HMY - Harmoney Corp Limited

[huxley]

https://static1.squarespace.com/static/58bc788c59cc68b9696b9ee0/t/5fa9c70ab874e907d3181b24/1604962102455/harmoney_corp_limited_-_prospectus.pdf


During a recession they are floating a company which exclusively offers personal loans...

[nztx]

https://static1.squarespace.com/static/58bc788c59cc68b9696b9ee0/t/5fa9c70ab874e907d3181b24/1604962102455/harmoney_corp_limited_-_prospectus.pdf


During a recession they are floating a company which exclusively offers personal loans...


Indeed .. $3.75 NZ / $3.50 AU a shot for a piece Loss making Company not in short term
planning on paying a dividend ?

Page 98 - showing the Financial & forward nuts & bolts looks interesting

In particular - Impairment & expected Loss provision total in relation to Interest Revenue

At $3.75 a piece - one would have to be brave in current times - unless I'm missing something ;)


I'm leaning towards thanks but no thanks on this one, but may be wrong ..

[peat]

I cant find an E.P.S ?

can anyone see this ?

my eyesight is not as good as it used to be and there are 236 pages ...

The 4 month forecast isnt loss projecting but annually their figure would represent about 3 million profit so I guess I just need to look at the capital structure and work it out myself...

[nztx]

I cant find an E.P.S ?

can anyone see this ?

my eyesight is not as good as it used to be and there are 236 pages ...

The 4 month forecast isnt loss projecting but annually their figure would represent about 3 million profit so I guess I just need to look at the capital structure and work it out myself...


We all know what may happen to forecasts if things turn to crap in OZ badly


This part interests me

"Dividend policy

The dividend policy of the Company is to reinvest all cash flows into the business to maximise its growth.
Accordingly, no dividends are expected to be paid in the near term following the Company’s listing on ASX."

On completion of offer there seem to be 100.9 Million shares on Issue:

"The Offer comprises an initial public offering of 26.4 million Shares
comprising 20.0 million New Shares and up to 6,428,572 Sale Shares
raising proceeds of up to A$92.5 million22 at the Offer Price of A$3.50
per Share.

The Offer is an invitation to apply for:
• 20.0 million New Shares offered by the Company to raise proceeds
of A$70.0 million; and
• up to 6,428,572 Sale Shares offered by SaleCo to raise proceeds
of A$22.5 million.

The Shares being offered under the Offer will represent 26% of the
Shares on issue at Completion.

The total number of Shares on issue at Completion will be 100.9 million
and all Shares on issue will rank equally with each other."

from Pt 1.8 of Offer Section

[peat]

The total number of Shares on issue at Completion will be 100.9 millionand all Shares on issue will rank equally with each other.
so a 4 month estimated profit of 1.2 mill as per page 21 of the prospectus so thats about 1.2 cents every four months. 3.6c annualised, so thats a PE of about 100.

I always hate it when companies talk about the size of the sector they are entering as if that is a positive and as if it is relevant. Just because other people are selling widgets, or in this case originating loans, doesn't mean you can.


edit
thx ntx

[peat]

and whoever started the thread spelt the name wrong so if they can fix it ...
Everything is better with an E including Harmoney.

[Snoopy]

The total number of Shares on issue at Completion will be 100.9 millionand all Shares on issue will rank equally with each other.
so a 4 month estimated profit of 1.2 mill as per page 21 of the prospectus so thats about 1.2 cents every four months. 3.6c annualised, so thats a PE of about 100.

I always hate it when companies talk about the size of the sector they are entering as if that is a positive and as if it is relevant. Just because other people are selling widgets, or in this case originating loans, doesn't mean you can.


A prospective PE of 100 in this sell down would suggest that the ideal time to get into this investment was earlier in the business development process when the capital invested was at a somewhat less lofty prospective PE ratio. Oh wait I did that. Heartland was in at the beginning and I am a Heartland shareholder! I think this float will be good for Heartland shareholders, once those Harmoney share escrow provisions expire.

SNOOPY

[peat]

. Heartland was in at the beginning and I am a Heartland shareholder! I think this float will be good for Heartland shareholders, once those Harmoney share escrow provisions expire.

SNOOPY

Hello Snoopy - I can see you again ;+)

Yes thats right and so am I a Heartland shareholder so I will just sit back on this one and enjoy.
Escrow release dates are staggered over 2021 (50% being 25% June and 25% end of calendar year), and the final 50% after results in Jun 2022 .

So payday comes pretty slowly.....


what multiple would you consider acceptable on this one ?

[winner69]

I saw somewhere in prospectus that IPO price is 3.5 times income

That applied to HGH would put them at $1.70 odd

[nztx]

Hello Snoopy - I can see you again ;+)

Yes thats right and so am I a Heartland shareholder so I will just sit back on this one and enjoy.
Escrow release dates are staggered over 2021 (50% being 25% June and 25% end of calendar year), and the final 50% after results in Jun 2022 .

So payday comes pretty slowly.....


what multiple would you consider acceptable on this one ?


Bear in mind that Companies Office filings suggest that some share parcels in Harmoney
near the entry point of Trade Me & after Heartland's initial investment were priced @ approx NZD 0.325c
back in 2014 / early 2015. If initial holders were selling down - then would they be getting their
initial ingoing back, or close to it fairly quickly?

See my post #13941 in the HGH thread -

https://www.sharetrader.co.nz/showthread.php?8425-HGH-Heartland-Group-Holdings/page698

The additional over that is cream on the top for being on the Harmoney Share Register early

[Snoopy]

Hello Snoopy - I can see you again ;+)

Yes thats right and so am I a Heartland shareholder so I will just sit back on this one and enjoy.
Escrow release dates are staggered over 2021 (50% being 25% June and 25% end of calendar year), and the final 50% after results in Jun 2022 .

So payday comes pretty slowly....


If I were Heartland, I would wait until June 2022 and sell the whole stake in one hit (if I was going to sell that is). That is still less than two years to wait.



what multiple would you consider acceptable on this one ?


Good question. Harmoney are in the process of transition from being a 'peer to peer lender' to a 'regular' finance company. The latter is apparently more profitable. So your prospective PE of 100 will shrink when all loans switch to 'wholesale funding'.

A premium PE would imply some underlying ongoing permanent advantage. In the case of Harmoney, they talk up their credit assessment methods. From the Prospectus p19:

-------

Credit assessment

Harmoney has invested in building (and continually improving) a proprietary credit scorecard to assess potential customers. The credit scorecard assesses both credit bureau data (positive and negative), and customer supplied information. The credit scorecard categorises customers across 25 credit grades in New Zealand, and 20 in Australia. From this, it is able to generate interest rates between 6.99 – 24.69% (New Zealand) per annum and 6.99 – 25.69% (Australia) per annum to optimise the risk‐return profile of loans within its loan book. The improved performance of this proprietary intellectual property over time is demonstrated through its increasing predictive accuracy. Harmoney has continuously refined its credit scorecard to ensure that Harmoney is able to make accurate real‐time decisions about approving and pricing lines of credit.

----------

They keep costs down by automating their debt collection tasks.

A further advantage Harmoney have is their partnership with Google. Google account holder behaviour is used to target prospective Harmoney customers. From AR2020 p25

"Harmoney also introduces its brand advertising to users whom Google has determined to have intent in the short‐term future to search for a personal loan. Google Smart Bidding accounted for approximately one third (35%) of new loan originations website traffic in New Zealand and Australia in FY20"

Again this process is automated.

From p42 we get more of an idea of the size and duration of loans that Harmoney is targetting:

-------

Personal loans in this segment of the market:

• are typically used by borrowers for purposes such as consolidating debt, financing home renovations, vehicle purchases or holidays, and funding other life events;
• are typically for principal amounts varying between $2,000 and $70,000 in New Zealand and A$2,000 and A$70,000 in Australia; and
• typically have maturities ranging from two to seven years.

The interest rates charged in the industry vary significantly depending on the credit profile of the borrower, and, for personal loans, whether the loan is secured or unsecured.

----------

A 7% interest rate secured loan is quite respectable. A 27% interest rate unsecured loan, you would hope for the sake of the borrower is short term (that interest bill would sting if the loan was for two years). p57 would suggest that most Harmoney lending is unsecured.

More information on typical Harmoney customers on p57

"Harmoney’s customers tend to hold stable incomes with over 70% having office, professional or trade occupations and are represented across multiple age ranges."

In summary, I think we are looking at high margin low running cost loans aimed at a demographic that should have relatively high paying jobs, giving a good chance of repayment. The prospectus reads in a very positive way. And if Harmoney can execute well, it may very well end up as a successful story. To me it does sound a little too good to be true though. There are plenty of other lenders, including Heartland, who would be very pleased to service the kind of customers that Harmoney is targetting directly. To me Harmoney's offering doesn't sound unique enough. Other lenders, like Heartland also claim fast digital platform approval of loans. I have no doubt that Google would been keen to market to their users to other financial institutions - not just Harmoney,

If Harmoney's proposed high profit margin can become reality, then due to the ability for other players to copy Harmoney's strategy, I still wouldn't invest with a long term PE of more than 15. That might correspond to a short term PE of 30 (reference: number pulled out of thin air). Nevertheless, I think Harmoney would have to put a lot more runs on the board before it could justify that IPO price. I would call this IPO speculative, with that next year's prospective PE of 100 in mind. Sometimes speculation pays off. But I am comfortable with Heartland managing 'my' investment in Harmoney for me, for now. I won't be seeking a direct stake,

SNOOPY

[Mr Slothbear]

The total number of Shares on issue at Completion will be 100.9 millionand all Shares on issue will rank equally with each other.
so a 4 month estimated profit of 1.2 mill as per page 21 of the prospectus so thats about 1.2 cents every four months. 3.6c annualised, so thats a PE of about 100.

I always hate it when companies talk about the size of the sector they are entering as if that is a positive and as if it is relevant. Just because other people are selling widgets, or in this case originating loans, doesn't mean you can.


edit
thx ntx


completely agree. Its a very cheap sales tactic drawing allusions and is a very common tactic with IPO's

no chance I'll be partaking

[peat]

A premium PE would imply some underlying ongoing permanent advantage. In the case of Harmoney, they talk up their credit assessment methods. From the Prospectus p19:

-------

Credit assessment

Harmoney has invested in building (and continually improving) a proprietary credit scorecard to assess potential customers. The credit scorecard assesses both credit bureau data (positive and negative), and customer supplied information. The credit scorecard categorises customers across 25 credit grades in New Zealand, and 20 in Australia. From this, it is able to generate interest rates between 6.99 – 24.69% (New Zealand) per annum and 6.99 – 25.69% (Australia) per annum to optimise the risk‐return profile of loans within its loan book. The improved performance of this proprietary intellectual property over time is demonstrated through its increasing predictive accuracy. Harmoney has continuously refined its credit scorecard to ensure that Harmoney is able to make accurate real‐time decisions about approving and pricing lines of credit.

----------

They keep costs down by automating their debt collection tasks.

A further advantage Harmoney have is their partnership with Google. Google account holder behaviour is used to target prospective Harmoney customers. From AR2020 p25

"Harmoney also introduces its brand advertising to users whom Google has determined to have intent in the short‐term future to search for a personal loan. Google Smart Bidding accounted for approximately one third (35%) of new loan originations website traffic in New Zealand and Australia in FY20"

Again this process is automated.

From p42 we get more of an idea of the size and duration of loans that Harmoney is targetting:

-------

Personal loans in this segment of the market:

• are typically used by borrowers for purposes such as consolidating debt, financing home renovations, vehicle purchases or holidays, and funding other life events;
• are typically for principal amounts varying between $2,000 and $70,000 in New Zealand and A$2,000 and A$70,000 in Australia; and
• typically have maturities ranging from two to seven years.

The interest rates charged in the industry vary significantly depending on the credit profile of the borrower, and, for personal loans, whether the loan is secured or unsecured.

----------

A 7% interest rate secured loan is quite respectable. A 27% interest rate unsecured loan, you would hope for the sake of the borrower is short term (that interest bill would sting if the loan was for two years). p57 would suggest that most Harmoney lending is unsecured.

More information on typical Harmoney customers on p57

"Harmoney’s customers tend to hold stable incomes with over 70% having office, professional or trade occupations and are represented across multiple age ranges."

In summary, I think we are looking at high margin low running cost loans aimed at a demographic that should have relatively high paying jobs, giving a good chance of repayment. The prospectus reads in a very positive way. And if Harmoney can execute well, it may very well end up as a successful story. To me it does sound a little too good to be true though. There are plenty of other lenders, including Heartland, who would be very pleased to service the kind of customers that Harmoney is targetting directly. To me Harmoney's offering doesn't sound unique enough. Other lenders, like Heartland also claim fast digital platform approval of loans. I have no doubt that Google would been keen to market to their users to other financial institutions - not just Harmoney,

If Harmoney's proposed high profit margin can become reality, then due to the ability for other players to copy Harmoney's strategy, I still wouldn't invest with a long term PE of more than 15. That might correspond to a short term PE of 30 (reference: number pulled out of thin air). Nevertheless, I think Harmoney would have to put a lot more runs on the board before it could justify that IPO price. I would call this IPO speculative, with that next year's prospective PE of 100 in mind. Sometimes speculation pays off. But I am comfortable with Heartland managing 'my' investment in Harmoney for me, for now. I won't be seeking a direct stake,

SNOOPY

So it all boils down to the competitive advantage they can create and maintain through their proprietary Stellare system which will more accurately but very cheaply assess and rate borrowers. This will allow them to undercut competitors (esp bricks and mortars and people based models i.e. banks) on the proffered interest rates , and yet still enjoy profits and thus attract more repeat business and new customers.

Yes I agree Snoops, it does sound okay in the prospectus as a business model but I'm not bothered to take it any further, as someone said 'lending money at the beginning of a recession '???

[nztx]

So it all boils down to the competitive advantage they can create and maintain through their proprietary Stellare system which will more accurately but very cheaply assess and rate borrowers. This will allow them to undercut competitors (esp bricks and mortars and people based models i.e. banks) on the proffered interest rates , and yet still enjoy profits and thus attract more repeat business and new customers.

Yes I agree Snoops, it does sound okay in the prospectus as a business model but I'm not bothered to take it any further, as someone said 'lending money at the beginning of a recession '???

That's it - I'm not sure about wanting a part of anything engaged in Retail Unsecured Lending over the ditch
after indications of the past trail of recent economic carnage in Aussie, which may or likely not improve.

My gut feeling is provisions & lending losses may well easily blow out badly - in excess of those in prospectus
as high as they are as % of Gross interest income

Being owed it is one thing, but getting it back yet another .. in expected recessionary times ;)

A myriad of other organisations are offering cheaper loan money - there is a large avalanche of
almost free Govt stimulus from Govt's trying rekindle their economies globally

[Snoopy]

So it all boils down to the competitive advantage they can create and maintain through their proprietary Stellare system which will more accurately but very cheaply assess and rate borrowers. This will allow them to undercut competitors (esp bricks and mortars and people based models i.e. banks) on the proffered interest rates , and yet still enjoy profits and thus attract more repeat business and new customers.


There may still be a niche here. Financial commentator Bernard Hickey on the radio this morning was very adamant that in NZ, with their new Reserve Bank liquidity, the NZ banks have lent an extra $10b to the housing market since Covid-19, kept things steady in rural lending (I guess that is better than before when they were reducing their exposure) and pulled $4b of funding out of business (so where are businesses going to get their funding from?) Hickey didn't mention unsecured personal lending, which are higher up the risk scale. But the implication of what he said is that no bank would touch such lending. So if Harmoney's credit score says a customer is good for a 7% loan, this might be the time to lock them in as 'good customers'.

SNOOPY

[nztx]

The recent Harmoney IPO via Sharesies (presumably their broker allocation) saw scaling back to 70% of what was applied for

so must have seen fairly strong interest


The Harmoney appearance as a dual ASX/NZX listing soon could be interesting..

[Snoopy]

If Harmoney's proposed high profit margin can become reality, then due to the ability for other players to copy Harmoney's strategy, I still wouldn't invest with a long term PE of more than 15. That might correspond to a short term PE of 30 (reference: number pulled out of thin air). Nevertheless, I think Harmoney would have to put a lot more runs on the board before it could justify that IPO price. I would call this IPO speculative, with that next year's prospective PE of 100 in mind. Sometimes speculation pays off. But I am comfortable with Heartland managing 'my' investment in Harmoney for me, for now. I won't be seeking a direct stake,


Good call on my part not to take part in this float. Harmoney has crashed from the $A3.50 offer price to a low $A3.15 on listing day. A recovery has set in and it is $A3.35 offer to buy, $A3.40 offer to sell as I write this. But all staggers have been slaughtered. Long term bargain entry price shareholders like Heartland showing a nice gain though, now confirmed by Mr Market,

SNOOPY

[Scrunch]

Good call on my part not to take part in this float. Harmoney has crashed from the $A3.50 offer price to a low $A3.15 on listing day. A recovery has set in and it is $A3.35 offer to buy, $A3.40 offer to sell as I write this. But all staggers have been slaughtered. Long term bargain entry price shareholders like Heartland showing a nice gain though, now confirmed by Mr Market,

SNOOPY

Strengthened from 2.30pm onwards to finish at A$3.45. Still down, but only a little bit. Quoted WA price for the day was $3.3423 with $4.2m traded.

[nztx]

A bit of a SP bounce up to NZ 3.70 ; but still short of NZ IPO price

[nztx]

Throw out the anchors -- SP is slipping - finish today @ $3.50

[nztx]

Sinking like a rock -- $2.86 currently -- Market don't seem to like HMY ;)

[nztx]

Good grief .. now just a paltry $2.75 a shot for such a handsome offering .. ;)

[Davexl]

Just a recent observation while doing some due diligence...

On 21 Dec there was high volume of 82416 shares traded, followed
On 22 Dec "Harmoney secures NZ$200m debt facility from M&G investments"
https://www.nzx.com/announcements/365521

SP immediately jumped from near bottom of $2.62 to recent high of $3.17

Does this transaction look highly suspicious to anyone else (insider trading?)

Where are our regulators?

Meantime the CEO seems to be whitewashing the company via its good news story in the Herald yesterday...
https://www.nzherald.co.nz/business/leading-questions-harmoneys-plans-to-take-more-business-off-the-banks/IALFMZFOPGIDPBEABM4XTTDLRE/ Paywalled

Maybe I'm overthinking this?

[Dlownz]

Just a recent observation while doing some due diligence...

On 21 Dec there was high volume of 82416 shares traded, followed
On 22 Dec "Harmoney secures NZ$200m debt facility from M&G investments"
https://www.nzx.com/announcements/365521

SP immediately jumped from near bottom of $2.62 to recent high of $3.17

Does this transaction look highly suspicious to anyone else (insider trading?)

Where are our regulators?

Meantime the CEO seems to be whitewashing the company via its good news story in the Herald yesterday...
https://www.nzherald.co.nz/business/leading-questions-harmoneys-plans-to-take-more-business-off-the-banks/IALFMZFOPGIDPBEABM4XTTDLRE/ Paywalled

Maybe I'm overthinking this?

I think this happens alot with company's on the sharemarket. Problem is if and I say IF they get caught they get a slap on the wrist compared to what they make out of these transactions The old saying is where there's smoke there's fire. That trade that went through before the announcement well that was a fire. Will the nzx (fire department) put it out. Probably not.

[winner69]

As the price went into free fall a few punters asked NZ Reg Co to investigate ...but they didn’t

Harmoney's post IPO share slump prompts investor call for price inquiry
https://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=12410246

Now suspicions when it goes up fast ....maybe just market volatility ;)

[winner69]

See (from that Herald article) Jarden had to play the old Chinese Wall trick


Harmoney's joint lead managers for the IPO were New Zealand investment bank Jarden and Australian firm Ord Minnett.

This week Jarden investment analysts released their first research report with a buy rating on the company and a 12-month target price of A$3.30 - A20c below its listing price.

A spokeswoman for Jarden emphasised its research was fully independent of its investment banking arm. The firm offered no comment when asked whether the IPO was over-priced, considering the now lower valuation from its retail analyst.

[ralph]

Just a recent observation while doing some due diligence...

On 21 Dec there was high volume of 82416 shares traded, followed
On 22 Dec "Harmoney secures NZ$200m debt facility from M&G investments"
https://www.nzx.com/announcements/365521

SP immediately jumped from near bottom of $2.62 to recent high of $3.17

Does this transaction look highly suspicious to anyone else (insider trading?)

Where are our regulators?

Meantime the CEO seems to be whitewashing the company via its good news story in the Herald yesterday...
https://www.nzherald.co.nz/business/leading-questions-harmoneys-plans-to-take-more-business-off-the-banks/IALFMZFOPGIDPBEABM4XTTDLRE/ Paywalled

Maybe I'm overthinking this?
Hi Davexl I noticed this also and decided at $2.7 that was a good time to buy, as the I P O was IMHO overpriced for such a paltry offering

[winner69]

Share price back below $3

Probably drift back to the $2.70s from here

[Rawz]

It needs a trading update. Share price is stuck in no mans land. Wandering around aimlessly. Or downhill.
I've got it on my watchlist but won't commit until I see the next numbers.

[nztx]

more downhill needed before it's time to be thinking about backing up the truck .. ;)

[KJMLimited]

Update due in Feb for the 6 months end Dec.

[nztx]

Good grief .. $2.80 lowish milestone reached again must have some of the IPO chasers fair Har-Moaning about now .. ;)

[KJMLimited]

Good update today. Shares are back up, but it is still a question of what the value of such a new listing with no NPAT is worth. However, the signs are encouraging.

[ralph]

https://moneyonline.cmail20.com/t/r-l-jukduin-odyfjlldh-y/ looking to be on the up

[ralph]

https://moneyonline.cmail20.com/t/r-l-jukduin-odyfjlldh-y/ looking to be on the up 

[winner69]

Share price $2.40

Must be all time low

Down 30% from its highs a good effort

Maybe this about low as it goes

[Baa_Baa]

Share price $2.40

Must be all time low

Down 30% from its highs a good effort

Maybe this about low as it goes

Lot of red days on this chart (https://invst.ly/tu62m), all time low about 15 of the last 20 trading days. No sign of a bottom. Nasty curving down-trend line doesn't give confidence.

[winner69]

Lot of red days on this chart (https://invst.ly/tu62m), all time low about 15 of the last 20 trading days. No sign of a bottom. Nasty curving down-trend line doesn't give confidence.

One cool chart mate .....very clear

Break below previous low of 260 was ominous wasn’t it

Next low could be anywhere

[Beagle]

Lending money to people unsecured is a recipe for disaster regardless of the interest rate charged.

I think their business model is fundamentally flawed so wouldn't be an investor at any price.

[nztx]

The wonderful analysts probably need a new supply of magic dust to smoke
before the next rounding of mouthing it up commences .. ;)

[Rawz]

Lending money to people unsecured is a recipe for disaster regardless of the interest rate charged.

I think their business model is fundamentally flawed so wouldn't be an investor at any price.

Really? One of your fav's (Heartland) do unsecured lending up to $100k. Yes to businesses, but majority of them are small 'mum and dad' businesses. No financials required as well. So same as Harmony, the computer scores the application and gives a yes or no.

Harmony is miles ahead of the banks and finance companies by the looks of it- for personal loans. Their website and application process looks really good- i took the application process as far as i could before actually submitting it.

Harmony is 100% on my watch list. I just thank the share market gods that I didn't participate in the IPO as was fully invested elsewhere. Including at the time Heartland so felt I was invested anyway. And now with the shocking performance of the share price its hard to pick an entry point. Especially when looking at Baa Baa's graph, could well go below $2 :(

[Beagle]

Pretty sure my client who borrowed $100K needed to submit the financials' I'd prepared for him for the last few years and had to sign a personal guarantee as well as fill out a full application including statement of financial position. He has a good house so if things go wrong its certain the personal guarantee will see HGH right. I will ask him more details next time we have a chat.

If I remember correctly this floated on a massive PE...what could possibly go wrong ;) and you mention the TA which looks absolutely horrendous.
Give it a few years and lets see if there's any profit in this business model. I am deeply skeptical.

[Rawz]

Harmoney has to meet the CCCFA regulations so its the same. Full financial position entered into the application. And the borrower is guaranteeing the loan, i.e. personal guarantee. If they default goodbye their credit rating.

From what I can see Harmoney is going to beat the banks in the personal loan space. You can borrow much more, it's 100% online, quicker approvals. It's all going to come down to their credit scorecard. And whoever gets in first will have the best data.

I'm pretty sure ANZ is still manually assessing personal loans which is laughable, not to mention far more costly when compared to a computer.

[nztx]

Pretty sure my client who borrowed $100K needed to submit the financials' I'd prepared for him for the last few years and had to sign a personal guarantee as well as fill out a full application including statement of financial position. He has a good house so if things go wrong its certain the personal guarantee will see HGH right. I will ask him more details next time we have a chat.

If I remember correctly this floated on a massive PE...what could possibly go wrong ;) and you mention the TA which looks absolutely horrendous.
Give it a few years and lets see if there's any profit in this business model. I am deeply skeptical.


Yes AU $3.50 issue price or around NZD 3.70 / 3.75

From prospectus (page 98) :

Pro forma Historical NPAT

2018 FY (LOSS 6.4 Million)
2019 FY (LOSS 6.1 Million)
2020 FY (LOSS 6.99 Million)

Forecast:

4 Mths to Oct 20 Forecast Proforma SURPLUS 1.2 Million

[KJMLimited]

The business model is robust. It's just a question of valuation. Of course it looks expensive, as they make no profit. As for TA, with 4 months data to work off, how meaningful is that approach? Audited accounts are due Early next week plus a forecast (there was only a 1 month forecast in the IPO) so more to work off. Maybe. But there's nothing wrong with the business model. Let's not forget either that the guys behind it have been there done that in the personal lending market in Oz.

[Beagle]

Yes AU $3.50 issue price or around NZD 3.70 / 3.75

From prospectus (page 98) :

Pro forma Historical NPAT

2018 FY (LOSS 6.4 Million)
2019 FY (LOSS 6.1 Million)
2020 FY (LOSS 6.99 Million)

Forecast:

4 Mths to Oct 20 Forecast Proforma SURPLUS 1.2 Million

The first question I would ask as a former auditor is were bad and doubtful debts properly provisioned in those 4 months ? Nobody ever puts lipstick on a pig just to get the float done and dusted do they :D

[Baa_Baa]

The business model is robust. It's just a question of valuation. Of course it looks expensive, as they make no profit. As for TA, with 4 months data to work off, how meaningful is that approach? Audited accounts are due Early next week plus a forecast (there was only a 1 month forecast in the IPO) so more to work off. Maybe. But there's nothing wrong with the business model. Let's not forget either that the guys behind it have been there done that in the personal lending market in Oz.

The share price speaks for itself as the market values the company. Sentiment is not good, that can’t be ignored by an investor. There’s no point in saying fundamentals suggest such and such when the market says no. Like who would invest into a loss making company with share price performance that is so poor? I think it will go lower from here but am only an observer, no stake in this charade.

[Scrunch]

Lending money to people unsecured is a recipe for disaster regardless of the interest rate charged.

I think their business model is fundamentally flawed so wouldn't be an investor at any price.

It all depends on the customer base you are attracting and often there is little to no visibility on this unless you are inside the outfit in question. Many years ago I worked in for one of the big banks in their credit card area. This is unsecured lending but it was very profitable business unit. In the right circumstances unsecured lending can work well.

[nztx]

The first question I would ask as a former auditor is were bad and doubtful debts properly provisioned in those 4 months ? Nobody ever puts lipstick on a pig just to get the float done and dusted do they :D


Yes good points there too

Let's look at the presented figures from the same page:

(a) Impairment Expense:

FY 2018: $ 14.2 million
FY 2019: $ 17.4 million
FY 2020: $ 24.4 million

4 Mth to Oct 2019: $ 6.2 million

Forecast 4 Mth to Oct 2020 $ 6.1 million

(b) Movement in Expected Credit Loss provision:


FY 2018: $ 2.8 million
FY 2019: $ 3.9 million
FY 2020: $ 8.3 million

4 Mth to Oct 2019: $ 1.3 million

Forecast 4 Mth to Oct 2020 $ (1.3) million RECOVERY


These are all above the Line in arriving at previous NPAT figures ..


--

Major movements between the 2019 & 2020 Oct four month periods:


(rounded to 10th's of & millions)


Interest Income -2.4 million
Other Income -0.3 million

Total Income Reduction ( - 2.7 million)

Expenses:

Interest Expenses -1.3 million
Impairment expense - 0.1 million
Cr Loss Provision - 2.6 million
Marketing expense - 1.7 million
Sharebased expense + 0.5 million
Other expenses & rounding -0.2 million


PBT 2.7 million improvement

Tax - 0.8 million increase

NPAT 1.9 million improvement

[Gerald]

The share price speaks for itself as the market values the company. Sentiment is not good, that can’t be ignored by an investor. There’s no point in saying fundamentals suggest such and such when the market says no. Like who would invest into a loss making company with share price performance that is so poor? I think it will go lower from here but am only an observer, no stake in this charade.


72% of shares in escrow so not too much liquidity even if you look at daily volumes.

[nztx]

72% of shares in escrow so not too much liquidity even if you look at daily volumes.


what there are out there from retail are probably nursing fairly heavy red ink anyway & not looking at realising losses
- but hoping for better fortunes ..

In the same boat I'd probably not be too happy with $1.30 / share or roughly 1/3 of what I'd paid at IPO
now sitting out the back door .. ;)

[Wsp]

It all depends on the customer base you are attracting and often there is little to no visibility on this unless you are inside the outfit in question. Many years ago I worked in for one of the big banks in their credit card area. This is unsecured lending but it was very profitable business unit. In the right circumstances unsecured lending can work well.

I have some insights into their customer base as I was a retail investor (lender) through their platform starting December 2014 and invested in my last loan in March 2020. I invested in over 1,000 loans. Less than 2% of those loans were written off. Of the loans that are still active, only 2 are in arrears. So overall I feel they do a good job of assessing credit risk through their automated systems. Their assessment of credit risk certainly improved over time as it was mainly some of my early loans that were written off. After write offs and fees I was making around 12.5% per annum.

[nztx]

It is quite possible that Jun 30 2020 saw some hefty Covid 19 provisioning FY & the 4 months to 31 Oct 2020
then saw significant reversal to put provision movement into Recovery position (or Negative expense presented)

But that would be an extraordinary one off expense reversal IMO

[Classic]

I had quite a bit less than you , as I was slowly scaling up.
When they first started out there was a consistent large selection of loans to choose from. Admittedly some of them looked pretty dubious from a fact checking perspective.
In the end, it felt like they were shafting the retail investors, as the loan quality went downhill.
I still have a bit of money in there, making ~16% all up, which I was very happy with.
So IMO the model works when directly investing.
I was very disappointed when they dumped the retail investors.

I was very dubious about the shares though, so didn't invest. Thankfully....

[winner69]

Dont Heartland lend zillions through the Harmoney platform ....probably unsecured

[Beagle]

Yes AU $3.50 issue price or around NZD 3.70 / 3.75

From prospectus (page 98) :

Pro forma Historical NPAT

2018 FY (LOSS 6.4 Million)
2019 FY (LOSS 6.1 Million)
2020 FY (LOSS 6.99 Million)

Forecast:

4 Mths to Oct 20 Forecast Proforma SURPLUS 1.2 Million

For my money its very important to look at the full history of the company. Extrapolating out a theoretical surplus of $3.6m from those 4 months operations is definitely not something I would do in an attempt to build any sort of theoretical investment case, especially given my deep cynicism with materially different short term performance immediately before a float. There is a consistent pattern of full year losses there and they are audited figures.

As Baa Baa has observed, the trend is definitely not your friend. This is definitely not for me.

[winner69]

the curved down trend line on baabaa's chart seems to be getting steeper today

[nztx]

For my money its very important to look at the full history of the company. Extrapolating out a theoretical surplus of $3.6m from those 4 months operations is definitely not something I would do in an attempt to build any sort of theoretical investment case, especially given my deep cynicism with materially different short term performance immediately before a float. There is a consistent pattern of full year losses there and they are audited figures.

As Baa Baa has observed, the trend is definitely not your friend. This is definitely not for me.


Agree -- the 4 months looks like a flash in the pan one off prior period recovery rather than consistent improve

Pre IPO - marketing well down & other costs

Following on even lower Interest Revenue & Expenses to follow

Growing the loan book must suggest some question on containing costs / risks / exposures etc too in changing times ?

[Beagle]

Forgive me I have done very little research on this as I am not especially interested but just out of morbid curiosity what is their NTA ?

[winner69]

Forgive me I have done very little research on this as I am not especially interested but just out of morbid curiosity what is their NTA ?

About 75 cents I think

[nztx]

Forgive me I have done very little research on this as I am not especially interested but just out of morbid curiosity what is their NTA ?


Proforma 30 June 2020 figures from Prospectus easiest to find here:

(Prospectus page 106)

No Intangibles by looks on proforma Balance sheet

Total proforma Equity $ 75.285 million

Shares on issue: (Note 7 - page 167)

After IPO issue of 20.0 m new = 100.9 million

NTA & similarly Net Assets / share roughly looks like 74.61 cps on prospectus proforma figures @ 30/6/20

[winner69]

I saw somewhere in prospectus that IPO price is 3.5 times income

That applied to HGH would put them at $1.70 odd

Suppose that’s changed a bit now at a 230 share price .....suppose now about 2.1 times income

Much ‘cheaper’ than Heartland

[Beagle]

NTA & similarly Net Assets / share roughly looks like 74.61 cps on prospectus proforma figures @ 30/6/20

Thanks. So if we apply a typical NTA approach, (let's face it earnings metrics don't work because there is no reliable track record of same), that our friend Winner likes to use to financial assets it should be about 1.3 - 1.5 times NTA so maybe $1 is fair value (if one believes their business model is sound, which quite clearly I don't).

Any way you slice and dice this, it looks like there was a LOT OF HYPE that went into this IPO.

[Rawz]

CEO purchased 10,000 shares yesterday. Not a huge amount but a good sign?

[winner69]

CEO purchased 10,000 shares yesterday. Not a huge amount but a good sign?

He must have read the manual on what to do if your share price falls after an IPO ...... CEO must buy shares to show his confidence in the company

They say it always works ..... punters are often seduced by such things

Hope he reads the next section

[KJMLimited]

There's always hype in any IPO. MFB anyone. I see Tracey Jones also bought 10,000 shares post result. Mind you they both probably sold some shares via exercised options at IPO. Follow the smart money they say. The result itself was a very good quality one. The big 4 increased their warehouse facility in AU and in NZ a second $200m facility was established. Other things to like are a record low 90day + arrears, new loan originations are up 100% in the first two weeks of the new proprietary software in the 3rd quarter, 2nd Q on 1st Q new loan origination were up 207%, momentum has continued into the 3rd Q), loan originations were ahead of prospectus forecasts. It proves their business model is very sound. What's not to like?

[winner69]

There's always hype in any IPO. MFB anyone. I see Tracey Jones also bought 10,000 shares post result. Mind you they both probably sold some shares via exercised options at IPO. Follow the smart money they say. The result itself was a very good quality one. The big 4 increased their warehouse facility in AU and in NZ a second $200m facility was established. Other things to like are a record low 90day + arrears, new loan originations are up 100% in the first two weeks of the new proprietary software in the 3rd quarter, 2nd Q on 1st Q new loan origination were up 207%, momentum has continued into the 3rd Q), loan originations were ahead of prospectus forecasts. It proves their business model is very sound. What's not to like?

Tend to agree with you about their future ....should lead to solid performance going forward

A lot of the comments re awful financials pre IPO and lending unsecured to the down and outs is a recipe for disaster etc etc we’re probably unfounded and lacked objectivity

Hope they do well

Once lent through platform.

[Habits]

Heartland is a tiny bit player here, what about they take the aussies on at their own game and open for business on the west island. No need for physical branches, online banking and call centre

[Rawz]

Has Heartland said anywhere what their intention is with their stake? 8.5% by memory

They can sell 25% of it in June. $231m market cap * 0.085 * 0.25= $4.9m could be sold.
They can sell 25% again end of Dec.

Potential for a bit of selling pressure because I see no reason why they should have capital in Harmoney when it could be put to better use in highly profitable reverse mortgage business unit.

[KJMLimited]

The ROIC Heartland lends to Harmoney is unreal. Far better than reverse mortgages.

[Rawz]

The ROIC Heartland lends to Harmoney is unreal. Far better than reverse mortgages.

They can still lend to them without having ~$20m tied up in shares?

[KJMLimited]

Yep I understand they are supporting the lending book with debt alongside the equity of course.

[winner69]

All numbers looking good latest quarter

The chart in announcement looks impressive

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HMY/370506/344004.pdf

[KJMLimited]

Looks really good. Just a question of valuation now.

[Rawz]

If they write $1b a year in Aus probably worth $500m-$600m market cap

[Rawz]

Just had a re-read of the recent announcement because I like this company and want to invest.. however noted that total loan originations for the group only increased 4% from Q2 to Q3. 4%??? Really?? Run rate is too slow!

NB. The company notes that Q2 is a peak qrt (presumable because it includes Nov/Dec i.e. Christmas months and holiday months so lots of loans for gifts, holidays, jet skies w/e). Still needs to be better than 4% qrt on qrt growth.

The book is $485m. Was sitting at $499m in FY20. So they still havnt recovered from turning the tap off during covid- a terrible move as it turned.

That graph they put up looks good and hence why it is on page 1 but the numbers are still average imo. These consumer loans roll off very quickly and need to be replaced at a ever increasing rate if you want to grow the book.

No wonder the SP is starting to look sick again with no more support in the $2.20's.
The SP will be at Beagle's $1 fair value soon enough unless they start to write decent volumes.

[Rawz]

HMY broke under $2.20 today and on big volume of $2.7m!! A good days turnover is usually $100k..

VWAP is $2.05 so I am assuming it was a off market trade at this low level? Does anybody have any insight on this?

[Jas001]

HMY broke under $2.20 today and on big volume of $2.7m!! A good days turnover is usually $100k..

VWAP is $2.05 so I am assuming it was a off market trade at this low level? Does anybody have any insight on this?

There are some small institutes selling off from IPO date and thus the SP keeps falling. I guess it is close to the end of sell off cycle based on the total shares they intend to sell. NZ herald premium has one article about the sell off before.

HMY narrowly meets expectations recently but not see any exceeding yet.

One billion Australian loan a year ambition, but just 10 million last month with the new platform launch, a big gap to catch up. It needs to show significant new loan acceleration month by month from now on to prove it can scale quickly in volume to meet its ambition.

It still has bright future but just need more proof on healthy growth (with good debt control).

It is a high risk IT growth stock, it is in high risk finance industry, it is an IPO stock with less than 1 year listing company experience. High risk means high return also.

My expectations for 1 year - down up to 20%, up 100% to 200% potential. A good bet at current SP.

[winner69]

Jeez down heaps today and just over 180

About 50% down from IPO price last November

Obviously unloved and unwanted

Will it stay this way forever?

[winner69]

Heartland said this today ..shouldn’t caused any panic

Harmoney’s transition of its funding model from a peer-to-peer off-balance sheet model to wholesale securitised on-balance sheet funding via warehouse structures is well advanced, and the transition of Heartland’s facilities with Harmoney is progressing well.

[Rawz]

HMY shares in Aussie are trading at $1.52 which is about NZ$1.64. So could see further falls this week to catch up.

Am I the only one thinking this is way oversold?

Current valuation is $181m.

[X-men]

What cause sp down almost 12% today?

[KJMLimited]

Maybe early stage investors who aren't escrowed. If there are any that is. I can't remember how all that worked in the IPO.

[nztx]

There are some small institutes selling off from IPO date and thus the SP keeps falling. I guess it is close to the end of sell off cycle based on the total shares they intend to sell. NZ herald premium has one article about the sell off before.

HMY narrowly meets expectations recently but not see any exceeding yet.

One billion Australian loan a year ambition, but just 10 million last month with the new platform launch, a big gap to catch up. It needs to show significant new loan acceleration month by month from now on to prove it can scale quickly in volume to meet its ambition.

It still has bright future but just need more proof on healthy growth (with good debt control).

It is a high risk IT growth stock, it is in high risk finance industry, it is an IPO stock with less than 1 year listing company experience. High risk means high return also.

My expectations for 1 year - down up to 20%, up 100% to 200% potential. A good bet at current SP.


Further Risk in that any one of the dual economies may experience a downturn

Leverage that further with expansionary big loan facilities, a creep up in interim
in interest rates, more pain, more defaults & she could turn to dust faster..

Global economies are volatile, in places badly Covid affected & will remain so for some time

The work of just a few clueless idiots can also just as easily turn Covid Free territories
back into Lock-downs again as well ..

US Fed suggests the central Usury rates to be on the going upwards - which spins
into other economies globally one way or another, like it or not

HMY are new boys on the block - if you like learners in OZ - expect mistakes, Red
ink off the back of large leverage too to get there

If that should happen, dreams of any sort of dividend go out the window as well

I'm with the $1 a share posted earlier as being nearer Fair Value

Sorry .. difficult to get excited by this one & it's ambitious well leveraged
expansion forays over the ditch .. ;)

Sorry to all those out there riding in on the inflated IPO float costs, but she
just hasn't materially climbed out Red territory sufficiently/at all, barring
some mysterious favourable movements in Doubtfuls provisions to get there.. ;)

[JohnnyTheHorse]

Interestingly HMY is to be included in the next MSCI index rebalancing at the end of this month. Given this stock is so illiquid I'd expect buying pressure will mean a bottom is in (for May anyway...).

What a disaster of an IPO.

[Getty]

Yeah, not much harmony, or money, just plenty of harm.

[newtrader]

Interestingly HMY is to be included in the next MSCI index rebalancing at the end of this month. Given this stock is so illiquid I'd expect buying pressure will mean a bottom is in (for May anyway...).

What a disaster of an IPO.

Where can I find the MSCI index rebalancing announcements?

[winner69]

A story of big numbers

Like +800% and 100% CAGR

The value of a company is the value of the story

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HMY/372109/345905.pdf

[trader_jackson]

A story of big numbers

Like +800% and 100% CAGR

The value of a company is the value of the story

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HMY/372109/345905.pdf

Not sure it is quite right to put out an announcement involving a comparison to a period impacted by a 1 in 100 year event and claiming this year's numbers are therefore a great success... but all about the headline, improving 'the story' and feeling good.

On a separate note, I'm still trying to figure out what makes HMY special as all I see is a finance company - it certainly isn't the first one to use fancy pictures and certain (selected) big numbers.

[JohnnyTheHorse]

Not sure it is quite right to put out an announcement involving a comparison to a period impacted by a 1 in 100 year event and claiming this year's numbers are therefore a great success... but all about the headline, improving 'the story' and feeling good.

On a separate note, I'm still trying to figure out what makes HMY special as all I see is a finance company - it certainly isn't the first one to use fancy pictures and certainly (selected) big numbers.

Some would say it's fintech so valuations don't matter.

On a serious note, with the MSCI inclusion I might have to run the ruler through this one and see where the value lies.

[winner69]

Not sure it is quite right to put out an announcement involving a comparison to a period impacted by a 1 in 100 year event and claiming this year's numbers are therefore a great success... but all about the headline, improving 'the story' and feeling good.

On a separate note, I'm still trying to figure out what makes HMY special as all I see is a finance company - it certainly isn't the first one to use fancy pictures and certainly (selected) big numbers.

I didn't want to question the timing of this ---- with the share price collapsing

[Rawz]

Aussie did $28m in new originations last qrt.
Based on April doing $11.5m you would think they will do say $35m in this qrt ending 30 June. That's qrt on qrt growth of 25%

Growth rates like that would mean they would hit their $1b in annual Aus loan originations within 2 and a bit years.

It will be interesting to see how the new scorecard goes in NZ when it is released.

The only thing to keep an eye on will be the arrears rate. If they stay low with the new scorecard then Harmoney will have a magic bullet and be ahead of the competition. With NIM of 10% its worth a look.

Disc. I bought a few last week

[Rawz]

On a separate note, I'm still trying to figure out what makes HMY special as all I see is a finance company - it certainly isn't the first one to use fancy pictures and certain (selected) big numbers.

Most of the banks still use employees to do the credit risk assessment on personal loans. Then they have employees that generate loan documents and process them.

Harmoney have a scorecard (Libra 1.7) that does the credit assessment, i.e. a computer says yes or no. Harmoney computer then generates the loan documents for the customer to complete which are then submitted back to Harmoney online. Less friction. Less employee cost. Faster etc. Fintech some would say.

The value of Harmoney is in the data of their scorecard. After processing 1000's of 1000's of applications they can have a very good idea of the likelihood of a default from a non home owner, male, tradie, in his 20's vs a homeowner, female, office worker in her 30's. And price the loan 15% vs 8%.. you get the idea.

If Harmoney gets it right they will make lots of money and end up growing to a decent loan book size of $1b to $2b. This is when one of the main banks will want to buy them for their scorecard I am thinking.

[KJMLimited]

It's the tech behind the loan originations this the point of difference. It leads to more and better quality loans, at lower cost. Their rivals can't match it.

[KJMLimited]

Bang on Rawz

[trader_jackson]

Most of the banks still use employees to do the credit risk assessment on personal loans. Then they have employees that generate loan documents and process them.

Harmoney have a scorecard (Libra 1.7) that does the credit assessment, i.e. a computer says yes or no. Harmoney computer then generates the loan documents for the customer to complete which are then submitted back to Harmoney online. Less friction. Less employee cost. Faster etc. Fintech some would say.

The value of Harmoney is in the data of their scorecard. After processing 1000's of 1000's of applications they can have a very good idea of the likelihood of a default from a non home owner, male, tradie, in his 20's vs a homeowner, female, office worker in her 30's. And price the loan 15% vs 8%.. you get the idea.

If Harmoney gets it right they will make lots of money and end up growing to a decent loan book size of $1b to $2b. This is when one of the main banks will want to buy them for their scorecard I am thinking.

Okay, I wasn't really comparing Harmoney to a Bank... so what is the significant diffrentiater between Harmoney and other finance companies... say Latitude Financial, Liberty Financial, Pepper Money, Prospa Group (and the list goes on, but can start with those ones) - all of these ones are claiming they are a fintech (for part of their business/to some extent or another and do fancy stuff with computers to minimize expenses and improve their data score cards etc)

[Rawz]

Okay, I wasn't really comparing Harmoney to a Bank... so what is the significant diffrentiater between Harmoney and other finance companies... say Latitude Financial, Liberty Financial, Pepper Money, Prospa Group (and the list goes on, but can start with those ones) - all of these ones are claiming they are a fintech (for part of their business/to some extent or another and do fancy stuff with computers to minimize expenses and improve their data score cards etc)

Latitude or GEM a good competitor. I am not sure about the others- they're more into mortgages but I get your point. I mention the banks because they own the market.

It's all going to come down to who can approve and drawdown the loans the quickest/ easiest with as little human interaction as possible and as little arrears as possible. That may seem simple or obvious but when you look at any company its often a bit of that.

Certainly this is far away from backing the truck up territory.. for me its about 2% of my portfolio. Imo its worth a look. Looking forward to the next qrt update.

[Scrunch]

Wow
I would not have thought announcing a 1% monthly growth in receivables from $485m to $490m would have caused a 16% increase in the share price (a circa $30m increase in market cap). If $37.8m of new loans does that, would have $30m caused declining receivables, or are they quoting loans granted but not drawn down?

[winner69]

Wow
I would not have thought announcing a 1% monthly growth in receivables from $485m to $490m would have caused a 16% increase in the share price (a circa $30m increase in market cap). If $37.8m of new loans does that, would have $30m caused declining receivables, or are they quoting loans granted but not drawn down?

So the headlines worked

+800% and CAGR 100% really huge numbers

[nztx]

Wow
I would not have thought announcing a 1% monthly growth in receivables from $485m to $490m would have caused a 16% increase in the share price (a circa $30m increase in market cap). If $37.8m of new loans does that, would have $30m caused declining receivables, or are they quoting loans granted but not drawn down?


How about further unwinding of Covid-19 Provisioning - was that separately disclosed in latest announcement

We know that brought things positive in earlier reports (just)

Lower borrowing costs maybe helping things on existing & expanding lending book ?

No indication of bottom line or guidance on forwards nuts & bolts financials in latest was there ?

[Rawz]

No indication given yet apart from "All other key operating metrics across the Group have improved or remain in line with thosereported on 12 April 2021 as part of our March quarter update."

12 April they say "Strong credit performance maintained due to Harmoney’s high-quality loan book, with Group 61+ day arrears at 1.26% and 90+ day arrears at 0.53% as at 31 March 2021 (31 December 2020 1.3% and 0.58% respectively)."

FY21 ends June 30. Suppose we will see some guidance on profit soon.

[nztx]

Well the feel good in the most recent HMY announcement didn't last for long

Downwards SP track resumed, it seems ;)

[winner69]

Well the feel good in the most recent HMY announcement didn't last for long

Downwards SP track resumed, it seems ;)

Those 2 days after that really positive announcement were good for surprise ....

.....but as you say it’s still down hill and into the 150s (from 190 odd a week or so ago)

[X-men]

Look like the sp has buttoned?

Any thoughts? Thinking to buy in as the growth is phenomenal.

Feb result was $42m.... expecting an update soon?

[winner69]

Look like the sp has buttoned?

Any thoughts? Thinking to buy in as the growth is phenomenal.

Feb result was $42m.... expecting an update soon?

That anouncement a week or so ago was pretty phenomenal

800% BOUNCE BACK IN LENDING VOLUMES ON APRIL 2020

Tempting

[X-men]

What your thoughts winner? Insiders bought in around $2 to $2.50....

[nztx]

Lending increases are one thing

The deal's not done until each bit of paper written comes out at the end of the term unimpaired

Therein lies the risk, along with venturing into the great well baked land over yonder on large borrowed dough
as new boys on the block .. ;)

[X-men]

winner,,if the growth was phenomenal ...why the market is not buying in??

[winner69]

winner,,if the growth was phenomenal ...why the market is not buying in??

Market obviously didn’t believe the story

Maybe market wants to see the phenomenal growth in lending turn into profit before getting excited

[X-men]

punt about $2k...money that i could afford to lose. Marketscreener said highly buy.. more than $3.50

Are you a holder winner??

[winner69]

punt about $2k...money that i could afford to lose. Marketscreener said highly buy.. more than $3.50

Are you a holder winner??

Not yet

The thing with HMY is that they have been a real disappointment since listing

Markets don't like stocks like this - they tend to come pariahs of the market - unwanted and unloved and it's hard to overcome that

Harmoney need to keep telling a good story and delivering on that - then the love might come their way

In the meantime there will be some/money who see them cheap on fundamentals - and some will buy and possibly will do very well in doing so

[nztx]

I'm watching ASX listed MME (currently A$1.87 or so) which seems to be making a lot of noise & in the same game as HMY

Have a few HMY onboard too

[X-men]

if the growth story is real and they delivered, current SP is so cheap?? If market waited until they delivered, SP would double then??

[winner69]

if the growth story is real and they delivered, current SP is so cheap?? If market waited until they delivered, SP would double then??

Could will do that

But also could remain unwanted and unloved with the share price remaining in the doldrums ,,,and in the eyes of some getting cheaper and cheaper

Somebody once said share price = intrinsic value plus/minus hype (or sentiment), Currently HMY trying to hype themselves up but sentiment remains real negative eh

[KJMLimited]

It's just question of how much time.

[winner69]

Harmoney NIM is 11%

That's pretty good

[X-men]

any gurus that able to calculate the fair value based on last update $42 million revenue?

[winner69]

Floated at 3.5 times income (IPO documents)

At that time Heartland was on about the same multiple

Harmoney's 3.5 must now be lower -- probably 1.5 depending n financial performance

Heartland's 3.5 is now about 5

That gives a rough idea of what could be possible in the way of Harmoney share price appreciation --- one day in the future 4 bucks might not be outrageous

[Rawz]

Hoping to see $35m new lending in Aus for the quarter

[X-men]

Read through MME Asx....same growth story but the market values MME more than twice of HMY...

[winner69]

Read through MME Asx....same growth story but the market values MME more than twice of HMY...

Not fair is it

HMY income lot more than MME .....but MME market cap double HMY

The MME story liked by the market ....who have rejected HMY

[X-men]

Yeah...the market is a beast...2 more weeks till end of June... hopefully big great news coming soon.

Only put 2k....so not to bother

[KJMLimited]

HMY loans are twice the size of MME. But I'm not sure if that is good or bad. I think good, as there's far less cost per loan.

[nztx]

I wonder how much of the disproportionate SP's between MME & Harmoney is
Aussie story liked by Aussie punters .. Kiwi one not

MME looks like it listed on ASX in last 2019 as far as I can see

How does the overhead structure compare between the two ?

[nztx]

HMY loans are twice the size of MME. But I'm not sure if that is good or bad. I think good, as there's far less cost per loan.

Cost per Loan is one thing, Risk per loan another - risk of greater loss if default occurs & unrecoverable, I imagine..

[winner69]

Harmoney really unwanted and unloved today - share price down to low 140's

[winner69]

Didn’t think share price would fall into the 130’s

[dabsman]

Didn’t think share price would fall into the 130’s

I'm ok with it. Slowly accumulating but not a lot of depth

[Rawz]

HMY SP a sick puppy. Worth a punt?

[nztx]

HMY SP a sick puppy. Worth a punt?


I'm not sure - still wondering how much lower the SP can go here ..

Anyone looked a the charts with critical support levels / volumes in mind ?


Each time I give this one a prod & think it's as low as it can go, I get a shower of red back .. ;)

[Ggcc]

I'm not sure - still wondering how much lower the SP can go here ..

Anyone looked a the charts with critical support levels / volumes in mind ?


Each time I give this one a prod & think it's as low as it can go, I get a shower of red back .. ;)
Until we see some better figure. Hold off. Of course do your own research

[X-men]

Lost 15% in less than 2 weeks.... lucky only $2k...

Want to buy more using my dog stock dividend this thrusday

[nztx]

Lost 15% in less than 2 weeks.... lucky only $2k...

Want to buy more using my dog stock dividend this thrusday


Not far behind you there on the red ink ;)

[Rawz]

One could argue it is the best 'punt' on the NZX right now. I reckon we are close to 1x income. HGH trading 5.5x? Crazy stuff.

I am hoping to see qrt on qrt growth in aus originations of 25% in the next announcement. If we get that it could reverse the downward spiral of the poor ole HMY sp.

I have dipped my toes in twice now trying to pick the bottom. What are the sayings? The trend is your friend? Better to double up rather than double down? Ah well. Now I'm gun shy, will wait for the next announcement before i buy more.

[winner69]

One could argue it is the best 'punt' on the NZX right now. I reckon we are close to 1x income. HGH trading 5.5x? Crazy stuff.

I am hoping to see qrt on qrt growth in aus originations of 25% in the next announcement. If we get that it could reverse the downward spiral of the poor ole HMY sp.

I have dipped my toes in twice now trying to pick the bottom. What are the sayings? The trend is your friend? Better to double up rather than double down? Ah well. Now I'm gun shy, will wait for the next announcement before i buy more.

Don’t fret …many versions of the famous stock cycle actions have buying before the bottom …….and then buying more at the bottom and on the way up

So unless the bottom is buck you should be fine

[Snow Leopard]

Bit of positive action today. That makes a change.

So is this the actual bottom then?

It just needs a little more liquidity and I could put it under close observation.

[nztx]

Bit of positive action today. That makes a change.

So is this the actual bottom then?

It just needs a little more liquidity and I could put it under close observation.


I wouldn't bank on it .. been trying to pick it & then it keeps sliding further .. ;)

[Rawz]

2-3 weeks we should get Q4 or H2 trading update. I wouldn't think we would see much SP action until then?? Unless word has gotten out that it has been a transformational qrt with big number of Aus originations???

[nztx]

2-3 weeks we should get Q4 or H2 trading update. I wouldn't think we would see much SP action until then?? Unless word has gotten out that it has been a transformational qrt with big number of Aus originations???


probably a quarter with what - interest & borrowing costs on all the extra bundle borrowed for OZ
and only Revenue for that part lent out by new boys on the block in the land of large sunbaked ? ;)

what was HMY released guidances again ? ;)

[Rawz]

probably a quarter with what - interest & borrowing costs on all the extra bundle borrowed for OZ
and only Revenue for that part lent out by new boys on the block in the land of large sunbaked ? ;)

what was HMY released guidances again ? ;)

What's the saying, got to spend money to make money?
HMY can't lend what they don't have.

Anyways, not too concerned with the bottom line right now. It is all about originations growth and impairments. Hopefully impairments are decreasing as a percentage. Interest expense will naturally slowly decrease the bigger/ more proven they get.

[Rawz]

probably a quarter with what - interest & borrowing costs on all the extra bundle borrowed for OZ
and only Revenue for that part lent out by new boys on the block in the land of large sunbaked ? ;)

what was HMY released guidances again ? ;)

What's the saying, got to spend money to make money?
HMY can't lend what they don't have.

Anyways, not too concerned with the bottom line right now. It is all about originations growth and impairments. Hopefully impairments are decreasing as a percentage. Interest expense will naturally slowly decrease the bigger/ more proven they get.

[dabsman]

I'm assuming I can shunt my shares to the ASX? The depth on the NZX is a joke. What am I supposed to do with 5,000 shares over a 10c spread? Me buying f all shares moves the price 5%?

[Rawz]

I'm assuming I can shunt my shares to the ASX? The depth on the NZX is a joke. What am I supposed to do with 5,000 shares over a 10c spread? Me buying f all shares moves the price 5%?

Who's going to sell at these prices ;)

You need to move the price up another 20%

[Rawz]

UP 10% today. Word has got out that its was game changing quarter????????

[Snow Leopard]

UP 10% today. Word has got out that its was game changing quarter????????

Heartland pushing the SP up so it looks better in their FY accounts :cool:

[Beagle]

https://www.interest.co.nz/banking/111071/tsb?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+1+ July+2021

Interesting sale at well below carrying value that looks like it had already been provisioned. (My thoughts on the merits of Harmoney have already been clearly articulated)

[KJMLimited]

Harmoney provisioned well below 10% last year in NZ and hasn't written it back. This news isn't all that bad. Anyway it's the growth in the 0z portfolio that matters most.

[ralph]

Good call that a week or so ago Rawz ,it has really come on :cool: it was due for the bounce back, its just when like anything else!


One could argue it is the best 'punt' on the NZX right now. I reckon we are close to 1x income. HGH trading 5.5x? Crazy stuff.

I am hoping to see qrt on qrt growth in aus originations of 25% in the next announcement. If we get that it could reverse the downward spiral of the poor ole HMY sp.

I have dipped my toes in twice now trying to pick the bottom. What are the sayings? The trend is your friend? Better to double up rather than double down? Ah well. Now I'm gun shy, will wait for the next announcement before i buy more.

[nztx]

Geeze - HMY SP sure got kicked north a bit .. any official HMY news releases to account for this ? ;)

[Rawz]

Geeze - HMY SP sure got kicked north a bit .. any official HMY news releases to account for this ? ;)

No official news. Maybe leaky ship that originations were exceptional last qrt. Or maybe my post that Ralph highlighted saying how its the best 'punt' on the NZX ;)

[dabsman]

I grabbed a bunch between $1.40 to $1.50 but as I said earlier it is very hard to get a decent position with such little volume. I will try and get a few more as I think it looks a good punt with consenss averaging $3.31 from last look

[Rawz]

Volume will increase once we get back above $2

[X-men]

Man...only put $2k... should put $20k...lol....now I looked greedy!

[Rawz]

Probably trading around 2x income now. Give or take 5%

At $86m income and 3x we have sp of $2.60ish.
At 4x income $3.40ish.
Dabsman says consensus is $3.31. Not unreasonable.

HMY have a goal of $1b in Aus originations per annum. That would be about 850% increase from their current run rate (I'm estimating they will hit $106m ish originations this year in Aus).

Looking forward to seeing the next numbers released, especially provisions & impairments.

[dabsman]

Probably trading around 2x income now. Give or take 5%

At $86m income and 3x we have sp of $2.60ish.
At 4x income $3.40ish.
Dabsman says consensus is $3.31. Not unreasonable.

HMY have a goal of $1b in Aus originations per annum. That would be about 850% increase from their current run rate (I'm estimating they will hit $106m ish originations this year in Aus).

Looking forward to seeing the next numbers released, especially provisions & impairments.

I think it will struggle to get over AUD $2 till more news is released. Happy to hold directly and via HGH

[winner69]

Probably trading around 2x income now. Give or take 5%

At $86m income and 3x we have sp of $2.60ish.
At 4x income $3.40ish.
Dabsman says consensus is $3.31. Not unreasonable.

.

Seeing they floated at 4.4 times income (EV was 3.5 income) a bit of a let down so far eh

You $86m income I assume was F20 number - what you expect F21 to be (H1 was flat)

Isn't 4 times income a bit optimistic?

[Rawz]

Seeing they floated at 4.4 times income (EV was 3.5 income) a bit of a let down so far eh

You $86m income I assume was F20 number - what you expect F21 to be (H1 was flat)

Isn't 4 times income a bit optimistic?

They are on track to to ~$440m of originations this year. That would be up 5% from last years $420m.
Q1 they turned the tap off due to covid (which turned out to be a big mistake). Otherwise they would have written at least another $30m.

Income ~$90m FY21? up 5%?

4x income maybe optimistic but not if Aussie takes off and their run rate to AU$1b per annum experiences double digit qrt on qrt growth. Might need to be higher to price the growth?

Everyone waiting for the numbers to see the devil in the detail. Those taking the punt now will be getting the multi baggers if this plays out nicely.

Isnt investing fun? :)

[Waltzing]

how do you get a position when there is next to no vol. That is the problem for NZ and the government doesnt seem to understand that the only way out of the long term debt problem is to fire up the economy.

This little stock might well grow but the lack of vol is the problem.

[Rawz]

Near on impossible for large investors to buy in and build a meaningful position.

No such issue for me. Benefits of being at the start of my investing journey with a portfolio under $100k

[winner69]

how do you get a position when there is next to no vol. That is the problem for NZ and the government doesnt seem to understand that the only way out of the long term debt problem is to fire up the economy.

This little stock might well grow but the lack of vol is the problem.

I see you found a seller to off load 700,000 shares for you ….you still after more?

[Waltzing]

winner(n) you would hope they made a profit off the low ....

that was an SP.

[Beagle]

Chart is starting to look a little bit interesting with a possible break coming up through 100 day MA if it goes up a bit more.

I guess its true the old saying that every dog has its day...maybe...

[winner69]

Heartland must see value in Harmoney - some discrete buys

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/375217/349808.pdf

[Ggcc]

Heartland must see value in Harmoney - some discrete buys

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/375217/349808.pdf
Or with a very small investment increase the value of it by millions

[Snow Leopard]

Heartland pushing the SP up so it looks better in their FY accounts :cool:

Told you so.

[Rawz]

Told you so.

I was thinking someone did call this. Well done

[Snow Leopard]

I was thinking someone did call this. Well done

Sometimes facitiousness and reality coincide :t_up:

[dabsman]

So much for my idea it wouldnt get over AUD $2 without more news. Smashed thru

[Rawz]

Now the fomo will start to kick in. What did we say? $3.20 was fair price?

[X-men]

Man.. should sold my dog stock n bought more when it was at$1.40

[ralph]

Man.. should sold my dog stock n bought more when it was at$1.40
I have said that a few times dagnabbit :D

[X-men]

Great update..still cheap to buy!

[dabsman]

Some incredible numbers. Very happy holder :)

[winner69]

Some incredible numbers. Very happy holder :)

Is amazing better than incredible.

Whatever pretty good eh

[whatsup]

Up 15.6% on a turn around story, well done the brave holders from the listing going through doubting thoughts !

[winner69]

Be back to IPO price before we know it

[KJMLimited]

As predicted, growing as fast as duckweed.

[Rawz]

Book is growing 3% every qrt in $NZs with management saying they are expecting significant growth in FY22, maybe we see 5% qrt on qrt growth next FY?

Aus Q3 to Q4 originations grew 75%. That is unbelievable! I was posting here hoping to see 25% lol.
Management say $1b p.a. Aus originations is the goal.

No commentary on provisions or impairments but 90 day arrears looking good at 0.69%
All future growth will be generating big economies of scale.

Things are humming at Harmoney.

[nztx]

looks like the plug has been pulled on that little bounce .. ;)


- 42.0 c in 5 days .. buyers not interested any more ? ;)

[Rawz]

I hate this stock

[X-men]

Hmy should not listed on Asx.....Asx market is a sea of traders n shorters.

[nztx]

Hmy should not listed on Asx.....Asx market is a sea of traders n shorters.


Wonder if Afterpay or Square have any interest in an Australasian dual listed Lender which the markets are somewhat uncertain of ? ;)

Could be a bargain for them .. ;)


many wouldn't sneeze at a few of either's shares instead of some hesitant twitching HMY share parcels susceptible to Transtasman
market jitters .. ;)

[dabsman]

Hoping for some more weak hands to accumulate

[Monarch]

I wonder if Heartland is still sniffing around, this is near the average price they purchased at last time. You would expect their original logic for buying last time still applies now. I've been tempted to look into these but I think I'll let Jeff at HGH do it for me ;)

[X-men]

Would be the best HGH buys all the shares. Mr market does not value HMY

[Dlownz]

Wow back down to 1.82. I'm just a little surprised it's come back down to this level after what I perceived as good news. I think it's a better buy than my food bag.
I don't hold any shares in this one but I'm watching with interest. Its one big yoyo

[clearasmud]

Wow back down to 1.82. I'm just a little surprised it's come back down to this level after what I perceived as good news. I think it's a better buy than my food bag.
I don't hold any shares in this one but I'm watching with interest. Its one big yoyo
NTA is only 99c as at 31 Dec 2020.
I dipped my toes in today.

[KJMLimited]

Good to see the settlement with the Commerce Commission today. albeit more than 2x what they had budgeted and provisioned for ($7m vs $3m). It has been a long-standing distraction. I'm looking forward now to the result and the forecast for the next 6 months. Some escrow shares become available and it'll be very interesting to see who might step up to buy any that are sold.

[Rawz]

Results tomorrow. $3m profit? (Ignoring comcom settlement)

[Dlownz]

Results out. I can see why heartland got in on this. Probably not the best at ipo. But those lows it reached over a month ago were a great time to get in

[winner69]

Results out. I can see why heartland got in on this. Probably not the best at ipo. But those lows it reached over a month ago were a great time to get in

Amazing presentation eh

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HMY/378232/353608.pdf


Heartland only bought a few as a bit of financial engineering to make their books look better. wouldn't read anything more into it

[KJMLimited]

Superb result. This is a key line for me:

Break even pro forma cash net profit after tax, with a pro forma loss after tax of $8.9 million before non-cash items and normalisation adjustments.

Breakeven operating cashflow. When Diligent got to this stage it began that steady rise from 20c to $5+.

[Getty]

Doesn't look like the market agrees with amazing and superb.

Dumped down 7.8% to $1.90 so far today.

Harming money...

[Dlownz]

There's one thing with the share market. Sometimes **** just gets weird. Look at sky. On the result it gets dumped almost 1 cent to 15.4. Now its at 18.5. Yes over priced at ipo. But now. Hmm. Maybe but they seem to be hitting their marks. Maybe someone else has better insight or knowledge. 😊

[nztx]

what - no dividend this year ? ;)

[winner69]

About 73 million shares come out of escrow tomorrow

[nztx]

About 73 million shares come out of escrow tomorrow


Any guesses for tomorrow's prospects ? ;)

[KJMLimited]

About 73 million shares come out of escrow tomorrow
This is not correct. The total amount of escrowed shares is about 73m. 25% of those come out of escrow tomorrow which is the day after the FY audited results are released. The next 25% come out of escrow the day after the audited half year result for Dec 2021 (sometime in late Feb/Mar 2022) and the last of them (50%) come out of escrow after the release of the audited full year result for the year ended June 2022 (sometime late Aug/early Sep). So there is not 73m shares coming onto the market tomorrow, there are a maximum of 18.5m - and not all of those are necessarily going to be sold. All this information comes from the prospectus (except for my comment about the likelihood of some not being sold, which is just an opinion).

[winner69]

This is not correct. The total amount of escrowed shares is about 73m. 25% of those come out of escrow tomorrow which is the day after the FY audited results are released. The next 25% come out of escrow the day after the audited half year result for Dec 2021 (sometime in late Feb/Mar 2022) and the last of them (50%) come out of escrow after the release of the audited full year result for the year ended June 2022 (sometime late Aug/early Sep). So there is not 73m shares coming onto the market tomorrow, there are a maximum of 18.5m - and not all of those are necessarily going to be sold. All this information comes from the prospectus (except for my comment about the likelihood of some not being sold, which is just an opinion).

Thanks for clarifying.

18.5 million is a still fair chunk ….esp relative to about 54 million of non-escrowed shares

But things are looking so bright they might be happy to keep holding.

[KJMLimited]

Thanks for clarifying.

18.5 million is a still fair chunk ….esp relative to about 54 million of non-escrowed shares

But things are looking so bright they might be happy to keep holding. a lot depends on who the buyer is. A trade buyer would, stir things up.

[Rawz]

I would call it a promising result. Turning the lending tap off after covid first hit our shores (a mistake in hindsight) really slowed the book growth for FY21. Looks like the chairman took the blame for the com com fine? The new chairman has strong regulatory knowledge..

The marketing spend in Aussie has been (as expected) quite high:
$7.8M for originations of AUS$120m
vs NZ of $8.6m for originations of NZ$318.9m.

Marketing spend to originations ratio is 6.5% for Aussie and 2.7% for NZ.. only natural that the Aussie ratio will fall in line with that of NZ overtime.

Employee expenses up an incredible 42%. Put down to new developers for the launch into Aussie.

Gee the Aussie side of the business really is sucking up the cash. Guess that is how you get 75% originations growth from Q3 to Q4.. The old saying you got to spend money to make money comes to mind.

Impairment expense to loan portfolio has improved from 4.8% FY20 to 3.9% FY21. This for me is the most important thing. If they can keep fine tuning the libra scorecard so that the ratio drops lower and lower that will be a huge competitive advantage. This combined with an automated loan application system and the banks will continue to bleed the A+ consumer credit customers. A good target would be impairment expense to drop below 2% of the portfolio and fully automated end to end loan applications over 80%.

As long as the book rapidly grows and impairment expense ratio drops all is well, seems simple aye:p.
It will mean the automation is working and the libra scorecard is working.
The rest will fall into line, the cost of funds will fall, marketing expense ratio will fall, employee expense ratio will fall etc because of economies of scale etc.

One last note, they highlight fintech and all this customer financial data they hold. Not sure how that can be used with new products but data is quite valuable in this world. Think I read they hold more financial data than any fintech in Aussie? Did I read that? That would mean more than afterpay? That's cool.

[KJMLimited]

I suspect the AU cost of loans compared to loans written will drop to the NZ cost over time. Libra has been used in NZ for a while now but as long as AU. There's also more repeat loans in NZ and these are the cheap ones. Less of those in AU but that's because the AU book is still full of first time borrowers.

[Rawz]

Should get Q1 trading update next week.

Not sure how the lockdowns will impact the results.

To continue the growth it would be good to see ~$140m originations and $520m loan book.

[whatsup]

Should get Q1 trading update next week.

Not sure how the lockdowns will impact the results.

To continue the growth it would be good to see ~$140m originations and $520m loan book.

R, fingers crossed, bought sub $2 so hope Im on a good horse here for a long term hold!!

[Rawz]

R, fingers crossed, bought sub $1 so hope Im on a good horse here for a long term hold!!

I assume you mean $2. It looks like the chart is levelling off. Was hard to pick an entry point since the slide down from listing price $3.75. I took 4 bites of the cherry. Two under $2 and two over $2. Slightly underwater at the moment. Ah well all will be fine as long as they keep putting runs on the board. HMY (imo) is one of those stocks that currently has lots of upside SP potential vs a disproportionately smaller downside SP risk.

[whatsup]

I assume you mean $2. It looks like the chart is levelling off. Was hard to pick an entry point since the slide down from listing price $3.75. I took 4 bites of the cherry. Two under $2 and two over $2. Slightly underwater at the moment. Ah well all will be fine as long as they keep putting runs on the board. HMY (imo) is one of those stocks that currently has lots of upside SP potential vs a disproportionately smaller downside SP risk.

Yeh $2 correct, brain fade, I concur with your understanding, one for the patient imo

[whatsup]

Apparently Jardens have done a indepth investment research on Harmoney,

[Rawz]

Apparently Jardens have done a indepth investment research on Harmoney,

Anyone have an executive summary of it? Would be keen to know their thoughts.

[whatsup]

Anyone have an executive summary of it? Would be keen to know their thoughts.

Try phoning them , they can only say NO , could be a yes also.

[dabsman]

Key Q1 FY22 highlights:
* Largest quarter of new originations in the Company’s history
* Australian new customer originations grow to A$31 million, up 885% versus pcp and up 17% on Q4 FY21
* Group proforma loan book reaches $517 million, yielding a net interest margin of >11% and net lending margin of >7%
* Australian receivables book grows to A$155 million, up 58% on pcp and up 15% on Q4 FY21
* Improvement in key lead indicators of account acquisition, new loan originations and net lending margin set to drive increases in receivables and revenue growth in current and future financial years through Harmoney’s 3Rs consumer-direct model
* Significant improvement in credit performance with 90+ days arrears at 47 basis points (June 21: 69 bps)
* Achieved breakeven on proforma Cash NPAT on existing loan book demonstrating value from automation and scalability of Harmoney’s 100% consumer-direct model

Break even :) What a story the last 2 quarters are showing

[Rawz]

Should get Q1 trading update next week.

Not sure how the lockdowns will impact the results.

To continue the growth it would be good to see ~$140m originations and $520m loan book.

All good! No covid slowdown like last year.

$142.9m originations
$517m book

Should be back over 2 bucks on this news

[peat]

is this where all the retail therapy is coming from ?

[winner69]

wish they would include lots of sexy charts rather than bolded numbers

You'd really get a feel of the growth

[peat]

sexy charts

885% versus pcp

the chart certainly pointing upwards

[Rawz]

This latest result should start a trend back to IPO price of $3.70(?)

Sufficient runs on the board now. HMY has a target of $1b aussie originations pa. That's $250m a qrt or 5x what they just reported.

[winner69]

This latest result should start a trend back to IPO price of $3.70(?)

Sufficient runs on the board now. HMY has a target of $1b aussie originations pa. That's $250m a qrt or 5x what they just reported.

This latest result should start a trend back to IPO price of $3.70(?) --- and everybody says MFB was a rort of an IPO .....this beats that

[nztx]

Where is the Bottom line PROFIT or LOSS for the Quarter ?

These guys *must* have Quarterly accounts prepared surely - seeing as they have the other Stats

They need to stop whitewashing with Selective Stats & other BS and provide the rest of the picture ;)

[Rawz]

This latest result should start a trend back to IPO price of $3.70(?) --- and everybody says MFB was a rort of an IPO .....this beats that

Yes both a rort.

But HMY turned the lending tap off during first covid shutdown so people didnt believe in the growth story. SP was punished.
Now we have had enough evidence that the model works.

[winner69]

Where is the Bottom line PROFIT or LOSS for the Quarter ?

These guys *must* have Quarterly accounts prepared surely - seeing as they have the other Stats



They need to stop whitewashing with Selective Stats & other BS and provide the rest of the picture ;)

Did say • Achieved breakeven on proforma Cash NPAT on
existing loan book ……what ever that means


I think it means breakeven now and when automation and scalability kicks in HUGE profits on thevway

[nztx]

Did say • Achieved breakeven on proforma Cash NPAT on
existing loan book ……what ever that means


I think it means breakeven now and when automation and scalability kicks in HUGE profits on thevway


That might be the case - but still doesn't exonerate HMY in terms of very likely having
the full Quarterly Accounts & Results at hand & reporting the Bottom line to the market IMO ;)


These guys dont govern the Biz with a series of shots at a Dart Board in the Board Room, so why do they
expect the market to accept their selective disclosures ? ;)

[Rawz]

That might be the case - but still doesn't exonerate HMY in terms of very likely having
the full Quarterly Accounts & Results at hand & reporting the Bottom line to the market IMO ;)


These guys dont govern the Biz with a series of shots at a Dart Board in the Board Room, so why do they
expect the market to accept their selective disclosures ? ;)

I suspect you know the answer to your own question ;)

The current narrative is all about the growth in originations and the book. This is a high growth fintech company after all- who cares about bottom line on such companies anyway :cool:

What's Afterpay or Xero's bottom line? See, nobody cares :)

[nztx]

I suspect you know the answer to your own question ;)

The current narrative is all about the growth in originations and the book. This is a high growth fintech company after all- who cares about bottom line on such companies anyway :cool:

What's Afterpay or Xero's bottom line? See, nobody cares :)


the current narrative also infers No Divy yet & still not materially into the black on a ramped up IPO pricing
- does it not .. ? ;)

Most of us will be aware that NZX behaves differently from ASX & USA exchanges on Internet Co listings,
our local perspective on dividends & yields etc .. probably the reason why some of these locally
grown beasties prefer to make ASX or further afield their home, rather than our dull & boring NZX home turf .. ;)

[Rawz]

the current narrative also infers No Divy yet & still not materially into the black on a ramped up IPO pricing
- does it not .. ? ;)

Most of us will be aware that NZX behaves differently from ASX & USA exchanges on Internet Co listings,
our local perspective on dividends & yields etc .. probably the reason why some of these locally
grown beasties prefer to make ASX or further afield their home, rather than our dull & boring NZX home turf .. ;)

Agree.. lucky for HMY they are listed on the ASX and new chairman (Paul Lahiff) is a big wig aussie businessman

[winner69]

Good day today eh rawz

[Rawz]

Good day today eh rawz

A harmonious day indeed

[thegreatestben]

HGH had a little bump, I suspect it's thanks to HMY :)

[clearasmud]

HGH had a little bump, I suspect it's thanks to HMY :)
What %age do they own?

[Rawz]

HMY reaffirmed guidance of a $600m loan book by the end of FY22.
Current book $517m.

HMY has grown the book 3% qrt on qrt for the last 3 quarters.

To reach $600m loan book by end of FY22 they will have to up their growth rate to 5% qrt on qrt.

And their guidance is "at least $600m". So room for upside.

HY update in late Jan likely to be a biggie with lots of cool graphs pointing up, bold lettering and the word RECORD mentioned more than a few times I reckon.

[Neophyte]

What %age do they own?

10.1% based on SSH released 7 July

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HMY/375261/349855.pdf

[clearasmud]

Thank you!

[KJMLimited]

Wait until the repeat loan business starts kicking into the AU portfolio. Then you'll see real growth.

[Rawz]

How do you value these fintech direct to consumer lending businesses?

Well Latitude Group recently announced they paid AU$200M for Symple. A direct to consumer lender in Aus.
Symple has a $53m loan book which it grew over 25 months.

Lets check against HMY Aussie loan book... currently 3x Symple at $155m. It has increased $54m in 9 months.
Total book inc NZ is $517m

HMY market cap currently au$192m... hmmmmm

HMY cheap as!

[winner69]

How do you value these fintech direct to consumer lending businesses?

Well Latitude Group recently announced they paid AU$200M for Symple. A direct to consumer lender in Aus.
Symple has a $53m loan book which it grew over 25 months.

Lets check against HMY Aussie loan book... currently 3x Symple at $155m. It has increased $54m in 9 months.
Total book inc NZ is $517m

HMY market cap currently au$192m... hmmmmm

HMY cheap as!

You’ve said HMY is a billion dollar company ….on those metrics its a 2 billion dollar company ….hmmmmm

[dabsman]

You’ve said HMY is a billion dollar company ….on those metrics its a 2 billion dollar company ….hmmmmm

This share is cheap. I'm buying all I can as soon as funds come free. Double in 18 months I'm thinking

[dabsman]

Good news for NIM :)

HARMONEY PRICES $105M INAUGURAL ABS TRANSACTION Key highlights:
• Validation of Australian loan book o Top tranche of AAA rating (Moody’s) achieved with 34% credit enhancement
• Material reduction in cost of funds o Day 1 weighted average interest rate of 1.45% + 1 month BBSW
• Significant release of capital o 50% reduction in Harmoney’s capital required compared to existing warehouse
• Harmoney has also been awarded 4th place in the AFR BOSS “Most Innovative Companies 2021” for its Libra™ automated real-time credit scoring platform

[Rawz]

Good news for NIM :)

HARMONEY PRICES $105M INAUGURAL ABS TRANSACTION Key highlights:
• Validation of Australian loan book o Top tranche of AAA rating (Moody’s) achieved with 34% credit enhancement
• Material reduction in cost of funds o Day 1 weighted average interest rate of 1.45% + 1 month BBSW
• Significant release of capital o 50% reduction in Harmoney’s capital required compared to existing warehouse
• Harmoney has also been awarded 4th place in the AFR BOSS “Most Innovative Companies 2021” for its Libra™ automated real-time credit scoring platform

Good news indeed:
Funding costs going down
Bad debts going down
Lending volumes going up
share price going down lol wot

[peat]

I wouldnt want to be on the other side of these ABS myself :p

[dabsman]

Not too concerned with share price currently. Volume is so low even I can move the market

[Rawz]

Not too concerned with share price currently. Volume is so low even I can move the market

I am in two minds. Lower SP lets me accumulate more. Higher SP good for my portfolio returns.

Long run it doesnt matter. I think half year will be a stunning result.

[dabsman]

I am in two minds. Lower SP lets me accumulate more. Higher SP good for my portfolio returns.

Long run it doesnt matter. I think half year will be a stunning result.

+ 1 except I dont care about portfilio returns at present with this one as its only a small part of portfolio. It wont be for long

[Rawz]

The Harmoney investor day https://www.nzx.com/announcements/383470 made for good reading I thought.

With an avg loan book of AU$481m producing break even cash EBITDA they forecast a AU$1B book will generate AU$45m cash EBITDA.

Currently has a market cap of AU$186M.

Its all down to Aussie. They need to pump the numbers over the next few qrts to put a rocket under this SP.

See not much downside from here but lots of upside

[Muse]

Yeah I rather like the look of this - now has a place in my portfolio. Attended the AGM today and thought the investor update the other day had some good background on their technical capabilities and operating leverage. Some of my observations, certainly not advice, on how I am starting to see things.

Took me a bit of time to get my head around things but I've now dipped in a handful of times. The original sin from the IPO was they did it two years too soon! Kiwi's couldn't get their head around it (and got confused with the old P2P model which was never going to make them much money), the Aussies had fintech IPO fatigue, what limited volume there was got split across two exchanges, and the financials are messy (statutory, proforma excluding the old P2P model, & normalised for IPO and one off expenses including the borrower origination rebate which got a lot of negative press) - Jarden & Ord. read the market sentiment badly. But operationally the business has gone well post float and the run rate in originations is deeply impressive, debt metrics are all going the right way, a shift to a warehouse funded model is nearly complete, and the company is rapidly reaching scale & cash npat profitability. I'm not a big early stage person but I do like fintech and particularly in Australia. I think its well clear there is a structural shift in personal lending going online and that accelerated post covid with the uptake in ecommerce and banks closing branches. The TAM is massive, online penetration is tiny and there is actually a strong and identifiable shift to online lending, particularly in Australia. I've looked at some of their technical staff and talked to a few people in the know who give Harmoney good technical creds.

[Rawz]

Great post FM.

The IPO probably was ill timed, but hey- that has given us all a great opportunity.. When looking for value HMY must surely be worth some portfolio allocation, even if its 2%. Because its cheap as chips compared to its pairs. And whoever wins this direct to consumer race will be getting a 10 bagger... as $2b market cap isnt going to be unreasonable for a company that has say 5% of the total addressable market (AU$169 billion)

I had a small stake at the end of FY21 and then added much more after FY22 Q1 results. It was very pleasing to see them keep the tap on during the lockdowns. And write a new record originations.

I think you an Jarden's are being too conservative and I reckon they can hit $1b loan book by Q3 FY24. To do that they need to grow the book 5% a qrt. They will be doing that right now in order to hit their guidance of $600m book by years end. The aus book is currently growing 15-18% per qrt and soon its numbers will swap the NZ book so its really not unreasonable to expect 5% or higher qrtly growth.

Top competitor is PLT.asx. I actually reckon they have a better name but Harmoney has the better model imo

[Muse]

Great post FM.

The IPO probably was ill timed, but hey- that has given us all a great opportunity.. When looking for value HMY must surely be worth some portfolio allocation, even if its 2%. Because its cheap as chips compared to its pairs. And whoever wins this direct to consumer race will be getting a 10 bagger... as $2b market cap isnt going to be unreasonable for a company that has say 5% of the total addressable market (AU$169 billion)

I had a small stake at the end of FY21 and then added much more after FY22 Q1 results. It was very pleasing to see them keep the tap on during the lockdowns. And write a new record originations.

I think you an Jarden's are being too conservative and I reckon they can hit $1b loan book by Q3 FY24. To do that they need to grow the book 5% a qrt. They will be doing that right now in order to hit their guidance of $600m book by years end. The aus book is currently growing 15-18% per qrt and soon its numbers will swap the NZ book so its really not unreasonable to expect 5% or higher qrtly growth.

Top competitor is PLT.asx. I actually reckon they have a better name but Harmoney has the better model imo

Given us an awesome opportunity! This is one of the few early stage companies with a good risk/reward profile, I reckon.

[Rawz]

If anyone is unsure on HMY’s business model I highly recommend you spend some time watching the investor update (link below) which clearly explains how HMY differs from the banks and other personal lenders by partnering with google and using machine learning/ AI to attract only the highest value customers.

https://www.nzx.com/announcements/383827

Google even features HMY globally as a leader in their field. “Harmoney has one of the most advanced digital marketing models in Australia and New Zealand, if not the world”.

Best way I can describe it is; HMY will outbid other lenders on google ad’s for the customers they want, this is based on their AI (Stellare) and the many different data points it has analysed over many hundreds of thousands of accounts. Google will send them the customers, loans will be written, Stellare will then measure the performance of the loans and go back to google with a refined request. It is a continuous feedback loop getting better and better.

13268



Another cool stat they gave was when the expanded into the Aussie market they only hired two extra employees. The model is clearly scalable

[whatsup]

F M, did you see the Jarden report, very great depth and well researched ?

[Muse]

F M, did you see the Jarden report, very great depth and well researched ?

Not sure which particular one you are referring to but yeah I get them. They've done about 4 since july - mosty short pieces updating on quarterly run rates and a note post the investor presentation released a few weeks ago where management gave an indicative model. They did an initiation of coverage report which is always the largest most comprehenive one as soon as they come off the restricted list but since then more ad hocs - ranging from 1 to 3 pages as they tweak their forecasts etc. Most recently had a spot price valuation of NZ$3.07 and 12m TP of $3.42 kiwi.

Their first report got some notoriety as their as their assessed target price was less than the IPO price that the Jarden/Ord investment banking teams undertook. probably a few conversations about that

[whatsup]

Not sure which particular one you are referring to but yeah I get them. They've done about 4 since july - mosty short pieces updating on quarterly run rates and a note post the investor presentation released a few weeks ago where management gave an indicative model. They did an initiation of coverage report which is always the largest most comprehenive one as soon as they come off the restricted list but since then more ad hocs - ranging from 1 to 3 pages as they tweak their forecasts etc. Most recently had a spot price valuation of NZ$3.07 and 12m TP of $3.42 kiwi.

Their first report got some notoriety as their as their assessed target price was less than the IPO price that the Jarden/Ord investment banking teams undertook. probably a few conversations about that

Their one covering the 31st Aug result, youve got it, hind sight is a wonderful tool, did jarden bid for the IPO. hmmmmm ! ?

[Muse]

Their one covering the 31st Aug result, youve got it, hind sight is a wonderful tool, did jarden bid for the IPO. hmmmmm ! ?

ah yeah i read that one. it was only 4 pages on content but succinctly got across it all. I hope as originations kick in and if interest in the stock starts rising again they will pick up the pace a bit with more comprehensive reports

[Rawz]

But before they do it is a great opportunity for the avg retail investor to pick some up at a dirt cheap price!