HGH - Heartland Group Holdings

[Left Field]

........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?

[Basil]

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.

[lorraina]

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.?

[SCOTTY]

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 

[lorraina]

They may have bought Basil's.?

[Basil]

They 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.

[SCOTTY]

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.

[mcdongle]

5% term deposit for 5 months.... are they short of cash

[lorraina]

Most probably greater than expected demand by borrowers.

[Basil]

5% 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. 

[mcdongle]

Well i am old and cynical... According to the Mrs

[lorraina]

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.




 

[lorraina]

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 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.




 

[mcdongle]

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

[Plata]

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