HGH - Heartland Group Holdings

[Fiordland Moose]

Yes, in my opinion, I think the probability is very high of another cap raise in 12-36 months.

[LaserEyeKiwi]

Yes, 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.

[winner (n)]

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.

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

[Basil]

$103m, $128m, $153m Craigs targets for FY25, FY26 and FY27.  Extrapolate that trend out for FY28 if you want too.

[winner (n)]

$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.

[winner (n)]

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

You cannot view this attachment.

[winner (n)]

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
.

[Basil]

Maybe 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.

[winner (n)]

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.

Yea basil ..I forgot they charge interest on interest ...real compounding stuff that is eh

[LaserEyeKiwi]

Yea 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.

[winner (n)]

What would be good to know is the number of mortgages there are and how many new ones and how many paid out

[Basil]

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.

With interest compounding monthly.

[lorraina]

Being a bank most probably compounding daily....lol

[Forrestdun]

Doesn't matter that much if its a per annum interest rate....

[Shareguy]

https://www.heartland.co.nz/Uploads/Seniors/Resources/reverse-mortgage-fact-sheet.pdf?2