HGH - Heartland Group Holdings

[Greekwatchdog]

- Investor day is now going to be in March, following Feb earnings.
- 2026 guidance re-iterated (no change)

EDIT: actually a slight upgrade in guidance depending on where you look in the document: NPAT guidance is listed as equal to or greater than $85 million, but in remarks it says "above $85 million"

Big reduction in NSA's
"By the end of this calendar year, we estimate the total value of NSAs will be $179.5 million – a reduction of $358.1 million, or 66.6%, since 30 June 2024"

[Left Field]

Watched the HGH presentation today.... then watched the IFT presentation.

Crikey what an amazing contrast!

IFT exuding confidence, knowledge and control of their business.

HGH, well suffice it to say the Chair may well be a big share holder, but he struggles to inspire.

[LaserEyeKiwi]

Watched the HGH presentation today.... then watched the IFT presentation.

Crikey what an amazing contrast!

IFT exuding confidence, knowledge and control of their business.

HGH, well suffice it to say the Chair may well be a big share holder, but he struggles to inspire.

Why did IFT sell off hard after the earnings call? Down 5% off the pre call price high this morning.

[Left Field]

Why did IFT sell off hard after the earnings call? Down 5% off the pre call price high this morning.

Likely because IFT has not upgraded their projections......... yet.

As a holder of both IFT and HGH. I'm more happy with holding one than the other....

IFT boasts 18% Total share holder return since inception ......and over 22% TSR in the last 5 yrs... go figure.

HGH faces some execution risk with their proposed IT upgrade.

Interesting times ahead.

[LaserEyeKiwi]

Likely because IFT has not upgraded their projections......... yet.

As a holder of both IFT and HGH. I'm more happy with holding one than the other....

IFT boasts 18% Total share holder return since inception ......and over 22% TSR in the last 5 yrs... go figure.

Hold large positions in both, think IFT was more negative today, essentially downgraded guidance amongst a bunch of bullish sounding enthusiasm. Whereas HGH sounded more reserved/conservative but had more bullish fundamentals.

IFT falling off a cliff today, down 7% from its morning high.

[LaserEyeKiwi]

RNZ out with a mostly positive story on reverse mortgages.

https://www.rnz.co.nz/news/business/580568/adjustment-to-single-pension-rate-may-be-prompting-women-to-borrow-against-homes

[SCOTTY]

RNZ out with a mostly positive story on reverse mortgages.

https://www.rnz.co.nz/news/business/580568/adjustment-to-single-pension-rate-may-be-prompting-women-to-borrow-against-homes

Interesting to read that 95% of loans are voluntarily repaid before death. Good for HGH cash flow 🥳

[LaserEyeKiwi]

Interesting to read that 95% of loans are voluntarily repaid before death. Good for HGH cash flow 🥳

Yes that usually happens upon downsizing/moving to a rest home.

[Bev]

Interesting to read that 95% of loans are voluntarily repaid before death. Good for HGH cash flow 🥳

Trying to understand the figures -
According to AI
"Key statistics on elderly care in New Zealand

In aged residential care: Around 33,000-36,000 people live in aged residential care facilities.

Age profile: The average age of someone in residential care is about 85 years old.
Not a majority: Residential care is not the norm; less than 5% of people over 65 live in a residential care facility.

Home support: About 80,000 older people receive services to support them to live at home or in the community, such as personal care, cooking, and cleaning.

Age Breakdown: The rate of residential care increases significantly with age:
65-74 years: ~1%
75-84 years: ~4%
85+ years: ~19%"

So, if 95% of people repay their mortgages where does the money come from? 

[LaserEyeKiwi]

Trying to understand the figures -
According to AI
"Key statistics on elderly care in New Zealand

In aged residential care: Around 33,000-36,000 people live in aged residential care facilities.

Age profile: The average age of someone in residential care is about 85 years old.
Not a majority: Residential care is not the norm; less than 5% of people over 65 live in a residential care facility.

Home support: About 80,000 older people receive services to support them to live at home or in the community, such as personal care, cooking, and cleaning.

Age Breakdown: The rate of residential care increases significantly with age:
65-74 years: ~1%
75-84 years: ~4%
85+ years: ~19%"

So, if 95% of people repay their mortgages where does the money come from? 

A care home is different to a retirement village, and also just simple old downsizing from the old large family home into a 1 or 2 bedroom unit.  Much more people live in retirement villages than aged care facilities.

[Bev]

Yes, that would be the answer LaserEye.  Thanks.

[Left Field]

Nice sp action lately on healthy volumes.

SP back to around $1.14 where it was before last Feb's big sell-off.

Winner predicts "Santa rally takes it $1.20 and then a bit more love with good news will take it to $1.35 in Feb"

[Left Field]

GreekWD posted this update on HGH by FB on the other channel.....interesting.

"The Reserve Bank of New Zealand's (RBNZ) capital review was largely in line with its proposed changes for Heartland Group (HGH). Importantly, it confirmed the minimum tier 1 capital ratio for HGH's NZ bank will be 11% (excluding its 2% transitional overlay), ~-20% lower than its previous settings, which puts HGH's NZ bank in a comfortable capital position. Lower risk weights for a mix of rural and business lending are also likely to lower HGH's capital needs. But potentially the most promising new information is the indication the RBNZ will review reverse mortgage risk weights in 2026. HGH, in its submission to the review, proposed lower weights for low-LVR reverse mortgages; we see this as a real possibility given the RBNZ reduced residential mortgage risk weights in this capital review. We leave our earnings estimates unchanged for now, given HGH does not have excess capital until FY28 on our estimates, but acknowledge the RBNZ's changes to date and the possibility of lower reverse mortgage risk weights would give HGH excess capital to grow its reverse mortgage lending faster over the medium term, should demand remain strong. HGH trades at a modest premium to NTA (1.1x), NEUTRAL.

RBNZ confirms proposed changes

RBNZ has confirmed HGH's (a Group 2 bank) minimum tier 1 capital ratio will be 11%, a -~20% reduction in minimum capital from the 14% required by 2028 under the previous settings. HGH's tier 1 capital ratio was 13.7% at FY25, and we estimate it will now grow to ~16.5% by 2028. RBNZ also confirmed lower risk weights for some rural loans (HGH's NZ rural book is ~NZ$700m), corporate loans to SMEs (HGH's business lending book is ~NZ$820m), and lower-LVR residential mortgages (not relevant for HGH).

A more comfortable capital position for HGH

The combination of lower capital requirements, HGH's success in exiting non-core lending, and modest declines in its motor and asset finance books means HGH could now find itself in a position with excess capital. Assuming a ~3% buffer, and the removal of half of its transitional capital overlay, HGH would have up to NZ9cps of excess capital in FY28, reducing the likelihood of an equity raise if impairments surprise to the upside or providing it capital to grow its reverse mortgage lending faster in NZ and Australia.

Reverse mortgage review may continue the good news in 2026

While reverse mortgage risk weights were unchanged in this review, the RBNZ is set to review them in 2026 'in the context of [its] revised standardised risk weights', noting the RBNZ reduced risk weights on residential mortgages in this review. HGH's proposed lower risk weights for low-LVR reverse mortgages would reduce HGH's average NZ reverse mortgage risk weight from ~45% to ~39%, a ~-14% reduction in capital needed. HGH's limited competition in NZ reverse mortgages means the improvement to returns from lower capital requirements (either the lower tier 1 capital ratio or the potential risk-weight changes) is unlikely to be fully competed away with NIM compression and therefore should increase HGH's reverse mortgage returns and free up capital for growth."

[winner (n)]

Great news. Heartland in 2 Brokers Too Picks for 2026

That should price up over $1.20 next week as Mum and Dad investors do their annual portfolio reviews

This part of the rave -

Heartland Bank was also singled out.

"Heartland provides exposure to niche lending segments, including reverse mortgages and vehicle finance, where it has built specialist capability," Hamilton Hindin Greene investment adviser Jeremy Sullivan said.

"Easing credit conditions and improved funding costs should support margins and volume growth, provided credit standards remain disciplined.


"The digital strategy gives Heartland a cost advantage in targeted markets.

"Key risks are credit quality in a weak economy, wholesale funding conditions and regulatory settings across its different jurisdictions."U

[Basil]

Great news. Heartland in 2 Brokers Too Picks for 2026

Maybe that's a good reason not to buy ?, (see my comments on average "experts" picks and their performance for 2025 in the new thread I started today).

Many brokers this year appear to be working on the "Dogs of the Dow" strategy.  Stocks with a really woeful recent performance, like HGH, RYM, SPK and FBU to name just four must come right in 26, surely ?...or maybe there's deep systemic flaws in their business models and although they might show some modest bounce at some stage from very deep inside the holes they have dug for themselves, over time they will continue to underperform. 

I like the old army saying of the 7 P's.  Prior Proper Planning Prevents Piss Poor Performance.  None of these companies appear to have planned for the downturn very well.  Maybe in fairer economic weather they can do okay but I for one, am not going to be punting on that.