HGH - Heartland Group Holdings

[lorraina]

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.

[winner (n)]

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

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
✅

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[winner (n)]

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.

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

[lorraina]

...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%..

[Teitei]

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!

[Stockgathering]

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.    

[Basil]

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
 

[LoungeLizard]

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
 

Just as well the ratings agencies are duty bound to be objective, eh Basil?

[Waltzing]

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

[Left Field]

For 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.

[Basil]

Just 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.😉

[KW]

New 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 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

[KW]

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.   

[LoungeLizard]

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 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.

[Basil]

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!