HGH - Heartland Group Holdings

[Left Field]

What was your reason for selling if you don't mind me asking, do you think it's currently sitting around fair value?

It's a personal decision to fine tune my portfolio and hopefully improve overall performance.

I see the recent short term weakness in the HGH SP as a possible concern, and an opportunity to take profits while boosting other shares in my portfolio such as PEB which gained over 50% today cf the Cap Raise offer and is likely to be substantially re-rated over the next 12 months.


JMHO. DYOR.

[LaserEyeKiwi]

Looks like the bottom hit today, at one point down 5% before regaining it all back by close.

[Plata]

It's a personal decision to fine tune my portfolio and hopefully improve overall performance.

I see the recent short term weakness in the HGH SP as a possible concern, and an opportunity to take profits while boosting other shares in my portfolio such as PEB which gained over 50% today cf the Cap Raise offer and is likely to be substantially re-rated over the next 12 months.


JMHO. DYOR.

I've been watching this one trend down with some interest. Was hoping to scoop some up around the $1 mark or below. With the SP weakness being a concern, are you suggesting that there might be some material negative information abound that isn't widely known yet?

I note a lot of similarity with the ANZ price graph since 1st March, was kind of thinking this was might just be the ugliest duckling getting hit hardest as people rotate out of the sector.

[Left Field]

I've been watching this one trend down with some interest. Was hoping to scoop some up around the $1 mark or below. With the SP weakness being a concern, are you suggesting that there might be some material negative information abound that isn't widely known yet?

I note a lot of similarity with the ANZ price graph since 1st March, was kind of thinking this was might just be the ugliest duckling getting hit hardest as people rotate out of the sector.

Apologies Plata, you may be right  and I'm not suggesting anything material. I don't make  my SP predictions public these days,  merely note TA and  my decision to sell is likely made for much different reasons than yours (as I've outlined above #2370.)

In the face the recent SP decline holders may be best to wait for the next HGH update and decide on facts not market fears.

I sincerely hope that HGH will prove the market wrong in their next update. GLH.

[Left Field]

Crikey we didn't see this coming! TSB & Heartland to merge.

https://www.nzx.com/announcements/473655

Investors presentation & more detail here; https://api.nzx.com/public/announcement/473655/attachment/469802/473655-469802.pdf

Good move HGH. Well done holders.

[Greekwatchdog]

Crikey we didn't see this coming! TSB & Heartland to merge.

https://www.nzx.com/announcements/473655

Good move HGH. Well done holders.

This is what Kiwibank should have been doing to grow their buisness, their loss.

[Shareguy]

I see this as a great move that's going to add real EPS value. Based on 31/12 2025 results pro forma post synergies EPS 12.6 cps against 10.5 cps pre synergies.

$250m of new shares issued (dilutionery) but interesting that paying a 14.6 percent premium to the 10- day volume weighted average sp. And $264m vendor loan payable at any time without a break fee, nice.

Pre tax synergies of $34m however $34m of one off integration costs over 3 years.

I like it.

[winner (n)]

Synergies and even more synergies seem to be the key to the success of this acquisition

Time for me to have another read of Mr Sirower's book The Synergy Trap - How Companies Lose the Acquisition Game.

A great read which coined the phrase 'Now where did all the synergies go'

[LoungeLizard]

Looks to be a good move, although the devil will be in the detail. Always thought that instead of expanding into OZ (apart from reverse mortgages) there was room for Heartland to increase its retail footprint in NZ. The merger with TSB will certainly do that! That's a lot of new shares though - a lot riding on it being as accretive as they say. Nice payday for holders though - well done!

[Shareguy]

Synergies and even more synergies seem to be the key to the success of this acquisition

Time for me to have another read of Mr Sirower's book The Synergy Trap - How Companies Lose the Acquisition Game.

A great read which coined the phrase 'Now where did all the synergies go'

Yes agree many companies have done this poorly. Only time will tell.

No cap raise to fund this and higher divi and DPS accretion.

[LaserEyeKiwi]

Yes agree many companies have done this poorly. Only time will tell.

No cap raise to fund this and higher divi and DPS accretion.

We literally have Heartland itself as an extremely recent example of a successful bank acquisition, with their challenger bank purchase.

[Basil]

How was it successful LEK ?  EPS was vastly higher (16 CPS in 2022) before the Challenger acquisition than after it.
 

[LaserEyeKiwi]

How was it successful LEK ?  EPS was vastly higher (16 CPS in 2022) before the Challenger acquisition than after it.
 

Correlation does not equal causation - The acquisition of Challenger bank has had nothing to do with the mixed performance of the NZ operations which is what has temporarily dragged down HGH EPS.

[lorraina]

TSB Bank Ltd (originally known as the Taranaki Savings Bank) trading as TSB, is a New Zealand bank with its headquarters in New Plymouth. It has 25 branches across the country but is heavily focused on the Taranaki region where 12 of its branches are located. As of June 2022, it was the seventh largest bank in New Zealand, with a market share in terms of assets of 1.4%.[1]

It provides retail banking and related financial services to individuals and companies. It was originally one of twelve trustee banks in New Zealand, but when nine banks decided to amalgamate as Trust Bank, TSB Bank stood aside and remained an independent institution and has since expanded its business across the country. The bank is owned by the Toi Foundation (formerly the TSB Community Trust) which distributes the income it receives from the bank back into the New Zealand community.

The merger seems to be a mismatch to me.
HGH closed branches to concentrate on "on line banking"
HGH's growth is driven by Reverse Equity loans,and their other major division is motor vehicle lending.
By merging with TSB they are joining forces with a bank with a lot of small local branches doing mortgages etc.ie everything HGH said they were avoiding.

[Basil]

Correlation does not equal causation - The acquisition of Challenger bank has had nothing to do with the mixed performance of the NZ operations which is what has temporarily dragged down HGH EPS.

I suspect that the $30m theoretical cost savings was just a simple one line comparison between cost of funds under one business model and the other without ever considering the additional costs of running an Australian registered bank including the separate management and board. 

We will see what synergies HGH extract from their TSB merger, if any, in due course.