case), which would mean something like 20 cents EPS (in 2028).
From experience - most things end up somewhere between worst and best case, so lets say something like 15 cents EPS in 2028 would be middle of the road. Not stellar (for a share which used to be above $2), but not bad either for a share you currently can buy around $1.
Ah yes, and then there is this dropping interest rate effect I mentioned in an earlier post. Interest rates down means inevitably higher lending margins for lenders with a captive clientele. As well - interest rates down means higher stock prices for dividend payers, even if they don't raise their dividend (obviously only if they don't drop their dividends). Win - win.
I stick in this discussion with shareguy ... and will keep my holding - but yes, I reinvested recently some free cash, and no, this money didn't went into additional HGH shares, i.e. I rate them currently as HOLD, not as BUY.
Vifteen cps earnings vor FY2028? Dividend of 7.5cps, on a zhare price of $1.02? Gives a 'gross dividend yield' of 10.2%. How vill zhat compare vith 'bank term deposit rates' een 2028?
Ze golden goose vor Heartland has been vor a vhile 'Reverse Mortgages': A business niche too specialized to be invaded by ze 'big banks'. Zees eez vhy ve chose to invest in Heartland over and above zhose other 'zcrappy zecond tier lenders', let us not vorget!
'Asset financing', ze zecond Heartland gig, vas always going to be hit hard in a recession. Granted zees recession eez turning out to be deeper and longer than zome predicted. But I do not theenk Heartand investors zhould act zurprised by zhis, and ze consequent headwinds zhat Heartland could, -and now are- vacing.. I agree zhat Heartland risk management on 'asset lending' has turned out var vrom optimal. But zees eez easy to zay vith ze benefit of hindsight. Heartland vill be learning from zhis experience and vill survive to bank another day.
If theengs do go down 'the middle of the road', zhen Heartand eez zet to become 'a very boring investment', vhich zuits me just vine. I theenk your overview heets ze right balance Blackpeter.
RB
I'd be out if I wasn't an embarrassing 25% underwater with HGH. If I realise the loss, what's there to put it in to recoup? The whole NZ market is not flash right now.
Quote from: winner (n) on Nov 01, 2024, 09:18 AMHeadlines of last two years results announcements -
Heartland announces solid FY2024 result
Heartland's FY2023 result demonstrates resilience
So all good
Solid FY2024 result they headlined.
They never made any mention that H1 NPAT was down ~25% on pcp and H2 NPAT was down ~22% on pcp ...and not much said by media/market watchers
That's some drop in profitability
Quote from: winner (n) on Nov 01, 2024, 03:38 PMSolid FY2024 result they headlined.
They never made any mention that H1 NPAT was down ~25% on pcp and H2 NPAT was down ~22% on pcp ...and not much said by media/market watchers
That's some drop in profitability
Actually, as it seemed to me at the time, the result was bad from just about every angle you could think of : NP down, debt up, EPS down, NIM down, CTI up, impairments up and to top it off the final dividend was cut by 50%. If that was solid result I'd hate to see a bad one.
I think the beagle is much like myself when it comes to sniffing out BS.
I have lost count of the amount of times my BS radar has made me sell or not buy an investment which turned out to be a very wise decision.
In fact I am pleased to say my BS radar has very rarely let me down.
I have learned that it is wide spread that corporates tend to understate the negatives and cheerlead the positives so one should be cautious and take special notice of the negatives and dig a little deeper than the companies statement.
Market does not like uncertainty nor does it tolerate BS for long periods of time so often it is best to quit these sort of companies before the rest of the market takes notice.
In saying that Heartlands SP IMO already reflects the poor results and most of the BS and certainly does not factor in much success in Aus.
[/quote]
Turners had a nice looking 2020 Alfa Romeo Giulia in the yard the other day with a $84,000 price tag
Guy said it had been repossessed ...punter thought he could afford it in 2020 but the world has changed..... and added lots more repos than usual these days as punters can't afford the payments
Alfa guy probably financed by Heartland 👻
Leanne Lazurus seems completely relaxed about continuing to provide zero deposit motor vehicle finance egged-on by one of the directors who touted only a 2% overall loss rate. They seem oblivious to the fact that the unemployment rate is going up and unconcerned that vehicles lose a large percentage of their value the moment they are driven off the car yard. Even mentioned in the meeting that the major Australian banks are stepping back from vehicle lending, but they see that as quite "the opportunity". $1.6 Billion in vehicle lending and growing. Some of that pretty reckless with no deposit. Good business ?...you be the judge.
sounds like more business for TRA motor finance?
Quote from: snapiti on Nov 02, 2024, 06:57 AMI think the beagle is much like myself when it comes to sniffing out BS.
I have lost count of the amount of times my BS radar has made me sell or not buy an investment which turned out to be a very wise decision.
In fact I am pleased to say my BS radar has very rarely let me down.
I have learned that it is wide spread that corporates tend to understate the negatives and cheerlead the positives so one should be cautious and take special notice of the negatives and dig a little deeper than the companies statement.
Market does not like uncertainty nor does it tolerate BS for long periods of time so often it is best to quit these sort of companies before the rest of the market takes notice.
In saying that Heartlands SP IMO already reflects the poor results and most of the BS and certainly does not factor in much success in Aus.
Or you could simply not buy stocks in a downtrend ::)
the interesting thing about Mr Markets is often it trades on fear, greed, momentum/confidence both in general and for individual stocks, these are often the drivers of trends so for that reason I shall use trends as part of the tool box, I think too many opportunities are created by the emotional aspects of the markets for one to purely say don't buy in a down trend.
Quote from: snapiti on Nov 03, 2024, 11:15 AMthe interesting thing about Mr Markets is often it trades on fear, greed, momentum/confidence both in general and for individual stocks, these are often the drivers of trends so for that reason I shall use trends as part of the tool box, I think too many opportunities are created by the emotional aspects of the markets for one to purely say don't buy in a down trend.
Maybe in the short term, but over the long term a trend reflects the collective wisdom of the market. As Graham says, "in the short run, the market is a voting machine, but in the long run, it is a weighing machine". So a long term downtrend means the market has carefully considered the value proposition of the stock in question, and gone "yeah, nah". It has been judged by large numbers of holders and potential buyers who have decided that its a poor investment. In HGH's case, this is the entire ASX stock analyst industry who are all experts on bank stocks. Secondly, fund managers dont buy stocks based on fear and greed. That's something that naive retail investors do. Fund managers cant move into and out of a stock based on a whim or emotional panic. So when they start exiting you know things are bad. Thats why you follow the "smart money" - the money that does the "weighing".Most of the companies on the NZX are bad investments, poorly run, with second rate management. Its always enlightening to look at how little interest Australian fund managers have in most of the dual listed NZ stocks - they really do avoid them like the proverbial plague. Very few are considered investment quality. But when something of quality is listed, they are happy to jump on board - see Xero, Fisher & Paykel, Gentrack. HGH has been in a long term downtrend since January 2022. Thats almost 3 years. And its kept falling despite the new global bull market that started November last year.
The biggest problem with HGH is that they have gone to the market some many times for new capital to grow. I have lost count how many raises they have down in past 3 years.
I bought in end July for $1.06 after selling out @ $2.06 August 2021.
They have always lent on riskier side hence higher NIM and now are paying the price for that. I expect this time next year we will be discussing how bad 2025 was, but then start to look forward to 2026 when things improve.
There are pro/cons to all investments, HGH's have been well discussed. 2025 will be the clean out with new management in charge. $200m in 2028 seems a hell of a long way from here but things can change quickly both ways.
Quote from: KW on Nov 03, 2024, 11:46 AMMaybe in the short term, but over the long term a trend reflects the collective wisdom of the market. As Graham says, "in the short run, the market is a voting machine, but in the long run, it is a weighing machine".
So a long term downtrend means the market has carefully considered the value proposition of the stock in question, and gone "yeah, nah". It has been judged by large numbers of holders and potential buyers who have decided that its a poor investment. In HGH's case, this is the entire ASX stock analyst industry who are all experts on bank stocks.
Secondly, fund managers dont buy stocks based on fear and greed. That's something that naive retail investors do. Fund managers cant move into and out of a stock based on a whim or emotional panic. So when they start exiting you know things are bad. Thats why you follow the "smart money" - the money that does the "weighing".
Most of the companies on the NZX are bad investments, poorly run, with second rate management. Its always enlightening to look at how little interest Australian fund managers have in most of the dual listed NZ stocks - they really do avoid them like the proverbial plague. Very few are considered investment quality. But when something of quality is listed, they are happy to jump on board - see Xero, Fisher & Paykel, Gentrack.
HGH has been in a long term downtrend since January 2022. Thats almost 3 years. And its kept falling despite the new global bull market that started November last year.
Fund managers arent using their own personal money so of course there's not the emotion involved but they are often far from being the smart money, how many examples would you like where fundies have ended up being the opposite of smart? There are of course other things they do which ensures that they are raking in the money continuously, some of which should be illegal yet the regulators turn a blind eye.
This time next year, the economy should hopefully be looking a bit better but the real question is how many more dodgy loans will get added to the bad bank in FY25? Quite common for new CEO's to kitchen sink all known problems and therefore FY25's result could be a real shocker.
Quote from: KW on Nov 03, 2024, 11:46 AMMaybe in the short term, but over the long term a trend reflects the collective wisdom of the market. As Graham says, "in the short run, the market is a voting machine, but in the long run, it is a weighing machine".
So a long term downtrend means the market has carefully considered the value proposition of the stock in question, and gone "yeah, nah". It has been judged by large numbers of holders and potential buyers who have decided that its a poor investment. In HGH's case, this is the entire ASX stock analyst industry who are all experts on bank stocks.
Secondly, fund managers dont buy stocks based on fear and greed. That's something that naive retail investors do. Fund managers cant move into and out of a stock based on a whim or emotional panic. So when they start exiting you know things are bad. Thats why you follow the "smart money" - the money that does the "weighing".
Most of the companies on the NZX are bad investments, poorly run, with second rate management. Its always enlightening to look at how little interest Australian fund managers have in most of the dual listed NZ stocks - they really do avoid them like the proverbial plague. Very few are considered investment quality. But when something of quality is listed, they are happy to jump on board - see Xero, Fisher & Paykel, Gentrack.
HGH has been in a long term downtrend since January 2022. Thats almost 3 years. And its kept falling despite the new global bull market that started November last year.
Made plenty of money from doing my own research when looking at unloved stocks, don't have to wait for a chart to tell when to buy and sell, although it can be useful, charts are only one part of the picture.
I say do your own research rather than take to much notice of squiggly lines.
hmmmmmm if fund managers were "smart money" at what they do how come most of them struggle to perform better than index funds over the long term.
To be honest most fund managers only need to be right 65% of the time to supply returns that seem acceptable to many.
Quote from: KW on Nov 03, 2024, 11:46 AMMaybe in the short term, but over the long term a trend reflects the collective wisdom of the market. As Graham says, "in the short run, the market is a voting machine, but in the long run, it is a weighing machine".
So a long term downtrend means the market has carefully considered the value proposition of the stock in question, and gone "yeah, nah". It has been judged by large numbers of holders and potential buyers who have decided that its a poor investment. In HGH's case, this is the entire ASX stock analyst industry who are all experts on bank stocks.
Secondly, fund managers dont buy stocks based on fear and greed. That's something that naive retail investors do. Fund managers cant move into and out of a stock based on a whim or emotional panic. So when they start exiting you know things are bad. Thats why you follow the "smart money" - the money that does the "weighing".
Most of the companies on the NZX are bad investments, poorly run, with second rate management. Its always enlightening to look at how little interest Australian fund managers have in most of the dual listed NZ stocks - they really do avoid them like the proverbial plague. Very few are considered investment quality. But when something of quality is listed, they are happy to jump on board - see Xero, Fisher & Paykel, Gentrack.
HGH has been in a long term downtrend since January 2022. Thats almost 3 years. And its kept falling despite the new global bull market that started November last year.
You make some good points. I often question why I bother with the NZX at all. However I agree with Pie funds and Craig's that it's our turn. I'm hopeful that we are near to the bottom with HGH. I do agree there is a risk around these ring fenced assets. And further bad debts. But hey that's the risk you take.
Interesting that at AGM there was a few words about adopting AI, no doubt part of their plan to proactively visualize an expanded array of strategic theme areas thereby
dynamically resource-maximizing intellectual capital.
I think that's what the guy said
That'll help getting to $200m profit in 2028
Quote from: snapiti on Nov 03, 2024, 02:47 PMMade plenty of money from doing my own research when looking at unloved stocks, don't have to wait for a chart to tell when to buy and sell, although it can be useful, charts are only one part of the picture.
I say do your own research rather than take to much notice of squiggly lines.
hmmmmmm if fund managers were "smart money" at what they do how come most of them struggle to perform better than index funds over the long term.
To be honest most fund managers only need to be right 65% of the time to supply returns that seem acceptable to many.
Because index funds are technically driven - they simply buy more of what is going up in price (increased index weighting) and sell more of what is going down in price (reduced index weighting). When companies decline in price so much they are removed from the index completely and replaced by something that is better. Thats why its difficult to outperform an index - because TA outperforms FA.
Quote from: KW on Nov 03, 2024, 04:08 PMBecause index funds are technically driven - they simply buy more of what is going up in price (increased index weighting) and sell more of what is going down in price (reduced index weighting). When companies decline in price so much they are removed from the index completely and replaced by something that is better. Thats why its difficult to outperform an index - because TA outperforms FA.
You never should state unproven believes as a fact.
Name any TA based fund which consistently (i.e. over more then one stock market cycle) outperformed Warren Buffett's investments (which are exclusively FA based)?
I suppose the list you could provide to prove you statement will be very empty.
Well done FA always beats TA.
Quote from: KW on Nov 03, 2024, 04:08 PMBecause index funds are technically driven - they simply buy more of what is going up in price (increased index weighting) and sell more of what is going down in price (reduced index weighting). When companies decline in price so much they are removed from the index completely and replaced by something that is better. Thats why its difficult to outperform an index - because TA outperforms FA.
Maybe it does the way you do FA ?
I wonder how I've beaten the NZX50 for 15 years in a row..I guess I am just extra lucky...but then again, the odds on beating the index 15 years in a row based purely on luck if you have a 50% chance of beating it each year are 1 in 32,768. Maybe high quality, thorough fundamental analysis beats TA ;)
Anyway, back on track of things that will affect HGH's happy go lucky approach to lending...unemployment forecast to continue to increase through to mid 2025 so we'll see the effects of that flowing through until at least FY26 and that's before dealing with the losses from the bad bank.
https://www.stuff.co.nz/business/360474067/why-unemployment-expected-rise-5
Quote from: Basil on Nov 04, 2024, 11:44 AMMaybe it does the way you do FA ?
I wonder how I've beaten the NZX50 for 15 years in a row..I guess I am just extra lucky...but then again, the odds on beating the index 15 years in a row based purely on luck if you have a 50% chance of beating it each year are 1 in 32,768. Maybe high quality, thorough fundamental analysis beats TA ;)
Anyway, back on track of things that will affect HGH's happy go lucky approach to lending...unemployment forecast to continue to increase through to mid 2025 so we'll see the effects of that flowing through until at least FY26 and that's before dealing with the losses from the bad bank.
https://www.stuff.co.nz/business/360474067/why-unemployment-expected-rise-5
Quote from: Basil on Nov 04, 2024, 11:44 AMMaybe it does the way you do FA ?
I wonder how I've beaten the NZX50 for 15 years in a row..I guess I am just extra lucky...but then again, the odds on beating the index 15 years in a row based purely on luck if you have a 50% chance of beating it each year are 1 in 32,768. Maybe high quality, thorough fundamental analysis beats TA ;)
Anyway, back on track of things that will affect HGH's happy go lucky approach to lending...unemployment forecast to continue to increase through to mid 2025 so we'll see the effects of that flowing through until at least FY26 and that's before dealing with the losses from the bad bank.
https://www.stuff.co.nz/business/360474067/why-unemployment-expected-rise-5
Sounds like this 'bad bank' is going to report strong growth! >:( >:(
Tony Alexander pointed out that from the latest NZIER Business Outlook survey that a net 41% of businesses have said they expect their costs to rise and a net 7% have said they plan raising their prices.
Hmm ...looks like a huge margin crunch coming next year
Talk of inflation being beaten and rates coming down will make for better times could just be a false dawn
Maybe tough times (for both business and household) will continue through to 2026
Not good for Heartland
Quote from: Basil on Nov 04, 2024, 11:44 AMMaybe it does the way you do FA ?
I wonder how I've beaten the NZX50 for 15 years in a row..I guess I am just extra lucky...but then again, the odds on beating the index 15 years in a row based purely on luck if you have a 50% chance of beating it each year are 1 in 32,768. Maybe high quality, thorough fundamental analysis beats TA ;)
Anyway, back on track of things that will affect HGH's happy go lucky approach to lending...unemployment forecast to continue to increase through to mid 2025 so we'll see the effects of that flowing through until at least FY26 and that's before dealing with the losses from the bad bank.
https://www.stuff.co.nz/business/360474067/why-unemployment-expected-rise-5
Nah, I think its because the NZX50 is so full of crap companies, that if you stick to the 5 good ones, you automatically beat the other 45.
RBNZ might even cut by 75 bps at the end of this month but that still leaves us for at least 3 more months with very restrictive monetary policy at a time when many business's are saying conditions are worse than the GFC. Lazarus saying at the annual meeting that company and business insolvencies are going up year to date in FY25 compared to FY24 is another clue this ship is not turning around anytime soon.
Hey Winner, it crossed my mind at the annual meeting when talking to Greg to ask how his other nag is going but I thought the better of it as it is quite clear he's not happy with how this one is running. Not cool to rub salt Into the wound eh.
Quote from: KW on Nov 04, 2024, 03:51 PMNah, I think its because the NZX50 is so full of crap companies, that if you stick to the 5 good ones, you automatically beat the other 45.
But you need to do good fundnwntal analysis to sort the wheat from all the chaff ;)
Quote from: KW on Nov 04, 2024, 03:51 PMNah, I think its because the NZX50 is so full of crap companies, that if you stick to the 5 good ones, you automatically beat the other 45.
Beating the NZ50 could be regarded as a pretty low bar measure these days.....unless of course you aim to outperform the NZX50 by 10 to 20% pa.
KW is right. It's much better to pick better performing individual stocks rather than index funds.
Check out FPH and IFT v the NZX50 over the last 10yrs.
Guru Brad on TV just saying that petrol prices are relstively low at the moment and that's helping businesses and households
Quote from: Basil on Nov 04, 2024, 03:56 PM................
Hey Winner, it crossed my mind at the annual meeting when talking to Greg to ask how his other nag is going but I thought the better of it as it is quite clear he's not happy with how this one is running. Not cool to rub salt Into the wound eh.
You forget about that concept of "the owner's eyes" ......... so no worries really with these 2 nags ...Greg has things under control
Having met him I wouldn't be so sure about that. I suspect he finds his other business investments way more rewarding than his listed dog's.
https://www.heartland.co.nz/about-us/news/heartland-bank-announces-leanne-lazarus-as-new-ceo
A bit more detail around the key cost to income ratio that I found so deeply concerning.
Excerpt "Leanne's extensive experience in operations and technology will contribute to advancing Heartland Bank's digitalisation strategy, and the ongoing reduction of Heartland Bank's cost-to-income ratio through removing customer friction and enhancing customer experience".
Interesting that this was one of the key reasons she was hired so it's fair to ask how she's going so far ?
Hired halfway through FY23 so not fair to say she could make any meaningful change until FY24 but I note CTI history of 43.6% in FY22, 44.9% in FY23, (she was there for half that year) and made a major impact in FY24 with a huge jump to 48%. She's certainly having a big impact but not the one she was hired for. But wait there's more..., she very quietly let it slip in the annual meeting the CTI for FY25 was expected to increase again...but it's all okay because by FY28 it will be down to 35%....why does a huge Tui billboard so readily spring to mind lol I note they now have two highly paid separate senior executive teams for Heartland N.Z. and Heartland Australia plus a third team gorging themselves from the bank trough, for the group. Yeah, that'll really help get the CTI down heaps lol. Going north of 50% for FY25 ? She was also adamant in discussion with me after the meeting she hadn't created a bad bank division within HGH. I would love to have had the gonads to tell her this in person. I think that's complete and utter B.S.
She's a great look for diversity and inclusion but it will be interesting to follow how she gets on with her key objectives. Happy to watch from the sidelines for a while. Another Tui yeah right moment on the day, Greg Tomlinson was adamant they were only doing the ESG things they had to do by regulation. He and another director were adamant that shorters had an absolute field day at their expense in the lead up to their much-needed capital raise. That rang true to my ears.
Did I hear the answer correctly that the 'bad bank' loans were already provisioned?
They said they were but shut down my questioning and any further questioning from the floor from anyone else in a huge hurry. I really wanted to ask the auditor publicly if they had been through those dodgy assets with a fine-tooth comb but was not allowed the opportunity to do so.
The way questioning was shut down was an absolute crock of s@#t. Plenty of things to try and hide is the clear impression I got.
Not sure if there's a recording anywhere of the meeting? I wouldn't mind hearing their so-called answers again. Hard to take everything in when you are Johnny on the spot thinking how to phrase the next question.
Basil ...this looks ominious for Leanne ...some say line heading to 3,000
IMG_5969.png
Quote from: Ferg on Nov 05, 2024, 02:42 PMDid I hear the answer correctly that the 'bad bank' loans were already provisioned?
Page 23 of this preso itemizes the NSA stuff
The fine print says 'Receivables are as 30 June 2024 excluding provisions'
Whatever that means
https://api.nzx.com/public/announcement/437072/attachment/426005/437072-426005.pdf
Quote from: Basil on Nov 05, 2024, 02:53 PMThey said they were but shut down my questioning and any further questioning from the floor from anyone else in a huge hurry. I really wanted to ask the auditor publicly if they had been through those dodgy assets with a fine-tooth comb but was not allowed the opportunity to do so.
The way questioning was shut down was an absolute crock of s@#t. Plenty of things to try and hide is the clear impression I got.
Not sure if there's a recording anywhere of the meeting? I wouldn't mind hearing their so-called answers again. Hard to take everything in when you are Johnny on the spot thinking how to phrase the next question.
Link to the meeting recording here: https://www.heartlandgroup.info/investor-information/annual-meetings
Quote from: winner (n) on Nov 05, 2024, 03:01 PM'Receivables are as 30 June 2024 excluding provisions'
Thanks Winner. Gosh, that does not read well to me at all. No wonder they wanted to shut down further questions! As I suspected, it would appear they have just rounded up all the really bad loans, which in truth, they have no idea how to collect at this point in time, and transferred them at full value to the bad bank, at least that's what I make of "excluding provisions". Their corporate statement of "we will work to realize these assets over a responsible period of time" is the worst sort of double speak nonsense I have read and heard for many years.
Transferring them all over to a separate bad bank at full value, completely fudging FY24's real figures and will provision these over a number of years and try and make the case they are extraordinary items by normalizing profit, a practice that's got increasingly worse over the years with HGH and try and pretend everything is good. This is exactly the same sort of crap that went on at Geneva Finance in the GFC and look how that's worked out for shareholders.
Thanks allfromacell, I'll have a listen to that just to hear their so-called "answers" again.
Quote from: KW on Nov 03, 2024, 04:08 PMBecause index funds are technically driven - they simply buy more of what is going up in price (increased index weighting) and sell more of what is going down in price (reduced index weighting). When companies decline in price so much they are removed from the index completely and replaced by something that is better. Thats why its difficult to outperform an index - because TA outperforms FA.
Technically driven 'at ze margin' yes, at ze point of index inclusion and exit.
But vor ze vast majority of zheir portfolio, vor an 'index fund' eet eez zimply 'buy and hold'. There eez generally no buying and zelling on a day to day basis. For example eef ze share price of Heartland drops by 2% in a day, ze value of Heartland zhares in ze 'index fund' drops by 2% automatically. Likewiseise eef ze Heartland share price rises by 2%, zhere eez no 'index buying'.
Zhis eez vone of ze reasons 'index funds' perform vell, compared to 'active funds'. Tradings costs are almost zero een 'index funds'.
RB
The barking starts at 56.45 minutes. Shut down very abruptly with little to no regard to shareholders rights to ask more detailed questions. I was only about half way through. Got another chance at 1.34 to quiz them on their absurd approach of lending on residential mortgages at only a 75 bps margin.
They blatantly lied about those doubtful debts being fully provisioned. As I said to a few shareholders after the meeting, calling $188m of really dodgy receivables "non-strategic assets" is analogous to creating a very old and ugly fat pig, putting him in the corner and putting a bow tie on him and saying doesn't he look pretty, what's the problem. Notioce how Greg said we have a pool of capital to go to with these assets before going to shareholders. Big hint there about another capital raise sometime down the track, not in the very near term.
"Blind Freddy" could have told them the residential mortgage thing at a 75 bps margin was a waste of capital and time considering the capital backing required and their overall bank costs. I could have told them this for free, you don't need to pay me $1m per annum to state the completely obvious. It would seem they have seen the light that they are wasting their time and capital allocation with those residential loans. "Only" another few hundred million non-strategic assets Leanne assured me after the meeting.
High resolution YouTube here https://www.youtube.com/watch?v=bFPQJtET6UM
Quote from: Red Baron on Nov 05, 2024, 03:17 PMTechnically driven 'at ze margin' yes, at ze point of index inclusion and exit.
But vor ze vast majority of zheir portfolio, vor an 'index fund' eet eez zimply 'buy and hold'. There eez generally no buying and zelling on a day to day basis. For example eef ze share price of Heartland drops by 2% in a day, ze value of Heartland zhares in ze 'index fund' drops by 2% automatically. Likewiseise eef ze Heartland share price rises by 2%, zhere eez no 'index buying'.
Zhis eez vone of ze reasons 'index funds' perform vell, compared to 'active funds'. Tradings costs are almost zero een 'index funds'.
RB
Only if the index fund is a closed fund with no redemptions. But if money is coming in, and redemptions are being made, then the fund has to invest that new money or sell stock to raise cash to pay redemptions. So if $100 comes in, then they have to invest more of that money into the greater weight stocks, and less of that money than before in the lower weight stocks. As a stock price goes up, more and more of that $100 will be directed towards buying it. As a stock price goes down, less and less of that $100 will be directed towards buying that stock. This is why passive investing has been blamed for the rise of the megacaps dominating the indexes - its a perpetuating cycle. Index funds buying drives the stock price, the stock price drives the index fund allocation to that stock.
Quote from: Basil on Nov 05, 2024, 03:46 PMThe barking starts at 56.45 minutes. Shut down very abruptly with little to no regard to shareholders rights to ask more detailed questions. I was only about half way through. Got another chance at 1.34 to quiz them on their absurd approach of lending on residential mortgages at only a 75 bps margin.
They blatantly lied about those doubtful debts being fully provisioned. As I said to a few shareholders after the meeting, calling $188m of really dodgy receivables "non-strategic assets" is analogous to creating a very old and ugly fat pig, putting him in the corner and putting a bow tie on him and saying doesn't he look pretty, what's the problem. Notioce how Greg said we have a pool of capital to go to with these assets before going to shareholders. Big hint there about another capital raise sometime down the track, not in the very near term.
"Blind Freddy" could have told them the residential mortgage thing at a 75 bps margin was a waste of capital and time considering the capital backing required and their overall bank costs. I could have told them this for free, you don't need to pay me $1m per annum to state the completely obvious. It would seem they have seen the light that they are wasting their time and capital allocation with those residential loans. "Only" another few hundred million non-strategic assets Leanne assured me after the meeting.
High resolution YouTube here https://www.youtube.com/watch?v=bFPQJtET6UM
1. If these are non-performing receivables then who the hell is going to want to buy them? If they are unsellable, how then can they be considered assets for the purpose of raising capital - no buyer = no cash. And if they were sold to a debt collector or similar, then they would be sold for cents on the dollar, and nowhere near their book valuation. So that asset valuation is rubbish.
2. If the placement capacity automatically rolls over in April next, why are they in such a hurry to cleanse the placement capacity? If they dont need to raise capital before April, there is no need to cleanse. Something is up here.
Come to conclusion that I have to work out whats 'between the lines' in the speeches and presentations .....in other what's not being said ...like what are they to embarrassed to own up to.
All started going downhill when Jeff's bottom drawer was found to be empty .... Goodbye to profit smoothing.... And then digging themselves into a big hole.
One issue I have is that new CEO has been party to all this carry, maybe he's one of the worst culprits. Be interesting what he does now as he's essentially just the "Chief Administrator" with putting together the glossy presentations his main task.
So far from trying to work out what's not being said I have a suspicion Australia not really working out as it's made out to be .
Quote from: Basil on Nov 05, 2024, 03:13 PMThanks Winner. Gosh, that does not read well to me at all. No wonder they wanted to shut down further questions! As I suspected, it would appear they have just rounded up all the really bad loans, which in truth, they have no idea how to collect at this point in time, and transferred them at full value to the bad bank, at least that's what I make of "excluding provisions". Their corporate statement of "we will work to realize these assets over a responsible period of time" is the worst sort of double speak nonsense I have read and heard for many years.
Transferring them all over to a separate bad bank at full value, completely fudging FY24's real figures and will provision these over a number of years and try and make the case they are extraordinary items by normalizing profit, a practice that's got increasingly worse over the years with HGH and try and pretend everything is good. This is exactly the same sort of crap that went on at Geneva Finance in the GFC and look how that's worked out for shareholders.
Thanks allfromacell, I'll have a listen to that just to hear their so-called "answers" again.
well my friend you sum it up wonderfully, great way to fudge a really bad year when you put all the shit into a basket and label it as smoke n mirrors, will drip feed this pile of shit back into our results over a number of years.
I never bought into the BS that staffing levels meant they could not chase bad debt as well as they liked, my son received several phone calls ,he did not like answering that number, a week and a couple of letters a month.
I salute you for speaking up with your concerns Mr Hound.
I note at about the 1 hour mark they are questioned on the Aussie bank deposits and lending out of this money.
They addressed the deposit side of things but totally avoided answering the very important question of who and where are they lending the money to.
Thanks for your very kind words, mate.
Jarden reckon net tangible asset backing is $1.03.
So where would I consider buying back in? I asked myself as a rhetorical question today. Well, I'd want to be quite confident all the dead wood is exposed and after what I witnessed last week, I'm not at all convinced they're being straight and honest with shareholders. I reckon those $218m of bad bank assets are not the end of it by any stretch of the imagination, especially with corporate receiverships jumping up in FY25.
Maybe another $100-200m (1-2%) of highly questionable receivables already of their other $9.6 Billion of loans, either being concealed or very inadequately provisioned and another $50m to come this year ? Say $218 declared + $150m concealed + $50m coming in FY25 = $418m as a really rough guess, and that's all it is.. Maybe they can recover somewhere between a quarter and half over time?, let's say 40%. 60% potential loss on $418m = $251m on 956m shares = 26 cents per share.
Maybe the true NTA is as low as $1.03 - 26 cents = 77 cents. Just my deeply jaundiced theory of what's really under the hood if you were allowed to do a deep dive and take a proper look yourself. (I recall in the last RBNZ disclosure 6.5% of all loans were past due, stood out like a pair of huge dog balls compared to any of the other finance companies, Opps sorry, banks).
Whether I have become unduly jaundiced or not, we won't know the real answer for years so in the meantime it's just as well we can sleep really easy at night and totally rely on the auditors to pick up all this alleged under provisioning eh...Opps, sorry,, how did that work out in the GFC, with the dozens of finance companies that went under? Hmmm... No worries, another capital raise or two over time will hopefully fix all this mess up properly. $200m NPAT by FY28?...I would argue it's the directors and management who are the ones in fantasy land.
Feel free to ignore this post if you are still holding. This could be just echoes in my mind of all the years of anguish I went through with Geneva Finance and all their creative B.S. in the GFC, or it might be some similar creative accounting B.S as they did., only time will tell.
one also has to wonder how bad some of their rural lending is when they have to wait for farm prices to recover so they can recover debt.
I am very confident most banks will only lend 50% of farm values.
Latest REINZ figures show a 12.6% average price fall across all sectors of farming in the last 12 month, the previous year was 8.5% decline however prior to that farm prices had been rising.
Looks to me that Heartland have been happy to loan 80% of value(much higher than mainstream lenders) and just like their 100% car loans have been caught with their pants down.
Makes you wonder if Geoff left or was he pushed? I wasn't at all surprised he was absent from the annual meeting. Seems quite interesting timing that his retirement was brought forward to the end of Sept so he could avoid being accountable to shareholders at the annual meeting.
Quote from: snapiti on Nov 05, 2024, 07:20 PMLooks to me that Heartland have been happy to loan 80% of value(much higher than mainstream lenders) and just like their 100% car loans have been caught with their pants down.
Do you have any evidence of this LVR or are you just throwing numbers around?
Quote from: Basil on Nov 05, 2024, 07:37 PMMakes you wonder if Geoff left or was he pushed? I wasn't at all surprised he was absent from the annual meeting. Seems quite interesting timing that his retirement was brought forward to the end of Sept so he could avoid being accountable to shareholders at the annual meeting.
Remember this post of mine -
One day, well into Jeff's long and illustrious career, a journalist asked the banker why he wasn't driving great Heartland performance like he used to.
"When Heartland was growing profits I was cold and hungry," said Jeff. "I'm not cold and hungry anymore."
Then Jeff realised he'd also had stuffed up big time and he better go before the shit really hit the fan. Had to chat to Greg and Greg probably said something good idea to go ..then Greg asked Jeff to get a $200m capital raise across the line before leaving....in good grace lol. At least Greg knew that Jeff could spin a good story and seduce punters.
That's how I see it anyway ...and I think I'm not too far off the mark.
I've sent Greg an email via Investor Relations that he and his team have a read through the thread on investing forums ...included link to this thread
But the high degree of self indulgence displayed at AGM suggests they are above such activities
Very impressive Beagle.
You certainly weren't just wagging your tail
You put management on a short leash with those questions
You were barking up the right tree and management knew it
Those were tough questions - all bite, no bone!
You definitely gave management paws for thought
You weren't rolling over for their excuses
You weren't there to play fetch, that's for sure
With a nose for nonsense, you've sniffed out many dodgy details
Your marked your territory with some pointed questions and management felt it
You didn't just scratch the surface, you dug deep, and management were left with their tails between their legs
(in all seriousness though, very impressive!)
Quote from: Basil on Nov 05, 2024, 02:53 PMThey said they were but shut down my questioning and any further questioning from the floor from anyone else in a huge hurry. I really wanted to ask the auditor publicly if they had been through those dodgy assets with a fine-tooth comb but was not allowed the opportunity to do so.
The way questioning was shut down was an absolute crock of s@#t. Plenty of things to try and hide is the clear impression I got.
Not sure if there's a recording anywhere of the meeting? I wouldn't mind hearing their so-called answers again. Hard to take everything in when you are Johnny on the spot thinking how to phrase the next question.
Here is a recording of the meeting:
https://www.youtube.com/watch?v=bFPQJtET6UM
Related to catching and remembering everything in AGM's when this service is not available: I got used to recording the meetings I attend with my cell phone (particularly when I am afterwards supposed to write a report - e.g. for NZSA). Technology these days is quite amazing.
LOL thanks Entrep. Nothing makes a dividend hound want to growl and bite more, than less food going into his dog bowl :D
Some good chatter over on the other channel too created by Rawz about concerns about problem customers being concealed with the Heartland "Extend" product facility. Have a read guys, should give you more "paws" for thought. $1.6 billion in vehicle lending at present, (Leanne Lazurus shared that info with me after the meeting). As mentioned previously, she has no issues with lending with no deposit despite the current economic conditions and forecasted higher unemployment rate.
Like I said yesterday, I think somewhere in the range of 1-2% of their total lending of $9.6 Billion is problematic concealed arrears and Heartland extend is one of the main ways they are sweeping a lot of problem loans under the carpet so people don't see them and they don;t need to be provisioned. What could possibly go wrong with unemployment forecast to increase to a decade high of 5.5% next year ? Hmmm
At AGM the shareholder question when they expect to become EPS accretive post cap raise was mine.
Question was abbreviated as it was F24 guidance prior to cap raise was 15 cents EPS so when are going to br eps accretive from that
Got the spiel about Ll fiis things blah blah and that FY26 should see improved result but nothing about eos accretive
Never mind ...couldn't expect much more
For the record EPS accretive in F26 implies npat of $160m .....just proves it was all words and hollow promises eh.
Quote from: winner (n) on Nov 06, 2024, 12:44 PMAt AGM the shareholder question when they expect to become EPS accretive post cap raise was mine.
Question was abbreviated as it was F24 guidance prior to cap raise was 15 cents EPS so when are going to br eps accretive from that
Got the spiel about Ll fiis things blah blah and that FY26 should see improved result but nothing about eos accretive
Never mind ...couldn't expect much more
For the record EPS accretive in F26 implies npat of $160m .....just proves it was all words and hollow promises eh.
OK - so, it appears they either can see the future and they are a bunch of liars (because they didn't tell us the truth about it) - or, if we assume that they can't predict the future either, maybe they are just human as well. I think we need to get used to not trusting any future pointing statements, no matter who produces them.
Lessons learned - never trust EPS forecasts made by humans;
The other question is, if we assume for a moment that they move their EPS by 2028 to something like 15 cents EPS (which would be the median between the current "sad" state of affairs - 10 cents EPS for a nearly $1 share and their 2028 Pie in the sky forecast (which would be roughly 20 cents EPS), would they be at the current share price an interesting investment?
I think they would be, but hey ... maybe I am just too easy to please :) ;
My view BP is it's increasingly looking like 15 cps for FY28 is the best-case scenario, (which means no growth in eps since FY22 so no longer a growth company) but the real problem is this. Is that FY28 eps of 15 cps before or after the ~ 5 cps of losses recognized that year on their previous bad bank lending? I think reported, (not normalized) eps, could stay fairly close to 10 cps for several years, possibly even in FY28.
I think Geoff's legacy is his loose lending policies will dog this company for many years. Worse, I don't see any indication Leanne Lazurus is learning anything from legacy problems experienced in the past. For example, go on to their car loan application page on their website. The default loan period is set at 5 years and the default deposit set in the system is $0. They make it quite clear in their system the payment of a deposit is entirely optional.
Another step diwn underway
May go below 90 cents this time
Quote from: winner (n) on Nov 06, 2024, 04:23 PMAnother step diwn underway
May go below 90 cents this time
100-26 apparently. Add in A CR possibility which someone will possibly have prior? Is there a barge pole long enough? Used to be one of my favorites. The board looked so uncomfortable.
Quote from: Basil on Nov 06, 2024, 03:08 PMMy view BP is it's increasingly looking like 15 cps for FY28 is the best-case scenario, (which means no growth in eps since FY22 so no longer a growth company) but the real problem is this. Is that FY28 eps of 15 cps before or after the ~ 5 cps of losses recognized that year on their previous bad bank lending? I think reported, (not normalized) eps, could stay fairly close to 10 cps for several years, possibly even in FY28.
I think Geoff's legacy is his loose lending policies will dog this company for many years. Worse, I don't see any indication Leanne Lazurus is learning anything from legacy problems experienced in the past.
Fair enough. I guess most of us used to respect the previous board and management team for a long time - and clearly, we got it wrong, and they clearly didn't act as much in our interest as we would have liked.
They have now a somewhat changed board and a quite significantly changed management team, and we don't trust them - clearly, they first would need to earn our trust.
The question is - if we got it wrong the first time (by trusting them), did we get it wrong the second time (by not trusting them) as well?
I don't know - yet.
BP, let me answer that by saying I just amended that post to include a little interesting anecdote.
Leanne Lazurus sees no issue with risky no deposit car loans, in fact as I suggested in that anecdote, their system is set up to sell the maximum possible debt for the maximum possible term. Further, one of their key goals is to automate and digitize everything as much as possible. You have to wonder how much scrutiny if any goes in behind the scenes with their loan approval process if everything is being automated.
Quote from: BlackPeter on Nov 07, 2024, 10:07 AMThey have now a somewhat changed board and a quite significantly changed management team, and we don't trust them - clearly, they first would need to earn our trust. The question is - if we got it wrong the first time (by trusting them), did we get it wrong the second time (by not trusting them) as well?
You've answered your own question. The new team need to earn our trust. I see no evidence they are taking steps to do that. The way my questioning was abruptly shut down, they do not respect basic shareholders rights to ask questions. We only get once chance per year and they are paying lip service to shareholder's rights to communicate with them. Although several directors came over to talk to me after the meeting, (which surprised me a bit), none gave me a business card to open up the lines of communication. Good communication is the basis upon which trust can be built and without it...
The way I see it, somewhere around 15 cps in FY28, less a few cents per share, perhaps as much as 5 cps for amortizing bad bank losses is the good-case scenario, maybe reported earnings of about 12 cps for FY28 ? But there are other not so positive scenarios too.
Clearly my view is the new management team have a long road ahead to earn shareholder's trust. There are far more trustworthy companies out there on attractive metrics, is how I see it. Why take a chance on the new management team at HGH when there's well proven management doing exceptional work growing shareholders wealth at for example, TRA and HLG ?
Three Boards and three CEOs
Australia Board and CEO you could call new
Most of NZ Bank and Group Board members been there for years. NZ Bank not exactly new blood.
Group CEO / Chief Administrator been there over 10 years .....hardly new blood
So talk of new management getting our trust a bit misguided .....they've had their chance
Quote from: Basil on Nov 06, 2024, 11:53 AMLike I said yesterday, I think somewhere in the range of 1-2% of their total lending of $9.6 Billion is problematic concealed arrears and Heartland extend is one of the main ways they are sweeping a lot of problem loans under the carpet so people don't see them and they don't need to be provisioned. What could possibly go wrong with unemployment forecast to increase to a decade high of 5.5% next year ? Hmmm
Leanne Lazurus from one hour into the youtube 2024 AGM meeting recording:
"The receivables and assets that we have pulled together is a combination of and some business lending and rural lending that no longer fit the business writing strategy of what we have. Some of the lending is large lending that we would no longer write that business. They are preforming loans.
Where there are some non-preforming loans those were provisioned prior to that. This is the receivables component. There are equity investments. There are property investments. Those will take longer to sell down. Andrew mentioned some farms. We will need to get that production back up so we get a good price for valuation. This is not about creating a good bank and a bad bank. It is about removing distraction to say that we can free up a pool of capital that we can then release and put back into asset classes that will generate a better return."
Zo "our Leanne" did answer ze question did she not? The 'non-strategic book' vas provisioned
vhere necessary BEFORE those assets vhere ring venced off eento 'Heartland Extend'.
RB
I took no comfort from her words. If you are happy to accept what she said at face value, that's fine but this dog's corporate B.S. meter, which I have refined over several decades, gave a solid reading of those are just "weasel words". There's $188m of receivables in there they presently don't know how to collect or realize if they do try and realize them at today's market value, there will be a bloodbath in terms of the percentage recovered. That's how I see it and I was there to see the body language.
Separate layers of boards and senior management will do "wonders" for the cost to income ratio going forward eh Winner.
The presentation said those NSA receivables were 'excluding provisions'
I sense some bull shit creative accounting coming up
The old CFO who knows these things in now the Group CEO ...hmmmmm
Quote from: Basil on Nov 07, 2024, 12:42 PMI took no comfort from her words. If you are happy to accept what she said at face value, that's fine but this dog's corporate B.S. meter, which I have refined over several decades, gave a solid reading of those are just "weasel words". There's $188m of receivables in there they presently don't know how to collect or realize if they do try and realize them at today's market value, there will be a bloodbath in terms of the percentage recovered. That's how I see it and I was there to see the body language.
Yes, but zhat is ze whole point. There eez no need to realise zhese assets in 'today's market'. Heartland have just done a capital raising to meet 'today's need'. There eez no need to zell in 'today's market'. Vhy try to zell a varm (vor example) at ze bottom of ze market, eff there eez no need?
RB
Quote from: winner (n) on Nov 07, 2024, 01:09 PMThe presentation said those NSA receivables were 'excluding provisions'
Zkimming through ze presentations, I could not vind zhis comment. But eef zhis is true (and I am not zaying eet eez not) ze NSA balance eez 'excluding provisions' because -vhere necessary- all of ze provisioning vas done BEFORE ze assets vhere reclassified as 'Non Strategic Assets' (as Leanne zaid). IOW as of EOFY2024, no provisioning of ze new NSA class eez required. The NSAs are valued 'excluding provisions', because zhere aren't any.
RB
Quote from: Red Baron on Nov 07, 2024, 03:47 PMZkimming through ze presentations, I could not vind zhis comment. But eef zhis is true (and I am not zaying eet eez not) ze NSA balance eez 'excluding provisions' because -vhere necessary- all of ze provisioning vas done BEFORE ze assets vhere reclassified as 'Non Strategic Assets' (as Leanne zaid). IOW as of EOFY2024, no provisioning of ze new NSA class eez required. The NSAs are valued 'excluding provisions', because zhere aren't any.
RB
Could well be the case but who knows.
Whatever all this stuff is going to avoid a capital raise in near future they say
...which sort of says if they hadn't let the situation develop they wouldn't have had to raise the $200m earlier in the year
Last years (2023) AGM our man Greg was up for Re-election
Nearly 10% voted NO ...apparently some proxy advisors weren't happy
Maybe just as well Greg didn't have to get re-elected this year
If those NSA receivables had been provisioned then why say when they put a number on them they say excluding provisions
I see some tricky accounting / reporting coming up.
"Tricky accounting" The trend towards normalizing profit for more things, which never used to be a feature of their reporting many years ago, has got noticeably worse in recent years and shows no signs whatsoever of abating in future years. I think they are really hurting their credibility with all this normalization. The bad bank thing is a sign that normalization will get worse going forward, not better. I'm sorry, but I simply don't believe their creative accounting anymore, especially when they hide consumer arrears using specialist tactics like Heartland loan extend.
You can only "cry wolf" so many times about costs being "extraordinary" in nature before people really want to say, please just stop the B.S. Fletchers is another company that have used up all their remaining shareholder goodwill with so called normalizing of their profits and not by coincidence, their share price is also in the toilet.
Runnng 2 small banks and a HQ can be expensive
Like the Directors pool is $2.4m (see we have 3 Boards) ..for the non exec directors
Add in 3 CEOs and heck for an outfit that only makes $75m that's an awful lot of money
Big payout for dairy farmers coming ...maybe $10 kg farm gate price
Good post by my mate Rawz elsewhere
That's good for NZs large farm owners, like HGH lol
Interesting article the other day, sorry don't have a link, about the new Govt guaranteed deposit scheme coming in on 1 July 2025. Deposit guarantee is capped at a pretty pathetic amount of $100K, (Australian scheme by comparison is $250K).
Levies charged to banks will be based on capital ratio and asset quality. I would think with HGH having 6.5% of all receivables as past due, which is far worse than any other registered bank in N.Z., the RBNZ will charge them a hefty levy to be part of the scheme.
Finance companies will get a concessionary rate for the first three years.
The game is quite simple for people with significant term deposits. Pick the highest rate of any financial institution that is Govt guaranteed and invest the maximum guaranteed amount of $100K. Rinse and repeat as necessary with other institutions giving as close as possible to the most competitive term deposit rates on offer.
It will be interesting to see what rate the Govt set, which was not disclosed in the article.
Quote from: Basil on Nov 12, 2024, 11:25 AMInteresting article the other day, sorry don't have a link, about the new Govt guaranteed deposit scheme coming in on 1 July 2025. Deposit guarantee is capped at a pretty pathetic amount of $100K, (Australian scheme by comparison is $250K).
https://www.nzherald.co.nz/business/nicola-willis-unveils-how-the-new-deposit-compensation-scheme-will-be-funded/TQXQWM2UPJD43CBPADQ7PLO5PI/
but it is premium
Thanks for the link. As I see it yes, it's a levy the financial institutions have to pay per $100,000 of deposits covered so they will have to factor that into the term deposit rates they offer to the public.
Apologies, my memory isn't what it used to be as a young dog, its credit unions and building societies that get the cut price levy deal for the first 3 years.
Extract for those who can't access this behind the paywall article.
"The levy rate applied to the riskiest cohort of deposit takers will be three times that of the rate applied to the least risky cohort.
If the risk was entirely priced in, the riskiest group would pay 12 times more".
So Heartland put all 'legacy' issues into a thing called Non Strategic Assets ...and say not the same as a 'bad bank' ....and hope they'll get a decent price for them.
Oceania have a lot of 'legacy stuff' as well .....old loss making stuff .....been bundling them up as 'Assets Held For Sale' and hocking off for a loss.
Probably our Greg turns up at Bosrd meetings and asks 'how are the legacy issues going'
At the 'shareholders eye' has got them to focus on clearing the messes up.
Poor Greg .... Might need an excuse to move on.
Neither of Greg's "dogs" are performing at the track. I'd wager he had a hand in sacking both CEO's and is hoping fresh leadership and a thorough house cleansing will see eventually see a return to form. I think the common theme here is each dog has deep systemic health issues and even if they can eventually clean house properly. itself a prolonged, painful and grueling exercise, the best you can realistically hope for in the medium term after many years of hard work, is a mid-field finish. I've done well from these in the past, but I know when the odds are stacked against you and when it's time to bet on something with better form and better prospects going forward. I don't like backing problematic companies that keep tripping over their own feet.
Just a thought, maybe Greg isn't quite as sharp as he used to be?
Greg's body language and general demeanor suggested he was under a bit of pressure and not happy with things ...just my observation
I think he's a lot happier with his wine business. Probably making so much money there, Heartland and Oceania are just problems he'd rather not bother with.
NBR rich list reckons he's worth over half a billion, so he probably doesn't care that much that the share price of these two are in the dog box.
Quote from: Basil on Nov 24, 2024, 06:43 PMI think he's a lot happier with his wine business. Probably making so much money there, Heartland and Oceania are just problems he'd rather not bother with.
NBR rich list reckons he's worth over half a billion, so he probably doesn't care that much that the share price of these two are in the dog box.
Greg's pretty keen on his horses as well ..has a thoroughbred stud
Quote from: Basil on Nov 24, 2024, 06:16 PMNeither of Greg's "dogs" are performing at the track. I'd wager he had a hand in sacking both CEO's and is hoping fresh leadership and a thorough house cleansing will see eventually see a return to form. I think the common theme here is each dog has deep systemic health issues and even if they can eventually clean house properly. itself a prolonged, painful and grueling exercise, the best you can realistically hope for in the medium term after many years of hard work, is a mid-field finish. I've done well from these in the past, but I know when the odds are stacked against you and when it's time to bet on something with better form and better prospects going forward. I don't like backing problematic companies that keep tripping over their own feet.
Just a thought, maybe Greg isn't quite as sharp as he used to be?
https://www.nasdaq.com/press-release/kkr-invests-in-argenta-to-accelerate-future-growth-2020-11-18
So a moose proves to a beagle...
1. Every dog must have it day
2. No matter how little money and few possessions you own, having a dog makes you rich.
3. People love dogs. You can never go wrong adding a dog to the story.
4. Dogs' lives are too short. Their only fault, really.
Doggone this site provides a few twists to a tail...
And some Turkey pointed it out.
Good one Mike
I nearly chickened out...thought I might get a roasting for straying off topic.
It just seemed quite an animal farm moment.
The moose communicating with a beagle and the turkey watching on from another paddock.
I finished now..
Thank giveness for that.
The Turkey has sold his HGH shares at 1.78 last raising so watching with interest but not expecting share price to do much in short term. Might buy again sometime but let's see how they perform. I think Australia could be good for them long term if they execute but I think NZ economic and certain business sectors underperformance will be headwinds for them in short term.
GLTH
Quote from: Turkey on Nov 25, 2024, 07:00 AMSo a moose proves to a beagle...
1. Every dog has must have it day
2. No matter how little money and few possessions you own, having a dog makes you rich.
3. People love dogs. You can never go wrong adding a dog to the story.
4. Dogs' lives are too short. Their only fault, really.
Doggone this site provides a few twists to a tail...
LOL Welcome to the forum and well done selling at $1.78 and avoiding getting yourself barbequed on the HGH bonfire. Definitely no roasting for that post but now you just have to navigate Thanksgiving Day ;)
Maybe its just that Greg is spread too thin these days looking after all his business interests ?
The only key advantage small investors have over someone like him is we can be nimble and back other horses when his donkey's goes astray.
If he tried finding a buyer for his tens of millions of HGH or OCA he paid $1.40 for many years ago :o one wonders how he would get on...
latest release on the NZX today , see 6.6m loans provision mentioned but await Feb 25 for a NPAT guidance indicated
https://www.nzx.com/announcements/442642
Expect an ugly half year result. $6.6m in extra loan provisions in the first quarter is not good. Growth rate in reverse mortgage lending is slowing and much of their other lending has slowed or gone backwards.
The announcement, in my opinion makes it clear FY25 is going to be extremely challenging for them.
Plenty of positives in the 4 month (1st 1/3rd of the year?)update as well to counter that relatively small bad loan provision increase.
Reverse mortgages still going gangbusters, Oz bank on track to move to completely retail despots funded by June 2025, which will be great for margins. And those specific large loan facilities being paid back in full early, while decreasing the amount of lending, at least makes the capital ratio better right? (Forgive me if I'm misinterpreting that)
Continued absence of any kind of guidance says to me that they still don't have a feel for how things are going. If they are so optimistic and keep talking up their prospects then why not put their money where their mouths are?
Quote from: LoungeLizard on Nov 26, 2024, 12:59 PMContinued absence of any kind of guidance says to me that they still don't have a feel for how things are going. If they are so optimistic and keep talking up their prospects then why not put their money where their mouths are?
You just answered your own question didn't you? They might have a feel but surely it's in everyone's best interests to not throw out wide range 'guidance' figures if they're not confident in them?
Personally I thought that was a fairly optimistic update on the whole but that might just be wishful thinking.
Disc. holding at break even
It's $200m in 2028
Heartland remains committed to its stated ambitions for the financial year ending 30 June 2028 (FY2028), including to deliver an underlying return on equity between 12-14% while achieving an underlying net profit after tax (NPAT) of $200 million by the end of FY2028. Heartland's pathway to achieving this is through simplification, core lending portfolio growth and capital efficiency.
It would be useful knowing the one off's HGH obviously already expecting in 2028, otherwise no need to talk about normalised profits in 2028.
Also a forecast of the amount of shares on issue in 2028 seems important especially with the history of issuing new ones so regularly.
Agree. Talk of $200m in FY28 not only looks extremely optimistic but is meaningless without knowing how many shares will be on issue.
The Target seems like it's designed to give shareholders hope in the dark days after originally being issued as bait to get the last capital raise done
I expect the real reported profit in FY25 after haircuts on deeply problematic assets and all other provisioning to be down on last years $75m.
But hang in there, everything will come right and we'll get to $200m 3 years later, yeah right... It's time for a Tui
Won't need any more shares by FY28 as they going to have 14% ROE
Retained earnings (not excessive divie payout) and DRP will see them through ....no cap raise
Oops ..forgot the NSAs things and recycling of that capital
Quote from: Basil on Nov 26, 2024, 02:18 PMAgree. Talk of $200m in FY28 not only looks extremely optimistic but is meaningless without knowing how many shares will be on issue.
The Target seems like it's designed to give shareholders hope in the dark days after originally being issued as bait to get the last capital raise done
I expect the real reported profit in FY25 after haircuts on deeply problematic assets and all other provisioning to be down on last years $75m.
But hang in there, everything will come right and we'll get to $200m 3 years later, yeah right... It's time for a Tui
Agreed - lets forget the $200m in 2028, they are pretty meaningless without stating the numbers of shares issued at that time. Pie in the sky stuff.
However - average EPS over the last 10 years was 13 cents, and this seems to be (with some superimposed jitter) a pretty constant number over the years. So, if we assume that they will (in average) stick to these 13 cents per year, than their P/E (at 98 cents) is 7.5. Not too bad, isn't it?
Add to that increasing earnings when they come out of the current crisis - and, lets face it, for long term investors it doesn't even matter, whether this will be in 2025 or 2026. So, I guess the market is pricing them already correctly (otherwise they would be really cheap at 7.5 PE) ... but I see in the midterm ways more up than down potential.
So - the question is - where do we see them in say 5 years from now (or if you like 3 years - if they achieve their 2028 targets)? Their highest EPS so far was in FY2022 - 16 cents, and at that stage their SP went up to something like $2.50. So where do we expect their SP to be when they make the $200m (which would be at current number of shares something like 20 cents eps)? Yes, the correct answer would be well above $3.
But hey - I am modest, when they achieve only half of that by 2028 and their SP climbs up to $1.50, I still would call this a good investment. Lets preserve the $3 for FY 2030 - shall we?
Always two sides to a coin ... and no matter, how long we ride on their (probably aspirational) $200m by 2028 - the joy of tearing them down in some Internet thread might not compensate for the pain to not join in the gains they are likely to have by then.
Basil says ' I expect the real reported profit in FY25 after haircuts on deeply problematic assets and all other provisioning to be down on last years $75m.'
I reckon lucky if they achieve $70m
Let's say an EPS of 7.0 cents
That's not very much is it
Most economists are predicting unemployment to continue to climb well into 2025 so one can expect more problems to surface in FY25 and FY26 as unemployed customers default on their loans.
Additionally, business receiverships and liquidations hit a ten year high in Sept 2024. With a long lead time between when business's start getting into trouble and when they go into liquidation I expect many more liquidations in HGH's FY25 year and flowing through to FY26.
Then there's the massive write downs on all their seriously impaired assets they currently have no idea how to resolve, (euphemistically called non strategic assets) Maybe they get 30-40 cents on the dollar on those ~ $200m of problem assets and there's another $100m worth of "deep systemic issues to come that they're presently disguising with Heartland "extend" and other possible concealment measures.
Somewhere around $70m before extra write-down's feels about right, (about 7.5 cps) to me but amortize circa $300m of bad bank loans and losses realizing them over the next 3-4 years and maybe after net realizations of problem assets reported eps is stuck about that level for several years as they spread out the realization of all the problem loans over a protracted period of time.
Here's how I see it BP. HGH has been severely stress tested by the severe economic recession of the last few years and failed miserably and is in the process or spreading huge losses over many years. Turners has likewise been severely stress tested and passed with flying colours.
Turners has earned huge respect with investors, institutions and analysts for how they have navigated the economic storm and HGH is in disgrace.
I'd rather back management I know I can trust. The way Greg Tomlinson shut down my questioning at the annual meeting was a bloody disgrace. How many more problems are they hiding?
HGH might be a risky speculative buy at some stage but I reckon we're far too early in the economic cycle at this stage. Some people reckon a no growth company, (which is what HGH is), should trade on no more than 10 times eps. I'm one of those people and I think HGH with all its known and highly likely, its hidden issues maybe is only really worth about 75 cents at this point. Maybe one day they get back to reported, (not normalized) earnings of their average eps of 13 cps...but my sense is that's several years away as there's so much mess already to clean up on their balance sheet and plenty more problems coming in FY25 and FY26.
Quote from: Basil on Nov 26, 2024, 09:26 PMMost economists are predicting unemployment to continue to climb well into 2025 so one can expect more problems to surface in FY25 and FY26 as unemployed customers default on their loans.
Additionally, business receiverships and liquidations hit a ten year high in Sept 2024. With a long lead time between when business's start getting into trouble and when they go into liquidation I expect many more liquidations in HGH's FY25 year and flowing through to FY26.
Then there's the massive write downs on all their seriously impaired assets they currently have no idea how to resolve, (euphemistically called non strategic assets) Maybe they get 30-40 cents on the dollar on those ~ $200m of problem assets and there's another $100m worth of "deep systemic issues to come that they're presently disguising with Heartland "extend" and other possible concealment measures.
Somewhere around $70m before extra write-down's feels about right, (about 7.5 cps) to me but amortize circa $300m of bad bank loans and losses realizing them over the next 3-4 years and maybe after net realizations of problem assets reported eps is stuck about that level for several years as they spread out the realization of all the problem loans over a protracted period of time.
Here's how I see it BP. HGH has been severely stress tested by the severe economic recession of the last few years and failed miserably and is in the process or spreading huge losses over many years. Turners has likewise been severely stress tested and passed with flying colours.
Turners has earned huge respect with investors, institutions and analysts for how they have navigated the economic storm and HGH is in disgrace.
I'd rather back management I know I can trust. The way Greg Tomlinson shut down my questioning at the annual meeting was a bloody disgrace. How many more problems are they hiding?
HGH might be a risky speculative buy at some stage but I reckon we're far too early in the economic cycle at this stage. Some people reckon a no growth company, (which is what HGH is), should trade on no more than 10 times eps. I'm one of those people and I think HGH with all its known and highly likely, its hidden issues maybe is only really worth about 75 cents at this point. Maybe one day they get back to reported, (not normalized) earnings of their average eps of 13 cps...but my sense is that's several years away as there's so much mess already to clean up on their balance sheet and plenty more problems coming in FY25 and FY26.
Fair enough ... and fwiw - I hold a meaningful parcel of TRA as well as of HGH. Clearly - TRA is currently performing (much) better, but I expect HGH to catch up in due course. No idea, whether this will be 2025, 2026 or 2027, but at some stage the earnings from the reverse mortgages will start to flush in (not just as paper gain) - and with agriculture and small business going up again, this part of the business will come right as well.
Not sure even whether I am too worried about the " non strategic assets". Sure, if they have to make a fire sell, they will get only a fraction of what they are worth. Same as with owning shares - if you sell them at the bottom, you make a loss. However - do they really have to kill the companies and sell their assets at a discount? Most of the companies will survive with a supportive bank, and if they work with them constructively they will flourish again and the value of the assets will recover as well.
I guess sell at the bottom and buy at the top is not just for banks a bad strategy. Their choice whether they apply it (I hope not).
Quote from: BlackPeter on Nov 27, 2024, 08:39 AMdo they really have to kill the companies and sell their assets at a discount? Most of the companies will survive with a supportive bank, and if they work with them constructively they will flourish again and the value of the assets will recover as well.
Great you're holding Tina, opps sorry, Turners as well.
Massive problems in the construction sector...warehouses full of plant and equipment they can't sell.
It's sad to say this as I once held this company in high regard, but I think Geoff has hidden problem loans in the company for years, culminating in them having to corral them all in a bad bank.
You saw my questioning at the annual meeting, if not there's a link in this thread to a YouTube of it and the way I was shut down. None of the people I met at the meeting impressed me with their strategy for HGH including Greg Tomlinson.
I didn't like the answers to my questions during the meeting or after it.
How I see it BP is this. I accept HGH will turn the corner at some stage in the years ahead and eventually revert to earning their long run average of 13 cps. I no longer accept its a growth company. At that point, in whatever year it is they revert to 13 cps reported earnings that makes this no growth company worth 10 times 13 cents = $1.30.
I see better places for my capital elsewhere.
Jeff not Geoff......lol.
Quote from: lorraina on Nov 27, 2024, 10:25 AMJeff not Geoff......lol.
LOL Maybe both Jeff and Geoff kept sweeping problems under the carpet hoping they'd eventually come right.
Posted by Balance on the other channel who has obviously looked at the RBNZ dashboard.
QuoteSobering update from HGH Sept quarter - NZ profit down 38% from June quarter.
Total assets down $171m so NZ book is going backwards.
June quarter was bad, really bad, so 38% down on that is really ugly. Maybe my $70m reported profit for FY25, (especially with a possible serious haircut to come on possible sale of some of their deeply problematic assets) is not pessimistic enough? Whatever, nobody should be under any illusions that when they do give FY25 guidance at the February half year reporting mark, it's going to be anything other than a very ugly number, which assumes they give guidance at all. Could just be the usual corporate speak we've got lately about market conditions still remaining too volatile.
HGH testing the 12 months lows, got a feeling Mr markets is become very wary of the accounts and risky lending.....highly suspect new 12 month lows are going to be created and we will probably see an 8 in front of the SP soon
Yeah, not surprising to see all the 96 cent bids get cleaned out at the close and testing its year and decade low of 96 cents.
If they can make 7.5 cps this year, (and that's a BIG IF), its not hard to make the case HGH is only worth 10 times current year earnings = 75 cents. Frankly I don't think they will make even that "reported" number, (not their creative B.S. normalized number) as there's likely to be a serious haircut on some of the bad bank realizations as they endeavor to smooth a mountain of losses over several years.
I think there's years of losses to come on bad bank problematic asset realizations which will heavily impact FY26, FY27 and FY28 results.
The sooner they disassociate themselves from Jeff's B.S. capital raise marketing lie of pretending $200 is a realistic target for FY28, the sooner they can start the multiyear task of trying to rebuild their shattered credibility.
Quote from: Basil on Nov 28, 2024, 05:28 PMYeah, not surprising to see all the 96 cent bids get cleaned out at the close and testing its year and decade low of 96 cents.
If they can make 7.5 cps this year, (and that's a BIG IF), its not hard to make the case HGH is only worth 10 times current year earnings = 75 cents. Frankly I don't think they will make even that "reported" number, (not their creative B.S. normalized number) as there's likely to be a serious haircut on some of the bad bank realizations as they endeavor to smooth a mountain of losses over several years.
I think there's years of losses to come on bad bank problematic asset realizations which will heavily impact FY26, FY27 and FY28 results.
The sooner they disassociate themselves from Jeff's B.S. capital raise marketing lie of pretending $200 is a realistic target for FY28, the sooner they can start the multiyear task of trying to rebuild their shattered credibility.
that's the problem Basil, IMO they are using creative selective accounting(smoke n mirrors) to smooth over and disguise very crappy results, however I assume the markets are now well aware of this and will be reflected in the next 3 years results as they dispose of the pile of shit loans they have written over the last 2 to 3 years in a selective manner.
I do believe more SP selling pressure is coming.
Quote from: snapiti on Nov 28, 2024, 05:58 PMthat's the problem Basil, IMO they are using creative selective accounting(smoke n mirrors) to smooth over and disguise very crappy results, however I assume the markets are now well aware of this and will be reflected in the next 3 years results as they dispose of the pile of shit loans they have written over the last 2 to 3 years in a selective manner.
I do believe more SP selling pressure is coming.
Exactly, which is precisely what all the finance companies in the GFC were doing. Remind me again, how did that work out in the end ;)
Quote from: Basil on Nov 28, 2024, 06:09 PMExactly, which is precisely what all the finance companies in the GFC were doing. Remind me again, how did that work out in the end ;)
Am I correct in thinking the banking capital requirements should prevent this happening to HGH
Quote from: snapiti on Nov 28, 2024, 06:52 PMAm I correct in thinking the banking capital requirements should prevent this happening to HGH
Most probably. The bad bank is just on 2% of all assets. Even allowing for another...say 2% of possible concealed bad debts that's 4% and their capital ratio is about 14% so there's plenty of headroom there, unless some major unforeseen exogenous shock of really serious proportions rocks the markets.
Bank accounts and term deposits will be Govt guaranteed from 1 July 2025 up to a limit of $100K but what will term deposit rates be by then with the OCR headed down to about 3% mid 2025. Maybe 3.5%? Less tax at 33% = 2.25% after tax so you're just treading water with inflation at 2%.
ha ha, low interest rates good for BRM as they pay a consistent 8% after tax, that will close the gap between NAV and SP, but that is for another thread,
New all time low for HGH at 95 cents. I can't say I am even a little bit surprised. I don't have a price target for Feb 2025 when they report their half year but I'm happy to wager after that report it will be south of where the share price is now.
HGH use of the word "volatile" is code speak for, we're getting the life beaten out of us with bad and doubtful debtors.
Quote from: Basil on Dec 04, 2024, 07:58 PMNew all time low for HGH at 95 cents. I can't say I am even a little bit surprised. I don't have a price target for Feb 2025 when they report their half year but I'm happy to wager after that report it will be south of where the share price is now.
HGH use of the word "volatile" is code speak for, we're getting the life beaten out of us with bad and doubtful debtors.
Nah it was lower in the covid lows of March 2020.
How low did it get LEK ?
Years ago I bought sone HBL at 98 cents and price straight away. That 98 was an all time high ....I laid claim to being the only person in the whole world to have lost money on Heartland
Only held that honour for a few days lol
I suspect an excuse, the company will use again, for bad debt will be they did not have the human resources to chase up the money owing.......hmmmmmmm will that is bound to happen when your pile of bad debt is increasing rapidly but still a smoke n mirror answer.
My bet is the SP is going to have an eight in front of it
Extract from NZX 10 biggest winners and losers on the NZX this year, (link to paywalled article) is in the HLG thread, 6th biggest winner up 58.6% this year.
QuoteThe top 10 losers were KMD Brands minus 48.67%, THL (48.65%), Spark (42.5%), Fletcher Building (38.7%), The Warehouse (33.9%), Heartland Bank (29.6%), Ryman (27.8%)...
Just look at that group of losers. HGH is right in there in the same wooden spoon league with all the other losers and their fiasco's that have unfolded with Fletcher Building, the Warehouse and Ryman. Talking about keeping "illustrious" company with fellow "top performers" lol.
All have been in a downtrend caused in no small measure by huge mistakes made by management.
What does the legend KW say about drinking and buying in a downtrend ! Don't be a bloody idiot and do that. Thanks for your excellent posts on here and awesome TA expertise KW. You've certainly helped my portfolio performance over the years and this year has been no exception.
Well this is New ! I clipped the bit where he apologised to Basil, nevermind !
Heartland Group Holdings Ltd
Reflecting on 2024 at Heartland
Dear valued shareholder,
As 2024 draws to a close, I want to take this opportunity to thank you for your continued support of Heartland Group Holdings Limited (Heartland). Your confidence has been instrumental in helping us achieve important strategic milestones this year, and we look forward to building on this progress in 2025.
Reflecting on this calendar year, we have achieved several significant accomplishments – most notably, the successful acquisition of Challenger Bank Limited (Challenger Bank), now Heartland Bank Australia Limited. This made Heartland Bank Limited (Heartland Bank) the first New Zealand bank to purchase an authorised deposit-taking institution in Australia. This acquisition provides a platform for the future of our Australian business, enhancing opportunities for growth, profitability and an improved return on capital. A key driver of success is the transition from Heartland's sole reliance on wholesale funding toward more cost efficient deposit funding, which is well advanced.
At the end of 2023, in New Zealand Heartland Bank also completed a major upgrade of its core banking system. This will continue to assist Heartland Bank's transformation journey to better meet the needs of its customers today and into the future.
Another milestone this year was the publication of Heartland's inaugural Climate Report, which underscores our commitment to sustainability and transparency. The Forsyth Barr Carbon, Environmental, Social and Governance Ratings Report published earlier this month analysed 9,500 data points from 61 leading NZX-listed businesses, of which Heartland was pleased to be recognised as a significant improver.
In a trading update to the market on 26 November 2024, we noted the volatility experienced during the financial year ended 30 June 2024 (FY2024) has continued during the first half of the current financial year (FY2025). Heartland will remain focused on credit quality and is optimistic about recovery during the second half of FY2025 as interest rates reduce and credit demand strengthens. Reverse Mortgages continue to perform well in both countries and confidence is returning within StockCo, which has shown good signs of growth this quarter.
Heartland continues to hold firm to its stated ambitions for the financial year ending 30 June 2028 (FY2028), including the delivery of an underlying return on equity between 12-14% and an underlying net profit after tax (NPAT) of $200 million by the end of FY2028.
We expect to provide FY2025 NPAT guidance as part of our interim financial results in February 2025.
As we look ahead to the 2025 calendar year, we remain confident in our strategic direction and the future of Heartland.
Thank you again for your trust as a Heartland shareholder. On behalf of the Board, I wish you and your loved ones a joyful holiday season and a happy New Year.
Yours sincerely,
Greg Tomlinson
Chair, Heartland Group Holdings Limited
Weird but nice
Seems our Greg feeling a bit guilty about how he's treated shareholders this year ... and reflected on his performance t the Annual Meeting
This could well be a prelude to his resignation as Chair and retirement
I have adjudicated on this briefly and it was a very easy decision. The inaugural 2024 Beagle dog "YEAH RIGHT TUI" wooden spoon award for quote of the year for utter corporate B.S. from management and boards this year both go to Heartland.
Firstly, the board award to Greg Tomlinson for his "more slippery than an Eel" statement under intense questioning from this dog during the annual meeting to effectively evade all further questions, "I am very mindful of time constraints" Secondly to Leanne Lazurus for her comment to me after the meeting, "I can assure you we haven't created a good bank - bad bank situation here" I am most grateful to both recipients for the very high level of clarity they provided to me around my personal shareholding. I'm calling it, reported profit for 2025, (not their B.S. normalized number), will be an absolute shocker.
Moving on to more positive things and awards, the inaugural 2024 Beagle dog Golden Bone award goes to Hallenstein Glasson. Record profit in the worst recession in 33 years, and sales for the year to date up more than 10%. Imagine what a golden performance is coming when the economy starts improving !
Finally, the most coveted inaugural Beagle dog platinum award for the hardest work and most dogged performance so far this decade goes to Turners. Who would have thought a company like them could post one record profit after another every year so far this decade through the Covid years and then the deepest recession in decades. Those guys are as tough as diamonds and worthy winners. Expecting a platinum performance from them for the rest of this decade with ongoing record profits year after year going forward. Well done to Todd, Aaron, Tina and team for a truly "dogged" performance.
Quote from: winner (n) on Dec 20, 2024, 10:54 AMWeird but nice
Seems our Greg feeling a bit guilty about how he's treated shareholders this year ... and reflected on his performance t the Annual Meeting
This could well be a prelude to his resignation as Chair and retirement
I read Greg's year-end message differently - as Chair and major shareholder, he is focused on driving performance to achieve potential despite the rocky road over the last year. Fair to say resigning at the first sign of adversity would not have got him to where he is. 2025 will be an interesting year for Heartland and not plain sailing for sure.
Quote from: Basil on Dec 20, 2024, 11:56 AMI have adjudicated on this briefly and it was a very easy decision. The inaugural 2024 Beagle dog "YEAH RIGHT TUI" wooden spoon award for quote of the year for utter corporate B.S. from management and boards this year both go to Heartland.
Firstly, the board award to Greg Tomlinson for his "more slippery than an Eel" statement under intense questioning from this dog during the annual meeting to effectively evade all further questions, "I am very mindful of time constraints" Secondly to Leanne Lazurus for her comment to me after the meeting, "I can assure you we haven't created a good bank - bad bank situation here" I am most grateful to both recipients for the very high level of clarity they provided to me around my personal shareholding. I'm calling it, reported profit for 2025, (not their B.S. normalized number), will be an absolute shocker.
Moving on to more positive things and awards, the inaugural 2024 Beagle dog Golden Bone award goes to Hollenstein Glasson. Record profit in the worst recession in 33 years, and sales for the year to date up more than 10%. Imagine what a golden performance is coming when the economy starts improving !
Finally, the most coveted inaugural Beagle dog platinum award for the hardest work and most dogged performance so far this decade goes to Turners. Who would have thought a company like them could post one record profit after another every year so far this decade through the Covid years and then the deepest recession in decades. Those guys are as tough as diamonds and worthy winners. Expecting a platinum performance from them for the rest of this decade with ongoing record profits year after year going forward. Well done to Todd, Aaron, Tina and team for a truly "dogged" performance.
Outstanding
Quote from: Basil on Dec 20, 2024, 11:56 AMI have adjudicated on this briefly and it was a very easy decision. The inaugural 2024 Beagle dog "YEAH RIGHT TUI" wooden spoon award for quote of the year for utter corporate B.S. from management and boards this year both go to Heartland.
Firstly, the board award to Greg Tomlinson for his "more slippery than an Eel" statement under intense questioning from this dog during the annual meeting to effectively evade all further questions, "I am very mindful of time constraints" Secondly to Leanne Lazurus for her comment to me after the meeting, "I can assure you we haven't created a good bank - bad bank situation here" I am most grateful to both recipients for the very high level of clarity they provided to me around my personal shareholding. I'm calling it, reported profit for 2025, (not their B.S. normalized number), will be an absolute shocker.
Moving on to more positive things and awards, the inaugural 2024 Beagle dog Golden Bone award goes to Hallenstein Glasson. Record profit in the worst recession in 33 years, and sales for the year to date up more than 10%. Imagine what a golden performance is coming when the economy starts improving !
Finally, the most coveted inaugural Beagle dog platinum award for the hardest work and most dogged performance so far this decade goes to Turners. Who would have thought a company like them could post one record profit after another every year so far this decade through the Covid years and then the deepest recession in decades. Those guys are as tough as diamonds and worthy winners. Expecting a platinum performance from them for the rest of this decade with ongoing record profits year after year going forward. Well done to Todd, Aaron, Tina and team for a truly "dogged" performance.
Very good Basil. I hope you're wrong with HGH. The chair is on record saying that nsa were valued by third parties and there is not going to be a fire sale. If we find out that there has, then his credibility will be shot. 4 percent NIM for FY25 is above Craig's forecast.
Feb we will all find out.
Shareguy - nsa? Do you mean nta (net tangible assets)?
Quote from: SCOTTY on Dec 21, 2024, 10:26 AMShareguy - nsa? Do you mean nta (net tangible assets)?
Non strategic assets
Thanks Shareguy 👍
As we close on 2024 HGH is hanging around a near decade low and I'm thinking is the current share price justified.
I have been through this thread and can see that a number of people have valid concerns. Have listened to the agm again and have gone through the anouncements and make the following points.
Out of the $218m of nsa. ( non strategic assets) $186m (86 %) are receivables, the balance is equity investments (Harmony) and property.
At the agm Basil's great questions provided some good information on these $186m of receivables. The chair and or the NZ ceo stated that these assets are a pool of business and rural leaning that includes lending that is still performing but HGH would no longer accept due to strategy changes. The loans that are not performing have already been provisioned. The chair stated that assets have been independently valued. The question is have they been provisioned enough and how much of the $186m is large performing loans. I'm no accountant but don't understand why they have not separated this out for everyone to see. It makes a difference. I intend to ask HGH for this information and will advise if I get a reply. Suspect that as the chair stated there will be no "fire sale"and will be realised over time.
The latest update had HGH reporting a softer-than-expected four-month trading update, as the challenging conditions at the end of FY24 have spilled into FY25. In particular, receivables growth has been lower than expected. Through the first quarter of FY25, Heartland Bank NZ saw non-performing loans increase ~+14 bps, and took an additional NZ$6.6m of provisioning (~13 bps of NZ receivables says FB.
Have looked at the reserve bank dashboard for HB NZ results to 30 Sep 2024 and they are as expected I thought given the state of the economy. A few stood out.
Return on assets
1.1 percent quarter ending 31 March 2024
0.9 percent quarter ending 30 June 2024
0.6 percent quarter ending 30 Sep 2024
Non performing loans ratio
3.8 percent quarter ending 31 March 2024
3.6 percent quarter ending 30 June 2024
3.8 percent quarter ending 30 Sep 2024
Another concern I have is that Heartland Bank (NZ subsid.) has 4.5 years to reach the new capital adequacy rules. Total capital has to go from 14.07% to 16% by 1 July 2028, and core capital to 11.5%. The brokers all seem to forecast this will be met in the normal course of business BUT will it. Sure realising these nsa,s will help but we certainly don't want another CR.
On the plus side we have the Australian bank at a 2 percent saving with retail deposits. That's big money. Craig's thought $30m when at 100 percent retail deposit's. Reverse mortgages going gangbusters and Stockco showing some improvement with large provisioned loan paying up.
In conclusion with the share price so low I'm picking most of this is already baked into the share price. I do agree that Basils concerns and others are justified. So yes there is risk. Will continue to hold at this stage BUT if I see something more compelling then will bail.
Sorry for the long post. Merry Xmas all
This sort of shite by a former 'accountant' at Heartland really undermines investor confidence. I'm surprised Heartland hasn't acknowledged it to the market, or how they're ensuring it will never happen again!
https://www.fma.govt.nz/news/all-releases/media-releases/individual-pleads-guilty-to-insider-trading-charges/
What Pritesh Patel got up to with his mate
https://www.fma.govt.nz/assets/Enforcement/Enforceable-undertakings/FMA-Pritesh-Patel-enforceable-undertaking.pdf?utm_source=miragenews&utm_medium=miragenews&utm_campaign=news
Good post Shareguy.
Chump change isn't it winner.
I think after the trading update https://www.nzx.com/announcements/442642 and RBNZ dashboard metrics for HGH for Q1 FY25 there's plenty of warning signs about FY25. Reported FY25 profit will struggle to match the $75m in FY24 after taking some of the bad bank losses on the chin is how I see it. There's 930.56m shares on issue now so reported, not normalized, eps is, (and I am going for a very wide range here because so much is unknown) likely to fall into the range of 6-8.5 cps. I see the midpoint of that as being the most likely, about 7.25 cps. If I am right and acknowledging that brokers are a fair bit higher than me, that put's the shares on a forward PE of 13.4 which is about the average HGH has traded on for the last decade.
I think the shares are probably priced about right where they are at just under $1 and the market is absolutely correct to have a very jaundiced view of their near-term prospects.
FY26 and FY27 gains from extra NIM on reverse mortgages in Australia by funding them from deposits are likely to be substantially obliterated from losses that are spread over those years from realizations in their bad bank is how I see it.
I was not impressed at all by Leanne Lazurus or Greg Tomlinson to be quite frank about it. There is going to be NO attempt to try and be more proactive about improving / tightening their loan origination procedures to try and reduce bad debts going forward. Just think about that for a few minutes and ask yourself what part of that makes common sense given the extreme headwinds in the economy? No proactivity whatsoever was signaled to me by Leanne Lazurus. Contrast that with Turners who have tightened their lending criteria many times during the recession. Ask yourself which approach has been more successful, the proactive approach of Turners with their finance book or the reactive one of Heartland. To be crystal clear, I think Heartland have engaged in reckless lending with standardized approval processes that are very weak, and are still doing it.
In the meeting they clearly signaled they were looking at stepping back from residential mortgage lending due to inadequate returns on capital. I see on their website today, nearly two months after their statement at the meeting, they are still lending on one-year mortgages at just 64 bps above 1 year term deposit. That suggests to me Heartland are a clumsily run ship just drifting along and hoping to make progress and maybe one day the skipper will ask, gosh the returns are really poor on that lot of capital employed and gosh, we need to reach the new capital adequacy ratios the RBNZ set us, we'd better do something about it now. When's that going to happen ? Leanne Lazurus said to me after the meeting that residential lending was a non-strategic activity, and all loans were also non-strategic assets. Well Leanne, why are you still doing that type of lending then and at market leading rates?
Food for thought. How big is their bad bank of NSA's going to be next year ?
I have very little confidence in the board or N.Z. management. I think they will do well with reverse mortgages, but most other lending will plague them with ongoing heavy losses and together with losses from realizations of assets from the bad bank the total effect on profitability is likely to be quite brutal. They will dress these normal, across the bottom of the economic cycle losses from the bad bank up as extraordinary and unusual items and normalize profit to try and make things look better. Creative accounting 101.
It's very easy to make the case that large parts of the group are ostensibly a finance company dressed up as a bank. Finance companies never do well in deep recessions, the GFC taught us that and there were very few finance companies that survived that and almost none that weren't seriously affected.
Just as well they have their specialist loan product "Heartland Extend" to conceal as many overdue finance receivables as they can. Just keep that practice up, what could possibly ever go wrong. Hmmm I hope I am too pessimistic, and this works out okay for holders. I sold all my stake at just over $1, breaking even and invested it all into more Turners shares at just on $4.50. You can sleep very well at night with Turners shares and their exceptional management team, in my opinion.
Quote from: Basil on Dec 21, 2024, 09:11 PMI think they will do well with reverse mortgages, but most other lending will plague them with ongoing heavy losses and together with losses from realizations of assets from the bad bank the total effect on profitability is likely to be quite brutal.
It's very easy to make the case that large parts of the group are ostensibly a finance company dressed up as a bank. Finance companies never do well in deep recessions, the GFC taught us that and there were very few finance companies that survived that and almost none that weren't seriously affected.
Just as well they have their specialist loan product "Heartland Extend" to conceal as many overdue finance receivables as they can. Just keep that practice up, what could possibly ever go wrong. Hmmm I hope I am too pessimistic, and this works out okay for holders.
Vow, Basil. Ze bit een bold. Take of zhose blinkers. Eet has taken you until now to vigure zhis out? You are much zharper zhan zhat!
Of course Heartland eez a vinance company! Even Jeff admitted 'Heartland
Bank" vas a marketing slogan. Ze vact that all Heartland
Bank accounts in NZ are actually Westpac NZ accounts vas another giveaway.
A "Bank" (I vill continue to humour ze 'cult of Jeff' and call Heartland that) vill be remembered by eets customers on how zhey are treated een bad times, not good. Your 'zolution' to ze bad bank eez to zell off all ze diesel builders utes and vans at ze bottom of ze market? Who eez going to buy zhem? Eet eez a very deeferent market to Turners 'light passenger vehicles' vith a much broader potential customer base.
You may not like 'Heartland Extend' but eet eez ze only zolution, apart vrom 'zending builders bankrupt'. Yes zome loans vill turn bad, but ze alternative eez 'all loans vill turn bad'. Eef you are a long term investor, you go in with zee knowledge that een downturns 'bad times vill come'. Eef you do not realise zhis, zhen you zhould not have been invested een Heartland to ztart vith!
Vhat makes Heartland distinct vrom all of zhose other 'vinance companies' out zhere eez ze 'reverse mortgage portfolio' (as you have identified). Zhis eez zee arm of zhis company zhat vill zee Heartland through 'tough times'. Heartland vill survive, make no bones about zhat. And vith other vinance companies teetering, and real banks zhying away vrom 'vehicle lending', who vill be zhere to pick up ze pieces een ze 'trade and equipment funding space' vhen ze market turns? Zhis eez ze 'medium term game' vor Heartland and eets zhareholders. And I theenk eet eez a 'vinning ztrategy'.
RB
Quote from: Basil on Dec 21, 2024, 09:11 PMGood post Shareguy.
Chump change isn't it winner.
I think after the trading update https://www.nzx.com/announcements/442642 and RBNZ dashboard metrics for HGH for Q1 FY25 there's plenty of warning signs about FY25. Reported FY25 profit will struggle to match the $75m in FY24 after taking some of the bad bank losses on the chin is how I see it. There's 930.56m shares on issue now so reported, not normalized, eps is, (and I am going for a very wide range here because so much is unknown) likely to fall into the range of 6-8.5 cps. I see the midpoint of that as being the most likely, about 7.25 cps. If I am right and acknowledging that brokers are a fair bit higher than me, that put's the shares on a forward PE of 13.4 which is about the average HGH has traded on for the last decade.
I think the shares are probably priced about right where they are at just under $1 and the market is absolutely correct to have a very jaundiced view of their near-term prospects.
FY26 and FY27 gains from extra NIM on reverse mortgages in Australia by funding them from deposits are likely to be substantially obliterated from losses that are spread over those years from realizations in their bad bank is how I see it.
I was not impressed at all by Leanne Lazurus or Greg Tomlinson to be quite frank about it. There is going to be NO attempt to try and be more proactive about improving / tightening their loan origination procedures to try and reduce bad debts going forward. Just think about that for a few minutes and ask yourself what part of that makes common sense given the extreme headwinds in the economy? No proactivity whatsoever was signaled to me by Leanne Lazurus. Contrast that with Turners who have tightened their lending criteria many times during the recession. Ask yourself which approach has been more successful, the proactive approach of Turners with their finance book or the reactive one of Heartland. To be crystal clear, I think Heartland have engaged in reckless lending with standardized approval processes that are very weak, and are still doing it.
In the meeting they clearly signaled they were looking at stepping back from residential mortgage lending due to inadequate returns on capital. I see on their website today, nearly two months after their statement at the meeting, they are still lending on one-year mortgages at just 64 bps above 1 year term deposit. That suggests to me Heartland are a clumsily run ship just drifting along and hoping to make progress and maybe one day the skipper will ask, gosh the returns are really poor on that lot of capital employed and gosh, we need to reach the new capital adequacy ratios the RBNZ set us, we'd better do something about it now. When's that going to happen ? Leanne Lazurus said to me after the meeting that residential lending was a non-strategic activity, and all loans were also non-strategic assets. Well Leanne, why are you still doing that type of lending then and at market leading rates?
Food for thought. How big is their bad bank of NSA's going to be next year ?
I have very little confidence in the board or N.Z. management. I think they will do well with reverse mortgages, but most other lending will plague them with ongoing heavy losses and together with losses from realizations of assets from the bad bank the total effect on profitability is likely to be quite brutal. They will dress these normal, across the bottom of the economic cycle losses from the bad bank up as extraordinary and unusual items and normalize profit to try and make things look better. Creative accounting 101.
It's very easy to make the case that large parts of the group are ostensibly a finance company dressed up as a bank. Finance companies never do well in deep recessions, the GFC taught us that and there were very few finance companies that survived that and almost none that weren't seriously affected.
Just as well they have their specialist loan product "Heartland Extend" to conceal as many overdue finance receivables as they can. Just keep that practice up, what could possibly ever go wrong. Hmmm I hope I am too pessimistic, and this works out okay for holders. I sold all my stake at just over $1, breaking even and invested it all into more Turners shares at just on $4.50. You can sleep very well at night with Turners shares and their exceptional management team, in my opinion.
Really and yet just before the result you were telling everyone how great this was and how big the divvies are going to be. It was all out there if you bothered to get your nose out and do some real research Basil and you missed it. You actually think you get some sort of pardon after telling everyone you have XXX amount and another $300k to go in.
You chop and change with the weather. Stick to HLG and TRA as they suit you better thou note wasn't it Percy on the other channel that was praising TRA long before you got in? And your comment it was only cars.
Always the same everything is great until its not, simply the writing was on the wall well before the FY result.
Quote from: Greekwatchdog on Dec 22, 2024, 09:59 AMReally and yet just before the result you were telling everyone how great this was and how big the divvies are going to be. It was all out there if you bothered to get your nose out and do some real research Basil and you missed it. You actually think you get some sort of pardon after telling everyone you have XXX amount and another $300k to go in.
You chop and change with the weather. Stick to HLG and TRA as they suit you better thou note wasn't it Percy on the other channel that was praising TRA long before you got in? And your comment it was only cars.
Always the same everything is great until its not, simply the writing was on the wall well before the FY result.
I think its a good sign/ethos when someone can change their opinion in a stock and admit it as Basil has done before .
It could save you a lot of money ,this sort of posting should be applauded for its honesty ,and encouraged .
Loyalty to a stock is a mugs game & the sooner we all learn off peoples doubts the better & sooner we can reappraise said stock/company rightly or wrongly .
Quote from: Auto Rower on Dec 22, 2024, 10:57 AMI think its a good sign/ethos when someone can change their opinion in a stock and admit it as Basil has done before .
It could save you a lot of money ,this sort of posting should be applauded for its honesty ,and encouraged .
Loyalty to a stock is a mugs game & the sooner we all learn off peoples doubts the better & sooner we can reappraise said stock/company rightly or wrongly .
Not when you go shooting Tom, Dick and Harry down praising the company then all of a sudden the wind changes and think you can save grace. Remember the Pied Piper it didn't up to well for him.
Quote from: Greekwatchdog on Dec 22, 2024, 11:43 AMNot when you go shooting Tom, Dick and Harry down praising the company then all of a sudden the wind changes and think you can save grace. Remember the Pied Piper it didn't up to well for him.
Regular readers of thees vorum all know Basil's ztyle and can read his posts in zhat context. Can I zuggest we move the discussion on vrom 'Heartlessnessland' (kick the dog)- it is Christmas after all- back to 'Heartland'.
RB
Quote from: Basil on Dec 21, 2024, 09:11 PMGood post Shareguy.
Chump change isn't it winner.
I think after the trading update https://www.nzx.com/announcements/442642 and RBNZ dashboard metrics for HGH for Q1 FY25 there's plenty of warning signs about FY25. Reported FY25 profit will struggle to match the $75m in FY24 after taking some of the bad bank losses on the chin is how I see it. There's 930.56m shares on issue now so reported, not normalized, eps is, (and I am going for a very wide range here because so much is unknown) likely to fall into the range of 6-8.5 cps. I see the midpoint of that as being the most likely, about 7.25 cps. If I am right and acknowledging that brokers are a fair bit higher than me, that put's the shares on a forward PE of 13.4 which is about the average HGH has traded on for the last decade.
I think the shares are probably priced about right where they are at just under $1 and the market is absolutely correct to have a very jaundiced view of their near-term prospects.
FY26 and FY27 gains from extra NIM on reverse mortgages in Australia by funding them from deposits are likely to be substantially obliterated from losses that are spread over those years from realizations in their bad bank is how I see it.
I was not impressed at all by Leanne Lazurus or Greg Tomlinson to be quite frank about it. There is going to be NO attempt to try and be more proactive about improving / tightening their loan origination procedures to try and reduce bad debts going forward. Just think about that for a few minutes and ask yourself what part of that makes common sense given the extreme headwinds in the economy? No proactivity whatsoever was signaled to me by Leanne Lazurus. Contrast that with Turners who have tightened their lending criteria many times during the recession. Ask yourself which approach has been more successful, the proactive approach of Turners with their finance book or the reactive one of Heartland. To be crystal clear, I think Heartland have engaged in reckless lending with standardized approval processes that are very weak, and are still doing it.
In the meeting they clearly signaled they were looking at stepping back from residential mortgage lending due to inadequate returns on capital. I see on their website today, nearly two months after their statement at the meeting, they are still lending on one-year mortgages at just 64 bps above 1 year term deposit. That suggests to me Heartland are a clumsily run ship just drifting along and hoping to make progress and maybe one day the skipper will ask, gosh the returns are really poor on that lot of capital employed and gosh, we need to reach the new capital adequacy ratios the RBNZ set us, we'd better do something about it now. When's that going to happen ? Leanne Lazurus said to me after the meeting that residential lending was a non-strategic activity, and all loans were also non-strategic assets. Well Leanne, why are you still doing that type of lending then and at market leading rates?
Food for thought. How big is their bad bank of NSA's going to be next year ?
I have very little confidence in the board or N.Z. management. I think they will do well with reverse mortgages, but most other lending will plague them with ongoing heavy losses and together with losses from realizations of assets from the bad bank the total effect on profitability is likely to be quite brutal. They will dress these normal, across the bottom of the economic cycle losses from the bad bank up as extraordinary and unusual items and normalize profit to try and make things look better. Creative accounting 101.
It's very easy to make the case that large parts of the group are ostensibly a finance company dressed up as a bank. Finance companies never do well in deep recessions, the GFC taught us that and there were very few finance companies that survived that and almost none that weren't seriously affected.
Just as well they have their specialist loan product "Heartland Extend" to conceal as many overdue finance receivables as they can. Just keep that practice up, what could possibly ever go wrong. Hmmm I hope I am too pessimistic, and this works out okay for holders. I sold all my stake at just over $1, breaking even and invested it all into more Turners shares at just on $4.50. You can sleep very well at night with Turners shares and their exceptional management team, in my opinion.
Thanks Basil. A few points that I want to clarify
I agree it's a big ask to exceed last years reported profit of $75m. Forbar has renewed their research after the last update and are saying $99m. Yes that's reported not normalised. A lot hinges on 2H. For what it's worth I have low expectations and think anything around $75m under the circumstances would be good, hopefully bottom cycle result.
You stated
"FY26 and FY27 gains from extra NIM on reverse mortgages in Australia by funding them from deposits are likely to be substantially obliterated from losses that are spread over those years from realizations in their bad bank is how I see it"
Your concerns may well be right Basil. I don't no Greg Tomlinson personally but he was adamant that there is not a bad bank hiding. Greg I thought clearly stated that there will be no fire sale and that the nsa are already provisioned and independently reviewed. Greg is a very very wealthy man and I personally don't think he would try and hide anything and have no reason to doubt what he stated at the agm. His credibility would be on the line if we see any massive writedowns on the existing nsa,s is how I see it. So until I see otherwise I'm expecting an orderly sell down at close to book value over all.
At the end of the day I see Australia as the prize and the additional Nim is going to be a game changer. The market is already pricing in a shocker 2025. What if it's not that bad. If we don't see this "bad bank" eventuating and guidance for FY25 is simalar to last year then I suspect the share price will head up again.
I'm a long term holder and think there is not many shares on the NZX that have such potential. You might prove to be right Basil(I hope not) If I see massive write downs as you suggest and this bad bank materialises then I will be selling.
As far as Turners gos, well it's been on my watchlist and I have come close to buying it several times. It's a great company and well managed I just don't see it as a buy at the current price. But watch this space.....
Your concerns get us all thinking which is good, so thanks for that Basil.
Well it's time for a swim and a cold beer.
I asked this ChatGPT thingie "Does Heartland Bank MZ have a looming bad debt problem"
Came back "Whoop,something went wrong"
Think it was too embarrased to say "Yes, they've stuffed up badly and significant writeoffs will inevitably result"
I'll ask it again later on ..
Might be in a better mood
Quote from: winner (n) on Dec 22, 2024, 01:05 PMI asked this ChatGPT thingie "Does Heartland Bank MZ have a looming bad debt problem"
Came back "Whoop,something went wrong"
Think it was too embarrased to say "Yes, they've stuffed up badly and significant writeoffs will inevitably result"
I'll ask it again later on ..
Might be in a better mood
Maybe it didn't like "Heartland Bank
MZ"
Here's what it has to say, to exactly the same question, with "New Zealand" (note the answers were found from NBR and RNZ articles):
While rising bad debts are notable, Heartland Bank appears to be addressing these challenges strategically, and its overall financial stability is not in immediate jeopardy.
Heartland Bank in New Zealand is currently navigating challenges related to rising bad debts, though the situation is not yet indicative of a major crisis. The bank's financial results reveal an increase in provisions for bad loans, primarily in sectors like motor finance and asset finance, which have been affected by subdued market demand and heightened competition. For example, net impaired and overdue loans rose by $6.2 million in the first quarter of the current fiscal year.
Contributing factors include operational issues from recent system upgrades, elevated arrears in longer-term loans, and economic challenges faced by business clients in sectors like transportation and forestry. However, Heartland Bank has been actively managing credit quality, implementing recovery strategies, and maintaining strong retail deposit flows to offset these issues.
Despite these challenges, the bank's core lending portfolios, such as reverse mortgages and small business loans, have shown resilience and growth potential. Heartland expects conditions to improve in 2025 as economic pressures ease and interest rates decline
Quote from: Red Baron on Dec 22, 2024, 11:50 AMRegular readers of thees vorum all know Basil's ztyle and can read his posts in zhat context. Can I zuggest we move the discussion on vrom 'Heartlessnessland' (kick the dog)- it is Christmas after all- back to 'Heartland'.
"Heartlessness land" hits the nail right on the head. Deep shame on that feral animal for going into rabid attack mode at this time of year.
Thanks for your kind words Auto Rower.
Thanks Shareguy. Balance on the other channel, who for other than his sometimes very controversial political views seems to talk a fait bit of common sense, reckons there's warehouses full of plant and equipment HGH are sitting on.
HGH has been a disappointment to me this year. I think my key mistake was underestimating the depth and severity of the recession. I Don 't think I was alone in making that mistake.
HGH's time to shine will come again at some stage but it's increasingly clear there's a big mess to clean up first. I think we agree, the cost of cleaning up that mess is a key determinant with the future share price of HGH.
My concerns over management's capabilities and the veracity of their loan approval processes will remain until HGH can prove otherwise.
I've said enough about TRA in that thread.
Anyway it's time for that drink and swim. Mrs is complaining it's too hot. I asked her if she had noticed the big swimming pool all around us lol ;)
Quote from: Buzz on Dec 21, 2024, 06:30 PMThis sort of shite by a former 'accountant' at Heartland really undermines investor confidence. I'm surprised Heartland hasn't acknowledged it to the market, or how they're ensuring it will never happen again!
https://www.fma.govt.nz/news/all-releases/media-releases/individual-pleads-guilty-to-insider-trading-charges/
Undesirable, but I don't see how this would be material to Heartland?
A certain percentage of people are crooks - some petty crooks as in this case and others large. This is a fact. Some of these crooks happen to be accountants and use their knowledge for insider trading with whatever organization they happen to work for.
How does this reflect on HGH other than that HGH and FMA together have been able to catch the crook and get him to admit his guilt and accept a penalty.
All good. At worst a boost of confidence into the system.
Dog's of the Dow theory. I reckon a few people will punt on HGH and some of the other stocks named below using the theory that those that have performed worst in 2024 might have a good 2025. Extract from recent Herald article. I think many of these companies face deep systemic issues and / or poor management. It would be interesting to see if say, $10K invested in each one outperformed the market in 2025. I'm not game to give it a go, I'd prefer to invest in winners in an uptrend, trading on compelling metrics.
QuoteThe top 10 losers were KMD Brands minus 48.67%, THL (48.65%), Spark (42.5%), Fletcher Building (38.7%), The Warehouse (33.9%), Heartland Bank (29.6%), Ryman (27.8%), Sky City (20.4%), Vital Healthcare (13.5%) and Genesis (8.4%).
Quote from: Basil on Dec 28, 2024, 05:12 PMDog's of the Dow theory. I reckon a few people will punt on HGH and some of the other stocks named below using the theory that those that have performed worst in 2024 might have a good 2025. Extract from recent Herald article. I think many of these companies face deep systemic issues and / or poor management. It would be interesting to see if say, $10K invested in each one outperformed the market in 2025. I'm not game to give it a go, I'd prefer to invest in winners in an uptrend, trading on compelling metrics.
Dogs of the Dow theory is based on good earnings but low hype.
This is something, which is true for some of these stocks and others not.
I see ...
HGH: has a 6.2% dividend yield, a (10y) backward PE of 7.7 and a (3yr) forward PE of 7.3. Not bad - might well be one of these outstanding dogs? But sure, the world might stop spinning, and than it will not. But hey, who would care?
GNE: dividend yield: 6.5%, backward PE: 20, forward PE: 21 ... not bad for a Gentailer.
RYM: no dividend, backwards PE 6.5, forward PE: 13.5: might be a good dog for people prepared to wait;
KMD: no dividend, backwards PE 3.7, forward PE 29.5. Hmm ... I guess it depends how fast (and if at all) they dig themselves our of the current hole (but yes, there are clearly risks - the market has changed).
FBU, WHS - less a numbers thingy and more a punt on whether they learned something ...
SPK - check my view on the relevant thread and ...
... the others - yeah, right.
So, yes, I do see some dogs worthwhile to invest in (and I did) ... and others not so.
All dogs, but the trick is to find the dogs which are going to perform.
The Dogs of the Dow is an investment strategy that identifies the highest-yielding, yet underperforming, stocks in the Dow Jones Industrial Average in an attempt to achieve share-price gains faster than peers with lower yields. ....theory being the share price might increase to reduce yields to more realistic levels.
So what are the highest yielding stocks on the NZX ... they're the Dogs ofvthe NZX
Suppose HLG and TRA would be included?
Quote from: winner (n) on Dec 28, 2024, 06:16 PMThe Dogs of the Dow is an investment strategy that identifies the highest-yielding, yet underperforming, stocks in the Dow Jones Industrial Average in an attempt to achieve share-price gains faster than peers with lower yields. ....theory being the share price might increase to reduce yields to more realistic levels.
So what are the highest yielding stocks on the NZX ... they're the Dogs ofvthe NZX
Suppose HLG and TRA would be included?
I'm really liking the dogs of the Dow theory now lol
Quote from: winner (n) on Dec 28, 2024, 06:16 PMThe Dogs of the Dow is an investment strategy that identifies the highest-yielding, yet underperforming, stocks in the Dow Jones Industrial Average in an attempt to achieve share-price gains faster than peers with lower yields. ....theory being the share price might increase to reduce yields to more realistic levels.
So what are the highest yielding stocks on the NZX ... they're the Dogs ofvthe NZX
Suppose HLG and TRA would be included?
People who try to apply the Dogs of the Dow theory to other stock markets all seem to focus on the first bit (the DOGS) and completely lose sight of the second bit (the DOW). The 30 companies in the Dow are the cornerstone companies of the American economy (and in many cases, the global economy). They are strong companies, that still have good cashflows (and therefore can still pay dividends) but that are going through a temporary or cyclical bad period from which they are fully expected to recover.
This is not the same as picking the worst companies on the NZX and thinking they will bounce back for no other reason than the "Dogs of the Dow" theory. There are very few "Dow quality" companies on the NZX.
Here are a few Small cap,[under $60mil] NZ companies which are paying a dividend.I have not included any smart shares.
Code....share price....Market cap.........NTA...........EPS.........PE..............Gross yield..Note
2CC.........80 cents.......$36.444mil........43cps........10.4..........7.663...........11.181
GEN.......23.5cents......$21.360mil.......28.3 cps.......033.......7.121.............3.321%..........1
MFB........22 cents........$53.497mil..... -0.082cps.......0.027.....8.209.............7.429%
RAD...... 20.5cents.......$58.412mil.........19cps.......-0.028....-7.374.............9.817%
SDL.........67cents.........$9.862mil...........52.7cps.....19.2 ........3.499............19.992% .......2
TAH.......$2.34...............$23.294..........-.076.cps.........20.........11.706...........7.952%
Notes
1...GEN have only started paying a dividend.I expect their yield will double.
2.SDL have lost their very large major client,and their business is down sizing
Quote from: lorraina on Dec 29, 2024, 11:52 AMHere are a few Small cap,[under $60mil] NZ companies which are paying a dividend.I have not included any smart shares.
Code....share price....Market cap.........NTA...........EPS.........PE..............Gross yield..Note
2CC.........80 cents.......$36.444mil........43cps........10.4..........7.663...........11.181
GEN.......23.5cents......$21.360mil.......28.3 cps.......033.......7.121.............3.321%..........1
MFB........22 cents........$53.497mil..... -0.082cps.......0.027.....8.209.............7.429%
RAD...... 20.5cents.......$58.412mil.........19cps.......-0.028....-7.374.............9.817%
SDL.........67cents.........$9.862mil...........52.7cps.....19.2 ........3.499............19.992% .......2
TAH.......$2.34...............$23.294..........-.076.cps.........20.........11.706...........7.952%
Notes
1...GEN have only started paying a dividend.I expect their yield will double.
2.SDL have lost their very large major client,and their business is down sizing
Great Post nice to look at some smaller companies.
As you noted, SDL is downsizing their business. However they might not have lost their mayor client completely. As I understand it SDL was the supplier of all services to this client in SDL's field, this contract was not renewed but not given to anybody else either. I understand that the client is planning to split this large contract up and companies included SDL can quote for parts. ( See part of SDL's announcement 27 Nov 24)
Update on RFP Decision 27 November 2024 Solution Dynamics (SDL) is providing this update to keep investors and the market informed with the latest information regarding the recent Request for Proposal (RFP) announcement on 25 November 2024. As noted in that announcement, SDL had previously advised that its largest customer was undertaking an RFP process that covered customer communications services provided by SDL as part of a major review and tendering of key projects. During this past weekend, SDL was advised that it had not been successful in this specific tendering process; however, a number of issues remained unclear, particularly whether this decision applies to all or part of SDL services to the customer. Furthermore, SDL received no information about the timing of the hand over process. However, as a result of a debriefing call with the customer's procurement team overnight on Monday night (NZ time), SDL can now provide a status update that the customer has advised that it undertook the tender with aim of qualifying another vendor's capabilities, and has done so. As a result of the debriefing call, SDL understands that the customer now expects to tender its communications programme services (software/professional services and print/logistics) on a project by project basis. And that the RFP decision was based on commercial factors not on performance. SDL has been advised that it will remain a vendor to the customer although it is understood this will be subject to an ongoing per-project contestable basis.
Major cost restructure commenced
11/12/2024, 08:30 NZDT, MKTUPDTE
SDL confirms that following its announcement on 27 November around the result of the Request for Proposal (RFP) outcome for its major customer, it has now commenced a significant restructure process to right size the business.
The restructure proposal is broad-based, affecting both New Zealand and international operations, and aims to remove a material amount of costs. The Company will incur an impairment provision in its first half results, although the final quantum will depend on the consultation results of the restructuring proposal now underway. From 1 January 2025, the Directors will reduce Board fees back to the level prior to the last fee increase in 2022 and the Chair will reduce fees entirely.
With the Company's largest customer having moved to a multi-vendor model, it will take some time until the range of decline in revenue and margin becomes clear.
The inclusion of restructuring costs, and additional clarity required around end of first half timing around contracts makes providing guidance more uncertain than usual, however, the first half earnings result now seems more likely to be in the range of $1.9 million to $2.5 million.
Heartland neat top of NZX leaderboard today
A new year ....And good news on way?
You can't be serious. "Blind Freddy" can tell you that the first half result to be announced next month is going to be an absolute shocker.
Quote from: Basil on Jan 06, 2025, 08:08 PMYou can't be serious. "Blind Freddy" can tell you that the first half result to be announced next month is going to be an absolute shocker.
And yet Blind Freddy was telling you before the Full Year was going to be a shocker and here you were pumping the stock up implying you had $300k to spend.
Maybe some are seeing value and looking forward expecting a turn around from 2nd half.
Quote from: Basil on Jan 06, 2025, 08:08 PMYou can't be serious. "Blind Freddy" can tell you that the first half result to be announced next month is going to be an absolute shocker.
Arguably expected bad results are priced in. At current valuation ($950m), the market already does not put any weight to management getting anywhere near stated medium term (2028) growth goals of $200m underlying NPAT.
Hi all,
Happy new year. Well I did get a reply which unfortunately was not happy with. Also with Basil's concerns top of mind I decided to bail.
Disc/ I'm out.
Quote from: Shareguy on Jan 08, 2025, 10:52 AMHi all,
Happy new year. Well I did get a reply which unfortunately was not happy with. Also with Basil's concerns top of mind I decided to bail.
Disc/ I'm out.
You've been a long term investor so it goes without saying you mulled that decision over very carefully and didn't take that decision lightly. The saddest thing is the legacy of loose lending policies that I articulated my concerns about at post #1790, along with other posts around that time, means this company, much like Greg Tomlinson's other one, OCA, has destroyed a lot of value for long term shareholders. Only those who have taken a very agile approach to trading the cycles of these pure cyclical companies have done well. At least with HGH you've got good dividends along the way so that's something. but speaking of dividends If they make something like $75m reported profit this year, on circa 950m shares and they're only paying out 55% now, gosh that's only 4.4cps so you've probably got out before a big dividend disappointment.
That said, I expect they will try and mask that dividend cut by basing their 55% payout on so called normalized profit so maybe 2 cps interim and 3 cps final is on the cards but my goodness that's less than half of the 11.5 cps they paid at the peak.
Quote from: Basil on Jan 08, 2025, 02:12 PMYou've been a long term investor so it goes without saying you mulled that decision over very carefully and didn't take that decision lightly. The saddest thing is the legacy of loose lending policies that I articulated my concerns about at post #1790, along with other posts around that time, means this company, much like Greg Tomlinson's other one, OCA, has destroyed a lot of value for long term shareholders. Only those who have taken a very agile approach to trading the cycles of these pure cyclical companies have done well. At least with HGH you've got good dividends along the way so that's something. but speaking of dividends If they make something like $75m reported profit this year, on circa 950m shares and they're only paying out 55% now, gosh that's only 4.4cps so you've probably got out before a big dividend disappointment.
That said, I expect they will try and mask that dividend cut by basing their 55% payout on so called normalized profit so maybe 2 cps interim and 3 cps final is on the cards but my goodness that's less than half of the 11.5 cps they paid at the peak.
Yes it was a hard decision. Feel the share price is priced for bad news to some degree. Had a low average cost and when I include dividends have done well, which made the decision harder. At the end of the day I see other opportunities so it came down to risk versus reward and agree that if there are massive write downs as you suggest are coming then this could go even lower. Sometimes it's better to wait and see on the sidelines....
Quote from: Shareguy on Jan 08, 2025, 10:52 AMHi all,
Happy new year. Well I did get a reply which unfortunately was not happy with. Also with Basil's concerns top of mind I decided to bail.
Disc/ I'm out.
You got a response to Nicola as well
Probably raved on without getting the point ... that's what she did to me
Doesn't give any confidence in what they say
Serious question for those of you that are bearish on the stock: realistically how much stock price impact do you expect under your pessimistic scenarios where they take an upfront large bad debts write down?
A large one off non-recurring loss now, what do you think the market would look at? The one off loss that tanks earnings this year, or the clean earnings forecasts that creates heading forward in 2025/2026 and beyond?
Your question is purely hypothetical as they've made it quite clear they are in no rush to address issues with the $218m of so called non-strategic assets.
I expect there will be substantial write downs of those so-called NSA's and further significant provisioning over FY26 and FY27 and possibly some effect on FY28 as well.
Quote from: LaserEyeKiwi on Jan 09, 2025, 03:00 PMSerious question for those of you that are bearish on the stock: realistically how much stock price impact do you expect under your pessimistic scenarios where they take an upfront large bad debts write down?
I've been bearish on HGH since the ill fated badly managed cap raise around $1.80
I also posted a chart warning Basil about his HGH purchase in a downtrend and our resident guru prolific poster roundly criticised me (and others) for questioning his wisdom.... we were all called 'naysayers."
Now Basil has joined the naysayers.
At some future stage HGH's TA may show an uplift in the downwards trend and perhaps herald a golden cross.... if all that is accompanied by a change to more positive FA then HGH may become a buy.
Every dog has its day.... but until then stay away.
One of the secrets to investing I have learned over the years is you're never going to get every call right, but you must take fast action when the game changes and companies start engaging in creative accounting.
When companies start with highly questionable and creative accounting practices and you can escape a fresh position with a breakeven result, I think that's a pretty satisfactory outcome in the circumstances, especially given the surprising length and quite extreme depth of the recession. I'm up more than 20% on where I reallocated that capital in late 2024 so I'm very happy I took early action when I wasn't happy with the answers to questions raised at the annual meeting. I enjoyed my second-best year ever in 2024 so am very pleased with the overall investment results achieved.
Others have claimed they had better forward vision on HGH in 2024 and whilst that's quite probably true, I am very content with my overall track record with Heartland over the last decade or so.
I once read in I think it was a Buffett book, if you get 6 out of 10 calls/investments right, you will make money on the share market.
I have made every mistake possible,but remain "well positioned."
What I have tried to do is add to my winners and sell my losers.
However, too often I have sold down a winner to get a free ride.
That said I have had a great deal of fun following the market for many many years.
Quote from: Left Field on Jan 09, 2025, 04:41 PMI've been bearish on HGH since the ill fated badly managed cap raise around $1.80
I also posted a chart warning Basil about his HGH purchase in a downtrend and our resident guru prolific poster roundly criticised me (and others) for questioning his wisdom.... we were all called 'naysayers."
Now Basil has joined the naysayers.
At some future stage HGH's TA may show an uplift in the downwards trend and perhaps herald a golden cross.... if all that is accompanied by a change to more positive FA then HGH may become a buy.
Every dog has its day.... but until then stay away.
Yep, same here. Bailed early when the writing on the wall was only too plain to see. Tried to warn others but got shot at from all sides. Now the same people are wise after the event ::)
There's more pain to come with HGH I feel, and I'm still extremely dubious whether the OZ banking gamble will ever pay off. There's a strong chance in my view that HGH will join the long list of kiwi businesses that retreat from OZ with their tail between their legs.
HGH are perceived rightly as a risky stock (SP graph is awful) and would have to fall further before I'd throw any money at it. I wouldn't be at all surprised if it is sub-90c in a few months.
Quote from: lorraina on Jan 09, 2025, 06:01 PMI once read in I think it was a Buffett book, if you get 6 out of 10 calls/investments right, you will make money on the share market.
Yeap, agreed, nobody including those here 'kindly" repeating I told you so, gets every call right, FAR from it.
I have been to a few Fisher funds annual meetings now and they trot out that 6 out of 10 line from time to time when they've had a mediocre year. I think you really need to get about eight calls out of ten right or better to make really serious money.
What I learned with Heartland last year is they really are a fair-weather company. They do well when the economy does well and very poorly when the economy tanks. The economy was a lot worse for a lot longer last year than I thought it would be and I got it wrong in 2024 but am grateful to escape with a break-even result. That's no worse than anyone who simply stayed out, except for the opportunity cost of what could have been made elsewhere. I guess Geoff's statement many years ago that the fortunes of the company are inextricably tied to the economy is the lesson to never ever forget. Heartland will do okay again one day when the economy starts doing well again and they have cleaned up all the mess from the long and deep recession and their loose lending policies and then in due course when the economy goes into recession again, they will tank yet again. An absolute classic cyclical company that's only ever been good as a trading opportunity that some people who have called it right nine times out of ten or thereabouts, have done very well out of over the last decade. Buy and hold simply doesn't work well with Heartland.
These days I prefer companies that have proven they are extremely resilient no matter what the economic conditions.
Quote from: winner (n) on Jan 09, 2025, 12:31 PMYou got a response to Nicola as well
Probably raved on without getting the point ... that's what she did to me
Doesn't give any confidence in what they say
Exactly the case Winner. Just repeated my question and agreed with my facts and said all will be revealed in Feb. Very disappointing indeed.
At the annual meeting Leanna Lazurus warned of very high business liquidations and the impact on the company. Doesn't look like things have changed since then. https://www.1news.co.nz/2025/01/17/nz-sees-highest-annual-business-liquidation-count-in-10-years/
Good to see small steps upwards for this Stock , bucking the long term trend . some investors obviously did'nt get the dire memo from the Throne about what a disastrous result we're going to hear about next month, if indeed that is the case , my crystal ball is a bit murky at present someone else has obviously got a later model !! lol !!
Quote from: Syd on Jan 22, 2025, 05:48 PMGood to see small steps upwards for this Stock , bucking the long term trend . some investors obviously did'nt get the dire memo from the Throne about what a disastrous result we're going to hear about next month, if indeed that is the case , my crystal ball is a bit murky at present someone else has obviously got a later model !! lol !!
confident the results will be poor, question is has the market priced it in
HGH breaking out here by he looks of it.
Still marching higher on good volumes
Yep what a shame they're not listening to the experts on here , who have all been reiterating how bad things are!
Time will tell , but good money has been made in the last few weeks and as the man said "be greedy when others are fearful" and you can smell the fear on this forum at least !
Great day for HGH finished on $1.12 with 1 Million shares traded. lol !!
Quote from: Syd on Feb 05, 2025, 05:04 PMGreat day for HGH finished on $1.12 with 1 Million shares traded. lol !!
Golden Cross can't be far off.
Its a strange rise given we are set for a poor result and hefty provisions.
Maybe $0.95 was the bottom (good picking if you got it currently) and investors with a more patient and longer term view are prepared to what will be poor number. Guidance will be interesting for the FY.
I am more interested on how the transition of all the spend up over last 2 years is going. Really wanting to see this start to show up on the NIM.
I bought in @ $1.06 before FY expecting result and nothing will be interested to see how Management come accross during the result.
Poor lending,hopeless collections resulted in approx $200 mil of suspect loans.
$200 mil cap raise resulted in 200mil more shares being issued,which reduces ROE,EPS,and DPS. .
Paid over the top for Stockco.
They stopped doing what they said they would do.
Crazy as they now have the same issues as when they first listed.
Current CEO was CFO while the current mess was developing,under a board who took their eye off the ball..
The old joke about the next capital raise being sooner than you expected still holds.
Quote from: lorraina on Feb 06, 2025, 12:28 PMPoor lending,hopeless collections resulted in approx $200 mil of suspect loans.
$200 mil cap raise resulted in 200mil more shares being issued,which reduces ROE,EPS,and DPS. .
Paid over the top for Stockco.
They stopped doing what they said they would do.
Crazy as they now have the same issues as when they first listed.
Current CEO was CFO while the current mess was developing.
Agree 100%. Even worse is I saw no evidence in the annual meeting speaches or in questions and answers with management and directors after the meeting really owning their mistakes and acknowledging changes need to be made.
Very pleased I sold out completely and reinvested the proceeds in Turners, up 25% incl divvy just paid, since the annual meeting in late Oct 24 v HGH up 9%
I am expecting the half year result to be an absolute shocker, whereas on the other hand an FY25 guidance upgrade from TRA would not surprise me in the slightest.
Plenty of pain to come from trying to collect hundreds of millions of disclosed doubtful debts and the hundreds of millions more non disclosed and concealed through products like Heartland extend.
Quote from: lorraina on Feb 06, 2025, 12:28 PMPoor lending,hopeless collections resulted in approx $200 mil of suspect loans.
$200 mil cap raise resulted in 200mil more shares being issued,which reduces ROE,EPS,and DPS. .
Paid over the top for Stockco.
They stopped doing what they said they would do.
Crazy as they now have the same issues as when they first listed.
Current CEO was CFO while the current mess was developing,under a board who took their eye off the ball..
The old joke about the next capital raise being sooner than you expected still holds.
Jeez lorriana, coming from that's a pretty damning post
You've been the most loyal of Heartland fans from the early days. Must be a bit shattering for you.
Hard to see them becoming great again eh.
Started going downhill a couple of years ago when the Greenslade Problem became obvious...remember my post not that long ago —
One day, well into Jeff's long and illustrious career, a journalist asked the banker why he wasn't driving great Heartland performance like he used to.
"When Heartland was growing profits I was cold and hungry," said Jeff. "I'm not cold and hungry anymore."
Quote from: Greekwatchdog on Feb 06, 2025, 12:02 PMIts a strange rise given we are set for a poor result and hefty provisions.
Maybe $0.95 was the bottom (good picking if you got it currently) and investors with a more patient and longer term view are prepared to what will be poor number. Guidance will be interesting for the FY.
I am more interested on how the transition of all the spend up over last 2 years is going. Really wanting to see this start to show up on the NIM.
I bought in @ $1.06 before FY expecting result and nothing will be interested to see how Management come accross during the result.
Not sure about "strange". They say the smart money buys when there is plenty of blood on the floor, but then - money is obviously not smart, and while everybody can predict the future, nobody manages to get it in a statistically relevant way right.
So - I suppose the chart clearly shows that somebody has confidence in the stock, and the future will show whether these parties are right or wrong.
Discl: holding, expecting a result roughly matching last year (but yes, always interested to learn some more creative accounting tricks), and relaxed.
While I don't subscribe to "she'll be right"- I am pretty sure with this company it will - and if not this year, then next year or the year after that. Good business (unless they screw up their Australian expansion - yes, this is a risk) and (for the REM's) long term good tailwind.
HGH was not the only "core" stock that I was slow to react to.SPK also caught me out.
Held them in our long term dividend portfolios,so was not watching them closely enough.First HGH warning was when they stated their collections were behind as they had people overseas or sick .Really.??
Luckily I recycled the funds into 2CC,CHI,GFL [Unlisted] and TWR.
Recently when a former director sold down I loaded up of GEN General Capital.
Surprisingly Brent King at GEN knows to lend on good security to safeguard the risk,and to keep an eye on collections.
Who would of thought GEN would be a safer risk than HGH.?.
Quote from: lorraina on Feb 06, 2025, 02:33 PMHGH was not the only "core" stock that I was slow to react to.SPK also caught me out.
Held them in our long term dividend portfolios,so was not watching them closely enough.First HGH warning was when they stated their collections were behind as they had people overseas or sick .Really.??
Luckily I recycled the funds into 2CC,CHI,GFL [Unlisted] and TWR.
Recently when a former director sold down I loaded up of GEN General Capital.
Surprisingly Brent King at GEN knows to lend on good security to safeguard the risk,and to keep an eye on collections.
Who would of thought GEN would be a safer risk than HGH.?.
Not sure, how you measure "safer risk". I guess - no doubt, GEN performed over the last 2 years better than HGH on the stock exchange, however - GEN's SP volatility during that time (and probably before as well) was significantly higher than HGH.s. Isn't high volatility an indicator for high risk?
Better risk profile,lending mainly on short term residential bridging finance.
Stronger growth rate.
Better equity ratio.
Currently have enough capital.
No exposure to Australian risks.,[which also means dividends will be fully imputed]
No exposure to property developers.
No exposure to livestock lending.
No exposure to motor vehicle lending.
No exposure to capital heavy Reverse Equity lending.
More in tune with current lending markets.
PS HGH made a right mess of things in NZ.Imagen the mess they will make in Australia.Bigger country,bigger mess.?
Couple of common themes between badly performing OCA and HGH. Same chairman in Greg Tomlinson, maybe he has too much on his plate, and an increasingly intense focus on all things ESG.
Go woke, go broke or go keep doing lots of capital raises to stop going broke.
Quote from: Basil on Jan 09, 2025, 06:43 PMWhat I learned with Heartland last year is they really are a fair-weather company. They do well when the economy does well and very poorly when the economy tanks. The economy was a lot worse for a lot longer last year than I thought it would be and I got it wrong in 2024 but am grateful to escape with a break-even result.
I guess Geoff's statement many years ago that the fortunes of the company are inextricably tied to the economy is the lesson to never ever forget. Heartland will do okay again one day when the economy starts doing well again and they have cleaned up all the mess from the long and deep recession and their loose lending policies and then in due course when the economy goes into recession again, they will tank yet again.
I have trouble believing an eenvestor as experierced as Basil has only just vigured out zhat Heartland eez a cyclical company. But at least he has acknowledged zhat Heartland vill get through zhis recession to vight another day. Ze reverse mortgage business has ztabalised ze company and vill allow eet to zurvive vhere various lesser vinance companies may not have.
Vehicle lending eez a market ze 'big banks' have zhied away vrom. Zo Heartland has correctly IMO identified a niche vhere zhey can operate. A niche vhere many tradies and zmall business owners have a real need vor Heartland's offering. Yes ze current recession has been longer and deeper zhan many predicted. But you cannot blame Heartland vor zhat.
Basil highlights 'loose lending policies', but vhat is the alternative zolution? Don't lend to tradies and contractors in good times because ze economy at zome part of ze business cycle might collapse? Be a fair veather lender who vill liquidate trade and construction assets at ze bottom of ze market vhen zhere is no-one out zhere to buy zhem? How vould zhat kind of operational policy help Heartland or zheir customers, or zhareholders vor zhat matter?
RB
Quote from: lorraina on Feb 06, 2025, 03:11 PMBetter risk profile,lending mainly on short term residential bridging finance.
Stronger growth rate.
Better equity ratio.
Currently have enough capital.
No exposure to Australian risks.,[which also means dividends will be fully imputed]
No exposure to property developers.
No exposure to livestock lending.
No exposure to motor vehicle lending.
More in tune with current lending markets.
PS HGH made a right mess of things in NZ.Imagen the mess they will make in Australia.Bigger country,bigger mess.?
Look - it is well possible that GEN may or may not do better than HGH in the short to midterm. I don't know. But still not sure whether I would see them as a lower risk. Did you happen to compare the creditratings of both companies?
GEN is rated BB, indicating "an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time;"
HGH on the other hand is rated BBB, indicating "good prospects for ongoing viability. The financial institution's fundamentals are adequate, such that there is a low risk that it would have to rely on extraordinary support to avoid default."
I suppose its just one of these things - GEN is (according to the rating agencies) clearly higher risk, but sure - if things go right, the rewards might be higher. On the other side, if they don't, than it might be not just a lower SP, but capital gone.
There is no free lunch.
Red Barron. Leanne Lazarus told me after the meeting they have no issues with continuing their zero deposit vehicle lending. I warned her unemployment is still trending up and to be more cautious. She and the directors I was talking to at the time expressed absolutely no interest in changing their approach.
Turners by contrast tightened their lending criteria many times during this seemingly endless recession and have put through 12, (that's not a typo) price increases on lending as interest rates increased.
I think it's crystal clear with Turners posting repetitive consequtive recod results in the last 5 years which approach has worked better.
Heartland are as loose as a promiscious Goose with their lending and not interested in changing. Look where that's got shareholders over the last decade, nowhere!
Quote from: Basil on Feb 07, 2025, 09:28 AMRed Baron. Leanne Lazarus told me after the meeting they have no issues with continuing their zero deposit vehicle lending. I warned her unemployment is still trending up and to be more cautious. She and the directors I was talking to at the time expressed absolutely no interest in changing their approach.
Turners by contrast tightened their lending criteria many times during this seemingly endless recession and have put through 12, (that's not a typo) price increases on lending as interest rates increased.
I think it's crystal clear with Turners posting repetitive consecutive record results in the last 5 years which approach has worked better.
Heartland are as loose as a promiscious Goose with their lending and not interested in changing. Look where that's got shareholders over the last decade, nowhere!
Basil, I agree vith you zhat Turners have turned in a better performance zhan Heartaland vor zhareholders over ze time period you are considering. But although zhere may be zome 'crossover at the margins', IMO we are largely talking about 'deeferent markets'.
Vhen you zay:
"Turners by contrast tightened their lending criteria many times during this seemingly endless recession and have put through 12, (that's not a typo) price increases on lending as interest rates increased."
you are talking about 'new lending'? You are not zaying zhat zomeone took out a 'vloating rate loan' on a car vhich zhen increased een eenterest rate twelve times?
A private car vill always vind an alternative buyer eef ze price gets low eenough. IOW zhere eez a good chance of recovering ze debt. But a bulldozer? How low vould ze price have to go before granny buys one to go down to ze zhops?
'Deposit' vs 'Eenterest rate' eez a commercial decision trade off. Many of Heartland's vehicle loans are via new vehicle dealers. Maybe new vehicle dealers are een a better position to recover capital vrom a defaulting new car owner on a new car, zhan Turners vould be vrom a defaulting zecond hand car owner on a zecond hand car?
RB
Quote from: Basil on Feb 07, 2025, 09:28 AMRed Barron. Leanne Lazarus told me after the meeting they have no issues with continuing their zero deposit vehicle lending. I warned her unemployment is still trending up and to be more cautious. She and the directors I was talking to at the time expressed absolutely no interest in changing their approach.
Turners by contrast tightened their lending criteria many times during this seemingly endless recession and have put through 12, (that's not a typo) price increases on lending as interest rates increased.
I think it's crystal clear with Turners posting repetitive consequtive recod results in the last 5 years which approach has worked better.
Heartland are as loose as a promiscious Goose with their lending and not interested in changing. Look where that's got shareholders over the last decade, nowhere!
HGH have always done the riskier side of lending hence their NIM was higher. Higher the risk, higher the chance of loss. Why would you compare a Bank like HGH to TRA who are in Car market? Goodness a little desperate. I do note that when you invested last time @ $1.15 you were quite bullish on all the risks.. Hmmm
Good to see the Dog doubling down on his Menu of Doubt , A la Trump, he's never wrong ! And currently shareprice still not listening, currently $1.15 .
Quote from: Greekwatchdog on Feb 07, 2025, 10:27 AMHGH have always done the riskier side of lending hence their NIM was higher. Higher the risk, higher the chance of loss. Why would you compare a Bank like HGH to TRA who are in Car market? Goodness a little desperate. I do note that when you invested last time @ $1.15 you were quite bullish on all the risks.. Hmmm
HGH always trumped their MARAC Finance as having major franchise dealers as well as only the top second hand car dealers.
Total rubbish.Vehicle financing turned out to be another mess.
Yet Turners avoided such a mess.
Quote from: lorraina on Feb 07, 2025, 11:03 AMHGH always trumped their MARAC Finance as having major franchise dealers as well as only the top second hand car dealers.
Total rubbish.Vehicle financing turned out to be another mess.
Yet Turners avoided such a mess.
Its TRA's market. They better get it right, nothing else to fall back on. Like I said, HGH always been on riskier side of willing to loan. Win some lose some. Simple Math.
Quote from: Greekwatchdog on Feb 07, 2025, 10:27 AMHGH have always done the riskier side of lending hence their NIM was higher. Higher the risk, higher the chance of loss. Why would you compare a Bank like HGH to TRA who are in Car market? Goodness a little desperate. I do note that when you invested last time @ $1.15 you were quite bullish on all the risks.. Hmmm
I've already stated the recession has been a lot longer than I thought it would be. Not sure what part of that requires further explanation...
A large part of Turners business is vehicle lending just like HGH. One has done well out of it, the other has failed miserably. Maybe you should spend some time trying to figure out why that is..
Quote from: Basil on Feb 07, 2025, 12:00 PMI've already stated the recession has been a lot longer than I thought it would be. Not sure what part of that requires further explanation...
A large part of Turners business is vehicle lending just like HGH. One has done well out of it, the other has failed miserably. Maybe you should spend some time trying to figure out why that is..
Its OK Basil, when the time suits you will be back in praising it all and highlighting what great people lead the place. Its your Philosophy
It's quite clear I think they have systemic problems with risk management and management are blind to it so don't hold your breath.
So far today: 6,184,599 shares traded @ VWAP $1.13586 :)
Entertaining as always
IMG_1331.gif
Base is forming for HGH. I suspect reporting will be the catalyst for it either breaking out or pulling back into the base.
Screenshot 2025-02-07 160439.png
Quote from: KW on Feb 07, 2025, 04:05 PMBase is forming for HGH. I suspect reporting will be the catalyst for it either breaking out or pulling back into the base.
Rawz on the other channel wonders whether the recent buying support is preparation for yet another capital raise?
Quote from: Left Field on Feb 08, 2025, 09:34 PMRawz on the other channel wonders whether the recent buying support is preparation for yet another capital raise?
I doubt that but you never know for sure with this board and management. Tomlinson acknowledged after the annual meeting to me that there had been too many capital raises but who knows, they might announce a trade sale of those problematic assets at a huge discount and then raise more capital and try and pretend all their problems are behind them and there would be quite a few gullible investors who might buy that B.S.
It just seems so reckless to keep growing their $1..6 Billion dollar motor vehicle loan book with zero deposit loans when unemployment keeps tracking up What could possibly go wrong lol
It just seems so reckless to keep growing their $1..6 Billion dollar motor vehicle loan book with zero deposit loans when unemployment keeps tracking up What could possibly go wrong lol
[/quote]
Makes me wonder with all this going on why you would trumpet it @ $1.15. Surely someone as skilled as you knew this before you bought in.
Again they have always taken riskier side of lending why the NIM was higher than the Major Banks.
The half year will be awful, it will all be about the start of the 2nd half and what the expectations are for Full Year and beyond. As you quoted many a time, "its always Darkest before Dawn"
I expected them to proactively manage lending risk during the worst recession since the GFC. That's what is reasonable to expect of any bank managing risk in a severe downcycle.
Their ongoing gung-ho approach clearly articulated to me at the annual meeting, after the meeting, in discussions with Leanne Lazurus and three of the directors was breathtaking to say the least. I didn't even have time for a snack or cup of tea, I was so engaged with those parties in after meeting discussions.
I sold out completely shortly after that at break even, reinvesting the capital into Turners who are proactively managing the recession risk very successfully.
When you make a mistake, and everyone does, including you, limiting the downside damage and reinvesting profitably elsewhere as quickly as possible is the key and exactly what I did.
Quote from: Basil on Feb 10, 2025, 10:59 PMI expected them to proactively manage lending risk during the worst recession since the GFC. That's what is reasonable to expect of any bank managing risk in a severe downcycle.
Their ongoing gung-ho approach clearly articulated to me at the annual meeting, after the meeting, in discussions with Leanne Lazurus and three of the directors was breathtaking to say the least. I didn't even have time for a snack or cup of tea, I was so engaged with those parties in after meeting discussions.
I sold out completely shortly after that at break even, reinvesting the capital into Turners who are proactively managing the recession risk very successfully.
When you make a mistake, and everyone does, including you, limiting the downside damage and reinvesting profitably elsewhere as quickly as possible is the key and exactly what I did.
You would hope TRA do it well because all they do is sell cars, I am happy how they have managed that risk during tough times. Comforting for all holders and employees.
As for the mistakes, we learn. little advice you may want to temper expectations on how you look at stocks as you tend to do a lot of shooting when you sell and according to you that stock is a dog blah blah.
You and I have different philsophies on investing which is fine and suspect you have done well. You need to show more consideration to others philosophies as they are not aligned to yours.
And as for Greg T, who you keep taking shots at. You might want to stop. Not a good look and he is a very successful business man.
I call it as I see it. I think the best value forums can provide is where their is a robust debate around all the issues.
Quote from: Basil on Feb 11, 2025, 08:29 AMI call it as I see it. I think the best value forums can provide is where their is a robust debate around all the issues.
OK, I guess what comes around goes around.
I see Chris Flood just sold a parcel.
Quote from: Greekwatchdog on Feb 11, 2025, 03:11 PMOK, I guess what comes around goes around.
I see Chris Flood just sold a parcel.
Well he left the company back in October so says something that he has only sold 20% of his holdings here and still holds ~$2m in the comapny.
HGH trading @ A$1.04 in Aussie = NZ$1.155 :)
Quote from: LaserEyeKiwi on Feb 11, 2025, 03:58 PMWell he left the company back in October so says something that he has only sold 20% of his holdings here and still holds ~$2m in the comapny.
Also says something he sold now rather than below $1. Maybe thought it was getting toppy?
Can we shunt HGH like the bank holdings?
Banks having a bad day on ASX - disappointing earnings
Hope Challenger performing better than Bendigo
From SMH -
Bendigo Bank shares tumbled 17.4 per cent after the regional lender announced a fall in interim cash profit to $265.2 million, below market expectations. The bank also flagged higher funding costs and said investment spending was elevated.
Westpac was 5.5 per cent lower after releasing its first quarter trading update. The other big four banks are all at least 1.5 per cent lower at lunchtime.
Market update: Increase in Heartland Bank impairment expense
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) has today announced an impairment expense of $49.6 million in its New Zealand bank, Heartland Bank Limited (Heartland Bank), for the six-month period ended 31 December 2024 (1H2025). This is in response to the impact of ongoing deterioration in economic conditions in New Zealand, and to derisk and reposition some of the New Zealand bank's lending portfolios.
This impairment expense relates predominantly to arrears within Heartland Bank's Motor Finance and business lending portfolios where collectability of customer arrears has been impacted by continued economic deterioration in New Zealand.
Although this is a substantial increase in impairment expense for Heartland Bank (up from $23.9 million in 1H2024 ), this will significantly derisk and reposition the affected lending portfolios, and is in the long-term interests of the business, its customers and Heartland's shareholders.
The components of the $49.6 million Heartland Bank impairment expense are listed below and detailed later.
1. Write-offs: a $20.2 million impact from writing off arrears, net of expected recoveries. This includes an $12.1 million impact from writing-off arrears greater than 365 days past due in the Motor Finance and Open for Business (O4B) loan portfolios, and $8.1 million of business-as-usual write offs.
2. Specific provisions: $19.4 million specific provisions expense predominantly for Asset Finance and older Business Relationship loan portfolios.
3. Collective provisions: $10.0 million collective provisions expense for the Motor Finance, O4B and Asset Finance loan portfolios.
This New Zealand bank impairment expense will impact Heartland's net profit after tax (NPAT) for 1H2025. Heartland expects 1H2025 NPAT to be in the range of $2 million to $5 million, subject to completion of the 1H2025 interim review by Heartland's external auditors, which is substantially progressed.
Heartland Bank remains well capitalised with a total capital ratio of 14.8% as at 31 December 2024 and strong liquidity. The credit quality of its Reverse Mortgage and Livestock Finance portfolios remains strong.
The Australian bank, Heartland Bank Australia Limited, is unaffected and continues to perform well. Growth has returned in its Livestock Finance portfolio, while strong growth continues in its Reverse Mortgage portfolio. The transition from mostly wholesale funding to a wholesale and deposit funding mix is progressing well.
While the Board is yet to declare an interim dividend, its current expectation is that the increased Heartland Bank impairment expense will not prevent Heartland from paying an interim dividend. The quantum of any dividend to be declared in respect of 1H2025 will be carefully determined by the Board based on Heartland's capital needs, return on equity accretive growth opportunities, balance sheet flexibility and financial performance.
Impact of the recessionary operating environment
As anticipated by Heartland in recent market announcements, economic volatility in New Zealand has continued into the financial year ending 30 June 2025 (FY2025). During 1H2025, New Zealand economic conditions have significantly deteriorated. The latest GDP data from Stats NZ reveals a 1.0% fall for the September 2024 quarter. Taken together with a significant restatement of the June 2024 quarterly GDP result which saw the New Zealand economy shrink by 1.1%, this represents the largest six-month fall in GDP since mid-1991, excluding the COVID-19 period.
The magnitude of this recent contraction is reflected in other macroeconomic indicators, with unemployment in New Zealand rising to a four-year high of 5.1%, financial hardships up 19% year-on-year, and company liquidations in New Zealand up 39% year-on-year . Within the market, consumer defaults increased by 39% annually compared with 28% at June 2024, while business defaults increased 22% annually compared with 5% at June 2024.
Construction and manufacturing are two of the sectors most affected by the recent deterioration – both are sectors Heartland Bank supports within its Asset Finance, O4B and older Business Relationship lending.
The continuing deterioration of economic conditions in New Zealand, particularly over 1H2025, is ultimately impacting the ability of Heartland Bank's Motor Finance, O4B, Asset Finance and Business Relationship customers in arrears to repay.
In response to this, Heartland Bank has increased provisions across affected portfolios and is writing off Motor Finance and O4B loans greater than 365 days past due (net of anticipated recoveries) in 1H2025.
Write-offs
The $12.1 million net impact from writing off all arrears greater than 365 days past due in Heartland Bank's Motor Finance and O4B loan portfolios constitutes a $27.2 million write-off of these loans, less an $11.2 million release of collective provisions held against these loans, and an assumed $3.9 million recovery from continued collections efforts. Of these arrears being written off, 77% are Motor Finance loans and 23% are O4B loans.
Writing off these arrears is expected to result in Heartland Bank's non-performing loan (NPL) ratio decreasing from 3.65% as at 30 June 2024 to 3.40% as at 31 December 2024 and will enable more resources to continue to focus on addressing earlier stage arrears.
The $8.1 million in business-as-usual write-offs, net of expected recoveries, is across Heartland Bank's lending portfolios. This compares with $8.5 million in the six-month period to 30 June 2024.
Specific provisions
The $19.4 million specific provisions expense is predominantly for Asset Finance and older Business Relationship lending within the transport, construction, forestry and agriculture sectors, where the probability of recovery has reduced substantially since June 2024. This increase reflects the impact of the current economic deterioration on trading conditions in these sectors, security valuations, and overall recoverability prospects of NPLs within these portfolios.
The majority (69%) of these loans were originated prior to Heartland Bank updating its lending standards in 2020 and are loans which Heartland Bank no longer writes.
Collective provisions
The $10.0 million collective provisions expense is due to the impact of the prolonged recessionary environment on loans within Heartland Bank's Motor Finance, O4B and Asset Finance portfolios. In particular, the economic deterioration for business lending (with reference to the increased rate of liquidations and receiverships in New Zealand) has resulted in an increase in estimated probabilities of default and an increase in the resulting loss. These are key inputs applied to model collective provisions.
Changes to Heartland Bank's collections, recoveries and write-off strategies
Heartland Bank had historically taken a supportive and judgement-based approach to helping customers in arrears repay their loans, particularly through the COVID-19 period. This approach had worked well, particularly during more stable economic conditions and due to the markets Heartland Bank served. As the economy has deteriorated and Heartland Bank has grown, its arrears management practices, while remaining supportive, require a more proactive and prescriptive approach.
As a result, Heartland Bank has enhanced its collections, recoveries and write-offs strategies for its Motor Finance portfolio. Changes have included the adoption of a more prescriptive repossession policy. This sees Heartland Bank implement recovery action sooner in the collections cycle for customers in arrears unable or unwilling to work with Heartland Bank to develop corrective solutions. Recovery rate improvements are already flowing through.
Heartland Bank has also implemented a prescriptive write-off policy which requires write-off decisions to be made no later than the point at which a loan becomes 180 days past due and the repossession process has been completed, if not earlier.
Rather than mainly managing recovery activity internally, Heartland Bank is now engaging with debt collection agencies immediately post-write-off to enhance subsequent recovery.
Simultaneously, in Heartland Bank's older Business Relationship and older Rural Relationship portfolios, changes to risk-grading, security valuations, Heartland Bank's restructuring policy, and the strategy and timing of intervention measures are underway to strengthen NPL management.
Looking forward
While there may be some positive economic tailwinds emerging in New Zealand during the second half of FY2025 (2H2025) from further interest rate reductions and a consequential increase in credit demand, it is expected economic conditions for New Zealand consumers and businesses will remain challenging. In particular, Heartland Bank expects trading conditions within the forestry, transport, agriculture and construction sectors to remain challenging through 2H2025. Heartland Bank will continue to proactively work with impacted customers.
With all future arrears in the Motor Finance and O4B portfolios managed under the new 180-day write-off policy, Heartland Bank is proactively managing Motor Finance and O4B loans currently between 180 and 364 days past due. Combined with the write-off of all Motor Finance and O4B loans greater than 365 days past due, this is expected to result in no arrears for this cohort by 30 June 2026.
If conditions deteriorate further than what is currently anticipated and provisioned within Heartland Bank's lending portfolios, then additional losses could result in 2H2025, of up to $8 million in write-offs (in addition to what is considered business as usual) and up to $5 million in specific provisions.
Heartland will report on its 1H2025 financial results, and provide a NPAT guidance range for FY2025, on 27 February 2025.
Heartland will hold an investor briefing at 11am NZDT today (18 February 2025) to discuss this announcement. Register to attend the briefing here: https://ccmediaframe.com/?id=IMC96OAT.
Jeez that's terrible .....so 'untruths' at the AGM.
This is even worse than what Basil was saying
But take comfort this 'signicantly derisks' the portfolio so all hunky dory
All those references to 365 days seem to suggest all of this is forced and the strategy is close your eyes and cross your fingers :o
Good Lord... What a woeful update. People need to be held accountable for the decisions leading to what is going to be an horrific FY25 result.
Heartland are still on my watchlist. Only because I sold out in Aug 22 at $1.85. I was getting disillusioned in their focus on ESG / DEI.
Inevitably the SP continued to climb after my sale. But then a peak was reached and it has been a downhill slide ever since then.
The more I look at DEI, the more I see companies being distracted from their core business. DEI creates numbers that divert form key business metrics.
Clearly there are more reasons that DEI for SP decline. But I find it quite a useful measure.
Wow this is shocking. And like Winner, I can't believe some of the wording they've used... "derisk and reposition the affected lending portfolios" that is some cheek
No worries half year announcement will read like this
Heartland reports Underlying NPAT of $50,7m, a decrease of $2.0m on H124. Reported NPAT was $3.0m
So all hunky dory
Quote from: BlackPeter on Feb 06, 2025, 02:54 PMNot sure, how you measure "safer risk". I guess - no doubt, GEN performed over the last 2 years better than HGH on the stock exchange, however - GEN's SP volatility during that time (and probably before as well) was significantly higher than HGH.s. Isn't high volatility an indicator for high risk?
Quote from: BlackPeter on Feb 07, 2025, 09:15 AMLook - it is well possible that GEN may or may not do better than HGH in the short to midterm. I don't know. But still not sure whether I would see them as a lower risk. Did you happen to compare the creditratings of both companies?
GEN is rated BB, indicating "an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time;"
HGH on the other hand is rated BBB, indicating "good prospects for ongoing viability. The financial institution's fundamentals are adequate, such that there is a low risk that it would have to rely on extraordinary support to avoid default."
I suppose its just one of these things - GEN is (according to the rating agencies) clearly higher risk, but sure - if things go right, the rewards might be higher. On the other side, if they don't, than it might be not just a lower SP, but capital gone.
There is no free lunch.
HGH result compared to GEN's update [28th January] is like the difference between chalk and cheese.
Wonder what HGH's next credit rating will look like.
Ugly.?
Quote from: lorraina on Feb 18, 2025, 10:07 AMHGH result compared to GEN's update [28th January] is like the difference between chalk and cheese.
Wonder what HGH's next credit rating will look like.
Ugly.?
Mmh - no doubt, update was not flash. Will it impact the credit rating? I guess it depends whether the rating agencies believe that this write off of bad debts was sufficient, or whether they expect more to come.
At this stage they are still profitable ... but yes, the margin of safety is getting thinner.
I warned at great length after attending the annual meeting and also several times subsequently, the first half would be an absolute shocker.
Honestly the caliber of management in terms of risk management is, as previously articulated, very poor.
I am not surprised by this appalling bad update. Plenty more pain to come as they try and realise their so called non strategic assets.
Quote from: KW on Feb 07, 2025, 04:05 PMBase is forming for HGH. I suspect reporting will be the catalyst for it either breaking out or pulling back into the base.
Screenshot 2025-02-07 160439.png
Well, guess that answers that question. Back into the downtrend it goes. This is NOT an opportunity to "average down" your holding.
Note to Heartland re their outstanding collections for motors, they may want to do a walk around of the Auckland International Airport long term car park for ex-Ubers ....
"the estimated number of non-NZ citizens who departed long-term increased from 4264 in December 2023 to 6357 in December 2024 (+49%)."
I'm tuned in for the 11am conference call. It will be interesting to see if Tomlinson shows up or if Andrew Dixson is left to carry the can alone.
No mention of NON STRATEGIC ASSETS ...hmmm
Quote from: Pierre on Feb 18, 2025, 10:59 AMI'm tuned in for the 11am conference call. It will be interesting to see if Tomlinson shows up or if Andrew Dixson is left to carry the can alone.
My bet is Mr Tomlinson will not make an appearance. His hollow words at the annual meeting to the effect of, we know the last years results are not good enough and we need to do better are still fresh in my mind.
Quote from: winner (n) on Feb 18, 2025, 11:02 AMNo mention of NON STRATEGIC ASSETS ...hmmm
That's a separate lot of special pain to come that's waiting in the wings.
Notice in the announcement that the auditors are most of their way through the process. Guess who forced them to make these new write-downs?
Andrew Dixson mumbled through the analyst briefing ...totally unconvincing performance
Going to cover a lot through half year announcement
2028 still seems to be on lol
I don't feel particularly reassured following the conference call at which Tomlinson was conspicuously absent.
TRA has been operating in the same economic environment as Heartland but with a markedly different outcome.
HBL has been operating as an extremely loosely run finance company with little evidence of any normal banking discipline in its operations.
And I'm not convinced their proposed changes to credit management are going to be very much better, but time will tell.
Fortunately, the Reverse Mortgage business is going well and has a strong runway ahead. It's a cash intensive operation though, so I hope it can continue to be funded from bank deposits in Oz rather than a call on shareholders.
What will the dividend be for this half? Probably should be zero, but they will probably throw a couple of cents per share to pacify the justifiably upset shareholders.
crickey Heartland continue to appear to be making up their own rules when it comes to write downs, I believe in a continued manor to make it supposedly easier to stomach their terrible loan book.
So if I read correctly they currently write off car loans when over 365 days due and are shifting to 180 days, will that tells me, given the economy in the last 365 days and that heartland over that time continue to give 100% financing to vehicle loans that there is a heap more loan write off's coming
I lost count of how many times legacy and pre-2020 was mentioned in analyst call
Jeez that's 5 years ago
What's happening now almost criminal and a lesson in how not to run a bank
In spite of the reassurances I betcha there's 'hidden' / 'unknown' problems in Oz.
"There are known knowns, things we know that we know; and there are known unknowns, things that we know we don't know. But there are also unknown unknowns, things we do not know we don't know."
Author: Donald Rumsfeld.
As I said after the annual meeting, management do NOT impress me. Leanne Lazurus especially. She sees no issues whatsoever writing new 5 year motor vehicle loans on zero deposit in a rising unemployment market. Nothing has been learned from past mistakes. The current group CEO was there all the while during the process of helping them create the mess they're in.
Reverse mortgage business is the one and only part of the business I like.
Quote from: Basil on Feb 18, 2025, 12:36 PMAs I said after the annual meeting, management do NOT impress me. Leanne Lazurus especially. She sees no issues whatsoever writing new 5 year motor vehicle loans on zero deposit in a rising unemployment market.
Nothing has been learned from past mistakes.
Reverse mortgage business is the one and only part of the business I like.
That seems insane. Are customers being charged significantly more for the vehicle to cover this risk?
This has been coming down the line for a long time, truth be told. Management arrogance and economy with the truth. Cavalier decision making. Contempt for the smaller investor. Expansion during a recession. Grandiose visions without doing the homework. I could go on and did. Heading towards 90c. Sad day for investors but the real shame is that there is no acceptance that Management took their eye of the ball. They are still playing investors for idiots. Shameful.
Quote from: lorraina on Feb 18, 2025, 12:32 PM"There are known knowns, things we know that we know; and there are known unknowns, things that we know we don't know. But there are also unknown unknowns, things we do not know we don't know."
Author: Donald Rumsfeld.
"It aint what you dont know that gets you into trouble, is what you know for sure that just aint so". Mark Twain
Don't buy shares in a downtrend, in the belief the market is wrong and you are right.
Quote from: Basil on Feb 18, 2025, 10:36 AMI warned at great length after attending the annual meeting and also several times subsequently, the first half would be an absolute shocker.
Honestly the caliber of management in terms of risk management is, as previously articulated, very poor.
I am not surprised by this appalling bad update. Plenty more pain to come as they try and realise their so called non strategic assets.
Bloody great call Beagle.
Good work sniffing that one out in advance
Quote from: KW on Feb 18, 2025, 01:07 PM"It aint what you dont know that gets you into trouble, is what you know for sure that just aint so". Mark Twain
Don't buy shares in a downtrend, in the belief the market is wrong and you are right.
Nothing wrong with buying shares in a downtrend if there's a disproportionate impact on the share price compared to intrinsic value.
No clue about HGH though.
Quote from: ValueNZ on Feb 18, 2025, 02:42 PMBloody great call Beagle.
Good work sniffing that one out in advance
Thanks. Just keeping my nose to the ground and sniffing out what's a good feed and what's corporate B.S.
QuoteThat seems insane. Are customers being charged significantly more for the vehicle to cover this risk? Minimoke
Gross recklessness and the answer is No, they're not charging more.
Some good discussion on the other channel today which is food for thought. This post by Rawz stood out.
QuoteNo Snoopy, take the rose tinted glasses off mate. This shocking result is a direct result of dumb products like Heartland extend and in general a very poor business writing strategy. They completely lost their way and forgot the fundamentals of asset finance lending. However it now looks like they have seen the light and changing their ways: 'Heartland Bank had historically taken a supportive and judgement-based approach to helping customers in arrears repay their loans..... As the economy has deteriorated and Heartland Bank has grown, its arrears management practices, while remaining supportive, require a more proactive and prescriptive approach. As a result, Heartland Bank has enhanced its collections, recoveries and write-offs strategies for its Motor Finance portfolio. Changes have included the adoption of a more prescriptive repossession policy. This sees Heartland Bank implement recovery action sooner in the collections cycle for customers in arrears unable or unwilling to work with Heartland Bank to develop corrective solutions. Recovery rate improvements are already flowing through'
There were warning signs 18 months ago that this day was coming. I posted a lot about Heartland extend and how it was covering up bad accounts. Also remember the crap story about the debt collections team being on holiday or sick leave etc....
Anyways, they have flagged another $8m in write offs and $5m of specific provisions if the economy doesnt pick up. I would say it is highly likely these are added in the 2nd half. Todays write offs only reduce non performing loans from 3.65% to 3.40%.. if you believe they wrote a whole bunch of bad historic loans, then you should conclude that there is still more crap on the books that will never be repaid
Not much of a reduction is it ! Plenty more pain to come.
Suggestions on the other channel that Heartland extend has been used to conceal delinquent loans for several years. Amazing how the former CEO was able to predict the profit a full year ahead and get it right so many times to appear to "earn" his enormous bonus's each year. It turns out that it could be the case that Heartland "extend" was used to manipulate the level of loan provisioning and the profit figure to whatever he wanted it to be. Hmmm
If this was the case as has been alleged, and I think there's solid grounds for thinking this has been going on, the mind boggles as to where was the board in providing oversight on this and the auditors seemed to overlook this method of delinquent loan concealment as well?
Whatever is the case, I think there's truckloads more skeletons to come out of the closet.
Only the very foolish or naive would think ALL their problems are behind them now and its all onward and upward from here.
Hey Basil ....didn't they give the impression at 5he AGM that all 'bad' stuff had been provided for (in full?) ...but then Greg ran out of time lol
For Bars review
Heading into Heartland Group's (HGH) 1H25 result we thought there were downside risks, but the pre-announcement of a ~-NZ$50m impairment charge and 1H25 NPAT guidance of NZ$2m–$5m was worse than expected. Significant impairments in motor and business lending are disappointing, especially given the known economic softness and the lack of further material deterioration in the economy since HGH's late-November 2024 update. Rising costs have also pressured profitability. This update has shaken market confidence in HGH, and rebuilding trust will take time. With its recent impairment track record and lending exposure to the soft NZ economy, risks remain skewed to the downside. Despite trading at ~8x 24-month forward PE, we retain NEUTRAL.
What's changed?
Earnings: Underlying NPAT down -53%/-28%/-16% over FY25/FY26/FY27 on increased opex and near-term impairment expenses
Target price: Reduced -15cps (-14%) to NZ$0.95 from NZ$1.10 given reduced earnings and dividend estimates.
The weak NZ economy may explain the impairments, but it was a known
HGH stated the impairments were due to the 'ongoing deterioration in economic conditions in NZ'. But 85% (NZ$35m) of the non-BAU impairments have come about since its last market update in late November 2024. While there is no doubt economic conditions in NZ have been soft, they have not dramatically weakened over the past two to three months and the economic downturn has been well known. The impairments raise concerns about HGH's systems and policies; concerns that cannot be erased overnight.
Opex looks to have stepped up and will stay higher
The other key driver of the weak 1H25 guidance relative to expectations appears to be higher costs. HGH's NZ bank reported to the RBNZ 1Q25 opex of NZ$30.5m, up +16% year-on-year. HGH stated that: (1) it is investing heavily to improve its collection processes, and (2) it expected costs to remain around these levels. We forecast total opex up +34% year-on-year for 1H25 and +31% for FY25.
More colour needed to provide the market with confidence in the earnings trajectory
The market's confidence in HGH is severely dented. To rebuild this, we believe it needs to: (1) provide more colour on the size and performance (non-performing loan ratio) of its legacy (pre-2020) book vs more recent lending—the latter will need to show better performance vs the former, (2) return to a more business-as-usual (BAU) impairment level, and (3) exit this period of elevated cost growth. We see it taking time for management to show this, and for the market to regain confidence in the growth story. However, once HGH is past the worst, we it expect it will re-rate upwards. Despite depressed valuation versus history, we retain NEUTRAL.
1H25 result preview
HGH's 1H25 NPAT guidance of NZ$2m–$5m implies PBT down ~-NZ$46m versus 1H25. HGH has indicated impairment expenses will be up +NZ$25.5m on 1H24, leaving the remaining ~NZ$20m to be explained by cost growth and/or net interest income declines, both a further negative from its update. HGH will report its 1H25 result on Thursday, 27 February. Our key focus areas are:
FY25 guidance: HGH has indicated it will provide NPAT guidance at its interim result. Following our downgrades, we forecast FY25 underlying NPAT of NZ$45m. Consensus prior to its announced impairments was ~NZ$103m.
Medium-term target: HGH has an ambition to achieve NZ$200m of underlying NPAT in FY28, we expect HGH to provide an update on this target at its 1H25 result. We see this target as unlikely to be achievable following its cost base increase. Our FY28 NPAT estimate is NZ$145m.
Net interest margins (NIM): HGH reiterated it expects to exit FY25 with a NIM of >4.0% at its late-November 2024 update. A reiteration of this would be a modest positive versus our expectations.
Cost base: We expect a strong step up in costs in 1H25 to NZ$89m, up +34% year-on-year and +31% versus 2H24. HGH will likely invest strongly into both its Australian and NZ banks. The market will welcome������� an indication of when cost growth will moderate again.
Dividend: We were surprised by HGH's indication that it still intends to pay an interim dividend following its impairment announcement. We decrease our estimate to NZ0.5cps for 1H25 and NZ2.5cps for FY25. While there is signalling value in the dividend, retaining capital in the business to help fund future growth (as opposed to raising equity) would be more prudent in the circumstances.
Earnings changes
We make material downgrades across our forecast horizon with a higher cost base being the largest driver of our medium-term downgrades. Increased impairment expenses in the near term exacerbate the FY25 and FY26 downgrades. We now forecast FY25 impairments of ~NZ$69m, slightly below HGH's indicated ~NZ$71m 'worst case' scenario, incorporating the majority of the further NZ$13m of impairments HGH indicated would be needed if conditions worsen in 2H25. We continue to forecast above BAU impairments in FY26 (~NZ$36m) before returning to a more normal expense in FY27. We also slightly moderate our NIM estimates.
Thanks for sharing. That's a damming review note. Basically, a SELL. Target price of 95 cents one year hence is basically 80 cents now given all the apparent risks and unknown risks and the time value of money.
I was also concerned at the annual meeting about Leanne Lazurus's indications of cost increases. Not sure if I articulated that properly in my post AGM review note.
Continuing to cling to their fanciful dream of $200m in FY28 does nothing to add to the credibility of the board or management, quite the opposite and shows they are not taking ownership of the size of the problems they face now or the operational weaknesses in their lending approval and collections systems.
I am just now getting a feel for the numbers that were eluded to at AGM time, and still now don't feel given much insight to where the arrears under 180 days exactly sit, but maybe the next 6 months of the NZ economy might bite a bit more yet to where the analysts are quantifying this, 95c value by June might be a bit optimistic to me at the best end of my predictions at this stage. Having a bit of a think of the foresight on why the board structure may have been adopted, certainly rotten apples can affect the whole bin comes to mind, perhaps it was a somewhat wise move.
Disclosure left holding a minimal holding <1% of portfolio, wishing I had set a SP around a week ago at $1.08, think I will await what happens now.
The first red flag about how Heartland was going was when they had an 'abnormal' item of $17m being that fe-designation relating to hedging
At the analyst briefing they mumbled through what this really was....and gave the impression they really had no idea but the auditors made them do it
Been downhill since then
Can't help wondering if most or all subsequent write-downs have been also been at the behest of the auditors?
Will this be a another sml opportunity at some point? And at what price?
Quote from: mike2023 on Feb 19, 2025, 04:11 PMWill this be a another sml opportunity at some point? And at what price?
You suggesting capital raise at 50 cents?
Quote from: winner (n) on Feb 19, 2025, 04:45 PMYou suggesting capital raise at 50 cents?
They'll have to be careful not to do this too close to the pending OCA capital raise at that price lol
Quote from: winner (n) on Feb 19, 2025, 04:45 PMYou suggesting capital raise at 50 cents?
No I was thinking buy at 26 cents.
Quote from: mike2023 on Feb 19, 2025, 04:11 PMWill this be a another sml opportunity at some point? And at what price?
Not enough CCP involvement - and actually, the interest drop might help them to crawl out of the hole they did dig for themselves.
People will have more money at hand to serve their distressed motor credits ...
TA suggests HGH will run down to 61c and loiter for a while, unless something else bad happens.
HGH_2025-02-20_09-00-27~2.png
Something else bad? I thought we had a list? Credit raise, more bad debts, maybe a pink font?
Quote from: mike2023 on Feb 20, 2025, 09:54 AMSomething else bad? I thought we had a list? Credit raise, more bad debts, maybe a pink font?
If we know and have a list then it's priced in.
HGH invested in Harmoney a while back.
HMY.asx is largely an unsecured lender charging rates 10%+.
They just reported HY today, key item:
Improved credit performance: Credit losses down to 3.7% from 4.2%, with low arrears at 0.64%
How on earth does HMY get through the recession with write offs shrinking and low arrears. Just goes to show how poor HGH lending systems were
Their systems are still appallingly bad as is their risk mis-management.
I'd go so far as to say the best thing they. can do for shareholders is to stop all lending apart from reverse mortgages and wind the book down and fire two thirds of the staff.
Everything apart from reverse mortgages is just a bloody train wreck.
Quote from: Rawz on Feb 20, 2025, 10:11 AMHGH invested in Harmoney a while back.
HMY.asx is largely an unsecured lender charging rates 10%+.
They just reported HY today, key item:
Improved credit performance: Credit losses down to 3.7% from 4.2%, with low arrears at 0.64%
How on earth does HMY get through the recession with write offs shrinking and low arrears. Just goes to show how poor HGH lending systems were
Are you zure you are reading zhose announcments right? Ze Heartland announcment reads (and I quote)
---------------------
Writing off these arrears is expected to result in Heartland Bank's non-performing loan (NPL) ratio decreasing
from 3.65% as at 30 June 2024 to 3.40% as at 31 December 2024 and will enable more resources to continue to focus
on addressing earlier stage arrears
----------------------
Zo even
before ze latest Heartland writedown, non-performing loans vere in better shape at Heartland (3.65%) zhan Harmoney non-performing loans are today (3.7%)
RB
RB, what i am saying is HMY write offs during the recession is shrinking vs HGH increasing dramatically.
HMY systems are clearly on point. Writing good credit. HGH motor and asset lending is clearly terrible.
One would think it would be the opposite. I.e. how does a non secured lender with 9% NIM achieve better credit outcomes than HGH..
Quote from: Cod on Feb 20, 2025, 09:04 AMTA suggests HGH will run down to 61c and loiter for a while, unless something else bad happens.
HGH_2025-02-20_09-00-27~2.png
61 cents is all they're worth and only if they fire half the clueless overpaid Muppets in management.
Quote from: Rawz on Feb 20, 2025, 10:44 AMRB, what i am saying is HMY write offs during the recession is shrinking vs HGH increasing dramatically.
HMY systems are clearly on point. Writing good credit. HGH motor and asset lending is clearly terrible.
Harmoney made no comment on zheir write offs een zheir announcment. HGH had write offs of $50m. No-one is zaying ze Heartland announcement eez good. But another vay of looking as zhis eez to say Heartland are being realistic about vhat they can collect, vheras Harmoney are choosing not to zhink about it.
Quote from: Rawz on Feb 20, 2025, 10:44 AMOne would think it would be the opposite. I.e. how does a non secured lender with 9% NIM achieve better credit outcomes than HGH..
It didn't. As I zaid before Credit losses at Harmoney 3.7%. Credit losses at Heartland 3.65% (prior to any write off adjustment). I.e. Heartland credit losses vere less.
RB
RB, it is because HMY write offs are BAU..
Quote from: Red Baron on Feb 20, 2025, 11:37 AMIt didn't. As I zaid before Credit losses at Harmoney 3.7%. Credit losses at Heartland 3.65% (prior to any write off adjustment). I.e. Heartland credit losses vere less.
RB
HMY NIM 9% vs HGH 4%. HMY credit losses should be far far higher than HGH. HGH not charging for the risk?
Quote from: Rawz on Feb 20, 2025, 10:11 AMHow on earth does HMY get through the recession with write offs shrinking and low arrears. Just goes to show how poor HGH lending systems were
Oh, thats easy.
Harmoney has a highly diversified funding panel with warehouses being provided by three of the "Big 4" banks across Australia and New Zealand With $900M at risk, the big banks are peering over HMY's shoulder and making sure they have good lending practices. Who provides oversight of HGH?
Quote from: Rawz on Feb 20, 2025, 11:49 AMRB, it is because HMY write offs are BAU..
Ze norm vith vinance companies eez to have a 'provision for bad debts' against vhich 'annual bad debt expenses' are 'written off'. You are zaying zhat Harmoney does zhings differently? Please explain.
RB
Quote from: Rawz on Feb 20, 2025, 11:50 AMHMY NIM 9% vs HGH 4%. HMY credit losses should be far far higher than HGH. HGH not charging for the risk?
Vith hindsight, vhich eez vhere zhese 'one off impairment expenses' come in, I vould agree vith you. However at Heartland ze risk base has now been reset.
RB
Quote from: Red Baron on Feb 20, 2025, 06:38 PMVith hindsight, vhich eez vhere zhese 'one off impairment expenses' come in, I vould agree vith you. However at Heartland ze risk base has now been reset.
RB
I am somewhat surprised that you would "buy" the latest B.S. they are spinning.
Quote from: Basil on Feb 20, 2025, 06:43 PMI am somewhat surprised that you would "buy" the latest B.S. they are spinning.
Deed I zay I bought ze reset? No, I just reported vhat they did. Vhether the reset eez adequate, time vill tell. But eet zounds like chasing up 'motor vehicle' and 'Open for Business' loans, vhere zhere has not been a payment made vor more zhan a year eez probably not a good use of Heartland ztaff time. Best to vocus zhat ztaff time on loans 'less overdue' zhan zhat.
However, ze counter point to your comment Basil eez, eef you zuggest zhat ring fencing out loans more zhan a year overdue eez not adequate, vhere vould you build your, "This position is adequate' vence?
RB
Da zeitgeist hat sich nicht geändert....
Quote from: Red Baron on Feb 20, 2025, 07:00 PMHowever, ze counter point to your comment Basil eez, eef you zuggest zhat ring fencing out loans more zhan a year overdue eez not adequate, vhere vould you build your, "This position is adequate' vence?
RB
No idea really because their entire non reverse ledger is such dark and murky waters, and they are so incredibly economical with the truth.
Quote from: Red Baron on Feb 20, 2025, 06:33 PMZe norm vith vinance companies eez to have a 'provision for bad debts' against vhich 'annual bad debt expenses' are 'written off'. You are zaying zhat Harmoney does zhings differently? Please explain.
RB
Lol okay. Yes I understand how it works.
Not sure why you are refusing to acknowledge my original point.
Perhaps you will believe the market, if not me.
HGH release update- market sends it down 16%
HMY release HY25- market sends it up 26%
A long recovery from these levels, 86 cents, Ouch. Just not worth the wait anymore and big wakeup call for everybody especially (mis)management. traded out and into TRA just before the upgrade so happy !
Yeap, TRA up 33% since the HGH annual meeting in late October and HGH down 15%. A 48% difference in relative performance. Very pleased I am blessed to have the nose to sniff out the difference between quality and rubbish which I clearly articulated on here. I think the institutions have had enough of the B.S. coming from the board at HGH and its headed down to fresh new decade lows over the next few months.
Heartland will report on its 1H2025 financial results, and provide a NPAT guidance range for FY2025, on 27 February 2025.
Wonder what that 'guidance range' will be?
If the likes of Bendigo any indication one shouldn't be surprised if Challenger result a bit weak. Jeez what will happen then.
Next Thursday more colour around real performance
Quote from: winner (n) on Feb 21, 2025, 06:29 PMHeartland will report on its 1H2025 financial results, and provide a NPAT guidance range for FY2025, on 27 February 2025.
Wonder what that 'guidance range' will be?
If the likes of Bendigo any indication one shouldn't be surprised if Challenger result a bit weak. Jeez what will happen then.
Next Thursday more colour around real performance
They gave color on the Australian operations in the announcement last week:
"The Australian bank, Heartland Bank Australia Limited, is unaffected and continues to perform well. Growth has returned in its Livestock Finance portfolio, while strong growth continues in its Reverse Mortgage portfolio. The transition from mostly wholesale funding to a wholesale and deposit funding mix is progressing well."
Reverse mortgages still growing rapidly - will soon be the majority of company assets.
As forewarned, an absolute shocker. Expenses and impairments up in a profoundly shocking way.
More pain to come is my call through the second half and into FY26.
https://api.nzx.com/public/announcement/447501/attachment/438538/447501-438538.pdf
Great that even though there's ostensibly no earnings per share, they're giving people back 2 cents of the $1 capital raise last year and keeping them onside for the next capital raise. That's one clever thing they've done.
Quote from: LaserEyeKiwi on Feb 24, 2025, 06:06 PMThey gave color on the Australian operations in the announcement last week:
"The Australian bank, Heartland Bank Australia Limited, is unaffected and continues to perform well. Growth has returned in its Livestock Finance portfolio, while strong growth continues in its Reverse Mortgage portfolio. The transition from mostly wholesale funding to a wholesale and deposit funding mix is progressing well."
Reverse mortgages still growing rapidly - will soon be the majority of company assets.
And the 'colour' of result is lower NPAT than pcp
No progress that I can see on realizing their so called non-strategic assets so expect huge write-downs to come on them in due course. Sticking with their underlying profit nonsense just keeps losing them credibility in my opinion as all costs incurred are just normal matters across the bottom of the economic cycle and as they try and build things in Australia. They can highlight the extra costs incurred but this underlying profit thing they started a few years ago is just creative accounting pure and simple. Maybe they do reported profit of about $30m this year, (about 3 cps). Maybe they report a huge loss for the full year if they dump their delinquent debts, (NSA's) in a trade sale, and take more losses on problematic parts of their loan book, who knows. Loan growth is slowing and expense growth and bad debt write-offs is growing exponentially. Some holders will be hoping the worst is behind the company. I think they're FAR too optimistic hoping that. Lots more skeletons in the closet that the previous CEO hid away so he could bank his enormous annual bonuses. Just as well shareholders can rely on the current management team to take a far more prudent approach to risk management going forward...oh wait, that's right, they can't....
Read the preso and listened to the Q&A at the briefing
Conclusion .....they all are suffering from a bad case of delusional optimism
You'd have to take anything they say with a grain of salt
Quote from: Basil on Feb 27, 2025, 11:34 AMNo progress that I can see on realizing their so called non-strategic assets so expect huge write-downs to come on them in due course. Sticking with their underlying profit nonsense just keeps losing them credibility in my opinion as all costs incurred are just normal matters across the bottom of the economic cycle and as they try and build things in Australia. They can highlight the extra costs incurred but this underlying profit thing they started a few years ago is just creative accounting pure and simple. Maybe they do reported profit of about $30m this year, (about 3 cps). Maybe they report a huge loss for the full year if they dump their delinquent debts, (NSA's) in a trade sale, and take more losses on problematic parts of their loan book, who knows. Loan growth is slowing and expense growth and bad debt write-offs is growing exponentially. Some holders will be hoping the worst is behind the company. I think they're FAR too optimistic hoping that. Lots more skeletons in the closet that the previous CEO hid away so he could bank his enormous annual bonuses. Just as well shareholders can rely on the current management team to take a far more prudent approach to risk management going forward...oh wait, that's right, they can't....
Well, not sure how you read page 9 of the presentation, but for me this looks like they had some progress in realizing the NSA's? 14% down, and this does not look like write offs. As well, the remaining NSA's don't sound that bad to me like you try to convey. Even if it might be difficult to recover 100% of some of their home and farm loans given at the property high days, it does not mean that all is lost.
As well positive to see that most of their loans are in the South Island. Other than in Auckland are property prices in the South already going up again. Just looking at our (semirural) property - the GV went up by nearly 5% from Sept 21 to Sept 24.
Overall - yes, not a flash result, but as per forewarning and expected. Markets haven't been caught surprised - the bad news was already priced in.
Sun will keep rising tomorrow, and, I am sure, as well over the Heartland :) ;
Like Balance on the other channel, I couldn't be bothered wading through all their presentation riddled with half-truth's, corporate B.S. and self-congratulatory praise. It's nauseating to say the least.
Like Winner above, I don't trust anything they say and neither does the market with the shares now trading at an all-time low which speaks for itself. You have to go back to the previous ticker code more than a decade to see it trading at a lower price point. The market has lost confidence in management, and they have an enormous task in the years ahead to rebuild confidence.
From other place Jenny Ruth says Heartland has shuttered its online-only mortgage offering. Why couldn't it make it work when it didn't have the branch network, staffing or legacy systems of those it was competing against and therefore had much lower costs?
I could not understand why they even bothered with this low margin sector.
Poor use of capital.
I still think it will take longer to sort out their current mess,and if they manage growth in Aussie they will need more capital to support it.REL's require capital up front.
Quote from: winner (n) on Feb 28, 2025, 11:12 AMFrom other place Jenny Ruth says Heartland has shuttered its online-only mortgage offering. Why couldn't it make it work when it didn't have the branch network, staffing or legacy systems of those it was competing against and therefore had much lower costs?
I don't think their home loans were profitable because of their cost of funds and Basil raised that at the AGM.
They responded that they were aware of the issue and would be dealing with it - which they now appear to be doing. It's taken them a while to get around to it though!
Quote from: winner (n) on Feb 28, 2025, 11:12 AMFrom other place Jenny Ruth says Heartland has shuttered its online-only mortgage offering. Why couldn't it make it work when it didn't have the branch network, staffing or legacy systems of those it was competing against and therefore had much lower costs?
A quick check of the HGH presentation would have told you the same as Jenny did - I guess this (shutting them down) is the reason they put them into the NSA's), but hey - Jenny obviously gets paid for repeating stuff everybody either knows or enough people want to hear.
Probably didn't hit their ROE targets ... tough to make 12 ... 14% as a minnow in a market where all the big boys compete as well.
BTW - Chris Lees latest Taking Stock (27/2/25) talks as well about Heartland.
https://www.chrislee.co.nz/taking-stock
I think its the fourth saga he is talking about in this weeks newsletter - so, better keep scrolling.
Sounds like he thinks that the recent write off was basically the cleaning out of old skeletons after Jeff Greenslade left and expects a good 2nd HY. Talks about risk of takeover ... and yes, all up from here ...
But hey, as all of us, Chris is only human and sometimes right and sometimes wrong :) ;
Quote from: BlackPeter on Feb 28, 2025, 03:46 PMBTW - Chris Lees latest Taking Stock (27/2/25) talks as well about Heartland.
https://www.chrislee.co.nz/taking-stock
I think its the fourth saga he is talking about in this weeks newsletter - so, better keep scrolling.
Sounds like he thinks that the recent write off was basically the cleaning out of old skeletons after Jeff Greenslade left and expects a good 2nd HY. Talks about risk of takeover ... and yes, all up from here ...
But hey, as all of us, Chris is only human and sometimes right and sometimes wrong :) ;
I have just accumlated 10k @ 0.85ea. Happy to ride the rollercoaster and expect improvement here even allowing for a couple more write offs. Aust side is looking very solid
Have to go back 13 years or so to see them that low before. Buying in a downtrend...what could possibly go wrong...
It must be getting close to the BBB, Basil buy bargain!
Quote from: Basil on Feb 28, 2025, 06:12 PMHave to go back 13 years or so to see them that low before. Buying in a downtrend...what could possibly go wrong...
Better than $1.15 I suppose. Ask me how I went in 3 years will you.
I am sure you will be back on this train when it suits you
Quote from: Forrestdun on Feb 28, 2025, 06:29 PMIt must be getting close to the BBB, Basil buy bargain!
LOL, speaking of BBB, I think they're at genuine risk of credit rating downgrade.
Don't worry about me GWD, I'm not going hungry as I have hundreds of thousands of bones safely buried away from previous successful forays with Heartland so breaking even on the last one is no skin off my nose. Yes, at some point they will be a buy, maybe with a new CEO who is not complicit in all their previous financial engineering B.S and when its half NTA ?
Quote from: Basil on Feb 28, 2025, 06:41 PMLOL, speaking of BBB, I think they're at genuine risk of credit rating downgrade.
Don't worry about me GWD, I'm not going hungry as I have hundreds of thousands of bones safely buried away from previous successful forays with Heartland so breaking even on the last one is no skin off my nose. Yes, at some point they will be a buy, maybe with a new CEO who is not complicit in all their previous financial engineering B.S and when its half NTA ?
We all do old dog. There are some handsome stocks out there doing well thru the gloom.
We shall see I guess. The root cause is gone, but maybe a broom should also sweep thru some of the others..Time will tell on that. Below was countering your thoughts..
'OPEX is at peak investment and expected to moderate by the end of FY2025.
Heartland remains well capitalised with strong liquidity and no changes to credit ratings'
In the end its all about building my position. Not all in by any stretch as I am a Black Jack player only so happy to accumulate.
One thing I did find odd was the DRP doesn't have a discount attached like normal (2.5%) I would have thought they would encourage the DRP uptake, then I was surprised with the dividend.
Very cunning to give shareholders back 2 cents from the last capital raise (given real eps was basically 0 cents). Cunning in that it keeps shareholders onside for the next raise.
Management and directors at the top table showed a smugness and detached arrogance at the annual meeting I have rarely witnessed before. Tomlinson being so dismissive of shareholders once a year right to ask questions encapsulated the prevailing dismissive attitude towards shareholders perfectly. Appreciate them, both during the meeting and afterwards in discussions with management and directors, making it such an easy decision for me to exit. Yes, a new broom is desperately required.
Has the tide turned on may ask
Or will it be like what they said after Jack Welch left GE ...."Jeff has left it a hollowed-out "pile of shit".... And suffered 20 years of gradual decline
Gap between Reported and Underlying NPAT is a cumulative $50m
IMG_6088.png
Sad thing I remember the days when some of you were saying Jerff should be knighted. I always comes out after they leave or was he asked to leave? Whatever the case there is alot of dung in the pile to clear
I see Craigs IP had a you tube comment couple of days ahead of reporting, suggesting that the SP reflected the negatives of the HGH book, suspect as Beagle would say but what is the reality, I can not discount the management let alone BOD might struggle to detail the levels of risk of any debts associated with a loan in arrears by more than a few days.
I have spent enough time over the decades on the sidelines of company liquidations to know the first delayed expenditures are plant maintenance which erodes the security levels for a lender then comes the default on the borrowing.
Still don't see any clarity of the shorter delinquent loan payments arrears quantum, nor what it might amount to for HGH in defaults. Still see a few Turners Auctions for finance company defaults on vehicles.
Discl I have no current shareholding, thanks to moments of clarity.
Rhetoric has Heartland Australia going gangbusters
But numbers show profits down on pcp ..... heaps more activity but NIM down and costs up
Suppose one day the rhetoric will reflect reality ...one way or the other
Quote from: winner (n) on Mar 01, 2025, 09:39 AMRhetoric has Heartland Australia going gangbusters
But numbers show profits down on pcp ..... heaps more activity but NIM down and costs up
Suppose one day the rhetoric will reflect reality ...one way or the other
Well said mate. Corporate speak does not match the reality. The deliberate obfuscation going on is straight out of the OCA playbook.
Intrigued as to why rhetoric around how great Australia is going is not feeding into better financial performance ....so I did a Snoopy Segment Analysis. Numbers from Financial statements for Australian Banking Group
Firstly look at Net Operating Income. This is mainly Net Interest Income with a few bits and pieces thrown in.
The trend for the last 5 half years is -
H123. 36.5m
H223. 41.3m
H124. 36.2m
H224 34.8m
H125. 45.1m
OK H125 looks relatively good but not spectacular, esp v say H2323
So how has Profit Before Tax gone -
H123. 24.0m
H223. 20.5m
H124. 24.9m
H224 3.6m
H125. 17.7m
Not that great eh ...profits down quite a lot.
Bit of a worry in preso for H125 it shows NIM down 41bps and cost ratio up 1606 bps.
ROE fell from 13.3% as at December 23 to 5.5% as at December 24
No doubt they will say all this doesn't matter and they are going through a transition period ..... but that declining NIM is a worry
You get the feeling that numbers don't matter with Heartland and they are basically story tellers. Say good things about the recent past and exciting things about the future ... just like that load of bull shit they spun to raise $200m a while ago
Wonder what this will look like in 6 months time
Can't be right, they said it had been a "strong performance by the Australian bank, Heartland Bank Australia Limited" What's strong about profit being down 29% in 1H FY25 to $17.7m compared to $24.9m in the PCP last year ?
Message to the board and management. Please start straight talking to investors rather than treating shareholders like they are 5 year old schoolchildren.
This "strong" performance was "offset by active derisking and repositioning of some of the New Zealand bank, Heartland Bank Limited's (Heartland Bank), non-performing loans (NPL) which contributed to a significantly higher impairment expense". Let me translate that for you. We have to have our interim financial statements audited and the auditors picked up that we have been far to slack with provisioning for bad and doubtful loans. (Recall that they said the recent profit downgrade happened after the auditors had performed most of their work). Active derisking and repositioning is just code speak for we got caught with our pants down by the auditors, in my opinion.
Winner thinks they're "full of it" and I couldn't agree more. Shares at a 13 year low...obviously the market thinks they're full of B.S. too. Can't help wondering what the credit rating agencies might make of their recent report when they've finished reviewing it. Oh well, nothing another capital raise won't fix I suppose...
Quote from: Basil on Mar 02, 2025, 04:02 PMWinner thinks they're "full of it" and I couldn't agree more. Shares at a 13 year low...obviously the market thinks they're full of B.S. too. Can't help wondering what the credit rating agencies might make of their recent report when they've finished reviewing it. Oh well, nothing another capital raise won't fix I suppose...
I have a cunning plan to take over zhis company. I have joined ze DRP. All I have to do eez vait vor ze zhare price to drop to zero. Zhen Heartland vill have to issue me vith an 'infinite number of zhares' to zubstitue vor my voregone cash dividend. Job done! Heh heh heh.
RB
I wonder how much value the Rainbow Tick is achieving.
Quote from: Basil on Mar 02, 2025, 04:02 PMCan't be right, they said it had been a "strong performance by the Australian bank, Heartland Bank Australia Limited" What's strong about profit being down 29% in 1H FY25 to $17.7m compared to $24.9m in the PCP last year ?
Message to the board and management. Please start straight talking to investors rather than treating shareholders like they are 5 year old schoolchildren.
This "strong" performance was "offset by active derisking and repositioning of some of the New Zealand bank, Heartland Bank Limited's (Heartland Bank), non-performing loans (NPL) which contributed to a significantly higher impairment expense". Let me translate that for you. We have to have our interim financial statements audited and the auditors picked up that we have been far to slack with provisioning for bad and doubtful loans. (Recall that they said the recent profit downgrade happened after the auditors had performed most of their work). Active derisking and repositioning is just code speak for we got caught with our pants down by the auditors, in my opinion.
Winner thinks they're "full of it" and I couldn't agree more. Shares at a 13 year low...obviously the market thinks they're full of B.S. too. Can't help wondering what the credit rating agencies might make of their recent report when they've finished reviewing it. Oh well, nothing another capital raise won't fix I suppose...
Winner & Basil: I'll give you both the benefit of the doubt and assume you both missed the details about the Australian operation in the half year report and on the earnings call.
The Australian business is doing very well.
The main cause of the net income drop in Australian business in mostly due to the business completely transforming vs the comparable period last year: They bought a bank!
Now that they are a bank, the Australian operation experienced a one time big increase in OpEx to meet the Australian regulatory requirements of becoming a bank, hence even with the strong growth in Australian reverse mortgages, along with the seeming turnaround of the Australian livestock lending business (which has been a drag the last couple of years), and the in progress transition from wholesale to deposit funding - Net income didn't reflect the strong performance.
Australian Reverse Mortgage business has total receivables of $1,968, grew 15% in the 6 month period.
Reverse mortgage is an absolute juggernaut, already approaching majority of lending for HGH - in several years all the other parts of HGH are going to be minor sideshows.
Absolute juggernaut will require a lot of feeding.Big eater of upfront capital.
I think the questions are;
1] When will the next capital raise be.?
2] At what price will it be.?
Quote from: lorraina on Mar 04, 2025, 02:05 PMAbsolute juggernaut will require a lot of feeding.Big eater of upfront capital.
I think the questions are;
1] When will the next capital raise be.?
2] At what price will it be.?
Quote from: lorraina on Mar 04, 2025, 02:05 PMAbsolute juggernaut will require a lot of feeding.Big eater of upfront capital.
I think the questions are;
1] When will the next capital raise be.?
2] At what price will it be.?
2 years @ $1.30
I agree.
[after the 1 for 2 share consolidation].
Quote from: lorraina on Mar 04, 2025, 02:05 PMAbsolute juggernaut will require a lot of feeding.Big eater of upfront capital.
I think the questions are;
1] When will the next capital raise be.?
2] At what price will it be.?
It's true that reverse mortgage cashflow is different to a regular mortgage business, but thanks to how long HGH has been doing it their loan book is maturing and the cashflow generation from reverse mortgages being repaid actually covers a significant amount of the new reverse mortgage lending being originated.
HGH is now very well capitalized (thanks to the last capital raise) and thanks to its new ability as an Australian Bank to take cash deposits it has retail cash deposit growth providing far cheaper funding than it had previously (hence why they are transitioning quickly from Wholesale funding to deposit funding in the Australian business).
The same half last year Heartland Australia had $1.737B in wholesale/debt funding and zero deposits. In the half just reported they now have $967B in wholesale/debt funding and $1.495B in deposits. Most of the remaining wholesale funding will be repaid by year end.
Most of the net reverse mortgage growth comes from capitalized interest on existing loans (that requires zero cash from heartland).
Here is how the reverse mortgage books performed in the 6 month period just reported:
Australian reverse mortgages:Increase in Reverse mortgage total:
$126m AUD New Reverse mortgages originated:
$176m AUDCash repaid from reverse mortgage customers:
$133m AUDSo the difference in money lent for new reverse mortgages originated less the amount of cash repaid from existing mortgages was only
$43m ($176m - $133m) well below the increase in cash deposits during the half.
It also means that
$83m in Australian reverse mortgage growth was capitalized interest from existing reverse mortgages (which requires zero new cash deployment from Heartland).
Now lets look at
NZ reverse mortgages:Increase in Reverse mortgage total:
$82.4m New Reverse mortgages originated:
$106mCash repaid from reverse mortgage customers:
$80mSo the difference in money lent for new reverse mortgages originated less the amount of cash repaid from existing mortgages was only
$26m ($106m - $80m).
It also means that
$56.4m in NZ reverse mortgage growth was capitalized interest from existing reverse mortgages (which requires zero new cash deployed from Heartland).
So in H125 the reverse mortgage juggernaut teams increased the number of loans by 221 in NZ and 244 in Au
Can't really work out NEW less REPAID to give those numbers
Suppose around 10 a week not too bad an effort
Quote from: LaserEyeKiwi on Mar 04, 2025, 02:56 PMIt's true that reverse mortgage cashflow is different to a regular mortgage business, but thanks to how long HGH has been doing it their loan book is maturing and the cashflow generation from reverse mortgages being repaid actually covers a significant amount of the new reverse mortgage lending being originated.
HGH is now very well capitalized (thanks to the last capital raise) and thanks to its new ability as an Australian Bank to take cash deposits it has retail cash deposit growth providing far cheaper funding than it had previously (hence why they are transitioning quickly from Wholesale funding to deposit funding in the Australian business).
The same half last year Heartland Australia had $1.737B in wholesale/debt funding and zero deposits. In the half just reported they now have $967B in wholesale/debt funding and $1.495B in deposits. Most of the remaining wholesale funding will be repaid by year end.
Most of the net reverse mortgage growth comes from capitalized interest on existing loans (that requires zero cash from heartland).
Here is how the reverse mortgage books performed in the 6 month period just reported:
Australian reverse mortgages:
Increase in Reverse mortgage total: $126m AUD
New Reverse mortgages originated: $176m AUD
Cash repaid from reverse mortgage customers: $133m AUD
So the difference in money lent for new reverse mortgages originated less the amount of cash repaid from existing mortgages was only $43m ($176m - $133m) well below the increase in cash deposits during the half.
It also means that $83m in Australian reverse mortgage growth was capitalized interest from existing reverse mortgages (which requires zero new cash deployment from Heartland).
Now lets look at NZ reverse mortgages:
Increase in Reverse mortgage total: $82.4m
New Reverse mortgages originated: $106m
Cash repaid from reverse mortgage customers: $80m
So the difference in money lent for new reverse mortgages originated less the amount of cash repaid from existing mortgages was only $26m ($106m - $80m).
It also means that $56.4m in NZ reverse mortgage growth was capitalized interest from existing reverse mortgages (which requires zero new cash deployed from Heartland).
Thank you for your considered reply.
Quote from: LaserEyeKiwi on Mar 04, 2025, 09:49 AMReverse mortgage is an absolute juggernaut, already approaching majority of lending for HGH - in several years all the other parts of HGH are going to be minor sideshows.
The growth rate of reverse mortgage lending has slowed from circa 20% CAGR to now be about 15% and forecast to be at that lower rate. A lot of this growth is merely compounding interest on existing loans.
$1.6 Billion in motor vehicle loans is not nothing by any stretch of the imagination and they continue to lend on secondhand cars on no deposit and five year terms in a rising unemployment environment. What could possibly go wrong...
Michelle, whatever her last name is that's leading Heartland Australia said at the annual meeting that other banks in Australia are stepping back from motor vehicle loans and they see that as a real opportunity there. Why are the other banks stepping back from it? (see the rhetorical question above)
Reverse mortgages are the only part of the business that's any good in my opinion but it is very intensive on capital demands which is the key reason other Australian banks have stepped back from it in the past but interestingly, one of the directors after the meeting told me he thinks there's a real risk one of the bigger banks in Australia will reenter this market in the not too distant future. More competition with lower margin's coming ?
"What could possibly go wrong...
everything... do they even have an accurate ledger....
If I've done my sums right it appears that Heartland currently have about 7,800 reverse mortgages on their books in NZ
I was bit surprised how low this number is but I suppose they are meeting market demand. They have a pretty high share don't they.
Suppose they have something in common with Oceania et al in thst an ageing population should boost future growth
One government dept has said that up to 25% of homeowners over 60 should take advantage of these products to give themselves a better lifestyle. That's a big potential market eh.
Surely Heartland must be inline for a rating agency downgrade soon
Quote from: snapiti on Mar 07, 2025, 01:04 PMSurely Heartland must be inline for a rating agency downgrade soon
I suppose just baseless stirring?
Sometimes it helps to read their announcements ....
https://www.nzx.com/announcements/447501
Quote‒Heartland remains well capitalised with strong liquidity and no changes to credit ratings.
Quote from: BlackPeter on Mar 07, 2025, 03:23 PM‒Heartland remains well capitalised with strong liquidity and no changes to credit ratings.
I think the key word missing here is "yet"( remembering HGH are almost a masterclass in "corporate speak" Credit rating agencies do regular reviews so it's anyone's guess what they might say when they next review Heartland.
Funnily enough I was just at lunch with a former HGH investor, and he mentioned the exact same thing as Snapiti just did in almost the exact same words and almost at the exact same time, if I recall correctly at about 1.00 p.m.. That's a bit spooky eh.
Some interesting chatter on the other channel today about HGH's loan quality and lack of provisioning for non-performing loans, only about half of nonperforming loans past due 90 days+ are provided for either with specific or general provisions.
Just as well the ratings agencies never look at this sort of asset quality thing, Opps, hang on a minute, they most certainly do !
https://bankdashboard.rbnz.govt.nz/asset-quality
Quote from: BlackPeter on Mar 07, 2025, 03:23 PMI suppose just baseless stirring?
Sometimes it helps to read their announcements ....
https://www.nzx.com/announcements/447501
certainly been reading HGH ann's, lots of smoke n mirrors being used IMO about their rapidly deteriorating loan book, looks like the rest of the market is wakening up and losing faith rather rapidly, shares down 30% in one month, BP have you taken notice of this, I can't see how they can keep the same rating based on this alone not to mention other deteriorating fundamentals so fully expect a downgrade
Quote from: snapiti on Mar 07, 2025, 01:04 PMSurely Heartland must be inline for a rating agency downgrade soon
That's what I'd imagine as well, however this is what Fitch had to say:
https://www.fitchratings.com/research/banks/heartland-bank-earnings-under-pressure-from-impairments-expenses-27-02-2025
Worth recalling Fitch's opinion is 'solicited'
think of it this way. If you have a country with low economic performance than that will determine the behavior of its citizens....
and if you pump money into in a pump it up scheme you will get behavioral variances on the bell curve.
Management will do what ever it can to get the salary and the performance pay up...
It becomes musical chairs...
And the wreckage is left for someone else to cope with after you have jumped ship....
This is a stock to stay away from...or be very careful of....
at least retail has a reason to sell off... or performance badly..
and we know there are no comprehensive systems in many places in the country tracking billions of dollars...
no no its all in excel spreadsheets from the reserve banks, to the retail banks... remember those errors in ANZ or WBC excel models...
and maybe this bank...
the Excel error prone worksheets runnning the country ..
simula was created by the Nordics in 1963 .... and here this dumb country uses EXCEL.. a terrible product for multi dimensional roll ups...
even back on DOS VP Planner had a multi dim total up...
https://www.nzherald.co.nz/nz/significant-concerns-health-nz-was-using-a-single-excel-spreadsheet-to-track-28-billion-of-public-money/WADIE2J26JEDVCLXYL7HKTMNDE/
there is the complete incompetence of the wellington mind set on display... and it will be all through the country right down to the councils not just the banks...
Quote from: Waltzing on Mar 08, 2025, 12:35 PMand we know there are no comprehensive systems in many places in the country tracking billions of dollars...
no no its all in excel spreadsheets from the reserve banks, to the retail banks... remember those errors in ANZ or WBC excel models...
and maybe this bank...
the Excel error prone worksheets runnning the country ..
simula was created by the Nordics in 1963 .... and here this dumb country uses EXCEL.. a terrible product for multi dimensional roll ups...
even back on DOS VP Planner had a multi dim total up...
https://www.nzherald.co.nz/nz/significant-concerns-health-nz-was-using-a-single-excel-spreadsheet-to-track-28-billion-of-public-money/WADIE2J26JEDVCLXYL7HKTMNDE/
there is the complete incompetence of the wellington mind set on display... and it will be all through the country right down to the councils not just the banks...
Hmm - I guess clearly - our Health system is just spreading taxpayer dollars around, so - who cares and anyway not relevant to this thread. However, looking into Heartland - I doubt that they upgraded their core system in 2023 just to a new version of Excel ... :
https://www.heartlandgroup.info/newsroom/updates/accelerating-digitalisation
Sounds pretty flash for Excel. What do you think?
i doubt its flash... probably a whole lots of javascript python and csharp ...
old technology to replace even more ancient technology...
or they might have put some blockchain in place... some on line statements and letters is hardly flash....
bet they still have excel in the head office... ANZ and WBC did and the reserve bank found numerous errors in the models...it may national headlines ...
that before they got to 600 staff..
the point is its doubtful that head offices in this country run on anything but excel... and its an ancient C API technology...
power is CUDA and the API is a shocker with its long names to implement and its doubtful they could afford it...
id they came and said they had trained a powerful AI model to implement CUDA then fine.. flash..
else NA... a page of nothing on there web site... what a joke of page ...
publish something that says something not that rubbish page of marketing nothing...
its not to say they havnt got something but that page does not say anything.
Always good sign when Directors buy
https://announcements.nzx.com/attachment/439259.pdf
Quote from: winner (n) on Mar 10, 2025, 09:00 AMAlways good sign when Directors buy
https://announcements.nzx.com/attachment/439259.pdf
Maybe he found some spare gold coins in his petty cash. I guess, what else can you buy these days with a bit of change?
Quote from: BlackPeter on Mar 10, 2025, 09:17 AMMaybe he found some spare gold coins in his petty cash. I guess, what else can you buy these days with a bit of change?
$50k aus is a bit of change to you BP? In that case well done with your 9 figure portfolio, very impressive.
Quote from: raW tent Buffer on Mar 10, 2025, 09:55 AM$50k aus is a bit of change to you BP? In that case well done with your 9 figure portfolio, very impressive.
Not sure you read the same announcement I did. The link is referring to two purchases with a total value of AUD 9720. Not quite relevant whether this is chump change for me, but it certainly doesn't looks like a high conviction purchase for a company director. Just put it into relation to his director fees :P ;
Quote from: BlackPeter on Mar 10, 2025, 10:06 AMNot sure you read the same announcement I did. The link is referring to two purchases with a total value of AUD 9720. Not quite relevant whether this is chump change for me, but it certainly doesn't looks like a high conviction purchase for a company director. Just put it into relation to his director fees :P ;
Perhaps you need to re-read the announcement in its entirety where you will find there are two separate purchasers. Hence the announcement entitled "various" (not singular).
Quote from: raW tent Buffer on Mar 10, 2025, 11:29 AMPerhaps you need to re-read the announcement in its entirety where you will find there are two separate purchasers. Hence the announcement entitled "various" (not singular).
OK - yes, Robert did spend $10k and Simon $50k. Good on Simon, and you are correct, I missed the attachment on him. But before smugness starts to impair your walking ... it appears you originally missed Roberts announcement, otherwise your original answer looks sort of incomplete as well. Didn't you :) ?
Interesting that Mr T with his vast fortune hasn't stepped up to the plate and bought more of this trading at a 13 year low or for that matter OCA either, both trading at what some see as incredibly deep value. Maybe he has strict ROI criteria and thinks there's no point throwing good money after bad ?
Quote from: BlackPeter on Mar 10, 2025, 01:32 PMOK - yes, Robert did spend $10k and Simon $50k. Good on Simon, and you are correct, I missed the attachment on him. But before smugness starts to impair your walking ... it appears you originally missed Roberts announcement, otherwise your original answer looks sort of incomplete as well. Didn't you :) ?
No weirdly enough I read both disclosure notices by using the very cool scroll function on my device.
I assumed your reference was to the higher value since you didn't distinguish.
Regardless, I see it as neutral news at worst and find it weird that it's getting scoffed at here and on the other channel. Some people just love to hate!
Quote from: Basil on Mar 10, 2025, 01:50 PMInteresting that Mr T with his vast fortune hasn't stepped up to the plate and bought more of this trading at a 13 year low or for that matter OCA either, both trading at what some see as incredibly deep value. Maybe he has strict ROI criteria and thinks there's no point throwing good money after bad ?
I see that all of Tomlinson/Harrogate shares have been transferred into a new entity called Tomlinson Group HGH Limited
Maybe Greg given up on Heartland and now calling his interest a NON-STRATEGIC ASSET and forming his own bad bank.
Another Director buying: https://api.nzx.com/public/announcement/448308/attachment/439524/448308-439524.pdf
I'm doing the same.
How long do shareholders have to wait before there is a clean out of the incompetent managers?
Just the managers.?
Two boards need to be cleaned out.
An experienced banker needs to be appointed Chair.
Oh dear, they really seem to have broken it.
Just looking at the usual suspects:
Milk price is in the stratosphere - which used to be a certain indicator for HGH doing well.
Agriculture generally doing well and farmers starting to spend money again - which is good for the people who loan them money.
Need for Reverse Equity Mortagages growing (remember the cost of living crisis?) - which should be a really great thing for the major provider of this service.
And now Trumps tariffs on cars, which no doubt will push car prices up world wide, which is not just good for selling old bangers, but should bolster as well the remaining security on not so certain car loans.
All indicators on green - and what is the share price doing? Dimpling along an All Time Low (well, for HBH certainly, not sure about the various tickers they used to have before).
Must be time for a new Board (OK - 2 new boards), a new CEO or two and a new Ticker ...
Quote from: BlackPeter on Mar 28, 2025, 10:10 AMOh dear, they really seem to have broken it.
Just looking at the usual suspects:
Milk price is in the stratosphere - which used to be a certain indicator for HGH doing well.
Agriculture generally doing well and farmers starting to spend money again - which is good for the people who loan them money.
Need for Reverse Equity Mortagages growing (remember the cost of living crisis?) - which should be a really great thing for the major provider of this service.
And now Trumps tariffs on cars, which no doubt will push car prices up world wide, which is not just good for selling old bangers, but should bolster as well the remaining security on not so certain car loans.
All indicators on green - and what is the share price doing? Dimpling along an All Time Low (well, for HBH certainly, not sure about the various tickers they used to have before).
Must be time for a new Board (OK - 2 new boards), a new CEO or two and a new Ticker ...
I think you are taking all the positives that you mention, but coming up with the wrong conclusion.
"There are a lot of positives, but the share price remains very low"
The correct response is not "we must clear out the board".
The correct response is: "hot damn the market is really mispricing this stock, I will accumulate during this amazing opportunity".
just my opinion of course, not advice.
Quote from: LaserEyeKiwi on Mar 28, 2025, 10:26 AMI think you are taking all the positives that you mention, but coming up with the wrong conclusion.
"There are a lot of positives, but the share price remains very low"
The correct response is not "we must clear out the board".
The correct response is: "hot damn the market is really mispricing this stock, I will accumulate during this amazing opportunity".
just my opinion of course, not advice.
Maybe. I said "They seem to have broken it".
But yes - if the stock does not follow the ususal indicators, it could mean the stock is broken, or it could mean the markets perception is broken.
If I look at the fundamentals - (3yr) forward PE is 7.7, (10yr) backward PE even just 6.3. Are these analysts just too pessimistic? On the other hand - earnings CAGR (both forward as well as backward) not flash - at best you could call it flatlining.
SP is only 77% of NTA (quite unusual for a bank), which might even offer some buffer against all these loans people are worried about.
So - what they clearly have broken is the markets perception. Remember - their job is to sell an amazing and convincing story, and clearly - they are inept doing that.
Have they broken the earnings machine as well? Time will tell (and yes, with market improving they might get away with a black eye).
Just for disclosure: I am holding and accumulated some more in recent months. Whether this is due to a stroke of genius, lethargy or stupidity, we will see in due course.
Quote from: BlackPeter on Mar 28, 2025, 10:10 AMAll indicators on green - and what is the share price doing? Dimpling along an All Time Low (well, for HBH certainly, not sure about the various tickers they used to have before).
Spot on, so many positive indicators for growth but who knows what's going on with all the bad loans in the background. Bit of a gamble but I too have been accumulating in the late 70s, probably more that I should have but time will reveal all.
Quote from: BlackPeter on Mar 28, 2025, 10:50 AMMaybe. I said "They seem to have broken it".
But yes - if the stock does not follow the ususal indicators, it could mean the stock is broken, or it could mean the markets perception is broken.
If I look at the fundamentals - (3yr) forward PE is 7.7, (10yr) backward PE even just 6.3. Are these analysts just too pessimistic? On the other hand - earnings CAGR (both forward as well as backward) not flash - at best you could call it flatlining.
SP is only 77% of NTA (quite unusual for a bank), which might even offer some buffer against all these loans people are worried about.
So - what they clearly have broken is the markets perception. Remember - their job is to sell an amazing and convincing story, and clearly - they are inept doing that.
Have they broken the earnings machine as well? Time will tell (and yes, with market improving they might get away with a black eye).
Just for disclosure: I am holding and accumulated some more in recent months. Whether this is due to a stroke of genius, lethargy or stupidity, we will see in due course.
I have been doing the same, in the end it comes down to your respective timeline you are prepared to hold the stock.
Quote from: Greekwatchdog on Mar 28, 2025, 11:45 AMI have been doing the same, in the end it comes down to your respective timeline you are prepared to hold the stock.
Basically, you've been buying in a down trend, right? I no longer hold and sold after the previous CR at $1.80 and they REALLY have broken it, I don't trust them an inch. HGH was one of my favorite stocks and div payers and now they are paying a div out of CR monies.
Yes they have some good business prospects, but credit control has been lax (i.e. a bonfire of cash)
Quote from: mike2023 on Mar 28, 2025, 11:50 AMBasically, you've been buying in a down trend, right? I no longer hold and sold after the previous CR at $1.80 and they REALLY have broken it, I don't trust them an inch. HGH was one of my favorite stocks and div payers and now they are paying a div out of CR monies.
Yes they have some good business prospects, but credit control has been lax (i.e. a bonfire of cash)
My average is now $0.82. Most expensive Purchase was $0.95. I see real value in it for a 5 year hold.
We all have our Philosophies. I remember when one poster started talking it up @ $1.15 only to get grumpy when full year was awful. The half year was and expecting the current full year to be same. I am ok with that.
Time will tell if I have done well or not but at these values its pretty good buying. Mind you another poor announcement before FY will make me a goose. Thats the way it is.
Quote from: mike2023 on Mar 28, 2025, 11:50 AMI don't trust them an inch.
Agree 100%
Quote from: mike2023 on Mar 28, 2025, 11:50 AMcredit control has been lax (i.e. a bonfire of cash)
Its been absolutely appalling and amounts to gross recklessness on a huge scale. I am not convinced at all that they have taken ownership of their mistakes and made any meaningful changes. Fully deserving to be in the dog box along with Tomlinson's other flea infested dog, OCA.
Quote from: mike2023 on Mar 28, 2025, 11:50 AMBasically, you've been buying in a down trend, right? I no longer hold and sold after the previous CR at $1.80 and they REALLY have broken it, I don't trust them an inch. HGH was one of my favorite stocks and div payers and now they are paying a div out of CR monies.
Yes they have some good business prospects, but credit control has been lax (i.e. a bonfire of cash)
Well, there was a bull trap late January to early February (and somemore before), but yes, apart from that everybody buying over the last three years or so was buying in a downtrend. On the other hand - buying in a downtrend at say 78 cents is much more fun than buying in an uptrend (i.e. in the bulltrap) at $1.10. The thing with traps is, you only see them with the benefit of hindsight.
The other thing is - the only way to turn a downtrend around is to buy, and yes, while it is more risky, it means as well (if successful) higher gains. The trick is to identify the likelyhood for a bottom with other means (fundamental analysis). Successful investors are not the ones who only buy in uptrends (actually, this might be a quite expensive experience as well, if you happen to buy close to the peaks).
While I like to look at trends as well as at fundamentals, I never buy if I see the fundamentals are wrong, but trend information just tells me in which direction a stampeding herd of horses are currently running, which may or may not indicate which direction they choose after the next bang.
Quote from: Basil on Mar 28, 2025, 12:10 PMAgree 100%Its been absolutely appalling and amounts to gross recklessness on a huge scale. I am not convinced at all that they have taken ownership of their mistakes and made any meaningful changes. Fully deserving to be in the dog box along with Tomlinson's other flea infested dog, OCA.
But what made you trust them at $1.15 8/9 months ago? Jeff G. has created alot of this, thou the board need to take responibilty as well. I remeber the days you were all happy with what they were doing saying JG should be knighted.
There was lot of miss judgement in alot of you back then. This is what happens when you do a number of CR's and your loan book is riskier for better returns.
The change is happening but there will always be a delay until the nasties get cleaned out fully.
Heaven forbid if we got an earnings upgrade over next few months. Not saying it will happen but none of us know. And look we are 3 months away from end year and appanetly the economy has Green shoots at thw bottom.
So I would rather buy at these low levels than $1.15 8/9 months ago when everyones eye was on the $200m earnings for 2028...
Remember what they said at GE when the master of profit smoothing left ....'he left us a hollowed out pile of shit'
What surprises me is that one of Jeff's loyal lieutenants and smoothing partner became CEO
That was at the turn of the century and GE never recovered
Quote from: Greekwatchdog on Mar 28, 2025, 12:06 PMMy average is now $0.82. Most expensive Purchase was $0.95. I see real value in it for a 5 year hold.
We all have our Philosophies. I remember when one poster started talking it up @ $1.15 only to get grumpy when full year was awful. The half year was and expecting the current full year to be same. I am ok with that.
Time will tell if I have done well or not but at these values its pretty good buying. Mind you another poor announcement before FY will make me a goose. Thats the way it is.
Correction, my first buy was $1.06 just before 2024 FY. Sorry for miss leading. Avg is still the same..
For about the 15th time GWD, the recession was far deeper and longer than almost anyone around this time last year thought it would be.
I belive also that HGH management have been deliberately deceptive or grossly incompetent with their delinquent receiveables provisioning and loan loss recognition.
As someone else just said, I wouldn't trust them an inch.
Quote from: Basil on Mar 28, 2025, 03:33 PMFor about the 15th time GWD, the recession was far deeper and longer than almost anyone around this time last year thought it would be.
I belive also that HGH management have been deliberately deceptive or grossly incompetent with their delinquent receiveables provisioning and loan loss recognition.
As someone else just said, I wouldn't trust them an inch.
We have heard that for the xxx amount time too Basil. It is what it is. Now we just sight idle until we get some sort of annoucement. In the meantime there are green shoots showing in the economy and of course the Aust business seems to be tracking ok
Quote from: Shareguy on Jan 08, 2025, 10:52 AMHi all,
Happy new year. Well I did get a reply which unfortunately was not happy with. Also with Basil's concerns top of mind I decided to bail.
Disc/ I'm out.
Well I am so glad that I emailed my questions and concerns. Also even happier that the answers did not satisfy me at all. And most importantly I'm so glad I sold out in Jan which was an excellent decision in this case.
Good luck to holders. I'm going to watch from the sidelines. I do agree that Australia has huge potential.
Quote from: Shareguy on Mar 28, 2025, 04:12 PMWell I am so glad that I emailed my questions and concerns. Also even happier that the answers did not satisfy me at all. And most importantly I'm so glad I sold out in Jan which was an excellent decision in this case.
Good luck to holders. I'm going to watch from the sidelines. I do agree that Australia has huge potential.
Good for you mate. That's exactly why I went to the annual meeting, to ask some very hard questions and as you know, I wasn't happy with any of the answers. I'm also very pleased I exited completely at just north of $1.
I'm certainly not the only one that holds a very low opinion of the board and management. For example, Shareguy and Percy, to name just two well respected posters have also been supporters of HGH for a VERY long time but think they have well and truly lost their way. Good luck with HGH, you'll need it.
I think we can all change our minds on anything. I'm not ready to reinvest in hgh or pgw till I see a report I like. I still think the rm business is sound.
yep the dog likes to wag his tail when he has been a good boy and barks a bit so probably some fox terrier in this beagle me thinks, but he is certainly no clown and many investors would have been very wise to take note of his persistent barking and superior ability to sniff BS when it comes his way, on many occasions
Thanks for your kind words snapiti. You've got a fine nose for sniffing corporate B.S. yourself as if I recall correctly, you were the first to question HGH when they first downgraded due to alleged staff sickness issues affecting their arrears recovery procedures. In hindsight you make a very good watchdog yourself, the kind of watchdog that makes himself very useful on here.
Quote from: Basil on Mar 28, 2025, 03:33 PMFor about the 15th time GWD, the recession was far deeper and longer than almost anyone around this time last year thought it would be.
...........
Talk of deep recessions and worst recession we have had for decades makes me smile at times.
Here's a chart showing one measure of GDP going back to the 1980's
Doesn't look too bad to me
Data ex RBNZ so must be right
IMG_6111.png
Quote from: winner (n) on Mar 30, 2025, 03:20 PMTalk of deep recessions and worst recession we have had for decades makes me smile at times.
Here's a chart showing one measure of GDP going back to the 1980's
Doesn't look too bad to me
Data ex RBNZ so must be right
IMG_6111.png
Wondering how the chart would look like if you draw it inflation-adjusted and as GDP per head of population?
But anyway, I am sure we all agree that the great depression 1929 to 1939 was worse.
Interesting to note that it finished the year WW2 started. This must mean something?
Quote from: BlackPeter on Mar 30, 2025, 03:32 PMWondering how the chart would look like if you draw it inflation-adjsuted and as GDP per head of population?
But anyway, I am sure we all agree that the ghreat depression 1929 to 1939 was worse.
Interesting to note that it finished the year WW2 started. This must mean something?
But we don't report Heartlands profit or Turners revenues etc on an inflation adjusted per head basis do we? Or even worse seasonally adjusted.
https://www.heartland.co.nz/village-access-loan
Borrow the money to buy an ORA so you dont have to sell your house. Why? What good is holding on to a house you are no longer living in? What 75 year old wants to become a landlord? And then you lose 30% on the value of the ORA plus pay 10% interest each year on top of it. That doesnt make financial sense.
Just sell the house.
And what ORA can you buy with only 50% of the value of a house? We've already established that the price of RV units are now around 100% of the median price for the area, but even at 70% of the medium price a reverse mortgage won't be enough.
Quote from: KW on Mar 31, 2025, 12:31 PMhttps://www.heartland.co.nz/village-access-loan
Borrow the money to buy an ORA so you dont have to sell your house. Why? What good is holding on to a house you are no longer living in? What 75 year old wants to become a landlord? And then you lose 30% on the value of the ORA plus pay 10% interest each year on top of it. That doesnt make financial sense.
Just sell the house.
And what ORA can you buy with only 50% of the value of a house? We've already established that the price of RV units are now around 100% of the median price for the area, but even at 70% of the medium price a reverse mortgage won't be enough.
Actually - there might be a number of good reasons.
Just some examples:
If you expect house price inflation to go back towards the medium annual price rises, then it makes a lot of sense to take a 10% loan to cover for the ORA (or parts of it) instead of selling the house at current for a price too low.
House prices would gain subject to any rises of the property market, while the ORA will not - i.e. anybody who expects annual average house prices to return to say 4 to 5 % (this is the average of the last 5 years), would win.
Might make as well lots of sense in individual cases to bridge short term cash flow issues (like waiting for an inheritance) or just to keep the family property for family to inherit. Its not for everybody just about the money.
Quote from: BlackPeter on Mar 31, 2025, 01:36 PMActually - there might be a number of good reasons.
Just some examples:
If you expect house price inflation to go back towards the medium annual price rises, then it makes a lot of sense to take a 10% loan to cover for the ORA (or parts of it) instead of selling the house at current for a price too low.
House prices would gain subject to any rises of the property market, while the ORA will not - i.e. anybody who expects annual average house prices to return to say 4 to 5 % (this is the average of the last 5 years), would win.
Might make as well lots of sense in individual cases to bridge short term cash flow issues (like waiting for an inheritance) or just to keep the family property for family to inherit. Its not for everybody just about the money.
You are paying 10% a year in interest. So if you borrowed 50% then house prices would have to appreciate 5% a year minimum just to break even on the interest cost. Or 15% over 3 years. Plus you have extra funds locked up in the house that is earning nothing, and is not available to fund things like healthcare or activities. And you still have to pay the rates, insurance, and maintenance of the property while its sitting there empty, or cover healthy homes, tenant damage and renovation costs if its tenanted out. And these costs will have to be funded out of your pension, after paying the $200+ a week village service fees.
The loan is only for 3 years. And then you have to pay it back. So you cant keep the property or leave it to your kids. And what happens when its a forced mortgagee sale after the 3 year time period is up, because the owner didnt get the magical number that he believed the house 'was worth"? The house will then be firesaled. So its just a rip off for 3 years. And what happens if prices actually fall for those 3 years instead? Now you not only have to pay 30% interest on the amount borrowed, but have lost 20-30% of what is left.
Sitting around waiting for imaginary price increases to happen is not the best use of what might be the last 3 years of your life.
Quote from: KW on Mar 31, 2025, 01:51 PMYou are paying 10% a year in interest. So if you borrowed 50% then house prices would have to appreciate 5% a year minimum just to break even on the interest cost. Or 15% over 3 years. Plus you have extra funds locked up in the house that is earning nothing, and is not available to fund things like healthcare or activities. And you still have to pay the rates, insurance, and maintenance of the property while its sitting there empty, or cover healthy homes, tenant damage and renovation costs if its tenanted out.
The loan is only for 3 years. And then you have to pay it back. So you cant keep the property or leave it to your kids. And what happens when its a forced mortgagee sale after the 3 year time period is up, because the owner didnt get the magical number that he believed the house 'was worth"? The house will then be firesaled. So its just a rip off for 3 years. And what happens if prices actually fall for those 3 years instead? Now you not only have to pay 30% interest on the amount borrowed, but have lost 20-30% of what is left.
Sitting around waiting for imaginary price increases to happen is not the best use of what might be the last 3 years of your life.
Oh dear. If you have dark thoughts and close your eyes, than for sure - everything will look black.
But nobody said that this is a get rich quick schema for everybody, but again, I do see situations where this loan might make sense depending on personal circumstances.
A bridge for house renovations to better sell it? Bridging time for family to move in? Rent it out on Airbnb and pay a manager. You need (as with any other financial decision) to look into the specific circumstances to see whether it imakes sense for the individual or not, but if feels you are just in trashing mode.
Ah yes, and if it is really the last 3 years of the mortgagee, than what? ORA (minus DMF) gets repaid and can be used to repay the loan.
Quote from: BlackPeter on Mar 31, 2025, 02:14 PMOh dear. If you have dark thoughts and close your eyes, than for sure - everything will look black.
But nobody said that this is a get rich quick schema for everybody, but again, I do see situations where this loan might make sense depending on personal circumstances.
A bridge for house renovations to better sell it? Bridging time for family to move in? Rent it out on Airbnb and pay a manager. You need (as with any other financial decision) to look into the specific circumstances to see whether it imakes sense for the individual or not, but if feels you are just in trashing mode.
Ah yes, and if it is really the last 3 years of the mortgagee, than what? ORA (minus DMF) gets repaid and can be used to repay the loan.
Just saw this in the Herald: https://www.nzherald.co.nz/business/heartland-bank-offers-retirees-loan-to-buy-into-village-without-selling-house-first/FHTYLVEQTFAP7CIR4W7W2TMIL4/
Looks like not everybody is trashing the offer ...
Jeez ..HGH down to 75 cents ...... and looks to be heading even lower
Suppose some say it's getting CHEAPER by the day ...even though in reality it's reflecting a bad NZ situation that's only going to get worse and an OZ performance that's not that flash
Quote from: winner (n) on Apr 02, 2025, 06:20 PMJeez ..HGH down to 75 cents ...... and looks to be heading even lower
Suppose some say it's getting CHEAPER by the day ...even though in reality it's reflecting a bad NZ situation that's only going to get worse and an OZ performance that's not that flash
Down from $1.15, (more than a third), in early February when some were suggesting the worst was behind them. A fresh 15 year low going all the way back deep into the timeline when they traded under the old ticker code. OCA in the dog box too at only 60 cents.
Quote from: winner (n) on Apr 02, 2025, 06:20 PMJeez ..HGH down to 75 cents ...... and looks to be heading even lower
Suppose some say it's getting CHEAPER by the day ...even though in reality it's reflecting a bad NZ situation that's only going to get worse and an OZ performance that's not that flash
Jeez this company isn't trouble is it.
I got my cash there.
I think not though,its got a fantastic reverse mortgage business which over compensates the ugly rest of it.
Quote from: Clearasmud on Apr 02, 2025, 10:46 PMJeez this company isn't trouble is it.
I got my cash there.
I think not though,its got a fantastic reverse mortgage business which over compensates the ugly rest of it.
Don't say things like that clearasmud .... Could start on a run on the bank
All the more reason why Nicola shouldn't be looking to relaxing capital requirement levels
I wonder how many poeple have left the country owing heartland finance money on a vehicle.
Heartland happy to loan 100% on new vehicles that depreciate faster than the interest payable on them, easy option is to run to Aus or to where ever you came from......bloody hard to track down an asset if it is just given to the owners friend cause you owe more on it than it is worth
Quote from: snapiti on Apr 03, 2025, 03:01 PMI wonder how many poeple have left the country owing heartland finance money on a vehicle.
Heartland happy to loan 100% on new vehicles that depreciate faster than the interest payable on them, easy option is to run to Aus or to where ever you came from......bloody hard to track down an asset if it is just given to the owners friend cause you owe more on it than it is worth
A LOT according to one of my clients who travels a lot. Tow trucks are kept very busy towing away vehicles dumped at the Auckland international airport carpark from what I hear. Many brands of new car depreciate 30% the moment you drive them off the lot, worse for some secondhand cars sold by some dealers at jacked up prices so they can overtrade the customers trade-in and make them feel good they have some equity in it.
Despite this and me pointing out at the annual meeting that the unemployment rate is headed higher and business liquidations at the highest levels since the GFC Leanne Lazurus sees no issue whatsoever with the risks involved with 100% vehicle finance. Worse, neither do either of the directors that were involved in that group discussion. My contention is simply this, vast amounts of arrears are simply swept under carpet each balance date with extensive use of "Heartland Extend" to conceal the level of delinquent loans in their $1.6 Billion vehicle loan book. The market (share price) is telling you there's more holes in their vehicle loan book that a giant block of Swiss cheese. It's the recklessness with which they go about meeting their sales targets that irks me the most. It's all about selling as much debt as possible and she'll be right.
Looks like T A trading systems have hit the sell button?
Quote from: snapiti on Apr 03, 2025, 03:01 PMI wonder how many poeple have left the country owing heartland finance money on a vehicle.
Heartland happy to loan 100% on new vehicles that depreciate faster than the interest payable on them, easy option is to run to Aus or to where ever you came from......bloody hard to track down an asset if it is just given to the owners friend cause you owe more on it than it is worth
Funny post.
Maybe you should just read the financials in the latest HY report (speciafically going through point 7), and you can stop wondering :);
But I suppose you really only wanted to stir instead of wonder, didn't you?
Spoiler alert - while the total of impairments did increase compared to the same period last year, it was just by a single digit percentage.
Quote from: BlackPeter on Apr 03, 2025, 05:41 PMFunny post.
Maybe you should just read the financials in the latest HY report (speciafically going through point 7), and you can stop wondering :);
But I suppose you really only wanted to stir instead of wonder, didn't you?
Spoiler alert - while the total of impairments did increase compared to the same period last year, it was just by a single digit percentage.
BP you obviously still have faith in their smoke n mirrors reporting and still hold the stock, how is that working for you, been some smart poeple on this thread trying to wake up those with rose tinted glasses on.
You seem very defensive of your position and the company and have done so for some time, happy to post a chart of the SP to say what the broader market makes of their performance. Very much suspect the smart money has become very wary of how they are reporting.
I can sum up an investment in HGH in a few words........ bad loans, sweep, carpet
Quote from: snapiti on Apr 07, 2025, 08:50 AMI can sum up an investment in HGH in a few words........ bad loans, sweep, carpet
The flip side to that is the RM business, which is doing very well here and in Aus. I think there will be an inflection point this year in the SP but depends on how many more provisions are to come...
Quote from: snapiti on Apr 07, 2025, 08:50 AMBP you obviously still have faith in their smoke n mirrors reporting and still hold the stock, how is that working for you, been some smart poeple on this thread trying to wake up those with rose tinted glasses on.
You seem very defensive of your position and the company and have done so for some time, happy to post a chart of the SP to say what the broader market makes of their performance. Very much suspect the smart money has become very wary of how they are reporting.
I can sum up an investment in HGH in a few words........ bad loans, sweep, carpet
The smart money buys when the stock is out of favor and sells off way below a sensible intrinsic value, and then unloads once the opposite occurs and the valuation overshoots. Not to toot my own horn too much, but this is exactly what I did post covid with Heartland. Doing the same again now.
Quote from: snapiti on Apr 07, 2025, 08:50 AMBP you obviously still have faith in their smoke n mirrors reporting and still hold the stock, how is that working for you, been some smart poeple on this thread trying to wake up those with rose tinted glasses on.
You seem very defensive of your position and the company and have done so for some time, happy to post a chart of the SP to say what the broader market makes of their performance. Very much suspect the smart money has become very wary of how they are reporting.
I can sum up an investment in HGH in a few words........ bad loans, sweep, carpet
[\quote]
I never buy or sell just because a number of anonymous avatars on this or any other forum say so. If this is your investment strategy, than good luck with that.
I came as well a long time ago to the conclusion that there is no such thing as "smart money". Money is paper, plastic or bits, and none of these is smart. Some people using money are certainly smarter than others - but haven't yet seen an analysis which stocks have been bought or sold at what stage by smart people (and how to measure that). Have you, or are you just grandstanding?
President Dumb considers himself a genius, but he bankrupted already six companies. Is this what you call smart?
Warren Buffett is an experienced investor who normally manages to achieve above average returns. He might be smart in investing money, but he made as well enough mistakes. Anybody followed his wisdom to buy airlines prior to Covid?
OK - but back to HGH. Yes, I do see tham at current SP good value. I do see neither their company loan book nor their car loans as a catastrophy, and unless president Dumb manages to crash the global economy (which admittedly is a risk) I do see things going up from here. So, yes, they made some mistakes and the markets punished them for it. Does not mean though, that they are worth nothing. They do have a well running RM business and I don't really see the value of this reflected in the current SP.
Markets typically overreact - and find it difficult to look at the big picture which means, that the current price well might be below value.
But anyway - just my view - and up to you whether you prefer to run instead behind the herd. Clearly a strategy as well. Less thinking required and it offers some safety in the numbers of the herd, though one has to pay for it by only getting already polluted water and grass which others already defecated on. Is this what the "smart money" does? - I leave this to others to judge.
Reported on the other channel and elsewhere that the recent extra loan provisioning that basically wiped out their half year profit in February took the level of delinquent loan provisioning down from 3.6% to 3.4%. WOW...how underwhelming is that! That's just on the loans they are currently disclosing as non-performing. How many more non-performing loans are hidden by their specialty Heartland "Extend" loan product?
27c then a SML type revival 2027?
I half joked about this on the other channel but I think it's possible the low is a long way off.
60c is full monk temptation meme.
Gosh are we going into the sixty's. At some point this will be a buy.........
They will need to do what they say they will do first.
problem is what right downs are still to come from their reckless lending, which they continue to do, I also think with a slowing China on the cards from the US tariffs, now in place, we could see a meaningful recession in NZ.
Have to see the 145% tarriff on most Chinese goods be negotiated way down before HGH is a buy.
A slowing China very bad for NZ inc.
I have a very large term deposit coming off 6.3% this week, now on offer 4.3% which for me does not reflect risk that has come to light due to their reckless lending, I can get 4.2% with the big boys.
You have to wonder how many depositors are thinking the same
Banking sector should underperform the broader market given the uncertainty and coming slow down in business activities. Cost of doing business is also very much high. In a weak business environment banks will end up with having more bad loans. On top of that many banks have lent money to businesses link to real estate, bitcoin, gold and other assets as well. What will happen if they start to fall rapidly. I'm cautious on the sector in 2025.
Really HGH have lost investor faith and market confidence, you have to wonder with the steps they have taken to smoke n mirrors the books they must have known investors would smell the BS. I suspect this move was the lessor of two evils as if they were more clearer with reporting the pile of crap loans and write offs all at the same time this would have been a very bitter pill to swallow.
Quote from: lorraina on Apr 15, 2025, 05:01 PMThey will need to do what they say they will do first.
Indeed. Won't be doing anything until next result's at the earliest. The market needs to see action on its non strategic assets and non performing loans. I notice only one director took the drp option. FB have normalised eps FY25 of 4.9 cps.
3rd quarter trading update
Heartland trading updateHeartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) today provides a trading update for the three months to 31 March 2025 (Q3).Heartland remains on track to achieve net profit after tax (NPAT) on an underlying basis for the financial year ending 30 June 2025 (FY2025) of at least $45 million. Net interest margin (NIM) expanded 28 basis points in Q3 (relative to the six-month period ended 31 December 2024 (1H2025)), with improvement seen in both Heartland Bank Limited (Heartland Bank) and Heartland Bank Australia Limited (Heartland Bank Australia). Operating expenses (OPEX) in Q3 remained stable – both banks are on track to meet OPEX expectations for the six-month period ending 30 June 2025 (2H2025) (as detailed below). Cost management programmes are in place to improve operational efficiency moving forward.Asset quality improvements are starting to show in Heartland Bank's Motor Finance portfolio following the introduction of more prescriptive collections and recoveries policies for the New Zealand bank as announced on 18 February 2025. As a result, early recovery efforts for the Motor Finance loans written off in February 2025 have exceeded expectations.Heartland is focused on sustainable, profitable growth, and has seen compelling gross finance receivables (Receivables) growth in Reverse Mortgages and Livestock Finance in New Zealand and Australia.For the full announcement, see the attachments to this release:- HGH 3Q2025 trading update- HGH investor presentation - 3Q2025 trading update
https://api.nzx.com/public/announcem...206-441713.pdf
good stuff, but link does not work for me.
Try this one:
https://www.nzx.com/announcements/450206
NPL down and RoE up ... and they even start to realize some of their NSA's (though slower than planned).
Moving into the right direction ...
https://api.nzx.com/public/announcement/450206/attachment/441713/450206-441713.pdf
$45m NPAT is nothing to be excited about.
The big increase in overheads (increase of 47 percent year on year) at last result surprised analysts, as it was explained they were NOT mostly one offs (7 percent). A cost-to-income (CTI) ratio of ~63 percent in 1H25H and 58 percent 3Q is far in excess of its <35% FY28 target. That's a real issue and a major concern. Increasing NIM is good but they also need a step change in income with such high over heads.
As far as the NSA'S go, taking out the home loans very little has changed.
$200m NPAT by 2028....... I suspect that goal and the CTI targets will need to be reviewed.
Don't think the market will be impressed with the update.
They seem to be making progress.
Run downs in poor lending sectors is welcome, as is their more progressive collections policy.
However I do wonder why it took so long for management and the two boards to wake up to their issues.
Agree Shareguy. Their costs are out of control. Management happy to gorge themselves and make endless excuses while shareholders get crumbs.
Quote from: Shareguy on Apr 16, 2025, 10:29 AM$45m NPAT is nothing to be excited about.
The big increase in overheads (increase of 47 percent year on year) at last result surprised analysts, as it was explained they were NOT mostly one offs (7 percent). A cost-to-income (CTI) ratio of ~63 percent in 1H25H and 58 percent 3Q is far in excess of its <35% FY28 target. That's a real issue and a major concern. Increasing NIM is good but they also need a step change in income with such high over heads.
As far as the NSA'S go, taking out the home loans very little has changed.
$200m NPAT by 2028....... I suspect that goal and the CTI targets will need to be reviewed.
Don't think the market will be impressed with the update.
CTI down, NPL down, NIM up, livestock and RM seeing more growth in NZ and AUS... Not saying it's an amazing announcement but for once it's not a negative one, and it's not going to be an overnight fix so like Percy said, looks like they are making progress. And market seems to have liked it enough to not continue the SP slide at least. Picked up a bunch more at 70c yesterday...
Quote from: raW tent Buffer on Apr 16, 2025, 11:53 AMCTI down, NPL down, NIM up, livestock and RM seeing more growth in NZ and AUS... Not saying it's an amazing announcement but for once it's not a negative one, and it's not going to be an overnight fix so like Percy said, looks like they are making progress. And market seems to have liked it enough to not continue the SP slide at least. Picked up a bunch more at 70c yesterday...
Agree, its a small step forward and if your a medium to long term investor these levels are good to buy into. The management team are going to gave to earn investors trust again and rightly so going forward.
Of course you have to be able to watch the volatility without panicking.
Quote from: snapiti on Apr 15, 2025, 06:16 PMI have a very large term deposit coming off 6.3% this week, now on offer 4.3% which for me does not reflect risk that has come to light due to their reckless lending, I can get 4.2% with the big boys.
You have to wonder how many depositors are thinking the same
Deposit guarantee scheme set to start on 1 July can't come soon enough for HGH but there's talk with the costs and Govt guarantee up to $100K, term deposit rates are set to take another big tumble. 3 point something percent will be the term deposit norm in a few months mate. Now do you see why some people are astutely hoovering up relatively safe utilities like GNE on a 9%+ gross yield ?
Quote from: Shareguy on Apr 16, 2025, 10:29 AMAs far as the NSA'S go, taking out the home loans very little has changed.
More holes in their balance sheet than a ten ton block of Swiss cheese.
I guess some people are thinking it must be cheap in the 70's and most of the skeletons are out of the closet. With a price to book of ~ 75% or thereabouts you can't go wrong, right ? But is it really all that cheap given non-performing loans only came down 25 bps to a still very high 3.4% at the half year result ?
Interesting segment on CNBC this morning pricked up my ears. Citibank with all its heritage, several experts on that segment reckon that's a buy. Price to book of only 60% and very cheap PE https://www.marketscreener.com/quote/stock/CITIGROUP-INC-4818/finances/ Anyway..I reckon you're very pleased you followed me out just north of $1 and you're wise to at least wait for the audited full year result and see how many more skeletons are in the closet.
Interesting
https://www.interest.co.nz/banking/132928/heartland-bank-chipping-away-car-loan-troubles-forsyth-barr-analysts-say-tough-times
Just discovered this interesting tool to compare banks by key financial metrics....... Have a play, it's quite revealing.
https://www.interest.co.nz/saving/bank-financial-comparator
Quote from: Left Field on May 10, 2025, 09:35 AMJust discovered this interesting tool to compare banks by key financial metrics....... Have a play, it's quite revealing.
https://www.interest.co.nz/saving/bank-financial-comparator
Thanks
Profit line for Hesrtland pretty shameful eh
WOW...fascinating tool, thanks Left field.
Benchmarking Heartland against the biggest bank in N.Z., ANZ I noted
Non performing business loans Heartland 6.3%, ANZ 1.4%
Non performing agricultural loans Heartland 4%, ANZ 0.5%
Total Non performing loans Heartland 3.4% ANZ 0.9%
Very poor up-front lending policies and ongoing loan management at Heartland ?...you be the judge.
I remain of the view that this train wreck is only part of the way through being played out and there needs to be huge changes at a management and board level before I'd ever consider being an investor again.
Quote from: Left Field on May 10, 2025, 09:35 AMJust discovered this interesting tool to compare banks by key financial metrics....... Have a play, it's quite revealing.
https://www.interest.co.nz/saving/bank-financial-comparator
Great stuff. Thanks for that Left Field
Hey Basil ...you didn't compare NIMs
Naughty, as Heartland NIM is awesome
Quote from: winner (n) on May 10, 2025, 12:19 PMHey Basil ...you didn't compare NIMs
Naughty, as Heartland NIM is awesome
Doesn't matter what you NIM is if you make poor lending and risk decisions and lend to any old bunch of Muppets and then the loans are managed by people who are incompetents'. HGH management increasingly talk about fully automating their lending process's like that's some magic panacea for improved profitability. What could possibly go wrong...lol The only part of their business model that's any good is the reverse mortgages and only because its really hard to make a mess of that.
Quote from: Basil on May 10, 2025, 12:26 PMDoesn't matter what you NIM is if you make poor lending and risk decisions and lend to any old bunch of Muppets and then the loans are managed by people who are incompetents'. HGH management increasingly talk about fully automating their lending process's like that's some magic panacea for improved profitability. What could possibly go wrong...lol The only part of their business model that's any good is the reverse mortgages and only because its really hard to make a mess of that.
They should adopt that Stellare thing that Harmoney has.....their custom credit risk tool backed by machine learning and AI that allows superior risk and loan making decisions.
That'll fix it for Heartland
Quote from: Basil on May 10, 2025, 11:50 AMWOW...fascinating tool, thanks Left field.
Benchmarking Heartland against the biggest bank in N.Z., ANZ I noted
Non performing business loans Heartland 6.3%, ANZ 1.4%
Non performing agricultural loans Heartland 4%, ANZ 0.5%
Total Non performing loans Heartland 3.4% ANZ 0.9%
Very poor up-front lending policies and ongoing loan management at Heartland ?...you be the judge.
I remain of the view that this train wreck is only part of the way through being played out and there needs to be huge changes at a management and board level before I'd ever consider being an investor again.
Mind you, holders will say all the adverse comparison figures are historical (hysterical?) and HGH's future is bright.
To that I would say from my experience at the annual meeting, I didn't get a single answer to any question asked of directors or management either during the meeting or afterwards that gave me any confidence there had been any learnings from past mistakes. Their overall demeneour was, we know we have to do better and trust us, we know what we are doing. What could possibly go wrong lol
Mind you, milk prices are currently in the stratosphere (which historically was always good for HGH), and I am sure the high prices for red meat help as well.
Apparantly there is as well a beef shortage in the US (with prices moving up), and putting a pig in the white house didn't help ...
Anyway - might well help some of these NZ farmers to pay back their debts, which would be good for HGH.
HGH already up 6.5% (5 cents) from recent lows and just moved through the MA50. Clearly - the backwards looking numbers don't look that flash compared with the more conservative competition (but hey, if they just would be a mini ANZ, they couldn't scale ..). Some people in the market seem to think now is a good time to buy ...
Dairy going gangbusters for sure BP. Take that out and one or two other primary industries that are doing well though, and oh dear, the rest of the economy still looks like its mired in recession. Then there's the global economic outlook with the petulant child in the Oval office throwing regular tantrums and its difficult to see what's going to make our economy start humming along in a satisfactory manner again, anytime soon ? Maybe 50 bps cut by RBNZ on 28 May will help to a fair extent but I doubt that's the panacea to all that irks most Kiwi's The big learning for me last year with HGH, is the fortunes of this company are inextricably tied in very tightly with that of the economy. I thought the economy would emerge from recession in the latter half of last year, it still hasn't in my opinion. Have a read of this, its pretty grim. https://www.theguardian.com/world/2025/may/09/leaving-new-zealand-record-departure-numbers?fbclid=IwY2xjawKLYuRleHRuA2FlbQIxMQBicmlkETF6T3JtWjdUZ3NWcDJEZXpZAR5RUD0jXJUp5brBj8oq9dTFSLPvy1xb_W1u6ogyIfhVoMY5xi2WOGgbBiNjZw_aem_qvPmRTuS0inrqY_CXB7X5Q
Taking a ~ $50m hit on their loan book in late February 25 that ostensibly wiped out the first half profit and then the rhetoric that went with that claiming it to be a big reset of the balance sheet and transformational this and reset that and other words to that effect...all sounded wonderful until you actually read the numbers that non performing loans were only reduced by a very modest 25 bps from 3.65% to 3.4%.
That very slight non performing loan reduction didn't match all the fancy narrative that went with it that management uttered, far from it. Its very easy to be forgiven for thinking management talks a very big story but their delivery is sadly wanting.
Good to see these guys making a rally, finally back in the black as of this morning (my last parcel at 70c helped). Onwards and upwards?
Quote from: raW tent Buffer on May 16, 2025, 10:41 AMGood to see these guys making a rally, finally back in the black as of this morning (my last parcel at 70c helped). Onwards and upwards?
There are certainly green shoots in the TA, but on the other hand - both MA100 and MA200 still hoovering above the current SP, i.e. we are not yet out of the woods.
Based on various FA indicators it is clearly a BUY (e.g. backward 10yr PE 7.2, NTA $1.03), but sure - one can always distrust the people who generate the forecasts (and yes, their forecasts are rarely better than chimpanzees throwing darts), and one can always distrust the people running the company - ANY company, and sometimes (often?) rightly so.
Anyway, as they say - the death of HGH seemed to be severely exaggerated, and while I don't know either what tomorrow will bring, I am pretty sure that HGH will keep appreciating over the years to come.
Retirees will need additional money (REM's), Farmers will have more money to pay back their loans, and even people buying cars will eventually benefit - they need a car to drive to their new job on the farm, and the farm pays the wages (and the loan).
Quote from: BlackPeter on May 16, 2025, 11:20 AMwhile I don't know either what tomorrow will bring, I am pretty sure that HGH will keep appreciating over the years to come.
I remember when this happened https://www.interest.co.nz/bonds/70048/heartland-bank-credit-rating-lifted-notch-bbb-sp-strengthened-business-position 11 years ago and the shares were in their mid 80's and quickly rose into the 90's as a result. Shares have done a round trip to nowhere in the last 11 years.
Just a thought. 90 cents in May 2011 should be $1.24 in inflation adjusted terms now, (source RBNZ inflation calculator). Just as well we know this dip is only temporary and its all up from here because we know for sure all the dirty laundry and skeletons are out of the closet, or do we?
Quote from: Basil on May 16, 2025, 11:54 AMI remember when this happened https://www.interest.co.nz/bonds/70048/heartland-bank-credit-rating-lifted-notch-bbb-sp-strengthened-business-position 11 years ago and the shares were in their mid 80's and quickly rose into the 90's as a result. Shares have done a round trip to nowhere in the last 11 years.
Just a thought. 90 cents in May 2011 should be $1.24 in inflation adjusted terms now, (source RBNZ inflation calculator). Just as well we know this dip is only temporary and its all up from here because we know for sure all the dirty laundry and skeletons are out of the closet, or do we?
Just confirms banks are 'cyclical' ...some more cyclical than others
Mind you WBC.AX share price today about the same as it was 11 years
Gosh...76 cents and we are coming up to that time of year when the auditors have to have a really good look through all of Heartland's dirty laundry. You'd be a brave investor to think there won't be quite a few more so called "one-off" write-offs.
Quote from: Basil on Jun 04, 2025, 05:51 PMGosh...76 cents and we are coming up to that time of year when the auditors have to have a really good look through all of Heartland's dirty laundry. You'd be a brave investor to think there won't be quite a few more so called "one-off" write-offs.
The monthly ADI reporting by APRA indicates Heartland Australia is experiencing excellent growth.
Quote from: LaserEyeKiwi on Jun 10, 2025, 09:20 AMThe monthly ADI reporting by APRA indicates Heartland Australia is experiencing excellent growth.
..,and heading to $200m NPAT
Quote from: LaserEyeKiwi on Jun 10, 2025, 09:20 AMThe monthly ADI reporting by APRA indicates Heartland Australia is experiencing excellent growth.
I think its widely understood that was always going to be a given and is something management have repeatedly highlighted, always accentuating the positive and trying to sweep all the problem loans here under the carpet and never once owning any of their mistakes or showing any remorse or contrition for their woeful performance.. The reverse mortgage business is the one part of the business that's good and gives a decent return on capital employed.
Quote from: Basil on Jun 10, 2025, 10:15 AMI think its widely understood that was always going to be a given and is something management have repeatedly highlighted, always accentuating the positive and trying to sweep all the problem loans here under the carpet and never once owning any of their mistakes or showing any remorse or contrition for their woeful performance.. The reverse mortgage business is the one part of the business that's good and gives a decent return on capital employed.
I wouldn't put it quite that way, the other products are also spitting off lots of cash for the most part, they just look uglier because thats where the big impairment accounting charges were:
See page 13 of this report:
https://api.nzx.com/public/announcement/447501/attachment/438541/447501-438541.pdf
So a much stronger than GDP number this morning should be good news for HGH.
https://www.nzherald.co.nz/business/...KLOZ25W33I2PQ/
Only 11 days to go before end of year with possible update during July ahread of year end result.
Quote from: Greekwatchdog on Jun 19, 2025, 11:11 AMSo a much stronger than GDP number this morning should be good news for HGH.
https://www.nzherald.co.nz/business/...KLOZ25W33I2PQ/
Only 11 days to go before end of year with possible update during July ahread of year end result.
I suppose this was the link you intended to post?
https://www.nzherald.co.nz/business/gdp-shows-strong-growth-in-the-first-quarter-of-2025/SXIINXFDCBD7RKLOZ25W33I2PQ/
(Paywalled)
I guess good to see some growth, but not so good it likely means no further interest drops ...
Quote from: BlackPeter on Jun 19, 2025, 11:21 AMI suppose this was the link you intended to post?
https://www.nzherald.co.nz/business/gdp-shows-strong-growth-in-the-first-quarter-of-2025/SXIINXFDCBD7RKLOZ25W33I2PQ/
(Paywalled)
I guess good to see some growth, but not so good it likely means no further interest drops ...
Thanks BP. Worked before.
Maybe market doesn't require any more interest rate cuts for know. This could be the bottom?
I mean lets look at it, we are 10 days away from end of quarter so be interesting to see what this quarters GDP numbers look like. Sadly we need to wait another 3 months for that.
In the mean time we await news ex HGH
HGH owed $8.9 million.......HGH appointed as receiver.
https://www.nbr.co.nz/business/boxman-group-companies-owe-creditors-16m/
Another ouch for HGH?
Quote from: Left Field on Jun 24, 2025, 03:26 PMHGH owed $8.9 million.......HGH appointed as receiver.
https://www.nbr.co.nz/business/boxman-group-companies-owe-creditors-16m/
Another ouch for HGH?
No worries ....non-cash adjustment in previous reports I'd say
Quote from: Left Field on Jun 24, 2025, 03:26 PMHGH owed $8.9 million.......HGH appointed as receiver.
https://www.nbr.co.nz/business/boxman-group-companies-owe-creditors-16m/
Another ouch for HGH?
Anymore details from the article? Or is there a direct link to the liquidators report?
From what I can see this started as a contract dispute with A1 containers, with boxman owning significant assets around the country which should recover a lot of the money owed, but would be great to see the figures in the report.
LEK here's some liquidators and receieversvreports
https://app.companiesoffice.govt.nz/companies/app/service/services/documents/204836C89791B38E0B1610131BB593BE
https://app.companiesoffice.govt.nz/companies/app/service/services/documents/CD4242324A4353533E579569C1092899
Quote from: winner (n) on Jun 24, 2025, 04:45 PMLEK here's some liquidators and receieversvreports
https://app.companiesoffice.govt.nz/companies/app/service/services/documents/204836C89791B38E0B1610131BB593BE
https://app.companiesoffice.govt.nz/companies/app/service/services/documents/CD4242324A4353533E579569C1092899
Thanks for that, appreciated.
Reading these as more of a curiosity, unfortunately doesn't contain asset values.
Big volume traded today- 7.685m shares @ 77.12cps VWAP
https://www.apra.gov.au/monthly-authorised-deposit-taking-institution-statistics
Looks like steady growth for the Aussie RM book month of May. I'm sure the NZ bank will be finding ways to offset this growth though.
Quote from: raW tent Buffer on Jul 02, 2025, 08:51 AMLooks like steady growth for the Aussie RM book month of May. I'm sure the NZ bank will be finding ways to offset this growth though.
LOL
you are absolutely correct
I was trying to open a savings account and had a question. they never responded to my message so I called. They never responded to that either. that was four weeks ago.
Have opened an account with another bank
Quote from: raW tent Buffer on Jul 02, 2025, 08:51 AMhttps://www.apra.gov.au/monthly-authorised-deposit-taking-institution-statistics
Looks like steady growth for the Aussie RM book month of May. I'm sure the NZ bank will be finding ways to offset this growth though.
The APRA report will be useful in future, but I enquired with HGH investor relations about the difference between the APRA report and HGH reporting for the OZ holdings, and they explained that HGH is still in the process of moving some OZ assets into the ADI entity, so until that process is complete we can't tell from the APRA report how much of the monthly growth is from new business vs internal company transfers.
Ha ha ....Heartland having ASM in Ashburton
They do anything to avoid Basil being present and asking tricky questions
LOL... I don't think Greg likes my questions. Happy to take people's proxies if it comes with free air tickets 😁
I think Basil will still have plenty of fun with his numerous online questions.
I can see Greg asking if there are any online questions.
Yes PLENTY..lol
Quote from: lorraina on Jul 16, 2025, 12:21 PMI think Basil will still have plenty of fun with his numerous online questions.
I can see Greg asking if there are any online questions.
Yes PLENTY..lol
They have a habit of overlooking online questions if too tough ....saves a lot of vague nonsensical answers
FB latest reporting season preview says arrears at elevated levels and impairments and or lending growth could surprise negatively over second 2H25. Cost outlook maybe negative relative to expectations..a negative bias. reporting season a potential negative catalyst.
Forsyth Barr's Harvey-Green is forecasting normalised (underlying) net profit of $46.2 million for Heartland's June-year, growing to $83.3 million in its 2026 financial year and $105.7 million in 2027.(from that piece in interest.co)
Not very demanding targets but should see the share price double over the next 2 years
On those figures the eps would be 4.91 cents and the PE ratio would be 16.5 at 81 cents.
Quote from: Shareguy on Aug 06, 2025, 04:22 PMFB latest reporting season preview says arrears at elevated levels and impairments and or lending growth could surprise negatively over second 2H25. Cost outlook maybe negative relative to expectations..a negative bias. reporting season a potential negative catalyst.
I believe they are reading the room correctly. The fact is we have unemployment at a very elevated level as well as business insolvencies in certain sectors, likewise. We also have a two speed economy with the some rural sectors doing well and the rest of the economy in a lengthy recession. It would seem inevitable that the RBNZ will cut tomorrow to reflect the reality of the overall economy recovering at a glacial pace however I don't expect the pace of recovery to improve quickly and more economic stimulus is definitely required. This is not an economic backdrop against which Heartland with its demonstrated inability to adequately manage arrears across business cycles is likely to thrive especially given their starting point with highly elevated loan arrears.
Hot dog - Market likes the OCR track dropping to 2.5% low
Here it is https://www.nzx.com/announcements/457176
Divvie $0.02. Result as to be expected
Guidance this early for 2026 as well. How many upgrades throughout the year I wonder?
Overview: FY2026 outlookHeartland's priority for FY2026 is to deliver an underlying return on equity (ROE) of at least 7% and animproved underlying NPAT of at least $85 million. In FY2026, Heartland will maintain its refined strategic focuson its core product sets, invest in technology uplift to unlock future growth, continue to focus on operationalcost control and prioritise efficient use of capital.
NPAT of $38.8 mil .Number of shares on issue 940,099,841,means eps of approx 4.1cps gives a PE of approx 20.24.
Underlying NPAT $46.9 means eps of 4.98 cps and PE of 16.67.
Disappointing to see impairments are up.
Guidance NPAT of $85 m gives eps of 9 cps and a PE of 9.22..
Decent progress from HGH in a challenging economy. Reverse Mortgages now around 48% of receivables and growing at 15-19% p.a. so should be closer to 54/55% of receivables in a year's time. Together with $85m+ NPAT guidance expect this to be well received by the market.
Quote from: Mos on Aug 21, 2025, 09:48 AMDecent progress from HGH in a challenging economy. Reverse Mortgages now around 48% of receivables and growing at 15-19% p.a. so should be closer to 54/55% of receivables in a year's time. Together with $85m+ NPAT guidance expect this to be well received by the market.
Yep looks like the tide has turned for HGH so I finally joined the club today.
Good divvy prospect (around 9% return on today's prices) plus aiming to double underlying profit in FY26 should drive the SP higher.
Article on today's news here FYI
https://www.interest.co.nz/banking/134827/heartland-posts-469-million-underlying-june-year-profit-and-targets-85-million
Quote from: lorraina on Aug 21, 2025, 09:43 AMNPAT of $38.8 mil .Number of shares on issue 940,099,841,means eps of approx 4.1cps gives a PE of approx 20.24.
Underlying NPAT $46.9 means eps of 4.98 cps and PE of 16.67.
Disappointing to see impairments are up.
Guidance NPAT of $85 m gives eps of 9 cps and a PE of 9.22..
Thanks for crunching the numbers on the hugely expanded number of shares on issue. Possibly worth noting that the guidance is for no real growth in eps in FY26 as 1H FY25 was a write-off with ostensibly no profit due to asset write-downs. Just as well we can be absolutely sure this won't repeat and there won't ever be more major unexpected write-offs ;)
I see all their much hyped FY28 goals that their capital raise was predicated upon of $200m profit and a cost to income ratio of 35% are gone for a Burton and they will announce new FY30 goals at an investor day to be held before the annual meeting. We can be sure these new goals have far more credibility that their last ones eh ;)
My assessment is this is a very, very poorly managed company with huge numbers of executives being paid incredibly well and performing far below the standard that would reasonably be expected of them. Taking years to realise that a stricter more regimented policy to chase loan arrears would result in a better outcome. ::) Costs and impairments are rampant. The reverse mortgage side of the business is worth normal banking metrics, the rest of it is ostensibly worthless in my opinion.
Quote from: Basil on Aug 22, 2025, 10:57 AMThanks for crunching the numbers on the hugely expanded number of shares on issue. Possibly worth noting that the guidance is for no real growth in eps in FY26 as 1H FY25 was a write-off with ostensibly no profit due to asset write-downs. Just as well we can be absolutely sure this won't repeat and there won't ever be more major unexpected write-offs ;)
I see all their much hyped FY28 goals that their capital raise was predicated upon of $200m profit and a cost to income ratio of 35% are gone for a Burton and they will announce new FY30 goals at an investor day to be held before the annual meeting. We can be sure these new goals have far more credibility that their last ones eh ;)
My assessment is this is a very, very poorly managed company with huge numbers of executives being paid incredibly well and performing far below the standard that would reasonably be expected of them. Taking years to realise that a stricter more regimented policy to chase loan arrears would result in a better outcome. ::) Costs and impairments are rampant. The reverse mortgage side of the business is worth normal banking metrics, the rest of it is ostensibly worthless in my opinion.
Agreed. Have they turned the corner? Possibly, but how would you know, given the credibility gap that exists between shareholders and management. HGH have been borderline dishonest in their predictions of growth in NPAT - either that or they simply did not know what was going on in their own business. Take your pick.
I am highly suspicious of their guidance figures and would want them to meet or exceed them before returning to the fold.
I am also a bit worried about their dependency on the reverse mortgage business. Will there be a point where that market begins to dry up and if so where does the growth come from?
My view
HGH share price was about $2.50 not that long ago. Will it ever get back to that level?
Not likely for a long time I reckon.
HGH EPS peaked at 16.1 cents a share .... FY25 it achieved 4.1 cents. Wow that's bad and the legacy that Greenslade left behind. Realisation that reported profits weren't actually there and the subsequent capital raises produced this collapse.
Never mind. We need to forget what was and live the new dream. After all Greenslade took EPS from 4 cents to 16 cents (over 10 years) so the new crew can do that eh.
guidance for F26 is >$85m or 9 cents a share ....maybe 10 cents after profit upgrades. The market might be happy in a years time and Heartland will be a roll so a share price of $1.50 is a reasonable target. Not $2.50 but a lot better than what it's now and a good start for the new Heartland era.
Book Value will be about $1.50 per share by then so it all stacks up
One of the most amazing charts I've produced
Many stories can be told over the years I reckon
HGH EPS Chart.png
Forbar have a neutral rating and a price target of $0.96
Cost to income ratio (CTI) has gone absolutely ballistic in the last 2 years and is completely out of control in my opinion. FY26 outlook for same gives no encouragement. CTI gone from 48% to 59.6% in just 1 year, for goodness sake ! This against their much hyped target, (now no longer mentioned), of getting it down to 35% by FY28. Completely disingenuous in my opinion. If there was any chance of them getting it down to 35% by then the CTI would be trending down, not rocketing up at a ballistic pace. Layers and layers of senior management on vast salaries, performing in a manner that would deeply embarrass decent quality middle management in one of the major Australian banks in my opinion.
The way they have dropped all FY28 targets that the capital raise was predicated upon smacks of a total lack of credibility around those original targets. The annual report due for release on 30 Sept will make for a fascinating read to see how many of these "banking professionals" are collecting $500K or more salaries.
That's one scary chart Winner! (thanks for posting.)
However, I like the bend beginning in the end.
The cunning plan is that management has learned something and won't repeat their past mistakes!!??....as you say in post #2166 (Crikey that's a lot of frenzied posting for this thread....) "guidance for F26 is >$85m or 9 cents a share ....maybe 10 cents after profit upgrades. The market might be happy in a years time and Heartland will be a roll so a share price of $1.50 is a reasonable target."
Risky maybe, but not as risky as it was buying north of $1.00. Sometimes turn-around stories prove worth the risk (TWR etc.) At around $0.80c I suspect the risk is worth the opportunities.
The other cunning plan is only holding HGH at < 2% of a portfolio currently, then only adding more when/if the news and the figures improve.
JMHO. Each to their own.
Great chart Winner. The way I see it anything over 12 cps is not real because Greenslade was chasing his huge bonus's and many loans were not provisioned properly. Its a no growth company capable of making about 10 cps across the business cycle and I value no growth companies at 8.5 times average earnings. Fair value is about where the shares are currently priced, if and only if, you trust the new management and quite obviously, I don't. I've made very good money in the past but in recent times its a case of once bitten twice shy and I'm not drinking the HGH cool aid again.
Quote from: winner (n) on Aug 22, 2025, 11:51 AMOne of the most amazing charts I've produced
Many stories can be told over the years I reckon
HGH EPS Chart.png
Interesting chart ... and yes, the years 2012 to 2022 had a lot of interesting moments as well.
The question is - is this a cyclical stock and the next 10 years are good again? Will the SP go up again to $2.50 and higher?
Impossible to say - even the usual one year forecasts are absolutely meaningless (little signal and plenty of noise).
I guess the only halfway sensible question is, whether the SP goes up from where it is now ... and I think the chances are not too bad that it will be better in a year or so.
More complicated is the question whether the SP will go up faster or slower than NZX. Hard to say und obviously very dependent as well on the performance of the current management team.
I understand that many people don't love them anymore, while some years ago everybody was just loving them.
Easy to see that love for a team is related to past earnings and (future) stories.
Rising earnings is good. Stories promising more earnings rises to come are good.
Clearly - earnings dropped since 2013. Was this the old loved team or the new unloved team?
Predictions look good, but hey - why would we want to believe them?
Anyway ... personally I am still holding and don't think that now is the best time to leave. But hey, my forward forecasts are not different to others. Sometimes I am right and sometimes I am wrong.
Quote from: Basil on Aug 22, 2025, 12:18 PMForbar have a neutral rating and a price target of $0.96
Cost to income ratio (CTI) has gone absolutely ballistic in the last 2 years and is completely out of control in my opinion. FY26 outlook for same gives no encouragement. CTI gone from 48% to 59.6% in just 1 year, for goodness sake ! This against their much hyped target, (now no longer mentioned), of getting it down to 35% by FY28. Completely disingenuous in my opinion. If there was any chance of them getting it down to 35% by then the CTI would be trending down, not rocketing up at a ballistic pace. Layers and layers of senior management on vast salaries, performing in a manner that would deeply embarrass decent quality middle management in one of the major Australian banks in my opinion.
The way they have dropped all FY28 targets that the capital raise was predicated upon smacks of a total lack of credibility around those original targets. The annual report due for release on 30 Sept will make for a fascinating read to see how many of these "banking professionals" are collecting $500K or more salaries.
Interesting noting HMY's cost to income.
19% Cost to income
Automation and increasing
scale continue to drive
efficiency gains, fuelling
improved profitability as the
loan book grows
Craigs;
FY26 guidance for NPAT of at least $85m
HGH has guided to FY26 Underlying NPAT of at least $85m. Key drivers of
this are 1) an average NIM greater than 3.90%, 2) a CTI ratio of under 53.5%,
Price Target $1.22 (prev $1.12)
and 3) an annualised Impairment Expense ratio of under 0.55%. The NIM looks
achievable based on Q425 exit rates, and with improvements in the operating
Our Price Target remains based on
environment we think the CTI and Impairment targets are also achievable. We
the average of a forward PE of 12.0x
have forecast $86.8m (prev $91.1m).
($1.41), a target P/BV of 0.9x ($1.20),
and a target dividend yield of 6.0%
Overweight rating retained
($1.04) based on the long-term
sector average.
We think the new management team has made a good start at restructuring
the activities to focus on the high ROE receivables where they can retain a
Our Price Target implies a forward
competitive advantage. We expect this will be aided by an improving macro
PE of 10.4x and and cash dividend
environment over the next year that should translate into growing EPS and
yield of 5.1% (7.1% gross yield).
dividends. We have retained our Overweight rating.
Forecasts And Ratios
Year End 2024A 2025A 2026F 2027F 2028F
EPS 9 4 9 11 14
P/E (CIP) (x) 9.7 20.8 9.4 7.5 6.2
DPS (net) (cps) 7.0 4.0 5.5 7.2 8.5
Yield (net) (%) 8.1 4.7 6.4 8.4 9.9
s
One lesson all should take on board from this mess is that 'normalisation' of profits is a bad practice. Often as in the case of Heartland the abnormals turn out to be real and not abnormal at all
The start of this practice at Heartland was a red flag ......especially after years of Jeff always doing what he said he would do.
Jeff was a master of 'normalising' to smooth profits ...as was Jack Welch at GE and just as it did with Jack it caught up with Jeff.
After Jack Welch left GE they said ...."Jeff has left it a hollowed-out "pile of shit".... And suffered 20 years of gradual decline. Have a look at the GE share chat this century to see the consequences
It concerns me that Jeff's protege and Heartland CFO during the normalisation period is now running the place as CEO
Have things changed? Probably not as they still tell great stories and continue the normalisation process. It was good news to some they beat guidance on 'underlying' basis (cynically I note that normalisation things in H2 was $1m) - haven't we heard just beating guidance before?
Never mind, the markets happy today so it's all hunky dory.
Quote from: winner (n) on Aug 22, 2025, 01:26 PMOne lesson all should take on board from this mess is that 'normalisation' of profits is a bad practice. Often as in the case of Heartland the abnormals turn out to be real and not abnormal at all
The start of this practice at Heartland was a red flag ......especially after years of Jeff always doing what he said he would do.
Jeff was a master of 'normalising' to smooth profits ...as was Jack Welch at GE and just as it did with Jack it caught up with Jeff.
After Jack Welch left GE they said ...."Jeff has left it a hollowed-out "pile of shit".... And suffered 20 years of gradual decline. Have a look at the GE share chat this century to see the consequences
It concerns me that Jeff's protege and Heartland CFO during the normalisation period is now running the place as CEO
Have things changed? Probably not as they still tell great stories and continue the normalisation process. It was good news to some they beat guidance on 'underlying' basis (cynically I note that normalisation things in H2 was $1m) - haven't we heard just beating guidance before?
Never mind, the markets happy today so it's all hunky dory.
Absolutely - a quite relevant lesson. Just hope somebody reminds us towards the end of the next path up ...
Quote from: winner (n) on Aug 22, 2025, 01:26 PMHave things changed? Probably not
My assessment from attending the annual meeting last year and talking with board members and senior management during and after the meeting is nothing has changed and no lessons have been learned.
That EPS chart I put up earlier. Suppose it makes a lie out of the times Heartland have used the terms 'eps accretive' and 'ROE accretive'
Balance seems to have got his timing right, purchasing HGH in the 70c & 80c range.
Here's his summation of the recent results.....
FY2025 Result – Resetting the Base, Market Rewards Strategic Clarity
Heartland Group reported its FY2025 full-year result on 21 August 2025, with the stock rallying +11% as investors responded positively to credible delivery on guidance, margin expansion, asset-quality improvements, and attractive yield.
Reported NPAT: NZD 38.8m (↓24% YoY)
Underlying NPAT: NZD 46.9m (met guidance ≥ NZD 45m)
Dividend: 4.0 cps, 80% payout of underlying NPAT (~6.9% yield)
Key Highlights
1. Strong Underlying Profitability
Underlying NPAT of NZD 46.9m met the bottom end of guidance, helping rebuild confidence in management credibility after a challenging FY24.
2. Margin Expansion
Group NIM improved 17bps to 3.56%. Exit NIMs of 4.13% in NZ and 3.59% in Australia exceeded expectations, underpinning improved earnings quality.
3. Asset Quality & Loan Book "Derisking"
Aggressive write-offs and collections improved credit quality. Motor Finance arrears now outperform industry peers. NPL ratio improved to 2.40% (ex-NSA & unsecured).
4. Growth in Core Segments
Reverse Mortgages: +15.5% NZ, +18.5% AU, confirming the key growth engine.
Livestock Finance: +18.4% NZ, +1.5% AU, reversing prior declines.
5. Capital Efficiency & Realisations
Reduction in non-strategic assets (−NZD 103m in 2H25) freed NZD 7.7m in capital. Sale of insurance and Harmoney exposures released an additional NZD 9.8m.
6. Dividend & Yield
Final dividend of 2.0 cps brought FY25 payout to 4.0 cps (80% payout). At ~NZD 0.86/share, this equates to a forward yield of ~6.9%, above peer averages.
7. Outlook FY2026
Management signalled improved NPAT and ROE in FY26, underpinned by a refocus on core products, digital upgrades, cost control, and disciplined capital allocation.
Market Interpretation
Guidance Delivered: Meeting the NZD 45m underlying NPAT threshold restored credibility.
Margin Upside: Higher NIMs point to structurally better profitability.
Growth Engines Intact: Reverse mortgages and livestock lending are scaling sustainably.
Risk Discipline Evident: Loan book clean-up reassures after past impairments.
Attractive Yield: A near 7% yield offers compelling shareholder returns.
Execution Confidence: FY26 strategy provides clarity and confidence.
Nice turn around story unfolding IMO. GLH's.
Craigs has moved Heartland to overweight with 12mth price target $1.22
Quote from: Nizzy on Aug 23, 2025, 11:52 AMCraigs has moved Heartland to overweight with 12mth price target $1.22
Nice boost to the SP today to reach $0.95c.
TA looking v favourable too. ( Tho' I expect some resistance around $1.00)
SP now up over 11% in less than 1 month ( future dividend yields an additional bonus.)
Craigs aren't alone in liking HGH at the moment.
After a period when HGH was Salt Funds favourite short, they are now going long on HGH saying;
"What has changed is that HGH has cleaned house. They are now
focused on their (average) car lending business, their strong stock
finance business and their incredibly attractive reverse mortgage
business, where they are the largest provider in NZ/Australia.
They (HGH) are pushing on an open door in a market which has many years of
strong growth ahead and which has very strong returns. Analysts
are under-estimating just how strong those returns will be."
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
Basically at consensus price already. Average analyst view is hold.
Cleaned house or cleaned a couple of the rooms to quite a poor standard ? I'd go with the latter.
Quote from: Basil on Sep 16, 2025, 09:12 PMhttps://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
Basically at consensus price already. Average analyst view is hold.
Cleaned house or cleaned a couple of the rooms to quite a poor standard ? I'd go with the latter.
Salt guy says - Analysts
are
under-estimating just how strong those returns will be."
Probably right in saying that
Salt likely looking to unload their position after loading up in the 70 cent range
Quote from: winner (n) on Sep 17, 2025, 12:29 AMSalt guy says - Analysts
are under-estimating just how strong those returns will be."
Probably right in saying that
Probably underestimating the costs of the convoluted management structure too.
7% ROIC target is poor as is the forecasted $85m profit on the vastly expanded number of shares.
A very average company and in my view management have done a well below average job of managing risks in their loan book which is still riddled with delinquent non performing loans.
Leading insolvency expert, PWC partner John Fisk reckons receiverships are going to go up.
https://www.nzherald.co.nz/business/the-danger-of-paying-upfront-in-tough-times-the-prosperity-project/DWQ3PPX5LVALHFWNRUJLALYI5U/
Still a LOT of business lending on HGH's books and a lot of it is past due debt.
Quote from: Basil on Sep 22, 2025, 10:14 AMLeading insolvency expert, PWC partner John Fisk reckons receiverships are going to go up.
https://www.nzherald.co.nz/business/the-danger-of-paying-upfront-in-tough-times-the-prosperity-project/DWQ3PPX5LVALHFWNRUJLALYI5U/
Still a LOT of business lending on HGH's books and a lot of it is past due debt.
Hmm - actually, the annuals (released a month ago) looked not too bad.
https://www.nzx.com/announcements/457176
Noting as well, that agriculture is doing reasonably well, and unemployment so far not too bad either ...
Anything new since then which really impacts on HGH business?
Construction sector really hitting the wall. The whole sector is being absolutely hammered, (pardon the pun).
Lazurus called out business insolvencies as a key risk at the last annual meeting.
Fisk is saying they're increasing due to the long lead time and lag effect. IRD taking a more assertive approach to collecting GST and tax arrears from what I have heard talking to other accountants.
Quote from: Basil on Sep 22, 2025, 11:31 AMConstruction sector really hitting the wall. The whole sector is being absolutely hammered, (pardon the pun).
Lazurus called out business insolvencies as a key risk at the last annual meeting.
Fisk is saying they're increasing due to the long lead time and lag effect. IRD taking a more assertive approach to collecting GST and tax arrears from what I have heard talking to other accountants.
Sure - things always look bad at the bottom, and you only know afterwards whether it really was the bottom.
But still - if we look into their still rather up to date report - I can't see anything too terrible.
Taking a totally different look - was this a golden cross a couple of weeks ago, and did the SP just climb above the MA400? Maybe market is not that negative at the moment?
Best wishes with it BP. Its not for me. I simply cannot be bothered anymore investing in companies where management haven't already earned my respect and full confidence.
Quote from: Left Field on Aug 25, 2025, 05:08 PMNice boost to the SP today to reach $0.95c.
TA looking v favourable too. ( Tho' I expect some resistance around $1.00)
SP now up over 11% in less than 1 month ( future dividend yields an additional bonus.)
Tested $1.00 however as expected there is resistance. I reckon HGH SP needs positive news to justify a firm new base north of $1.00 but JMHO.
held over $1.00 yesterday - interested to see what it does today.
I'm close to moving out of the red on this one.
I'm sure those who bought a while back at the bottom will be a lot happier than those who paid $2.50 a few years ago. Nevertheless there is still good reason to be cautious about delinquent and problematic loans.
https://www.nzherald.co.nz/business/economy/company-liquidations-up-26-despite-improving-credit-trends/NAK5UM7C5NAOTCWUYIDSLUOYAQ/
No one seems to have posted HGH's FY 2025 annual report...... so here it is for reference.
https://api.nzx.com/public/announcement/459734/attachment/453264/459734-453264.pdf
"We currently expect that during the period
to FY2030, investors will see a significant
increase in underlying ROE and underlying
NPAT, driven by a continued focus on capital
efficiency, the retention of Australian profits
by Heartland Bank Australia to fund growth,
continued growth in core products with a bias
to growth in Reverse Mortgages, superior NIM
being maintained, enhanced asset quality,
and a reduced underlying cost-to-income
(CTI) ratio."
People should keep their expectations on improvements very modest in my opinion. Over the long run this has proven to be a very poorly managed and governed company with little real financial expertise displayed by management in managing lending risks across the business cycle. The current CTI ratio is absolutely disgraceful and is a direct function of the culture of greed and and entitlement that runs very deep in Heartland. Does a leopard change its spots...
Quote from: Basil on Oct 01, 2025, 01:11 PMPeople should keep their expectations on improvements very modest in my opinion. Over the long run this has proven to be a very poorly managed and governed company with little real financial expertise displayed by vastly overpaid management in managing lending risks across the business cycle.
Does a leopard change its spots ?
Seriously thats rather rich coming from you considering you were boasting buying @ $1.15 and with $300k more to spend looking so far forward to the $200m in 2028. Take a check here Basil, and consider how badly you screwed up missing all the signals.
Of course the irony here is that you made alot of money thru some of HGH managements high rish dealing, not once were you complaining about the same management that you are here.
Times have changed since Greenslade retired. The market needs to gain confidence that the current leadership group are being alot smarter. Thus far they are on the right track, but there is still alot of work to do to prove to the market.
As always time will tell.
Quote from: Greekwatchdog on Oct 01, 2025, 01:25 PMOf course the irony here is that you made alot of money thru some of HGH managements high rish dealing, not once were you complaining about the same management that you are here.
Indeed I did but to be fair it was only really after Greenslade left that it became readily apparent he'd been sweeping a lot of problems under the carpet, (and that's putting it very politely.)
Quote from: Greekwatchdog on Oct 01, 2025, 01:25 PMTimes have changed since Greenslade retired.
His right hand man, (complicit in the inadequate bad debtor provisioning), the CFO, is now the CEO of Heartland Holdings Limited. Food for thought: How much has really changed...
Quote from: Basil on Oct 01, 2025, 07:49 PMIndeed I did but to be fair it was only really after Greenslade left that it became readily apparent he'd been sweeping a lot of problems under the carpet, (and that's putting it very politely.)His right hand man, (complicit in the inadequate bad debtor provisioning), the CFO, is now the CEO of Heartland Holdings Limited. Food for thought: How much has really changed...
Give him a chance Basil, changes take time to in bed back into the business postively.
In the mean time it was great buying pre full year result.
Time will give us our answer, but they have alot to prove to market.
Quote from: Basil on Oct 01, 2025, 07:49 PMIndeed I did but to be fair it was only really after Greenslade left that it became readily apparent he'd been sweeping a lot of problems under the carpet, (and that's putting it very politely.).... How much has really changed...
To be fair, you purchased & sold in a clear SP downtrend long after the disastrous capital raise around $1.80 (which was ample warning about bad management to many here.)
At the time you purchased (around $1.20) you acknowledged the downtrend.... but said you were a big long term punter ready to punt more (or words to that effect.)
As KW has said so many times, and warned you at this time....."never buy in a downtrend." You claimed to know better in this instance.
As KW also say's "follow the trend....till the bend in the end."
Now an uptrend is in progress and we'll see how much things have changed.
Its weird how you two forgot to mention I correctly picked the bottom and top of the previous three cycles over the last decade. Nobody gets every pick dead right. To my mind, If you make a mistake and get out of a position at break even which is what happened after loading up more in the 90's and selling out about $1.05 from memory, that's a satisfactory outcome. It's literally impossible to pick each and every cycle change correctly with perfect timing.
My thoughts on management and the many weaknesses in HGH's business model were shared after the last AGM, and have not changed. I'd go a bit further today and say their management expense ratio is a bloody disgrace. Other better quality companies are preferred.
Quote from: Basil on Oct 02, 2025, 12:21 PMYou're incorrigible.
Don't leave this thread as somebody suggested
I'm sure many will still want to hear your wisdom.
You never know but once the current consolidation has settled down and management have proved things back on track you just might be keen enough to put a bit in at say $1.20 and enjoy the ride back to $2.00 plus and the next capital raise before selling out.
Then again the current excitement might turn out to be unwarranted and share price falls back below $1.00 and we could say yes Basil was spot on ...again
Another big close @ $1.095. One big trade earlier today.
I remember being hounded by a certain poster when I had the cheek to suggest that maybe, just maybe, HGH wasn't the sure fire bet that he was repeatedly saying it was. How times have changed!
Quote from: Greekwatchdog on Oct 02, 2025, 05:38 PMAnother big close @ $1.095. One big trade earlier today.
A near 30% SP gain in less than 2 months is great and provides a solid base for a long term hold..... however I'll only breathe easy when/if the next update supports further SP growth.
A growing dividend yield is more icing on the cake.
Quote from: LoungeLizard on Oct 02, 2025, 06:52 PMI remember being hounded by a certain poster when I had the cheek to suggest that maybe, just maybe, HGH wasn't the sure fire bet that he was repeatedly saying it was. How times have changed!
Yes it was in bad taste.
Is the eighth or ninth time you guys have brought this up ? I've lost count. Not even Warren Buffett gets every call right and certainly you guys don't either. Yeah I was over confident after getting so many previous calls on this correct.
Thanks Winner.
Quote from: Basil on Oct 02, 2025, 08:29 PMIs the eighth or ninth time you guys have brought this up ? I've lost count. Not even Warren Buffett gets every call right and certainly you guys don't either. Yeah I was over confident after getting so many previous calls on this correct.
Thanks Winner.
And nor do HGH management, but how many times have you crucified them, and how many more times do we read it
https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
The average target price of the three analysts covering HGH is only 99 cents. I'll leave it at that.
Quote from: Basil on Oct 02, 2025, 09:04 PMhttps://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS--47041144/consensus/
The average target price of the three analysts covering HGH is only 99 cents. I'll leave it at that.
And how many times do you call them out? You only agree with them when it suits you, time and time again
I make my own assessments of the value of every stock I consider investing in. Sometimes I agree with the analysts and sometimes i don't. I would think its the same for most professional investors.
Quote from: Basil on Oct 02, 2025, 09:12 PMI make my own assessments of the value of every stock I consider investing in. Sometimes I agree with the analysts and sometimes i don't. I would think its the same for most professional investors.
Wrong, our money, make your own call, and I stand by my comment you only do it when you are happy with what they say. You have proven it time and time again and have called them out countless times when you don't agree onw way or the other.
I can not remember which Buffett book I read it in, but Buffett said if you get 6 out of 10 stocks right you will make money in the market.
I think the secret [which I am still to learn] is to wake up to your mistake early.
Stock guru Jim Slater, who wrote the Zulu Principle, said sell on the first bad/poor/surprise announcement.
Thanks lorriana. I'm way to hard on myself and expect to get 9 out of 10 right but I am learning to forgive myself for my mistakes. I don't think there's any harm in debating whether analysts values on stocks seem fair and reasonable or not.
Quote from: lorraina on Oct 02, 2025, 09:25 PMI can not remember which Buffett book I read it in, but Buffett said if you get 6 out of 10 stocks right you will make money in the market.
I think the secret [which I am still to learn] is to wake up to your mistake early.
Stock guru Jim Slater, who wrote the Zulu Principle, said sell of the first bad/poor/surprise announcement.
LOL no one ever gets it right 100%, however you miss the point of all of this..
ZZZZZZZ
Quote from: Greekwatchdog on Oct 02, 2025, 09:18 PMWrong, our money, make your own call,
Its not your or our money as you choose to describe it. If you choose to share research in a public domain in breech of client terms and conditions without authority from Forsyth Barr, it becomes public information and is open for debate whether you like or not. If you don't want to share, don't. I do make my own calls and am very content indeed with my market outperformance over the last decade and this financial year is no exception.. I post a lot and contribute a lot. No, I'm not proud of every single post I've ever made and believe me, you shouldn't be proud of every post you've ever made either, far from it. There is a famous saying, it goes, thus
"Don't waste your time arguing with someone who is committed to misunderstanding you." You're very highly committed so I'm done. You have a wonderful evening,
Not everyone will always agree but it is better to have a range of views than just an echo chamber on how great a stock will be. Basil is raising some important points (though maybe slighly more often than some people would like)
From my Heartland database I couldn't but help notice how much operating costs (OPEX) have been out of control last few years. Yes, Oz contributed but NZ not blameless.
Hopeless. No wonder profits are where they are
When they seduced punters with a glitzy preso and collected $200m they said OEX to NOI would be reducing to <35%. What a laugh and another broken promise.
If nothing else how they've managed expenses reinforces Basil's view of Heartland
OPEX is Operating Expenses and the % is that of Net Income
Since 2019 incomes grown at 7.8% pa but expenses at 14%
Will things really improve that much from here?
.IMG_6242.png
Gosh this threads going the OCA way. No need for personal attacks what so ever, we are all adults. A wide range of views is important for balance and its also important to note that changing a view on a stock is expected as more information or changes in circumstances come to hand.
Back to the stock, I can currently see value in Heartland. Craig's have it as a possible inclusion into their conviction portfolio. I'm on the fence at this stage about buying in again. Hard to get past the last few years performance. Personally happy to wait until the next result, before I go back in or not.
The big re-rate is under way. Punters are happy with Heartland sentiment improving
P/B ratio tells the story
The line enters the yellow zone at $1.14. Only start to think overvalued when it goes above $1.46
Onwards and upwards ....hope no disasters coming our way
.IMG_6243.png
Quote from: winner (n) on Oct 03, 2025, 10:16 AMFrom my Heartland database I couldn't but help notice how much operating costs (OPEX) have been out of control last few years. Yes, Oz contributed but NZ not blameless.
Hopeless. No wonder profits are where they are
When they seduced punters with a glitzy preso and collected $200m they said OEX to NOI would be reducing to <35%. What a laugh and another broken promise.
If nothing else how they've managed expenses reinforces Basil's view of Heartland
OPEX is Operating Expenses and the % is that of Net Income
Since 2019 incomes grown at 7.8% pa but expenses at 14%
Will things really improve that much from here?
.IMG_6242.png
Thank you for your analysis and that image which clearly encapsulates my key concern with HGH. Costs, both in absolute terms and as a percentage of gross revenue have been rising at an alarming rate over the years, especially in the last year which flies directly in the face of the promised reduction when they were last handing around the begging bowl for their most recent capital raise.
I said a lot after the last annual meeting in my detailed review and people can go back and read that if they wish, Even though that post was nearly a year ago in late October 2024, I will refrain from repeating much of it for those that have tender ears or who want to live in an echo chamber of positivity. All I will add is that the very modest forecast cost reduction this year, considering that Heartland Australia is fully operational now is something I find extremely underwhelming to say the very least as is their forecast return on equity.
Greg Tomlinson admitted to me after the meeting last year that a lot of what they have done over the years has been trail and error. Lots of trails and lots of errors is my interpretation of that. Another director after the meeting was frank enough to suggest to me that competition is likely to heat up in the reverse mortgage market in Australia in the next two years, and that's happening already.
Leanne Lazurus seemed proud of the fact that bad debtors in their motor vehicle book only cost them a 2% margin. I was too polite to say that Turners are doing a FAR better job of managing their arrears. To Lazurus, it seems all about computerized automation of the loan approval process. What could possibly go wrong... My caution is that large parts of the economy have been in very deep recession for many years now and that's likely to lead to ongoing severe issues with problematic loans for several years to come.
The big change for me at the annual meeting last year is I simply don't trust what the board and management say any more. They have not earned my respect, in fact, the exact opposite. Good luck.
The difference between now and previous share price highs is the number of shares on issue. ie. Currently every 1c net dividend will require $9.43m npat.
Quote from: winner (n) on Oct 03, 2025, 10:16 AMFrom my Heartland database I couldn't but help notice how much operating costs (OPEX) have been out of control last few years. Yes, Oz contributed but NZ not blameless.
Hopeless. No wonder profits are where they are
When they seduced punters with a glitzy preso and collected $200m they said OEX to NOI would be reducing to <35%. What a laugh and another broken promise.
If nothing else how they've managed expenses reinforces Basil's view of Heartland
OPEX is Operating Expenses and the % is that of Net Income
Since 2019 incomes grown at 7.8% pa but expenses at 14%
Will things really improve that much from here?
.IMG_6242.png
Aren't you a holder winner?
OZ OpEx is entirely understandable from the extra operational requirements of becoming a bank, more than made up for by the large increase in NIM due to being an ADI. Forward guidance has NZ OpEx as flat year on year.
I feel like we have had this same conversation a gazillion times, and yet you never remember it.
Thank you Basil and Greek for your input on this thread, always important to hear both sides.
I still see value here (mind you I saw value when I bought back in just under a buck over a year ago).
At least my conviction led me to buy down into the 70s so I am quite happy with the SP now but I really do feel like there is room for more RM growth, particularly in Aus. The rest of their lending is rubbish imo, maybe they will turn it around, maybe they won't. Doesn't seem like they will based off Basil's input.
Equally I'm not sure the competition is taking too much of a toll on the Aus RM business. Growth still seems to be heading in the right direction there.
Time will tell but I think I will hold on to this stock for the time being as it has plenty of room to run in my opinion, particularly if they turn around other aspects of the business.
Quote from: Basil on Oct 03, 2025, 11:32 AMThank you for your analysis and that image which clearly encapsulates my key concern with HGH. Costs, both in absolute terms and as a percentage of gross revenue have been rising at an alarming rate over the years, especially in the last year which flies directly in the face of the promised reduction when they were last handing around the begging bowl for their most recent capital raise.
I said a lot after the last annual meeting in my detailed review and people can go back and read that if they wish, Even though that post was nearly a year ago in late October 2024, I will refrain from repeating much of it for those that have tender ears or who want to live in an echo chamber of positivity. All I will add is that the very modest forecast cost reduction this year, considering that Heartland Australia is fully operational now is something I find extremely underwhelming to say the very least as is their forecast return on equity.
Greg Tomlinson admitted to me after the meeting last year that a lot of what they have done over the years has been trail and error. Lots of trails and lots of errors is my interpretation of that. Another director after the meeting was frank enough to suggest to me that competition is likely to heat up in the reverse mortgage market in Australia in the next two years, and that's happening already.
Leanne Lazurus seemed proud of the fact that bad debtors in their motor vehicle book only cost them a 2% margin. I was too polite to say that Turners are doing a FAR better job of managing their arrears. To Lazurus, it seems all about computerized automation of the loan approval process. What could possibly go wrong... My caution is that large parts of the economy have been in very deep recession for many years now and that's likely to lead to ongoing severe issues with problematic loans for several years to come.
The big change for me at the annual meeting last year is I simply don't trust what the board and management say any more. They have not earned my respect, in fact, the exact opposite. Good luck.
Meanwhile, those of us with half a brain are up 50% on HGH from buying in the low 70c's.
Honestly you guys are missing the forrest for the trees. You look at one financial half where they cleaned out the bad debts in there legacy lending businesses, and ignore the incredibly profitable and low risk locomotive that is the reverse mortgage business which is soon about to account for the majority of their assets as it continues growing 15-20% a year with basically zero impairments.
Quote from: LaserEyeKiwi on Oct 03, 2025, 01:30 PMcleaned out the bad debts in there legacy lending businesses,
That "clean out" you refer too took underperforming loans from the extremely high level of 3.8% of their loan book down to the still extremely high 3.6% level. A proper bank, (not a finance company) usually has underperforming loans at under half a percent.
You can use any adjective you like to describe that write-down but in my books, I'm a numbers man and any way you slice and dice it, that's only a very slight reduction to their problematic loans and it came at the cost of ostensibly wiping out their entire first half profit. Its also well worth noting that we've seen incredibly tough times in the economy in calendar year 2025, more than 9 months since they took that slight haircut and business receiverships and insolvencies up significantly on 2024's already very elevated level's. Emerging signs of increased competition with their reverse lending book too, (the only part of their operation that's really worth anything in my opinion).. Forward PE, average of analysts opinions), on market screener is 12.1.
9 is normal for HGH when we're in a deep recession and we have been in one for more than 5 years. Risk abounds in their balance sheet in my opinion and the risk of a similar sized ~ $50m haircut down the track is very real. I see the shares as being about 25% overvalued at the current price and see far better prospective returns with FAR lower level's of risk, elsewhere. Just my opinion...noting that nobody is always right and others will have a very different view and that's perfectly fine.
OK Basil we get your message. You don't like HGH.
Can we now get a rest from your endless repetitive negative posts and let the market decide the issue.
Time to move on.
Reminds me very much of the parable of the Donkey and the Tiger which has been doing the rounds lately. We have to decide on who is the Donkey and who is the Tiger
Crikey HGH on a roll today......$1.13 when I last looked.
Quote from: Left Field on Oct 09, 2025, 02:43 PMCrikey HGH on a roll today......$1.13 when I last looked.
And still at $0.96 aud on ASX.
Quote from: Left Field on Oct 03, 2025, 03:15 PMOK Basil we get your message. You don't like HGH.
Can we now get a rest from your endless repetitive negative posts and let the market decide the issue.
Time to move on.
What is the point of a forum if all you get is endless hype? Basil provides factual information that is much appreciated by many of us..
Thanks for your kind words Bev. FYI Before that post I'd already decided I had shared enough on this thread for a while.
Let's see how they go when they report their half year result in late Feb 2026.
Won't have to wait that long, there is going to be an investor day before the November AGM where the new management team will roll out the new 5 year plan, and presumably provide a Q3 update.
" At an investor day ahead of its FY2025 annual general meeting (2025 Investor Day), Heartland intends to
present updated long-term ambitions, resetting to a full five-year time horizon (to the financial year ending 30
June 2030 (FY2030)) to demonstrate its operating metrics at scale. Heartland will provide to investors detailed
information on the underlying approach, growth drivers and timeframes that support the delivery of its reset
long-term ambitions.
Heartland currently expects that during the period to FY2030, investors will see a significant increase in
underlying ROE and underlying NPAT from:
‒ a continued focus on capital efficiency, both in the composition of its regulatory capital and the allocation
of that capital to core product sets
‒ profits generated in Australia largely, if not wholly, retained within Heartland Bank Australia to provide
the capital to fund projected growth
‒ continued growth in core product sets, with a bias to growth in Reverse Mortgages
‒ superior NIM being maintained
‒ enhanced asset quality
‒ an underlying CTI ratio reduction.
More information about Heartland's 2025 Investor Day will be provided in due course."
What an update ...Q1 results suggest full year NPAT well over $100m
Go Team Heartland
https://announcements.nzx.com/attachment/455029.pdfYou
Consolidated group key financial metrics
Reported Underlying
Underlying
guidance
3Q2025 4Q2025 1Q2026 3Q2025 4Q2025 1Q2026 FY2026
NOI $81.4m $85.7m $89.6m $81.4m $83.9m $86.5m
No guidance
provided OPEX $46.9m $47.7m $46.3m $46.3m $44.9m $46.3m
Impairment expense $11.1m $10.0m $7.0m $11.1m $10.0m $7.0m
NPAT $16.6m $17.8m $26.7m $17.1m $18.4m $23.6m ≥$85m
Average NIM 3.69% 3.87% 3.89% 3.69% 3.87% 3.89% >3.90%
Exit NIM 3.66% 3.93% 3.85% 3.66% 3.93% 3.85% >3.95%
CTI ratio 57.6% 55.5% 51.6% 56.8% 53.5% 53.5% <53.5%
Impairment expense ratio1 0.63% 0.56% 0.39% 0.63% 0.56% 0.39% <0.55%
ROE 5.4% 5.9% 8.6% 5.6% 6.1% 7.6% ≥7%
Receivables2 $7,224m $7,156m $7,250m
Here's the HGH update as Winner's link in post #2231 didn't work for me.
https://www.nzx.com/announcements/461283
Plus this link for more details from the investor presentation; https://api.nzx.com/public/announcement/461283/attachment/455030/461283-455030.pdf
Seems Winner and Lorraina are happy......
Good to see the improved reporting in the investor presentation...... roll on the AGM 13 Nov where we will get more details.
Yes it almost seems like they are going to reporting quarterly with the depth of detail given in this update.
Pretty happy with the update today.
Reverse mortgages now account for 50% of assets.
Return on equity heading in the right direction.
NOI (Net Operating Income) heading up, Operating expenses staying flat = declining CTI & expanding profitability.
Selldown of NSAs continues to exceed expectations, and a bunch more sales were detailed that are occurring this month (after the end date that todays figures cover)
Good update. Yes LEK RM 50% of assets and growing at 17% and 14% annualised rate in Australia and NZ respectively. RM's the low risk, high margin enduring growth engine - RM well placed to double in 5 years if HGH can sustain the momentum.
Yes I thought a good update with good progress on the NSA.
Disc/ I'm back in.
Coverage from interest.co.nz:
"Heartland Group Holdings (HGH, #32) delivered a solid Q1 FY2026 result to 30 September, with improved profitability and ROE supported by expanding net interest margins, stable costs, and stronger asset quality in Motor Finance. Reverse Mortgages continued to grow strongly across both New Zealand and Australia, while subdued conditions weighed on other lending portfolios. Non‑strategic asset realisation accelerated, including the full exit of Harmoney and Alex Bank shareholdings, with total NSAs expected to fall to $179.5mln by year end, down -66.6% since June 2024. Heartland Bank's NPL ratio was steady at 3.22%, with underlying improvements excluding NSAs, while arrears in Business Finance rose but are expected to ease in Q2. In Australia, Reverse Mortgage receivables grew +17.2% in Q1, though Livestock Finance contracted seasonally. Heartland Bank Australia also repaid its final AU$100mln medium term note early in October, replacing it with lower‑cost deposit funding, which will weigh on Q2 results but deliver margin benefits in FY2027 and FY2028."
In spite of how wonderful things are going ROE reported 7.6% is still rather pathetic
Could say on track to 10% ....need $125m profit for that
Quote from: winner (n) on Oct 23, 2025, 06:13 PMIn spite of how wonderful things are going ROE reported 7.6% is still rather pathetic
Could say on track to 10% ....need $125m profit for that
Underlying RoE:
Q1: 5.6%
Q2: 6.1%
Q3: 7.6%
Going in the right direction.
Quote from: winner (n) on Oct 23, 2025, 06:13 PMIn spite of how wonderful things are going ROE reported 7.6% is still rather pathetic
Could say on track to 10% ....need $125m profit for that
Agree Winner. That is where it is heading.
For Bars Review
Heartland Group (HGH) provided a solid 1Q26 update, slightly ahead of our expectations. Quarterly NPAT was ~28% of the bottom end of its reiterated FY26 guidance. There was a lot for investors to like in the update: opex in NZ appears under control; reverse mortgages in Australia and NZ continued to grow well; and it is making real progress on reducing its non-strategic assets, which could've proved troublesome. The key negative remains growing Business arrears. HGH expects these to moderate in 2Q26 and is confident in the low provision levels; we are more cautious. HGH appears to be past the worst, and we modestly increase our earnings estimates. It has re-rated to historic PE levels and ~1.1x NTA; a further re-rating will be harder. We estimate HGH can generate ~12% returns on tangible equity in the medium term, and with mid-single-digit NTA growth we see a modest premium to NTA as now fair. Retain NEUTRAL with an increased target price.
What's changed?
Earnings: Increased low-to-mid single digit on reduced opex and impairments.
Target price: Increased to NZ$1.10 (was $0.96) due to earnings upgrades and roll forward.
NZ bank delivering on opex control and non-strategic asset recovery
HGH's NZ bank reported a solid increase in profitability, NPAT of NZ$14m for 1Q26 versus NZ$11m in each of the prior quarters. The key highlights were: (1) lower opex, down sequentially and up just +3% year-on-year; we think this should allay some investors' concerns that opex was not under control; (2) impairments in its Motor and Rural book remain close to business-as-usual levels; and (3) its non-strategic asset realisation programme delivered solid results, with more expected to be realised in early 2Q26.
Reverse mortgage growth remains robust, but the rest of its lending is in decline—arguably both positives
Reverse mortgages across both Australia and NZ reported quarterly growth in line with prior run-rates. Demand remains robust, although there is an increase in Australian opex to meet the lift in onboarding demand. Motor receivables continue to decline, with its pivot to higher-quality distribution channels yielding fewer new loans but should deliver higher returns. Business lending fell >-6% in 1Q26; we see this as a positive, given the segment generates the lowest returns on equity (comfortably below cost of capital).
Motor arrears improving but Business arrears deteriorating
We are gaining confidence that large 1H25 Motor arrears were a one-off, with Motor arrears steadily decreasing since 1H25, including in the >180 days past-due category, and recoveries have been solid. However, Business arrears continue to grow in absolute terms despite a reduction in lending. Since FY24, Business non-performing loans (NPL) have grown +45%; HGH expects to see a reduction in 2Q26, but we remain cautious. Australian rural arrears have increased, with the NPL ratio rising from ~20% to ~30%.
Earnings changes
We slightly increase our earnings estimates, reflecting: (1) lower NZ opex; (2) lower Motor impairments; and (3) lower net interest income; these are partially offset by increased Australian bank opex.
I wonder if the wobbles being experienced in US regional banking will have any impact here. I think they are making the right choice focusing on quality in the motor lending division.
Interesting post by Muse on the other channel, quoted below. I agree with almost all the points he has made, which are very well articulated in my opinion.
Highlighting his concerns
The number of shares on issue in the last 5 years and eps each year, from Jarden website is as follows
2021 599.7m eps 15 cps
2022 606.8m eps 16 cps
2023 726.3m eps 14 cps
2024 930.6m eps 10 cps
2025 940.1m eps 4 cps
Off Market Screener average of 3 analysts forecast eps in the next 2 years is as follows
2026 9.1 cps
2027 11.4 cps.
Average eps last 5 years, historical 11.8 cps
Average eps last 8 years + 2 years forecast ahead = 11.6 EPS right across the economic cycles for a decade.
It seems clear to me Heartland will need to keep raising significant amounts of capital with discounted rights issues in the years ahead to fund their cash operational burn. Its also clear to me, (I am sure others will disagree and that's fine), that on an earnings per share basis HGH is definitely not a growth company.
One also needs to consider that earnings forecast of 11.4 cps for FY27 is not the same as the 12 cps they earned in 2018, there's 9 years of inflation to account for and in just the last 5 years its totaled 23%, (source RBNZ inflation calculator), so earnings per share in real terms will be more than 30% lower based on FY27's forecast to what they were in 2018 !
My valuation. Including the forecast period their 10 year average eps is 11.6 cps. I put a no growth Ben Graham PE of 8.5 on that and get fair value of 98.6 cps. I note the average broker forecast 12 months hence is $1.03 which suggests a spot valuation today right in line with where I see fair value.
QuoteOne thing that has really changed in recent years relative to to the past is the significant deterioration in Heartland's cashflow profile. Yes reverse mortgages are capital intensive (interest income is capitalised to receivables rather than received in cash whereas Heartland's funding expense is paid in cold hard cash) but historically there always used to be enough cash income to more than cover keeping the lights on (ie covering its cash operating costs, capex, and cash tax).
Case in point.
Pluck out from the profit and loss reported interest income and interest expense - giving you 'reported' NIM. Then from the cashflow statement pluck out the cash interest income received and cash interest paid - giving you 'cash' NIM. 'Cash NIM' as a % of 'reported NIM' is troubling - from FY20 to FY25 it has gone 65.2%, 63.5%, 48.9%, 49.7%, 38.0%, to 12.6% in the last financial year (the big 4 banks are all at ~100%) - gulp. Heartland reported $307.2m in NIM in its profit and loss - but only received $38.7m of NIM in actual cash.
As a thought experiment lets tack on all the other cash fee income and cash opex, capex and tax bits to see how well the business is treading water before even contemplating how they fund growing the RM receivables, pay dividends, or other 'extraordinary' expenses.
To cash NIM add cash fees and cash lease income which gets you to a cash version Heartland's operating net margin. Then less its cash opex (ie underlying opex per the accounts adding back all the non cash expenses like D&A and share issues expenses - and I used underlying opex to exclude all the M&A transaction costs as I just wanted to see its core operating expenses), less net cash leases, less capex, less cash taxes.
I reckon this is a very fair way to look at Heartland's 'keep the lights on' cashflow profile. From FY20 to FY25 Heartland's 'core' cashflow went from +$35.2m, +$23.4m, ($17.0m), ($41.3m), ($65.1m), to ($145.6m) in the last financial year (parenthesis are negative values!!). Even though Heartland's core cashflows have never been enough to cover the dividend (in these 5 years anyway) they have continued to pay them. Including dividends I think there is +$500m of embedded corporate debt on Heartland's balance sheet that has been drawn not to fund receivables but to fund its core cashflow deficits and dividends. Even more when you include all the substantial M&A and capital raising fees paid over the years.
Banking is weird you can raise deposits to fund all this stuff and show positive earnings.
First, raising deposits (or wholsesale funding) to cover core operating losses leaves a bad taste in my mouth. A few years ago at least they had enough cold hard cash lending to underwrite its opex, capex, and tax but that really changed in FY24 and FY25.
Second, I struggle to get comfortable with the long-term implications from this. Sure they can raise deposits to cover these losses, but then presumably they are raising interest bearing liabilities that aren't being put to work in new lending - wouldn't this start to eat into NIM% at some point? And I get the wobbles when I think about liquidity coverage challenges (core funding ratios and mismatch ratios) - when keeping the lights on burns cash and you are constantly raising new deposits to fund that as well as to funding all the term deposit maturities - just seems like a dynamic that will pose challenges at some point.
Third, institutions will (or should) be aware of this and start to perpetually ascribe Heartland a 'cum capital raising' valuation. We all know how NZX investors drive the price down in anticipation of a capital raising and you really don't want that to become a permanent fixture of how the market values you. If you look closely at the sources and uses of the capital raised in their last few cap raising presentations you'll see a meaningful amount of the capital raised was used as a cash buffer, over and above what was strictly required for the acquisition or AU statutory banking requirements.
Cynically I've observed the mad dash to sell down any and all asset for cash and divest less profitable books for cash, which sorta coincides with this period but of course it is also an attempt to repair Heartland's credibility.
None of this is meant to be alarming - I see that Fitch on the 20th of October reaffirmed Heartland's credit rating - and I know the banks will have all sorts of tremendously sophisticated cashflow monitoring and forecasting systems in place to manage all this. And the RBNZ bank dashboard shows Heartland's liquidity ratios to all be in good nick relative to the big 4 banks as at 30 June 2025.
But yeah nah after seeing that drop in cashflow profile I'm just not interested in investing in Heartland again, despite what looks to be an uptrend and hopefully start of an economic recovery. For those that did invest at the bottom well done, but as a long term investor this one just isn't for me anymore. That and not enough heads have rolled at Heartland over the last few years. They were totally over committed to the capital raising to acquire that Aussie business in the face of a heavily depressed (and no doubt suppressed) share price, when I reckon existing investors at time would have been much better off not proceeding given the huge dilution. StockCo was purchased for way too much and never delivered on what HGH said it would do. Impairments rocketed above expectations and look quite rooky in retrospect. There are too many people left in the company and on the Board that were involved with these sins for my liking. I reckon they have lost any mandate to undertake any more acquisitions or expansionary capital raisings.
The other irritating thing is how poorly NIM in Australia has tracked. It looks like has plateaued with the company guiding FY26 ave NIM of 3.4% - about the same as 2H FY25 (despite more deposits being raised)...but that compares to an average of ~3.4% in Heartland Australia between FY19 and FY23. So all the hype about how much cheaper the cost of funds were and how positive it would be for NIM% at the time of the equity raise, has gone straight out the window...either the competitors have dropped pricing and so have heartland, or heartland is competing it away to grow the book faster.
All in my own opinion - and certainly do your own research. No doubt the SP will keep rocketing up right after I post this but whatever....more ETFs for me.
Great post Muse and Basil. Always good to get others views. The main reason I got back in was they are making good progress finally on the NSA.
By the end of the 2025 calendar year (CY2025), Heartland estimates the total value of NSAs to be $179.5 million, a $358.1 million (-66.6%) reduction since 30 June 2024.
The Australian NIM is down and they mention full pass on of OCR cuts to reverse mortgages. As Muse has pointed out they were going on about the banks cost of money going down so why is it low?
Yes when you look back on EPS performance it's not good. I'm banking on the fact that this time it's different. Will be waiting for the investor day for signs. I think a lot of the SP growth is the current melt up chasing yields as deposit rates decline. With another cut coming and bottom of cycle I'm expecting the SP to continue to increase.
Talking of EPS here's a chart of the past and future
Somebody once said "When we have reached the depths of despair, only then can we look up and see the light of hope,"
That light of hope leading to greatness
IMG_6258.png
Quote from: winner (n) on Oct 26, 2025, 09:46 AMTalking of EPS here's a chart of the past and future
Somebody once said "When we have reached the depths of despair, only then can we look up and see the light of hope,"
That light of hope leading to greatness
Some might say the 1 year TA is looking a tab auspicious too...... those that like 'gap theory' will be pleased to see the historic gap around $1.00 seems to have been filled and more good news in the next update is likely to see the SP continue to climb. Time will tell. Those that climbed into HGH around the $0.80 mark have done well (so far)
Quote from: winner (n) on Oct 26, 2025, 09:46 AMTalking of EPS here's a chart of the past and future
Somebody once said "When we have reached the depths of despair, only then can we look up and see the light of hope,"
That light of hope leading to greatness
IMG_6258.png
2 painful Cap Raises certainly show on that graph combined with Management dodgy loaning that finally showed up in the results.
Those who bought in under $1 and trusted their research have certainly done well.
Quote from: Shareguy on Oct 25, 2025, 04:06 PMI'm banking on the fact that this time it's different
That's arguably the most dangerous phrase in the investor lexicon.
Quote from: winner (n) on Oct 26, 2025, 09:46 AM"When we have reached the depths of despair, only then can we look up and see the light of hope,"
That light of hope leading to greatness
Said on a Sunday morning and sounds remarkably like something you'd hear a preacher say from the pulpit on a Sunday.
Quote from: Basil on Oct 27, 2025, 06:31 PMThat's arguably the most dangerous phrase in the investor lexicon.
Said on a Sunday morning and sounds remarkably like something you'd hear a preacher say from the pulpit on a Sunday.
To be fair, the new management is running things differently:
- Immediately recognized more realistic impairments
- tightened up auto lending, now has better than industry average NPLs
- cuts dividend payout ratio to 50%, to allow more capital to remain in the business for growth (including all that is generated in Australia stays in Australia for growth)
- Immediately refocused business (getting out of low margin traditional Home Loans) and started winding up non-core assets, again to release capital for growth of core products.
Quote from: Shareguy on Oct 25, 2025, 04:06 PMThe Australian NIM is down and they mention full pass on of OCR cuts to reverse mortgages. As Muse has pointed out they were going on about the banks cost of money going down so why is it low?
Good question. Any takers to answer it ? Maybe a good question for someone to ask at the forthcoming AGM. From memory there was heaps of promotion by the company around their recent capital raise and driving down the cost of Australian funding, ($30m annual savings rings a bell for me), was touted as one of the key reasons for the capital raise. So where have these savings gone in FY25 ? More concerning is the forecast for FY26 of only $85m on a massively expanded number of shares on issue. Surely this does not include a $30m funding cost reduction as otherwise the profit forecast would have only been a pitiful $55m...surely not ?
What they didn't talk about very much was the cost of the new convoluted management and board structure with the huge cost of senior management teams on both sides of the Tasman, as well as a group management team and separate boards for each country's operations. Is this a key reason their cost to income ratio has climbed so alarmingly ? So how are they going with progress on that cost to income ratio they talked about going down to 35% by FY28 ?
I've followed this company for many years and I can't ever recall it being over 50% before but it is now and was 52.4% in Q1 FY26 compared to 41.9% in 2H FY22. That's a massive increase since they started this process of growing their Australian operations with their own registered bank there. All the talk of getting the CTI down has come to nothing, in fact their operational costs have grown at a truly alarming rate in recent years so that begs the questions. Are they still on track for their $200m profit target in FY28 and CTI ratio of 35% or have these goals been quietly dropped / about to be pushed out to FY30 and watered down ?
Just a few questions to ask at the annual meeting. I did my bit last year including pushing the directors and management on why they continue lending on residential mortgages on a pathetic 65 bps margin and why they haven't tightened their approvals for motor vehicle loan approvals, (both policies have now been changed after I suggested they should be). Hopefully someone else asks the hard questions this year.
Craigs added to conviction portfolio
At this juncture we are adding Heartland Group (HGH) with a 5% weight and NZX with a 2.5% weight. HGH, under new management, is re-allocating capital to auto loans and reverse mortgages, where it is the market leader in NZ and Australia and generates higher returns. The NZX offers leverage to both a short-term NZ market recovery and long-term growth in KiwiSaver. These positions are being funded by removing PCT (5%) and reducing our FPH position from 12.5% to 10%. The Gentailers
Geez this was great buying/adding to holding from the late $0.70's.
Economy now has more green shoots, finally, job market getting a little more traction all off lows.
Be an interesting Investor day next week to see if there is any further news from 1st quarter update
Quote from: Greekwatchdog on Nov 04, 2025, 01:04 PMGeez this was great buying/adding to holding from the late $0.70's.
Economy now has more green shoots, finally, job market getting a little more traction all off lows.
Be an interesting Investor day next week to see if there is any further news from 1st quarter update
Farmers getting $4 Billion in 2026 from the brands sale also de-risks the rural sector somewhat.
FPH getting the cold shoulder while HGH gets the love ...wow this time really is different
Quote from: winner (n) on Nov 04, 2025, 03:24 PMFPH getting the cold shoulder while HGH gets the love ...wow this time really is different
Hey maybe if HGH management outperform and Shareholders do well you can make one of your requests to have them Knighted.....
I see Heartland not a finalist in the Best Growth Strategy in this years big biz awards
That's a good sign
https://newsroom.co.nz/2025/11/11/heartland-bank-repossesses-a-vehicle-a-day-amid-tougher-loan-enforcement/
QuoteThe bank begins engaging with customers almost immediately after they fall behind on their loan repayments, contacting them by text and email. Five days after non-payment they will begin calling the customer, which continues through to day 45.
At this point the vehicle may be seized by two companies that contract to Heartland. The customer has a further 14 days following repossession to redeem the vehicle by paying the arrears or by engaging with the bank to find a solution.
Since February 2025. Hmmm. This is the sort of policy that makes sense and that they should have been doing ever since they started lending on motor vehicles.
Quote from: Basil on Nov 12, 2025, 01:11 PMSince February 2025. Hmmm. This is the sort of policy that makes sense and that they should have been doing ever since they started lending on motor vehicles.
well yes, hence why the new CEO has implemented the change shortly following his appointment, along with other sensible moves like getting out of traditional home loans and selling other non-core assets.
Quote from: LaserEyeKiwi on Nov 12, 2025, 04:11 PMwell yes, hence why the new CEO has implemented the change shortly following his appointment, along with other sensible moves like getting out of traditional home loans and selling other non-core assets.
Leanne Lazarus was appointed CEO of Heartland Bank N.Z. in August 2022 and she is responsible for N.Z. lending so this was always her purview. You're getting confused with the timing of the new Group CEO who was the former Group CFO and should have been providing Lazurus with support and directional guidance from the get-go. My contention is that no matter how you try and frame it more positively, the groups loan arrears management processes appear to have been too loose until quite recently.
A year ago at last years ASM I recall Basil getting stuck into Leanne Lazarus telling her their collecti9n process was pretty disgraceful. Basil suggested they start contacting overdue punters much sooner and keep nagging them to pay up or else
Obviously Leanne took this on board and after returning from her Christmas break got things moving ..in February
Well done Basil ...shaming them into action. Bravo, shareholders need to thank you.
PS .... That's one reason why this years ASM is in Ashburton ..keeping the likes of Basil out of the way
It's always easy to lend money - much, much harder to collect it. Just ask Shane Jones!
ASM meeting data attached. Seems the mood is positive
https://www.nzx.com/announcements/462563
- Investor day is now going to be in March, following Feb earnings.
- 2026 guidance re-iterated (no change)
EDIT: actually a slight upgrade in guidance depending on where you look in the document: NPAT guidance is listed as equal to or greater than $85 million, but in some remarks it says "above $85 million"
Quote from: LaserEyeKiwi on Nov 13, 2025, 09:29 AM- Investor day is now going to be in March, following Feb earnings.
- 2026 guidance re-iterated (no change)
EDIT: actually a slight upgrade in guidance depending on where you look in the document: NPAT guidance is listed as equal to or greater than $85 million, but in remarks it says "above $85 million"
Big reduction in NSA's
"By the end of this calendar year, we estimate the total value of NSAs will be $179.5 million – a reduction of $358.1 million, or 66.6%, since 30 June 2024"
Watched the HGH presentation today.... then watched the IFT presentation.
Crikey what an amazing contrast!
IFT exuding confidence, knowledge and control of their business.
HGH, well suffice it to say the Chair may well be a big share holder, but he struggles to inspire.
Quote from: Left Field on Nov 13, 2025, 12:04 PMWatched the HGH presentation today.... then watched the IFT presentation.
Crikey what an amazing contrast!
IFT exuding confidence, knowledge and control of their business.
HGH, well suffice it to say the Chair may well be a big share holder, but he struggles to inspire.
Why did IFT sell off hard after the earnings call? Down 5% off the pre call price high this morning.
Quote from: LaserEyeKiwi on Nov 13, 2025, 12:41 PMWhy did IFT sell off hard after the earnings call? Down 5% off the pre call price high this morning.
Likely because IFT has not upgraded their projections......... yet.
As a holder of both IFT and HGH. I'm more happy with holding one than the other....
IFT boasts 18% Total share holder return since inception ......and over 22% TSR in the last 5 yrs... go figure.
HGH faces some execution risk with their proposed IT upgrade.
Interesting times ahead.
Quote from: Left Field on Nov 13, 2025, 01:08 PMLikely because IFT has not upgraded their projections......... yet.
As a holder of both IFT and HGH. I'm more happy with holding one than the other....
IFT boasts 18% Total share holder return since inception ......and over 22% TSR in the last 5 yrs... go figure.
Hold large positions in both, think IFT was more negative today, essentially downgraded guidance amongst a bunch of bullish sounding enthusiasm. Whereas HGH sounded more reserved/conservative but had more bullish fundamentals.
IFT falling off a cliff today, down 7% from its morning high.
RNZ out with a mostly positive story on reverse mortgages.
https://www.rnz.co.nz/news/business/580568/adjustment-to-single-pension-rate-may-be-prompting-women-to-borrow-against-homes
Quote from: LaserEyeKiwi on Dec 02, 2025, 10:14 AMRNZ out with a mostly positive story on reverse mortgages.
https://www.rnz.co.nz/news/business/580568/adjustment-to-single-pension-rate-may-be-prompting-women-to-borrow-against-homes
Interesting to read that 95% of loans are voluntarily repaid before death. Good for HGH cash flow 🥳
Quote from: SCOTTY on Dec 02, 2025, 10:56 AMInteresting to read that 95% of loans are voluntarily repaid before death. Good for HGH cash flow 🥳
Yes that usually happens upon downsizing/moving to a rest home.
Quote from: SCOTTY on Dec 02, 2025, 10:56 AMInteresting to read that 95% of loans are voluntarily repaid before death. Good for HGH cash flow 🥳
Trying to understand the figures -
According to AI
"Key statistics on elderly care in New Zealand
In aged residential care: Around 33,000-36,000 people live in aged residential care facilities.
Age profile: The average age of someone in residential care is about 85 years old.
Not a majority: Residential care is not the norm; less than 5% of people over 65 live in a residential care facility.
Home support: About 80,000 older people receive services to support them to live at home or in the community, such as personal care, cooking, and cleaning.
Age Breakdown: The rate of residential care increases significantly with age:
65-74 years: ~1%
75-84 years: ~4%
85+ years: ~19%"
So, if 95% of people repay their mortgages where does the money come from?
Quote from: Bev on Dec 02, 2025, 03:30 PMTrying to understand the figures -
According to AI
"Key statistics on elderly care in New Zealand
In aged residential care: Around 33,000-36,000 people live in aged residential care facilities.
Age profile: The average age of someone in residential care is about 85 years old.
Not a majority: Residential care is not the norm; less than 5% of people over 65 live in a residential care facility.
Home support: About 80,000 older people receive services to support them to live at home or in the community, such as personal care, cooking, and cleaning.
Age Breakdown: The rate of residential care increases significantly with age:
65-74 years: ~1%
75-84 years: ~4%
85+ years: ~19%"
So, if 95% of people repay their mortgages where does the money come from?
A care home is different to a retirement village, and also just simple old downsizing from the old large family home into a 1 or 2 bedroom unit. Much more people live in retirement villages than aged care facilities.
Yes, that would be the answer LaserEye. Thanks.
Nice sp action lately on healthy volumes.
SP back to around $1.14 where it was before last Feb's big sell-off.
Winner predicts "Santa rally takes it $1.20 and then a bit more love with good news will take it to $1.35 in Feb"