HGH - Heartland Group Holdings

[LaserEyeKiwi]

From my Heartland database I couldn't but help notice how much operating costs (OPEX) have been out of control last few years. Yes, Oz contributed but NZ not blameless.

Hopeless. No wonder profits are where they are

When they seduced punters with a glitzy preso and collected $200m they said OEX to NOI would be reducing to <35%. What a laugh and another broken promise.

If nothing else how they've managed expenses reinforces Basil's view of Heartland

OPEX is Operating Expenses and the % is that of Net Income

Since 2019 incomes grown at 7.8% pa but expenses at 14%

Will things really improve that much from here?

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Aren't you a holder winner?

OZ OpEx is entirely understandable from the extra operational requirements of becoming a bank, more than made up for by the large increase in NIM due to being an ADI. Forward guidance has NZ OpEx as flat year on year.

I feel like we have had this same conversation a gazillion times, and yet you never remember it.

[raW tent Buffer]

Thank you Basil and Greek for your input on this thread, always important to hear both sides.

I still see value here (mind you I saw value when I bought back in just under a buck over a year ago).

At least my conviction led me to buy down into the 70s so I am quite happy with the SP now but I really do feel like there is room for more RM growth, particularly in Aus. The rest of their lending is rubbish imo, maybe they will turn it around, maybe they won't. Doesn't seem like they will based off Basil's input.

Equally I'm not sure the competition is taking too much of a toll on the Aus RM business. Growth still seems to be heading in the right direction there.

Time will tell but I think I will hold on to this stock for the time being as it has plenty of room to run in my opinion, particularly if they turn around other aspects of the business.

[LaserEyeKiwi]

Thank you for your analysis and that image which clearly encapsulates my key concern with HGH.  Costs, both in absolute terms and as a percentage of gross revenue have been rising at an alarming rate over the years, especially in the last year which flies directly in the face of the promised reduction when they were last handing around the begging bowl for their most recent capital raise. 

I said a lot after the last annual meeting in my detailed review and people can go back and read that if they wish, Even though that post was nearly a year ago in late October 2024, I will refrain from repeating much of it for those that have tender ears or who want to live in an echo chamber of positivity.  All I will add is that the very modest forecast cost reduction this year, considering that Heartland Australia is fully operational now is something I find extremely underwhelming to say the very least as is their forecast return on equity.

Greg Tomlinson admitted to me after the meeting last year that a lot of what they have done over the years has been trail and error.  Lots of trails and lots of errors is my interpretation of that.  Another director after the meeting was frank enough to suggest to me that competition is likely to heat up in the reverse mortgage market in Australia in the next two years, and that's happening already.

Leanne Lazurus seemed proud of the fact that bad debtors in their motor vehicle book only cost them a 2% margin.  I was too polite to say that Turners are doing a FAR better job of managing their arrears.  To Lazurus, it seems all about computerized automation of the loan approval process.  What could possibly go wrong...    My caution is that large parts of the economy have been in very deep recession for many years now and that's likely to lead to ongoing severe issues with problematic loans for several years to come. 

The big change for me at the annual meeting last year is I simply don't trust what the board and management say any more.  They have not earned my respect, in fact, the exact opposite.    Good luck. 

Meanwhile, those of us with half a brain are up 50% on HGH from buying in the low 70c's.

Honestly you guys are missing the forrest for the trees. You look at one financial half where they cleaned out the bad debts in there legacy lending businesses, and ignore the incredibly profitable and low risk locomotive that is the reverse mortgage business which is soon about to account for the majority of their assets as it continues growing 15-20% a year with basically zero impairments.

[Basil]

cleaned out the bad debts in there legacy lending businesses,

That "clean out" you refer too took underperforming loans from the extremely high level of 3.8% of their loan book down to the still extremely high 3.6% level.  A proper bank, (not a finance company) usually has underperforming loans at under half a percent. 

You can use any adjective you like to describe that write-down but in my books, I'm a numbers man and any way you slice and dice it, that's only a very slight reduction to their problematic loans and it came at the cost of ostensibly wiping out their entire first half profit.  Its also well worth noting that we've seen incredibly tough times in the economy in calendar year 2025, more than 9 months since they took that slight haircut and business receiverships and insolvencies up significantly on 2024's already very elevated level's.  Emerging signs of increased competition with their reverse lending book too, (the only part of their operation that's really worth anything in my opinion)..  Forward PE, average of analysts opinions), on market screener is 12.1.
9 is normal for HGH when we're in a deep recession and we have been in one for more than 5 years.   Risk abounds in their balance sheet in my opinion and the risk of a similar sized ~ $50m haircut down the track is very real.   I see  the shares as being about 25% overvalued at the current price and see far better prospective returns with FAR lower level's of risk, elsewhere.  Just my opinion...noting that nobody is always right and others will have a very different view and that's perfectly fine.

[Left Field]

OK Basil we get your message. You don't like HGH.

Can we now get a rest from your endless repetitive negative posts  and let the market decide the issue.

Time to move on.

[Umpah]

Reminds me very much of the parable of the Donkey and the Tiger which has been doing the rounds lately. We have to decide on who is the Donkey and who is the Tiger

[Left Field]

Crikey HGH on a roll today......$1.13 when I last looked.

[Greekwatchdog]

Crikey HGH on a roll today......$1.13 when I last looked.

And still at $0.96 aud on ASX.

[Bev]

OK Basil we get your message. You don't like HGH.

Can we now get a rest from your endless repetitive negative posts  and let the market decide the issue.

Time to move on.

What is the point of a forum if all you get is endless hype?  Basil provides factual information that is much appreciated by many of us..

[Basil]

Thanks for your kind words Bev. FYI Before that post I'd already decided I had shared enough on this thread for a while.

Let's see how they go when they report their half year result in late Feb 2026.

[LaserEyeKiwi]

Won't have to wait that long, there is going to be an investor day before the November AGM where the new management team will roll out the new 5 year plan, and presumably provide a Q3 update.

" At an investor day ahead of its FY2025 annual general meeting (2025 Investor Day), Heartland intends to
present updated long-term ambitions, resetting to a full five-year time horizon (to the financial year ending 30
June 2030 (FY2030)) to demonstrate its operating metrics at scale. Heartland will provide to investors detailed
information on the underlying approach, growth drivers and timeframes that support the delivery of its reset
long-term ambitions.

Heartland currently expects that during the period to FY2030, investors will see a significant increase in
underlying ROE and underlying NPAT from:

‒ a continued focus on capital efficiency, both in the composition of its regulatory capital and the allocation
of that capital to core product sets
‒ profits generated in Australia largely, if not wholly, retained within Heartland Bank Australia to provide
the capital to fund projected growth
‒ continued growth in core product sets, with a bias to growth in Reverse Mortgages
‒ superior NIM being maintained
‒ enhanced asset quality
‒ an underlying CTI ratio reduction.

More information about Heartland's 2025 Investor Day will be provided in due course."

[winner (n)]

What an update ...Q1 results suggest full year NPAT well over $100m

Go Team Heartland


https://announcements.nzx.com/attachment/455029.pdfYou

[lorraina]

Consolidated group key financial metrics
Reported Underlying
Underlying
guidance
3Q2025 4Q2025 1Q2026 3Q2025 4Q2025 1Q2026 FY2026
NOI $81.4m $85.7m $89.6m $81.4m $83.9m $86.5m
No guidance
provided OPEX $46.9m $47.7m $46.3m $46.3m $44.9m $46.3m
Impairment expense $11.1m $10.0m $7.0m $11.1m $10.0m $7.0m
NPAT $16.6m $17.8m $26.7m $17.1m $18.4m $23.6m ≥$85m
Average NIM 3.69% 3.87% 3.89% 3.69% 3.87% 3.89% >3.90%
Exit NIM 3.66% 3.93% 3.85% 3.66% 3.93% 3.85% >3.95%
CTI ratio 57.6% 55.5% 51.6% 56.8% 53.5% 53.5% <53.5%
Impairment expense ratio1 0.63% 0.56% 0.39% 0.63% 0.56% 0.39% <0.55%
ROE 5.4% 5.9% 8.6% 5.6% 6.1% 7.6% ≥7%
Receivables2 $7,224m $7,156m $7,250m

[Left Field]

Here's the HGH update as Winner's link in post #2231 didn't work for me.

https://www.nzx.com/announcements/461283

Plus this link for more details from the investor presentation; https://api.nzx.com/public/announcement/461283/attachment/455030/461283-455030.pdf

Seems Winner and Lorraina are happy......

Good to see the improved reporting in the investor presentation......  roll on the AGM 13 Nov where we will get more details.

[LaserEyeKiwi]

Yes it almost seems like they are going to reporting quarterly with the depth of detail given in this update.

Pretty happy with the update today.

Reverse mortgages now account for 50% of assets.

Return on equity heading in the right direction.

NOI (Net Operating Income) heading up, Operating expenses staying flat = declining CTI & expanding profitability.

Selldown of NSAs continues to exceed expectations, and a bunch more sales were detailed that are occurring this month (after the end date that todays figures cover)