HGH - Heartland Group Holdings

[winner (n)]

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.

[KW]

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.

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.

[Waltzing]

" 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..

[Basil]

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.

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)

[Breezy]

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.

Well yes but crap stocks often become good stocks and good stocks often become crap stocks.

[Basil]

Well 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 !

[Red Baron]

As 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

[Basil]

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.

[LoungeLizard]

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.

For now.

[Basil]

For 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.  

[KW]

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.

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."

[LoungeLizard]

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.

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?

 

[Teitei]

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.

Illogical and just weird!

What happens when someone can only think in the negative frame of mind about a stock.

[Basil]

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?

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).

 

[Basil]

Illogical 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