HGH - Heartland Group Holdings

[Basil]

Have 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.

[winner (n)]

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'

[Left Field]

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.

[Nizzy]

Craigs has moved Heartland to overweight with 12mth price target $1.22

[Left Field]

Craigs 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.)

[Left Field]

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."

[Basil]

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.

[winner (n)]

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.

Salt guy says - Analysts
are under-estimating just how strong those returns will be."

Probably right in saying that

[HAWKDOG]

Salt likely looking to unload their position after loading up in the 70 cent range

[Basil]

Salt 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.

[Basil]

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.

[BlackPeter]

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.

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?

[Basil]

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. 

[BlackPeter]

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. 

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?

[Basil]

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.