HGH - Heartland Group Holdings

[percy]

Any form of borrowing has fish hooks.
The article did point out if you were to borrow $300,000 on a normal mortgage you're likely to shell out over $600,000 over 25 years
The option of borrowing from the children, appears to me to the right way to focus everyone's attention.

[winner69]

An interesting article in this morning's The Press, page B4 headed ,"Reverse mortgages have their place."
"Quite frankly there's not a lot of personal downside."
Good to see a well balanced informative article.

Was it one of those advertorial pieces or a genuine bit of financial reporting.

Hope Heartland are encouraging more media to do bits on this.

[percy]

Any form of borrowing has fish hooks.
The article did point out if you were to borrow $300,000 on a normal mortgage you're likely to shell out over $600,000 over 25 years
The option of borrowing from the children, appears to me to the right way to focus everyone's attention.

[winner69]

Winner, the equity transferred to get the HER business was $86.140m (note 40). Assuming an ROE of 10% that equates to an after tax profit increment of $8.614m.

The business was acquired on 1st April, so one quarter of that incremental gain is already in this years profit figure. So teh three quarters Heartland can expect in FY2015 amounts to

0.75 x $8.614 = $6.5m

On my normalised profit of $41m for FY2014 this means a profit of $47.5m for FY2015. So maybe a reduction in the interest margin explains the difference?

SNOOPY

Heartland say they made $700,000 (after paying $1.2m in acquisition costs) in the last quarter of F14'

So that $8m estimate yours seems about right.

[percy]

Was it one of those advertorial pieces or a genuine bit of financial reporting.

Hope Heartland are encouraging more media to do bits on this.

Not advertorial.
In Good Living section.
Written by Janine Starks ;financial Agony Aunt.
Janine Starks is a financial commentator with expertise in banking,personal finance and funds management.
I expect the same article would be in The Dominion,and will appear on www.stuff.co.nz site..

[winner69]

I think the heartland School Fee Finance offer is a neat idea

Might not be huge part of their business but in these days of ever increasing inequality anything that can help kids get ahead is great. And maybe those kids as well as Mum and Dad or Granddad and Grandma will be customers for life,

Like this bit -

Heartland Bank is committed to helping develop and educate the next generation of Kiwis – who will drive prosperity in New Zealand. We’re now pleased to introduce a new and flexible way of paying for school tuition fees – to help get your child or grandchild off to a great start in life.


Gives me the warm fuzzies

A Colin seems to be in charge of this. Best of luck mate.

[Snoopy]

The bad debt position of Heartland's problem property assets has evolved. I have prepared a graphic to show what has happened over the years, and how that relates to capital risk

6228

Now to explain.

Each year (FY2012, FY2013 and FY2014) is represented by three columns. The column to the left (total height) represents Heartlands shareholder funds at the end of each financial year. The LH column is made up of three colours. The first section, in wavy blue pyjamas, is the minimum amount of capital Heartland needs to satisfy Reserve Bank requirements. The mauve and yellow sections on top of that represent the safety margin. This is the amount of capital in excess of reserve bank requirements. The yellow section, which on the original version of this graph I drew was part of the mauve section, represents net profits earned during the financial year, less dividends paid. The yellow part therefore represents retained earnings from normal operations.

The second column (orange) represents 'doubtful debts' as taken from the company's breakdown of asset quality. The third column (red) I have labelled 'difficult debts' and this one incorporates the 'doubtful debts' as well. I calculated this by starting with the doubtful debts and adding on the next categpry of debt (not quite bad enough to be doubtful).

The effect of all the doubful debts going bad can be seen by subtracting the height of column 2 from column 1. You can see that for all three years that if all of the doubtful debts went bad, it wouldn't affect Heartland that much. The capital buffer above minimum reserve bank standards is still largely intact. However, if all the 'difficult debts' went bad, then that is where things could get interesting.


Some more explanation.

A 'stress bridge' is meant to show what could happen if a bank is placed under extra stress. A bank will always have some loans that cause real concern. Indeed the impairment provisions in the accounts are there to allow for just such a contingency. But sometimes these accounting contingencies are not enough. Sure there are the annual adjustments to impairment to allow an annual 'stock take' of risk. But these do not cover every possible loan problem. This is why I have concluded that further risk assessment is warranted.

My own 'doubtful debt' extra stress provision for FY2014 is around $20m. I think even the most ardent of HNZ supporters would be prepared to concede that such a scenario could happen, even under normal business conditions. Such an extra provision might cause the share price to gravitate back towards NTA, as investors questioned managements own judgement in assessing risk. The dividend might be cut in half too. But I don't believe a provision like that would be fatal to the company.

The red 'difficult debt' scenario for FY2014 takes things to another scale. It is hard to believe that management, who have performed admirably to date, could be caught out in their provisioning to this extent. This scenario, I believe, would probably only happen with some large external shock,: interest rates suddenly rising 5 percentage points within a year, a foot and mouth disease outbreak, something like that. Some might argue that such a scenario is not worth considering becasue the likelihood of such an event is so rare. I would argue that it should be because the consequences are so dire, even if the probability of such an event is low.

The 'red' scenario for FY2014 would see a capital hole of $90m to be filled to meet minimum reserve bank requirements. Of course no bank would raise just the bare minimum of funds required. But $90m when a banks market capitalisation is $400m is very doable. Go back one year (FY2013) and the equivalent minimum amount of capital to be raised would have been $120m, based on a then market capitalisation of $270m and with 388.704m shares on issue. The share as at June 2013 was around 70c. Looking more at FY2013, a 1:2 rights issue at 60c could have raised:

0.5 x 388.705 x 60c = $117m

About the right number. Of course dividends would to be cancelled for a couple of years to allow the capital base to recover. My guess is the market price would have drifted back to 60c, or maybe as an alternative Heartland could have made a placement to get a new cornerstone shareholder? The details here are less important than the overview. That is, Heartland would have been in a lot more trouble last year than if a similar event had occurred this year.

Ok, let's cut to the chase. The risk profile of Heartland has IMO been greatly reduced over the last twelve months. Those who bought in earlier have had a certain amount of luck that against all expectations the property market has been very favourable and so helped Heartland out of their balance sheet pickle. Good on them as luck can often play more of a part in investment returns that most people believe. Those buying in at today's prices will pay more. But they are buying into a significantly derisked entity. For many, that higher entry price today is a price worth paying to be free of that 2013 'red scenario' risk.

SNOOPY

[Tevita]

Thank you. I needed reassurance on my largest portfolio investment. You deserve others paying a fee for your personal research.

[Beagle]

So Snoopy, now we're looking at a business that's been significantly de-risked lets have a look at how the historical PE for HNZ compares with some Aussie banks, (remember Aussie banks average interest margin is a lot lower).
Current price of HNZ 96 cents, ex divvy price 92.5 cents, lets use the latter seeing as they're ex in five minutes time so too speak. 92.5 / 9 = 2014 PE of 10.3

A quick look at some of the Aussie banks off Reuters data
Bank of Queensland ASX code BOQ Price $12.77 PE 18.56 Div yield 4.82%
Bendigo Bank ASX Code BEN Price $12.74 PE 14.53 Div Yield 5.02%
National Aust Bank ASX code NAB Price $34.88 PE 14.3
Westpac ASX Code WBC Price $34.86 PE 15.14
Suncorp Metway Price $14.85 PE 26

Now I know all of these are much bigger banks BUT is does make me wonder if there isn't room for a bit of PE expansion for HNZ as it continues to pile on the runs, reduce risk and continues to gain credibility.
As I said a while back I think a PE of about 11.5-12.0 seems about right given the size of the bank and its slightly higher risk profile so based on a conservative mid point estimate of 9.3 cps EPS for 2015, (the mid point of the company's own forecast), that would in theory lead to a SP of about $1.07 - $1.12 this time next year with more growth to come as the HEL business shifts into a higher gear in 2015/6.
My contention therefore is we will see approx. 19% SP gains in the ensuing 12 months along (110 / 92.5, current effective ex divvy price) plus with our 10.6% gross dividend yield I have an expectation of circa total return. 30% :)

People, please feel free to add more comparisons and their PE's to this list which is by no means intended to be an exhaustive attempt to compare Australasian bank's ratio's.

[winner69]

So Snoopy, now we're looking at a business that's been significantly de-risked lets have a look at how the historical PE for HNZ compares with some Aussie banks, (remember Aussie banks average interest margin is a lot lower).
Current price of HNZ 96 cents, ex divvy price 92.5 cents, lets use the latter seeing as they're ex in five minutes time so too speak. 92.5 / 9 = 2014 PE of 10.3

A quick look at some of the Aussie banks off Reuters data
Bank of Queensland ASX code BOQ Price $12.77 PE 18.56 Div yield 4.82%
Bendigo Bank ASX Code BEN Price $12.74 PE 14.53 Div Yield 5.02%
National Aust Bank ASX code NAB Price $34.88 PE 14.3
Westpac ASX Code WBC Price $34.86 PE 15.14
Suncorp Metway Price $14.85 PE 26

Now I know all of these are much bigger banks BUT is does make me wonder if there isn't room for a bit of PE expansion for HNZ as it continues to pile on the runs, reduce risk and continues to gain credibility.
As I said a while back I think a PE of about 11.5-12.0 seems about right given the size of the bank and its slightly higher risk profile so based on a conservative mid point estimate of 9.3 cps EPS for 2015, (the mid point of the company's own forecast), that would in theory lead to a SP of about $1.07 - $1.12 this time next year with more growth to come as the HEL business shifts into a higher gear in 2015/6.
My contention therefore is we will see approx. 19% SP gains in the ensuing 12 months along (110 / 92.5, current effective ex divvy price) plus with our 10.6% gross dividend yield I have an expectation of circa total return. 30% :)

People, please feel free to add more comparisons and their PE's to this list which is by no means intended to be an exhaustive attempt to compare Australasian bank's ratio's.

Like the logic

So after the upgrade and your standing ovation EPS should be 10.6 cents

PE of 12 and we have a shareprice of $1.30

Move on a year when forward looking guidance will be at least 14 cents (remember HER things in full stride) and heck that's $1.56 by Xmas next year. People tell me markets are forward looking.

All I expect them to do is push a bit harder.

And what were the divies again?

That's my investment strategy ....and hope not part of it

[Beagle]

Looking at this from a TA perspective, the SP is up from 55 cps 2 years ago, (up 68%), interestingly only up from 87 cents 1 year ago so after quite a lengthy period of ostensibly flat SP performance over the last year it wouldn't surprise me in the slightest if from a technical perspective we've built a springboard for out-performance in the year ahead. Certainly if we see a 68% gain from here in the next two year W69, we'll have your $1.56 but you might have to wait till Sept 2016. I can be patient and will hereby undertake to lead said standing ovation at the 2016 AGM if we're north of $1.50 by then :D
Have I mentioned before that we're being paid very handsomely in dividends while we wait :)

[winner69]

Looking at this from a TA perspective, the SP is up from 55 cps 2 years ago, (up 68%), interestingly only up from 87 cents 1 year ago so after quite a lengthy period of ostensibly flat SP performance over the last year it wouldn't surprise me in the slightest if from a technical perspective we've built a springboard for out-performance in the year ahead. Certainly if we see a 68% gain from here in the next two year W69, we'll have your $1.56 but you might have to wait till Sept 2016. I can be patient and will hereby undertake to lead said standing ovation at the 2016 AGM if we're north of $1.50 by then :D
Have I mentioned before that we're being paid very handsomely in dividends while we wait :)

A breakout / springboard happened a while ago. Belg said a perfect time to buy - I did .......long long long consolidation period and vroom. Nearly hit a buck eh. But alas fell back to that consolidation level and I was only a day away from being underwater .....what an embarrassment..

Has settled at 94/95 but boring as eh.

The people at Heartland need to get out and do a bit of promoting, a bit of hype needed from. Do a round of analyst briefings and all ha sort of stuff.

As you say in spite of a superbly wonderful performance over the last year he shareprice only up a bit - not much in fact and not in line with performance.


They need a rev up instead of sitting on their laurels

[Beagle]

A breakout / springboard happened a while ago. Belg said a perfect time to buy - I did .......long long long consolidation period and vroom. Nearly hit a buck eh. But alas fell back to that consolidation level and I was only a day away from being underwater .....what an embarrassment..

Has settled at 94/95 but boring as eh.

The people at Heartland need to get out and do a bit of promoting, a bit of hype needed from. Do a round of analyst briefings and all ha sort of stuff.

As you say in spite of a superbly wonderful performance over the last year he shareprice only up a bit - not much in fact and not in line with performance.


They need a rev up instead of sitting on their laurels

Just hold fire on the promo mate I'm still busy https://www.youtube.com/watch?v=Hc7mc3sS1nM

[percy]

Just hold fire on the promo mate I'm still busy https://www.youtube.com/watch?v=Hc7mc3sS1nM

Fantastic driving.
Don't all of us get ahead of ourselves with future projections.
Heartland have been moving at a very respectable pace.Merging three businesses to form HNZ.Taking over PGW's finance division and Sentinel RELs.
All the time obtaining a banking licence,working their way through the end of government gurantee period,keeping depositors happy and reducing the costs of doing business.They have taken the time to lay the solid foundations for a very prosperous long term bank business.
Now posters want a "diversity policy" more "promotion" and higher expected eps.
I just want them to keep doing what they have proved they can do,and my value price of $1.25 will be reached soon enough. .

[Cool Bear]

[QUOTE=winner69;502762They need a rev up instead of sitting on their laurels[/QUOTE]

HNZ is an incredibly boring share but with a very slight upward bias.

However, it is also my best performing share for the last two years. It closed at 57 cents on 6 Sep 2012 and at 86 cents a year ago on 5 Sep 2013. Even if you consider the boring last 12 months, it is now 96 cents, an increase of 10 cents. Add the dividends of 6 cents (and fully imputed too!!), you are 16 cents up or an 18.6% after tax gain. If we can consistently achieve that in our portfolios, we will all retire very young and early.

So all I want is for it to just creep up an average of 1 cent a month for the next couple of years, or better still 1 percent a month.

Not asking much am I?


Edit: realised that my calculation above is based on present price which is CD but so is the 86 cents last year (albeit with 2.5 cents div then) - so, share up 10 cents and div paid in the last 12 months of 5 cents makes an after tax gain of 17.24 percent

[winner69]

Percy they probably have a Diversity Policy. I would just like to see what it looks like and what they are doing in achieving any objectives

They met minimum listing requirements in the 2013 Annual Report with a little table showing 1 female out of 14 Directors and Officers. No commentary. NZX has recommended that companies make an effort and do a commentary around diversity strategies

You like how PGW operate. They do a good job on their website and in their Annual Reports in this regard.

I am not saying that they need 20% of seniors to be female or whatever . I just want to know if diversity is even on the strategic agenda. Remember (NZX quote from guidelines) There is credible research based evidence which suggests that diversity, and gender diversity in particular, contribute to improved performance at both Board and senior management level.

We'll see what eventuates

[Beagle]

SUM have lots of diversity on their board and it doesn't seem to be helping them :ohmy:

[winner69]

SUM have lots of diversity on their board and it doesn't seem to be helping them :ohmy:

Your hero Norah was a great diversity champion .... or put up as the poster person

I think age and cultural background are just as importance as gender

[Beagle]

Fantastic driving.
Don't all of us get ahead of ourselves with future projections.
Heartland have been moving at a very respectable pace.Merging three businesses to form HNZ.Taking over PGW's finance division and Sentinel RELs.
All the time obtaining a banking licence,working their way through the end of government gurantee period,keeping depositors happy and reducing the costs of doing business.They have taken the time to lay the solid foundations for a very prosperous long term bank business.
Now posters want a "diversity policy" more "promotion" and higher expected eps.
I just want them to keep doing what they have proved they can do,and my value price of $1.25 will be reached soon enough. .

Not too forget getting that credit rating upgrade :)

W69 I suspect Norah is none too pleased with me at the moment.

[percy]

[QUOTE=Roger;502819]Not too forget getting that credit rating upgrade :)

Yes I did forget that.
Certainly they worked for it and got it.
Would think they will keep working for further upgrades.

[percy]

Percy they probably have a Diversity Policy. I would just like to see what it looks like and what they are doing in achieving any objectives

They met minimum listing requirements in the 2013 Annual Report with a little table showing 1 female out of 14 Directors and Officers. No commentary. NZX has recommended that companies make an effort and do a commentary around diversity strategies

You like how PGW operate. They do a good job on their website and in their Annual Reports in this regard.

I am not saying that they need 20% of seniors to be female or whatever . I just want to know if diversity is even on the strategic agenda. Remember (NZX quote from guidelines) There is credible research based evidence which suggests that diversity, and gender diversity in particular, contribute to improved performance at both Board and senior management level.

We'll see what eventuates

I feel sure Heartland boards are fully aware of NZX,Reserve Bank,the community, and any other recommendations that would enhance the good reputation Heartland enjoy.

[winner69]

I feel sure Heartland boards are fully aware of NZX,Reserve Bank,the community, and any other recommendations that would enhance the good reputation Heartland enjoy.



Appreciate that - so a little more embellishment on the bare minimum requirements in this years Annual Report as per NZX recommendations

Not moaning from a governance point of view - genuinely interested in whether it is strategic or not as great companies are open and proud about their diversity, in all its forms

Hate them to end up like A2 Corp who had to do this last year

ANNREP: ATM: 2013 Annual Report - Diversity

It has come to our attention that the 2103 Annual Report for A2 Corporation
did not contain a quantitative breakdown as to the gender composition of its
staff.

The relevant statistics, as at 30 June 2013 and today, are attached
End CA:00245595 For:ATM Type:ANNREP Time:2013-12-23 08:50:15

[Beagle]

I'm not really sure that all that many people care to be honest W69.
Surely people should be employed and promoted based solely on their abilities without regard to gender, race, religion, creed or the treaty of Waitangi or any other cultural or ethnicity sensitivity.
We live in a PC world where being PC has got away on itself more than a little bit in my opinion.

P.S. I nearly forgot, I talked myself into buying more today :D

[bunter]

Even if the evidence on gender diversity is sound, any company is free to ignore it. Who cares? If HNZ is missing out (which I seriously doubt) it's their problem. The Clark era's over.
I have no respect for this policy of NZX's.

[Snow Leopard]

....
Surely people should be employed and promoted based solely on their abilities without regard to gender, race, religion, creed or the treaty of Waitangi or any other cultural or ethnicity sensitivity.
We live in a PC world where being PC has got away on itself more than a little bit in my opinion....

They should - but instead they keep bringing in middle and old aged 'persons of european descent' whose annual report photograph can be used to frighten small children (and Tigers).

Best Wishes
Paper Tiger

[Longhaul]

I'm not really sure that all that many people care to be honest W69.
Surely people should be employed and promoted based solely on their abilities without regard to gender, race, religion, creed or the treaty of Waitangi or any other cultural or ethnicity sensitivity.


I think it's fair that W69 raises the lack of gender diversity and it would be good if more people took notice. Of course this doesn't mean that they should appoint people who lack the right credentials, but diversity can bring a lot of less noticeable benefits.

[Beagle]

What's that old cliché...oh yes, you can't put an old head on young shoulders. I like highly experienced older bankers, they've seen all the bull**** there is to be seen.

[mouse]

What's that old cliché...oh yes, you can't put an old head on young shoulders. I like highly experienced older bankers, they've seen all the bull**** there is to be seen.
I was at the recent AGM of FMG Insurance. A mutual. Voting for more cash for Directors. I suggested we put the job out to tender. Since there were four candidates for three positions, all being approved by FMG as suitable, it seemed we could select the three who put in the lowest tenders.
Also, there are now strong rumours that Heartland are going to update their website.
I must add that I am doing ok with Heartland, plus Meridian and Mighty River.

[percy]

I was at the recent AGM of FMG Insurance. A mutual. Voting for more cash for Directors. I suggested we put the job out to tender. Since there were four candidates for three positions, all being approved by FMG as suitable, it seemed we could select the three who put in the lowest tenders.
Also, there are now strong rumours that Heartland are going to update their website.
I must add that I am doing ok with Heartland, plus Meridian and Mighty River.

Did you consider voting for the candidates you thought may achieve the most for FMG? I would have.
Any mention of a "diversity policy"?Being an insurance company I would expect they would have a range of "diversity policies."
I must say www.heartland.co.nz is a very good website,so I look forward to seeing it when it is updated.Good section on careers.
Pleased you are doing OK with your shares..

[iceman]

Your hero Norah was a great diversity champion .... or put up as the poster person

I think age and cultural background are just as importance as gender

Norway is probably the most high profile country to implement gender quotas for listed companies quite some years ago and has 40% of Directors as females. All studies since then have concluded that the high percentage of female Board Members has not lead to an increase in the number of women moving up the executive pipeline. In fact they have fewer CEOs and senior Executives than the European average and many high profile female Executives are now openly speaking out against the gender (diversity) quotas as being a failed experiment.
Just select the best persons possible for the task, whatever their gender or cultural background.

[mouse]

Did you consider voting for the candidates you thought may achieve the most for FMG? I would have.
Any mention of a "diversity policy"?Being an insurance company I would expect they would have a range of "diversity policies."
I must say www.heartland.co.nz is a very good website,so I look forward to seeing it when it is updated.Good section on careers.
Pleased you are doing OK with your shares..

Yes, Heartland has an excellent website. I am thinking of going to their AGM, down in Ashburton. Time travelling as well back to 2013.
From my Communist past, or similar, I voted for only one candidate out of the four, we had to select three, to give the usurper best shot. Sadly he missed anyway in spite of my efforts.

[winner69]

Did you consider voting for the candidates you thought may achieve the most for FMG? I would have.
Any mention of a "diversity policy"?Being an insurance company I would expect they would have a range of "diversity policies."
I must say www.heartland.co.nz is a very good website,so I look forward to seeing it when it is updated.Good section on careers.
Pleased you are doing OK with your shares..

Well I won't tell you what my latest conversation with Heartland was about

[percy]

Well I won't tell you what my latest conversation with Heartland was about

And I promise not to ask.!!

[winner69]

P.S. I nearly forgot, I talked myself into buying more today :D

Well done - you will do better than you expect methinks

I am way too overweight HNZ to buy more.

[percy]

Well done - you will do better than you expect methinks

I am way too overweight HNZ to buy more.

In that case it may pay to leave giving Jeff "advice", and let him get on with looking after all our interests.After all it must have been his record of achieving, that caused you to become too overweight. lol.

[Beagle]

Well done - you will do better than you expect methinks

I am way too overweight HNZ to buy more.

Thanks. It does beg the question of how much is too much ?

I am curious as to what others consider as the maximum sensible limit of one's portfolio to have in any one stock ?

20% as an absolute maximum ?

[percy]

Thanks. It does beg the question of how much is too much ?

I am curious as to what others consider as the maximum sensible limit of one's portfolio to have in any one stock ?

20% as an absolute maximum ?

Depends on what books you have read, and what suits your investment model.
Readers of "The Gnomes of Zurich" or "The Dhando Investor" may be prepared to invest 100% in one stock,thinking you are best to "put all your eggs in one basket and watch it carefully."
My own thoughts are I would stop at 30%,although I did very well once with SCY, when it made up over 50%.At that time I most probably knew as much about SCY as any of the directors.!!
Research,reading and more research does mean you can back yourself.Relying on brokers,sharetrader posters,mates and family, one should not go much more than 15% to 20% in any one share.Then one should look to spread the portfolio around other sectors,ie have a bank,a utility or two,a retailer,a retirement village,etc.,but no more than 1% in any airline shares.!!!!!

[Wolf]

If i sell on ex-dividend day open am i correct that i will receive the dividend?

[couta1]

If i sell on ex-dividend day open am i correct that i will receive the dividend?
You sure will:cool:

[iceman]

Thanks. It does beg the question of how much is too much ?

I am curious as to what others consider as the maximum sensible limit of one's portfolio to have in any one stock ?

20% as an absolute maximum ?

This is a really interesting question Roger that I suspect has no "correct" answer. My HNZ holding is now 25.6% of my NZX holdings. It will get higher as I am in the DRP and am investing my spare cash overseas at present rather than the NZX. But I am very comfortable with it so will not sell. I agree with Percy above that we have to trust our own judgement with this !

[dingoNZ]

This is a really interesting question Roger that I suspect has no "correct" answer. My HNZ holding is now 25.6% of my NZX holdings. It will get higher as I am in the DRP and am investing my spare cash overseas at present rather than the NZX. But I am very comfortable with it so will not sell. I agree with Percy above that we have to trust our own judgement with this !

I was always told minimum to hold 13 different stocks in different industries to maintain diversification. Currently I am am about 20 in AIR and pretty happy with that. I think it depends on the investor and their personal views on the market/economy/company and their own comfort.

[kizame]

There have been a few occasions when HNZ was 100% of my holdings,and am planning that scenario again,trading the trend.
You have to have faith that the stock is reasonably cheaply priced,very good quality,and of course trending upwards.
I am very comfortable with taking a more aggressive approach,so long as you watch the markets,the charts,and have a stop loss.
the beauty of Heartland is I can have a tight stop loss as it isn't that volatile.

[SCOTTY]

Thanks. It does beg the question of how much is too much ?

I am curious as to what others consider as the maximum sensible limit of one's portfolio to have in any one stock ?

20% as an absolute maximum ?

I am definitely overweight with HNZ at around 40% of my portfolio. Frankly I just can not see any other stocks which are showing a gross 10% yield with good growth potential in a relatively stable investment sector that temp me to look elsewhere at present.

I would be most interested to hear of better alternatives to HNZ as other high yielding stocks such as the power companies and some retailers in particular tend to have either limited/riskier growth potential or in the case of PGW fluctuating seasonal earnings?

Please tell me. What are the better long term buys than HNZ at present?

[Snoopy]

Thank you. I needed reassurance on my largest portfolio investment. You deserve others paying a fee for your personal research.


I always advocate a policy of DYOR Tevita. Never get too comfotable with what I or others write here.

I have slightly back-tracked on my diagram in post 3843 Tevita. The basic message is unchanged. But after doing some benchmarking, I have decided to remove the intangible assets from the equity column. This has the effect of making HNZs position under debt shock a little more risky.

I had a psychological tug or war with myself while doing this. On one hand, Heartland have only just bought their HER portfolio. So it seems inappropriate to argue just months later the $25m of goodwill they saw fit to buy is worthless. OTOH, if the company was in troublein the future, one might argue the overall banking environment had changed so that historical goodwill could not be relied upon as having value. In the end, this latter view won out.

In doing this I have also valued the goodwill associated with software used in the company as zero as well. Perhaps that is harsh. But I am not sure that in a difficult situation, legacy software platforms have much value. I will be pleased to hear counter arguments if others fell I have done the wrong thing.

SNOOPY

PS I have also changed the minimum equity requirement in 2014 to 12% of the loan book as pointed out by PT

[couta1]

I'm leaning toward the 10% rule these days bar retirement stock and both Sum and Ryman have made up as much as 50% of my portfolio total at one stage or another(Sum currently at 30% and Rym 15%) with such a strong tailwind and ever increasing need I'm happy to hold higher percentages in this sector.I got burnt badly with CNU last year and had 30% of my portfolio in there at the time OUCH so any stock that has too much possibility of political interference and or regulation I won't break the 10% rule going forward. Regarding Tech stocks I would not have any more than 5% max of total portfolio in any one stock going forward but currently have higher percentages in Xro/Peb and Dil all running good sized paper losses, these are some of the rules I have set myself from the lessons I've learnt. Disc- Very happy with the HNZ portion of my portfolio

[percy]

When I first look at a company I find I get a clearer picture of their financial position if I take out intangibles and goodwill.

[Tevita]

Do we have access to the categories of those borrowing from HNZ? Percentages of the total would be an indicator to risk factors as we read volatilities in different sectors of the economy. Exchange rate movements hitting/aiding farmers. Reciprocal trade sanctions re the Ukraine debacle . The long term reliability of farmers depending on China as a market. When China sneezes who catches a cold? Australia has already.

I appreciate farmers would borrow primarily from the major banks. But what could be the level of indebtedness to HNZ for secondary lending behind the main banks ?

In the event of another financial crisis the resilience or otherwise of the major banks would be a buffer to risk from secondary borrowing if borrowers defaulted mind you the major banks would ensure they held primary security over debtors assets.

With it`s entry to reverse mortgage lending by HNZ we are talking primarily about the elderly as borrowers . They are easy to categorize though with a broad brush.

If you see what I am driving at - can we present varieties of HNZ risk in better detail to shareholders? Reserves required by the RBNZ on level of HNZ lending don`t inform us sufficiently.

[percy]

All this information is given in HNZ's annual report and company presentations.

[winner69]

Do we have access to the categories of those borrowing from HNZ? Percentages of the total would be an indicator to risk factors as we read volatilities in different sectors of the economy. Exchange rate movements hitting/aiding farmers. Reciprocal trade sanctions re the Ukraine debacle . The long term reliability of farmers depending on China as a market. When China sneezes who catches a cold? Australia has already.

I appreciate farmers would borrow primarily from the major banks. But what could be the level of indebtedness to HNZ for secondary lending behind the main banks ?

In the event of another financial crisis the resilience or otherwise of the major banks would be a buffer to risk from secondary borrowing if borrowers defaulted mind you the major banks would ensure they held primary security over debtors assets.

With it`s entry to reverse mortgage lending by HNZ we are talking primarily about the elderly as borrowers . They are easy to categorize though with a broad brush.

If you see what I am driving at - can we present varieties of HNZ risk in better detail to shareholders? Reserves required by the RBNZ on level of HNZ lending don`t inform us sufficiently.

There is summary data in the pretty pictures in te presentations

The Annual Accounts has heaps of detal, in particular Note 37

Does $77m lending to Manufacturers worry you, or is the $469m to the Agriculture sector

[Tevita]

Pretty pictures ! Beauty is in the eyes of the beholder. Statistics are more telling . 36" x 24" x 36".

[winner69]

Pretty pictures ! Beauty is in the eyes of the beholder. Statistics are more telling . 36" x 24" x 36".

You won't be looking at the pretty pictures in the Ryman reports then

Ecoya Reports more to your style by sounds of it

[percy]

Pretty pictures ! Beauty is in the eyes of the beholder. Statistics are more telling . 36" x 24" x 36".

You are a big girl then?

[Snoopy]

Do we have access to the categories of those borrowing from HNZ? Percentages of the total would be an indicator to risk factors as we read volatilities in different sectors of the economy. Exchange rate movements hitting/aiding farmers. Reciprocal trade sanctions re the Ukraine debacle . The long term reliability of farmers depending on China as a market. When China sneezes who catches a cold? Australia has already.


Heartland in their annual report shows market segment categories of risk. Heartland in a separate table lumps all loans together then tells us the quality of those loans: i.e. whether they are in default, have almost no risk of default or are something in between. But what Heartland does not do is take, say, all agricultural loans, and then tell us within that sector how much of those debts are liable to go bad.

A lot of people here make the mistake IMO, of believing that Heartland is a bank in the mode of the big 5. The truth is Heartland are distancing themselves from the big bank model, by tackling niche loan areas the big banks are averse to. Nothing wrong with that. In fact it is probably the most sensible strategy they could follow. But it does mean that how Heartland is buffeted by a changing economy is liable to be very different to the big banks.



I appreciate farmers would borrow primarily from the major banks. But what could be the level of indebtedness to HNZ for secondary lending behind the main banks ?


For example, in a good year on the farm I believe Heartland will do poorly. Why would a farmer borrow from Heartland when they can get a much lower rate loan by expanding their mortgage? In a poor year though, the big banks might not be so keen to lend. In this instance Heartland's seasonal financing is liable to come to the fore.



In the event of another financial crisis the resilience or otherwise of the major banks would be a buffer to risk from secondary borrowing if borrowers defaulted mind you the major banks would ensure they held primary security over debtors assets.


Thinking that by market segment analysis, you can gain a better insight to Heartland's loan portfoloio than Heartland do themselves is optimistic IMO.



If you see what I am driving at - can we present varieties of HNZ risk in better detail to shareholders? Reserves required by the RBNZ on level of HNZ lending don`t inform us sufficiently.


Required reserve levels on their own are not that useful I agree. But stress testing the performance of bad loans against required reserve bank provisions, I believe is very useful. It may not give you as much information as you want as to which market sectors are waxing and waning. But you will never get that from Heartland, because it isn't reported. So we are left with distilling the information that is declared in its most useful form, which is what I am trying to achieve.

SNOOPY

[winner69]

A fair chunk of the 'Consumer' loans relate to motor vehicles

Let us not forget Percy's wisdom here - if times get hard keep paying the car off before anything else otherwise I can't get to work (or the kids to school)

Good piece of wisdom that

[percy]

Well researched niche markets are most probably more profitable ,and a lot safer than following the major banks who are over commitment to housing in both NZ and Australia.
A farmer has more sense than add to his mortgage.Better and cheaper going for a shorter term livestock or seasonal loan,or equipment loan.

[Beagle]

This is a really interesting question Roger that I suspect has no "correct" answer. My HNZ holding is now 25.6% of my NZX holdings. It will get higher as I am in the DRP and am investing my spare cash overseas at present rather than the NZX. But I am very comfortable with it so will not sell. I agree with Percy above that we have to trust our own judgement with this !
Thanks for sharing your view mate.

I was always told minimum to hold 13 different stocks in different industries to maintain diversification. Currently I am am about 20 in AIR and pretty happy with that. I think it depends on the investor and their personal views on the market/economy/company and their own comfort.
I can't find 13 N.Z. stocks in different industries trading on realistic PE's with a solid outlook.

There have been a few occasions when HNZ was 100% of my holdings,and am planning that scenario again,trading the trend.
You have to have faith that the stock is reasonably cheaply priced,very good quality,and of course trending upwards.
I am very comfortable with taking a more aggressive approach,so long as you watch the markets,the charts,and have a stop loss.
the beauty of Heartland is I can have a tight stop loss as it isn't that volatile.
And that's a great point. It is a low beta stock with very low volatility so tight stops can be set and the lower volatility is supportive of a higher than usual allocation.

SCOTTY;503077]I am definitely overweight with HNZ at around 40% of my portfolio. Frankly I just can not see any other stocks which are showing a gross 10% yield with good growth potential in a relatively stable investment sector that temp me to look elsewhere at present.
I would be most interested to hear of better alternatives to HNZ as other high yielding stocks such as the power companies and some retailers in particular tend to have either limited/riskier growth potential or in the case of PGW fluctuating seasonal earnings?
Please tell me. What are the better long term buys than HNZ at present?That's the $64,000 question that's also got me stumped. Unless you take on more risk like a stock such as AIR I can't see anything better.

I'm leaning toward the 10% rule these days bar retirement stock and both Sum and Ryman have made up as much as 50% of my portfolio total at one stage or another(Sum currently at 30% and Rym 15%) with such a strong tailwind and ever increasing need I'm happy to hold higher percentages in this sector.I got burnt badly with CNU last year and had 30% of my portfolio in there at the time OUCH so any stock that has too much possibility of political interference and or regulation I won't break the 10% rule going forward. Regarding Tech stocks I would not have any more than 5% max of total portfolio in any one stock going forward but currently have higher percentages in Xro/Peb and Dil all running good sized paper losses, these are some of the rules I have set myself from the lessons I've learnt. Disc- Very happy with the HNZ portion of my portfolio
Good to see you've taken on board the lessons from the school of hard knocks, (arguably the best school).

As most all of us know, portfolio theory has it that a well diversified portfolio of stocks, bonds, property and other assets classes gives the optimum return with the least risk...the trouble I have with this is a couple of factors.
1. Its very hard to get a broadly diversified portfolio of quality companies across a range of sectors in N.Z. without buying some stocks which are at present on really stupidly high PE ratio's and bond yields are artificially low all around the world as a result of quantitative easing.
2. What we saw with the GFC was that portfolio theory might be fine in theory but it simply didn't work all that well in practice with virtually all asset classes getting a proper belting.

I think there are however a couple of fundamentally good reason to have some sort of set limit on exposure to any one stock.
1. You might believe that you are absolutely right but what if you're wrong ? and haven't seen something that comes back to bite you, (loss mitigation and risk management strategies suggest some reasonable limit is appropriate)
2. I think portfolio theory works to some extent.

I'll stick with 20% max for any one moderate risk well managed company, less where there's specific identifiable risk's involved. Bond's look like a losing strategy to me at the current prevailing yields.
My silver holding is in the toilet and I won't add to that.

[couta1]

Cheers Roger,I definitely agree with you on the bond front apart from the works finance hybrid issue there's very little out there paying over 6% then you have to take 33% off for tax, at least works is imputed and increasing in yield upon reset,my APN bonds are due to be repaid early and they are the last of my high yield bonds so its all shares for the foreseeable future:cool:

[Longhaul]

I am very excited about this announcement (PDF) (http://www.heartland.co.nz/_upload/news/HarMoney%20NZX%20Release%208%20Sept%2014%20final.p df). While it's unclear how much upside it will generate, I think it says a lot about management that they really looking outside the box. Peer-to-peer lending could be a massive growth area.

[percy]

Well Winner69,it looks as though you are getting your wicked way!!!!
Heartland are taking a 10% shareholding in HarMoney NZ's only licensed peer-to-per lending platform.
I note HarMoney have a very experienced board.

[Tevita]

Well Winner69,it looks as though you are getting your wicked way!!!!
Heartland are taking a 10% in HarMoney NZ's only licensed peer-to-per lending platform.
I note HarMoney have a very experienced board.

Beaten to it



NZX and Media Release


HEARTLAND TO TAKE SHAREHOLDING IN HARMONEY

8 September 2014


Heartland New Zealand Limited (Heartland) (NZX: HNZ) advises that it has taken an approximately 10%
shareholding in HarMoney Corp Limited (HarMoney), New Zealand’s only licensed peer-to-peer lending
platform.
In conjunction with this, Heartland Bank Limited is providing a funding line to enable lending to a range
of individual borrowers using the platform.
Heartland's strategy is to occupy leading positions in niche markets through specialist offerings which
are different to traditional banks. Likewise, HarMoney operates a lending model that challenges those
being offered by mainstream banks - a model that can change the way people borrow and invest.
The shareholding in HarMoney complements Heartland’s strategy and provides a potentially valuable
channel to attract customers in the Household sector that current distribution networks may not reach.
The funding line will help provide initial momentum, complementing the investments made by Retail
investors. HarMoney and Heartland also intend to build on this relationship and are confident that
scope exists to create high value products for New Zealand consumer and business customers in New
Zealand.

- Ends -
For further information, please contact:

Jeff Greenslade
Chief Executive Officer
Heartland New Zealand Limited
DDI 09 927 9149

[Harvey Specter]

I am very excited about this announcement (PDF) (http://www.heartland.co.nz/_upload/news/HarMoney%20NZX%20Release%208%20Sept%2014%20final.p df). While it's unclear how much upside it will generate, I think it says a lot about management that they really looking outside the box. Peer-to-peer lending could be a massive growth area.P2P lending is huge in the US - Lending club is about to IPO I think.

I think the operator in Australia got investment from Westpac.

Good investment. No indication of what they spent though??

[Okebw]

Just had a quick look through Harmoneys website and I must say the interest rates charges, even for low risk borrowers are higher than expected. With the max being nearly 40% for high risk individuals.

The "Platform Fee" of 2-6% of the initial loan balance seems excessive though.

https://www.harmoney.com/how-it-works/interest-rates-fees

[Beagle]

The level of default and delinquency amongst certain borrower types is astonishing and the amount of administration and costs involved in managing their difficult loans well and truly justifies those higher rates.
I hope under this new platform borrowers are forced to put down decent deposits on the asset they're acquiring. One thing that became readily apparent from the finance companies and GFC, if young people don't have much skin in the game they're more than happy to walk away if that old XYZ asset doesn't perform.

[Harvey Specter]

Just had a quick look through Harmoneys website and I must say the interest rates charges, even for low risk borrowers are higher than expected. With the max being nearly 40% for high risk individuals.

The "Platform Fee" of 2-6% of the initial loan balance seems excessive though.

https://www.harmoney.com/how-it-works/interest-rates-feesI thought they looked high as well. I would think the most common would be debt consolidation but for that to be worthwhile, it needs to be less than the ~20% that the credit card companies charge.

My application when in today (lender, not borrower) so will be able to get a better look on the inside soon.

[Okebw]

My application when in today (lender, not borrower) so will be able to get a better look on the inside soon.

Do let us know. I did just fill out the application however it doesn't give me the option t use my webcam for a photo and I don't have a scanner on hand to copy my license. It does look rather interesting though. The main thing I'm curious about is the volume of loans available in the marketplace at present. The mention that they're intending to create a secondary market for the notes bodes well too.

All in all I'd say a good move from Heartland.

[Beagle]

Do let us know. I did just fill out the application however it doesn't give me the option t use my webcam for a photo and I don't have a scanner on hand to copy my license. It does look rather interesting though. The main thing I'm curious about is the volume of loans available in the marketplace at present. The mention that they're intending to create a secondary market for the notes bodes well too.

All in all I'd say a good move from Heartland.

I agree and its good to see they're prepared to take a proactive approach.
I'm still happy to help anyone save brokerage by buying off market at 94 cents :D

[winner69]

Well Winner69,it looks as though you are getting your wicked way!!!!
Heartland are taking a 10% shareholding in HarMoney NZ's only licensed peer-to-per lending platform.
I note HarMoney have a very experienced board.

Good one eh Percy.

Better to part of the game just in case P2P catches on. The way the world works is changing.

Must have some young ones working for them who they listen too!!!!! (Diversity at work)

Maybe I know more about what's going on then I let on to?

[Joshwnz]

I made an account for Harmoney after I saw it in on Stuff a couple of weeks ago. Since then I can see there have only been between 2-7 loans that have been available to invest in. Hopefully as word gets out about it, this will become more popular and I will consider getting involved. Problem is you cannot currently sell your investments, so once you are invested in a loan which can be up to 60 months, you can't out if you need it. I think they are developing something on this though. Website is really cool. Hoping it takes off!

[percy]

Good one eh Percy.

Better to part of the game just in case P2P catches on. The way the world works is changing.

Must have some young ones working for them who they listen too!!!!! (Diversity at work)

Maybe I know more about what's going on then I let on to?

Diverse Rata planters network?

[winner69]

Well Winner69,it looks as though you are getting your wicked way!!!!
Heartland are taking a 10% shareholding in HarMoney NZ's only licensed peer-to-per lending platform.
I note HarMoney have a very experienced board.

Wonder what's next?

Are they still keen on Motor Trade Finance if they can stitch a deal together?

Got to keep pushing ahead dont they

[winner69]

Well Winner69,it looks as though you are getting your wicked way!!!!
Heartland are taking a 10% shareholding in HarMoney NZ's only licensed peer-to-per lending platform.
I note HarMoney have a very experienced board.

Market seems to like it .....whoopee

Keep the announcements coming ......excitement boosts the shareprice, good

Maybe the FMA man has a point. from todays paper - "....the boss of New Zealand's market watchdog reckons it is time to "turn down the music" in case bullish investor confidence spills over into recklessness."

Confidence is good for HNZ ....but not reckless in pumping up the share price.

Ironically a better market response to this announcement than the Seniors one. One make a bit of money, one will make heaps. Strange world eh

Over a buck by weeks end

[percy]

Wonder what's next?

Are they still keen on Motor Trade Finance if they can stitch a deal together?

Got to keep pushing ahead dont they

Yes they are keen for further acquisitions.
They have proven with merging three companies to form Heartland,the takeover of PGW Finance, and Sentinel REL they have the expertise in this field.
Motor Trade Finance would make an excellent fit with Marac,so long as "the MTF fish hooks" with the commerce commission are sorted satisfactorily.
All the time they are looking to be "the best" rather than "the biggest" bank which is most important for us shareholders.

[SCOTTY]

At 1.54pm today $1.00 :)

[Cool Bear]

At 1.54pm today $1.00 :)
:t_up::t_up::t_up:

[BlackPeter]

:t_up::t_up::t_up:

Does this still qualify for the beer?

[Snoopy]

A farmer has more sense than add to his mortgage.Better and cheaper going for a shorter term livestock or seasonal loan,or equipment loan.

If farmers using short term finance from the likes of Heartland , instead of ramping up the mortgage, is true then I am sorry to say it is not Heartland that is getting the business. Heartland acquired PGG Wrightson Finance in August 2011. Since then Heartland's 'agriculture' loans and 'forestry and fishing' loans (FY2014, table 37) have 'grown' like this:






Jun 2012


Jun 2013


Jun 2014




Agriculture


$520.4m


$499.9m


$469.0m




Forestry/Fishing


$35.7m


$29.7m


$22.3m




All this remember in what has been widely reported as the best environment for farming in many years. So if this is what has happened to Heartland's exposure in 'good times', what on earth is going to happen if things start to get tough?

Heartland is getting a reputation for acquiring niche businesses. I wonder what would happen if Heartland paid more attention to the niches they are already operating in?

SNOOPY

[Banksie]

Looks like there is a lot of buy pressure as well. Definitely one of my favourite shares.

[Cool Bear]

Does this still qualify for the beer?
Already had free beer, thanks again Percy.

[percy]

Already had free beer, thanks again Percy.

My pleasure Cool Bear.
Belgarion.Sorry to see you go.I think you must have done well.Happen to think you will be back,as I think there is a long way to go here yet?

[Harvey Specter]

Jun 2012
Jun 2013
Jun 2014


Agriculture
$520.4m
$499.9m
$469.0m


Forestry/Fishing
$35.7m
$29.7m
$22.3m



All this remember in what has been widely reported as the best environment for farming in many years. So if this is what has happened to Heartland's exposure in 'good times', what on earth is going to happen if things start to get tough?I assumed Farmers paid off debt in good times. If they had negative cashflow after last seasons huge payout, they will be in big trouble this season.

[Joshuatree]

Lovely meandering chart to a new high;like a :)Pleasant and Green walk in the hills.

[Markymarknz]

Anyone know how much this 10% stake in HarMoney is costing?

[Beagle]

Undisclosed price.

[Beagle]

Many parts of the rural economy are still doing extremely well even if dairy is under a bit of pressure at present. Beef, sheep and many forms of agriculture are going absolutely gang-busters.
We are well positioned :)

[winner69]

My hero on the radio this morning

http://www.radionz.co.nz/audio/player/20148880

Love things like

- 200% growth rates
- P2P is so modern and reflects the new world
- and endorsed by a REAL BANK
- borrowers and lenders meeting up through an online dating agency. So cool
- market leading position
- first mover advantage
- Internet based - so cool


Heartland must be listening to their young employees. Diversity at work

HNZ to be rerated as it now just like a Xero, well sort off

[percy]

All Heartland directors,management and staff are young at heart!!!
No age discrimination here please.!

[winner69]

This funding to Harmoney.

I take they lend it to Harmoney who spread it amongst keen borrowers

Or are Heartland going to use the Harmoney platform (channel) to lend direct to keen borrowers?

Hope it the former as the keen borrowers are only keen on using P2P because they want to bypass the greedy banks

[winner69]

All Heartland directors,management and staff are young at heart!!!
No age discrimination here please.!

But are they young of mind?

That's more important these days

[vorno]

...
HNZ to be rerated as it now just like a Xero, well sort off

Well mate, think of it like this - a lending service has a much higher chance than Xero to generate profit! And if you're not convinced then put the minimum $500 up on HarMoney to "invest" it and see how the system works. If it is good and works well then sweet, you have yourself a decent platform. However should it be otherwise then people will soon come to a reality check!

Simple :)

[percy]

But are they young of mind?

That's more important these days

Quiet right,should have said young of heart and mind.Thank you.

[winner69]

Well mate, think of it like this - a lending service has a much higher chance than Xero to generate profit! And if you're not convinced then put the minimum $500 up on HarMoney to "invest" it and see how the system works. If it is good and works well then sweet, you have yourself a decent platform. However should it be otherwise then people will soon come to a reality check!

Simple :)

Already have

[dingoNZ]

Already have

I like the idea and am gonna throw a bit at it and see what happens

[iceman]

A very interesting interview with Greenslade on NBR Online (under paywall) today where he explains the thinking behind the HarMoney purchase.
He gives an interesting example of where they see the benefit for HNZ:
"A lot of our customers come to us at a point of purchase, for example when they are at a car dealer and come to us for motor vehicle finance. But HarMoney means we could get to customers before they go to the car dealer so we could help them at an earlier stage of their decision making"

He also says he can not confirm whether they will make further acquisitions before Christmas but says they are actively looking at a few options.

Keep it up Jeff :)

[noodles]

A very interesting interview with Greenslade on NBR Online (under paywall) today where he explains the thinking behind the HarMoney purchase.
He gives an interesting example of where they see the benefit for HNZ:
"A lot of our customers come to us at a point of purchase, for example when they are at a car dealer and come to us for motor vehicle finance. But HarMoney means we could get to customers before they go to the car dealer so we could help them at an earlier stage of their decision making"

He also says he can not confirm whether they will make further acquisitions before Christmas but says they are actively looking at a few options.

Keep it up Jeff :)
Yes very interesting. It looks like some strategic thinking going on here. I also like the chances of another acquisition. Hopefully this will provide a catalyst for another share price boost.

[percy]

It all seems to be taking off since Winner69 declared his overweight position.!!!
Thank you winner69.

[Harvey Specter]

Yes very interesting. It looks like some strategic thinking going on here. I also like the chances of another acquisition. Hopefully this will provide a catalyst for another share price boost.Only a 10% stake though. They should have got the option to increase to 20% atleast, since their funds will no doubt under right its early growth.

[percy]

Only a 10% stake though. They should have got the option to increase to 20% atleast, since their funds will no doubt under right its early growth.

Yes I agree with you,but should HarMoney take off I think they will need further capital,and at time we may see Heartland increase its holding.

[winner69]

Financially return wise for HNZ this is really is peanuts. I feel it that from a strategic view P2P is here and will have its use so it is good that HNZ is involved, even if only from a risk mitigation point of view. Also sends that message that Heartland is more than just a boring old bank waiting for things to happen.

In Britain P2P lending was just $1 billion pounds in 2013, but growing. I posted a link to a lot of numbers and developments earlier in the year (copied to Jeff)

One segment seen to be catching on was SME using these alternative ways to fund their businesses cash requirements.

Something that Heartland could explore. They already into invoice financing.

Watch this space



But it does signal that strategic thinking is alive

[Harvey Specter]

Financially return wise for HNZ this is really is peanuts. I feel it that from a strategic view P2P is here and will have its use so it is good that HNZ is involved, even if only from a risk mitigation point of view. Also sends that message that Heartland is more than just a boring old bank waiting for things to happen.

In Britain P2P lending was just $1 billion pounds in 2013, but growing. I posted a link to a lot of numbers and developments earlier in the year (copied to Jeff)Lending Club did $1B in 3 months. Its valuation is huge : http://techcrunch.com/2014/08/27/lendingclub-files-for-500m-ipo/

[winner69]

Lending Club did $1B in 3 months. Its valuation is huge : http://techcrunch.com/2014/08/27/lendingclub-files-for-500m-ipo/

Thanks for that, very interesting eh

Fascinating that the way is heading there I going to be more money in setting something up and collecting fees along the way than taking money in and lending at a margin.

So this Lending Club is worth more than HNZ

Wonder what HarMoney will be worth in 3 years time?

[Snoopy]

Thanks for that, very interesting eh

Fascinating that the way is heading there I going to be more money in setting something up and collecting fees along the way than taking money in and lending at a margin.

So this Lending Club is worth more than HNZ

Wonder what HarMoney will be worth in 3 years time?

No idea. But Heartland was up 2c when the announcement came through it had acquired a 10% stake.

2c x 463.3m Heartland shares = $9.26m. So HarMoney in total must be worth

$9.26m/ 0.1 = $92.6m today, according to Heartland shareholders.

SNOOPY

[Soolaimon]

No idea. But Heartland was up 2c when the announcement came through it had acquired a 10% stake.

2c x 463.3m Heartaland shares = $9.26m. So HarMoney in total must be worth

$9.26m/ 0.1 = $92.6m today, according to Heartland shareholders.

SNOOPY

They are worth another $500 now, as I had to have a look at this. Let's keep track of the system and progress?

[Snoopy]

I assumed Farmers paid off debt in good times. If they had negative cashflow after last seasons huge payout, they will be in big trouble this season.


Yes, and that goes back to the point I made originally. Farmers will use the lowest cost of funds loan they need. If they have the equity to pay for their farm inputs the cost of funds is zero on that. So they will pay from their cash balances. Second lowest cost of funds would be to incorporate into their mortgage. Third lowest cost of funds is to obtain those funds from a second tier lender like Heartland. So just because farmers are doing well does not mean that Heartland will be doing great business in their agriculture loan book. Farmers doing well could be bad news for Heartland. That would be one explanation of the declining agricultural loan book.

SNOOPY

[Snoopy]

They are worth another $500 now, as I had to have a look at this. Let's keep track of the system and progress?


Don't confuse an investor putting in $500 into HarMoney with increasing the value of HarMoney by $500. The value of Harmoney will be ultimately be determined by the profit they make on their loans. Not the amount of the loan. Investment capital avilable to loan and profit are completely different things.

SNOOPY

[winner69]

HarMoney keen on this idea

http://www.interest.co.nz/business/71848/could-nz-govt-follow-british-example-and-help-supply-credit-smes-peer-peer-lending

[winner69]

Looks like Heartland money going direct to borrowers through the Harmoney platform

And Percy please note Jeff mentions these young Internet savvy people who love these sort of things. Young of mind eh.

http://www.interest.co.nz/business/71843/heartland-bank-says-it-has-taken-10-stake-peer-peer-lender-harmoney

[Beagle]

Thanks for the links W69.
In my view they should have at least secured exclusive access to be the preferred financial institution backing lending through this platform, as an integral part of the deal.
10% is hardly a stupendous stake and non access to preferential lending waters the significance of this deal down further in my opinion, but that could in a perverse way be a good thing. My bitter experience with finance companies leads me to the conclusion that young people are generally a very risky bet when it comes to lending. We have the new, (I forget what they call them), (its late and I had a glass or two of wine with my excellent dinner my wife prepared, God bless her), but its short form bankruptcy, no assets, under $40,000 in debt and people can go through only a 12 month bankruptcy process and come out the other side.
I understand many, many hundreds of Geneva Finance's customers have done this and you can see how they have performed over the years and my comments on that company in the Geneva thread. HNZ might find they get a salient lesson in Gen Y and Gen X's propensity toward financial recklessness if they're not extremly cautious through this platform.

I know others are all excited about this but I'm definitely a sceptic. That said, as previously posted at some length I believe HNZ remain very good value of a forward PE basis so if the market is happy to move the stock more towards where I see its intrinsic value in 12 months I'm not going to argue with it, nor do I intend to fight the trend.
It could well be that the stock is simply going up ahead of the dividend, like we have seen recently with several other examples such as AIR and PGW to name just two.
I seriously doubt the market ascribes anything like the value in this minor acquisition that the increase in the market capitalisation would suggest.
That would be a big YEAH RIGHT to $92.6m in accretive NPV and someone hand me another Tui's...no, make that another glass of wine :)

[winner69]

Harmoney launch on radio

http://www.radionz.co.nz/audio/player/20149020

How can Heartland go wrong?

Digital platform / peer to peer / fast and pleasant experience / $100m in funding / 12% returns

All good stuff ....exciting new world

Go HarMoney

[Tony Two Gloves]

Harmoney getting everybody upset already......

Subject: Please Read - New Harmoney Finance Company - Deceiving Tactics
Hi Fellow competitors

It has come to our attention that this new Finance company is using deceiving tactics to pretend to be our finance company names (stealing our identity) to gain business when searching on the web.

If you search on Google under your finance name you will get the Harmoney website listed with your company name.

The legal position where we have a case is the following:

· passing off (a tort) - the law of passing off prevents traders from appropriating the goodwill of their competitors by passing off their business as either being that of or associated with the business of another; and
· Fair Trading Act issues – i.e. misleading and deceptive conduct.

I suggest you contact your own legal team to take action and nip this in the bud immediately.

Also I suggest you tell any other finance companies that I have not emailed in this list.

Example below


https://mail.google.com/mail/u/0/?ui=2&ik=8ddee1429b&view=att&th=1485c99e3ab3709d&attid=0.2&disp=emb&zw&atsh=1

[winner69]

Harmoney getting everybody upset already......

Subject: Please Read - New Harmoney Finance Company - Deceiving Tactics
Hi Fellow competitors

It has come to our attention that this new Finance company is using deceiving tactics to pretend to be our finance company names (stealing our identity) to gain business when searching on the web.

If you search on Google under your finance name you will get the Harmoney website listed with your company name.

The legal position where we have a case is the following:

· passing off (a tort) - the law of passing off prevents traders from appropriating the goodwill of their competitors by passing off their business as either being that of or associated with the business of another; and
· Fair Trading Act issues – i.e. misleading and deceptive conduct.

I suggest you contact your own legal team to take action and nip this in the bud immediately.

Also I suggest you tell any other finance companies that I have not emailed in this list.

Example below


https://mail.google.com/mail/u/0/?ui=2&ik=8ddee1429b&view=att&th=1485c99e3ab3709d&attid=0.2&disp=emb&zw&atsh=1




Whoever needs to get with it?

Not Internet savvy are they.

Can't they see the little AD next to Harmoney

That's how things work these days. You need to know

Sho

[Harvey Specter]

Hard to see what the issue is as the link doesn't work but I assume it is using adwords to their advantage much like this case: http://www.nbr.co.nz/article/naked-bus-appeal-trademark-case-vy-p-153179

They do need to be careful.

NOte: Harmoney does have its own thread on this forum so things that dont directly impact Heartland should probably go there.

[winner69]

OMG its terrible

Type Heartland Finance into Google and Harmoney is at the top of the page


Heartland need to sort out their Adwords as well

Harmoney taking over the world.

[Snow Leopard]

...Harmoney taking over the world.

No, only NZ.
They do not worry about the ex-pats in KL

6234

Best Wishes
Paper Tiger

[vorno]

Shares looking good this morning - will we see the big $?

[Toasty]

I have set up my Harmoney account. Just deciding whether I want to actually lend anybody money.

[dingoNZ]

Shares looking good this morning - will we see the big $?

In the next 3 days, yes, should go to around $1.01/1.02 than back to these levels after it goes ex-div

[Beagle]

In the next 3 days, yes, should go to around $1.01/1.02 than back to these levels after it goes ex-div

Two hours ago I would have said you might be a little optimistic but the offer at 99 and now at $1.00 has been cleaned out and who knows you might get your wish :)
Just on a week ago I was buying in volume at 95 cents....that's a pretty racy week for a boring bank don't you think Winner69 :)

[dingoNZ]

I'm not a holder in HNZ just a observer in the stock- so this is my unbias opinion :)

[winner69]

Two hours ago I would have said you might be a little optimistic but the offer at 99 and now at $1.00 has been cleaned out and who knows you might get your wish :)
Just on a week ago I was buying in volume at 95 cents....that's a pretty racy week for a boring bank don't you think Winner69 :)

Not boring mate ... was to be expected

Good timing on your part though, well done

Just the start of a reasonably steady climb to $1.30 by June next year

Practice your standing ovations for that October meeting when new guidance is given

[Beagle]

Not boring mate ... was to be expected

Good timing on your part though, well done

Just the start of a reasonably steady climb to $1.30 by June next year

Practice your standing ovations for that October meeting when new guidance is given

No wait $1.01 now and very thin on the offer. I'm doing my squatting exercises now so I can spring up from my chair like a keen young fella could :)
Forest has kindly offered to drive so I have a funny feeling I'll be doing some serious damage to their liquor bill at the AGM :D

[percy]

No wait $1.01 now and very thin on the offer. I'm doing my squatting exercises now so I can spring up from my chair like a keen young fella could :)
Forest has kindly offered to drive so I have a funny feeling I'll be doing some serious damage to their liquor bill at the AGM :D

Just position yourself between The Bar and The Kitchen !!!!
Known as "the handy position," or sometimes "pole position".!!

[Beagle]

Just position yourself between The Bar and The Kitchen !!!!
Known as "the handy position," or sometimes "pole position".!!
Thanks for the heads-up mate. Why do I get the feeling that you've had a fair bit of experience with this sort of thing LOL.

[percy]

Not boring mate ... was to be expected

Good timing on your part though, well done

Just the start of a reasonably steady climb to $1.30 by June next year

Practice your standing ovations for that October meeting when new guidance is given
Well,well,well.
$1 today. $1.30 June next year.But wait there's more!!!!! Two dividends of 3,5cents.So 30cents plus 7 cents == 37cents or 37%%%%%
Has that "smell of money" I feel.!!!!

[percy]

Thanks for the heads-up mate. Why do I get the feeling that you've had a fair bit of experience with this sort of thing LOL.

Best bit is either taking a "full plate" of tucker off the waitress/waiter on either the start or finish of their circuit.
Offer to hold the platter of tucker while friends journey to the bar for you.!!
No need to go looking for directors,they will come to you.They love to appear to be listening/talking to shareholders.!
Get Forest to ask Jeff a question,that will guarantee Jeff will come looking for Forest, so he is seen to be talking to a questioner.!! Politically correct! Don't for any reason talk diversity policy!!!!
Just hold position until nature finally calls.!

[luigi]

What are people's thought's on the consumer finance division of GE Capital?
http://www.interest.co.nz/business/71912/ge-capital-looking-sell-its-australasian-consumer-finance-operations

The interest article states that the NZ consumer finance is 60% of GE Capital.
According to GE Finance and Insurance Limited's statements
http://www.business.govt.nz/companies/app/service/services/documents/A34FB3790453010D06E19A432BB7AB57
gross interest revenue in FY2013 was $477m so 60% = $286m.

This makes GE Money just a bit bigger than HNZ's FY14 revenue of $210m. Too big for HNZ?

[winner69]

Best bit is either taking a "full plate" of tucker off the waitress/waiter on either the start or finish of their circuit.
Offer to hold the platter of tucker while friends journey to the bar for you.!!
No need to go looking for directors,they will come to you.They love to appear to be listening/talking to shareholders.!
Get Forest to ask Jeff a question,that will guarantee Jeff will come looking for Forest, so he is seen to be talking to a questioner.!! Politically correct! Don't for any reason talk diversity policy!!!!
Just hold position until nature finally calls.!

So if I go and wear a bright yellow shirt and ask a question Jeff will seek out that bright yellow shirt and come and talk to me ......cool (unless that question is about the number of middle aged white male directors)

And Percy get with it mate - waitress/waiter is called waitron these days. And a real waiter or waitress gets really peeved by be calling a waitron.

[percy]

Great business.
Don't know how HNZ could do it though.

[BlackPeter]

Well,well,well.
$1 today. $1.30 June next year.But wait there's more!!!!! Two dividends of 3,5cents.So 30cents plus 7 cents == 37cents or 37%%%%%
Has that "smell of money" I feel.!!!!

Hi Percy,

I obviously do respect your optimism and agree as well, that HNZ overall looks like a well run operation (within reason - was not that convinced by their to be blunt quite boring and dusty AA members action some months ago, but who knows, maybe there have been clients they managed to catch).

Just looking at data points to value the company ... the 12 month target in Financial Times is between 96 and 97 cents - i.e. even expecting a slight fall back compared to the current price. If we look at growth potential - yes, the HER loans might take off (I wish it for the share holders, but not sure, whether I would want one for myself or for my parents) and 10% of a new peer to peer lending platform of which we don't really know how it will perform is not the world either.

Obviously - the current PE looks better than that of the big banks, but then - the overall business model looks still closer to finance company (like e.g. DPC used to be) than a big bank, i.e. you expect some sort of risk premium to keep share holders interested.

How do you get to your $1.30 in 9 months?

[percy]

Hi Percy,

I obviously do respect your optimism and agree as well, that HNZ overall looks like a well run operation (within reason - was not that convinced by their to be blunt quite boring and dusty AA members action some months ago, but who knows, maybe there have been clients they managed to catch).

Just looking at data points to value the company ... the 12 month target in Financial Times is between 96 and 97 cents - i.e. even expecting a slight fall back compared to the current price. If we look at growth potential - yes, the HER loans might take off (I wish it for the share holders, but not sure, whether I would want one for myself or for my parents) and 10% of a new peer to peer lending platform of which we don't really know how it will perform is not the world either.

Obviously - the current PE looks better than that of the big banks, but then - the overall business model looks still closer to finance company (like e.g. DPC used to be) than a big bank, i.e. you expect some sort of risk premium to keep share holders interested.

How do you get to your $1.30 in 9 months?

My post was in reply to winner69's post #3866 where he quoted $1.30 by June next year.I was only pointing out there will be two dividends before that time.

[Tevita]

Bold claims need more than economy of evidence.

[percy]

My own valuation of $1.25 is made up looking at eps of 10cents,nett dividend of 7 cents.PE 12.5.dividend yield 5.6% net.That is based on 463,266,592 shares on issue.
I expect Heartland to improve their credit rating,and to be rerated by broking houses,who will see they are "putting runs on the board" and achieving what they say they will do,so I see further eps growth.They stated eps for the last quarter were 9.7 and with their stated policy for eps growth, 10cps may be realistic.
Banks have the capacity to pay increasing dividends,so HNZ's fully imputed dividend will be an attraction to investors.
HNZ does not have the over exposure to housing the Australian banks have.They also have no exposure to European wholesale funding issues.
Overseas people look at PEG ratio.This is the PE divided by growth.No allowance is made for dividend,In NZ some companies pay very high dividends,so we should factor them in.PEGD.
So my thinking on HNZ.PE 12.5 growth 10% and 7cents dividend.
therefore 12.5 divided by 17 [growth 10 plus dividend 7] gives us .73 This is well under one,so l think my $1.25 is fair value.
These figures have made no allowance for any further acquisitions by Heartland.

[Beagle]

Putting my Friday afternoon happy angle on things I get to $1.20...sorry I can't see more than 10 cps EPS or a PE of more than 12. As previously posted I was realistically at $1.10 in 12 months but the recent new online investment and the company looking for more opportunities that could be EPS accretive, who knows, maybe $1.30 is attainable plus circa 7 cps fully imputed divvy's, (gross value 9.72 cps), total gross possible return 40%):t_up:

[noodles]

6173



Roger, As much as I would like to see 20% gain this year, I don't think it is going to happen unless we get some corporate action such as a buyback or an acquisition. For the last 18 months, the ceiling on the share price has been the broker targets (see image). I'd expect this to stay the same and I wouldn't expect broker targets to change much as a result of this result.
Well I was wrong. HNZ is now above broker targets.

[percy]

Well I was wrong. HNZ is now above broker targets.

Looks as though we are well positioned!!! lol.

[winner69]

Well I was wrong. HNZ is now above broker targets.

Analyst/brokers targets - you don't much faith in them do you mr noodles?

One or two might increase their targets soon because a bit of an embarrassment having BUY and HOLD recos when price is higher than target

And then after the standing ovation at the ASM they will realise they have got it wrong.

Analyst/broker targets are usually bullish by 15% to 20% - meaning they really think HNZ only worth low 80s. Get real eh

Those three analysts have no idea about HNZ and their targets show. (maybe they believe the muted guidance/messages from HNZ management who obviously don't want the market to set too high expectations for them)

You buying up big here noodles. Still time to get in.

[winner69]

Putting my Friday afternoon happy angle on things I get to $1.20...sorry I can't see more than 10 cps EPS or a PE of more than 12. As previously posted I was realistically at $1.10 in 12 months but the recent new online investment and the company looking for more opportunities that could be EPS accretive, who knows, maybe $1.30 is attainable plus circa 7 cps fully imputed divvy's, (gross value 9.72 cps), total gross possible return 40%):t_up:

Will you increase your 10 cents to even 11 after the ASM

Heck 11 cps times 12 is 132 ....plus divies .....cool

[winner69]

Noodles - I see 1 of those 3 brokers has DOWNGRADED Heartland from Buy to Hold over the last month or so.

He got his finger on the pulse eh

[noodles]

Analyst/brokers targets - you don't much faith in them do you mr noodles?

You buying up big here noodles. Still time to get in.
All my purchases were in the 80's. I'm not buying at these levels as nothing has changed since the mid 90's really.

I'm still a little surprised that the recent 10% stake in harmoney has given such a boost in the share price. I remember that before the HER aquisition, there was a bit of a runup. Maybe something else is on the cards. GE finance perhaps? Cap raising at 95c?

[iceman]

All my purchases were in the 80's. I'm not buying at these levels as nothing has changed since the mid 90's really.

I'm still a little surprised that the recent 10% stake in harmoney has given such a boost in the share price. I remember that before the HER aquisition, there was a bit of a runup. Maybe something else is on the cards. GE finance perhaps? Cap raising at 95c?

Or maybe the Harmoney acquisition and the publicity around it put HNZ back on the radar screens for investors and brokers resulting in a more fair valued SP !!

[kizame]

I think the timing is about right with that small stake announcement,still cum dividend,and the fact that it is a growth story on the lookout for a good aquisition,reasonably priced,making a good profit.
Dorchester is probably the only other growth story growing by aquisition,so is exciting stuff really.

[Beagle]

Will you increase your 10 cents to even 11 after the ASM

Heck 11 cps times 12 is 132 ....plus divies .....cool

After a few drinks for sure :)


Or maybe the Harmoney acquisition and the publicity around it put HNZ back on the radar screens for investors and brokers resulting in a more fair valued SP !!
You got it mate.

[mouse]

Quite. My crystal ball says 90 cents, December 2014. The Genie supplied with it agreed.
Percy, crystal ball without Genie, suggested 12 Dec 2014 at 12.43? $1.57.
My ball would not go any further, even with prodding.
Percy got 2015 $2.38 and Dec 2016 over $3.00.
What I think we all agree with, its a hold. Those who want quick profits, well you made them between 50 cents and 70 cents. Pretty spectacular actually. So wait to December 2014. I will be delighted to be proven to have a crystal ball price that is far too low.

One problem is that cheap, on sale, Crystal Balls, even with a Genie, are a bit unreliable. Plus can break down. Getting them serviced is a problem.

Crystal Ball Faulty. But I think I will keep it, since the Genie was quite conservative. However, the Crystal Ball does need servicing. Back to Briscoes?

[percy]

May pay to wait until 12th December before you question the Crystal Ball.???!!!!

[mouse]

May pay to wait until 12th December before you question the Crystal Ball.???!!!!

But there is a Dividend before then! Do we add that to the share price?

[percy]

But there is a Dividend before then! Do we add that to the share price?

May have to?

[winner69]

Percy said this on the SUM thread


Diversity,multi-channels,one model does fit/suit all.
We will see operators targeting different niches. From full total care to more lifestyle independent living.
We can see this very quickly when you compare RYM/SUM model to INA's [asx].INA are putting retirement relocatable mobile homes in tourist park/villages.A lot of these are in lovely places on the NSW coast.
I did note this appears to be happening at Tahunanui Motor camp in Nelson.
Governments around the world are keen to keep people in their own home,and supply them with more services.
We will also see growth in people taking up resverse mortgages so they can afford to stay in their own home

More demand for reverse mortgages

Exactly Percy .... very perspective of you

[percy]

Percy said this on the SUM thread



More demand for reverse mortgages

Exactly Percy .... very perspective of you

And as an aside Snoopy will be pointing out the (many) spelling and grammar errors.

I did add to that post.

[winner69]

I did add to that post.

Some of words with red squiggly lines under them weren't spelling mistakes so not many. I deleted that line because you a good guy and didn't want Snoopy to go looking for them

Reckon HNZ a $1.05 by the end of this week?

[percy]

Reckon HNZ a $1.05 by the end of this week?

"Would Sir like that at a $1.05 ex dividend"?

[winner69]

"Would Sir like that at a $1.05 ex dividend"?

Why not

Do I get a dividend soon then?

[percy]

Why not

Do I get a dividend soon then?

Yes,LARGE fully imputed 3.5cents per share.
Record date 19th September,Payable Friday 3rd October.Winner69 get used to them.They pay them ever 6 months.[And I expect they will keep increasing them]
NB.Any one buying HNZ this week be sure you check you are buying CD, cum dividend.

[janner]

Yes,LARGE fully imputed 3.5cents per share.
Record date 19th September,Payable Friday 3rd October.Winner69 get used to them.They pay them ever 6 months.[And I expect they will keep increasing them]
NB.Any one buying HNZ this week be sure you check you are buying CD, cum dividend.

percy !!.. Stop wetting your knickers..

I think many have understood our long term conviction .. :-)))

[Beagle]

For the sake of clarity, the shares will trade ex divvy on Wednesday 17th.

[zigzag]

Some of words with red squiggly lines under them weren't spelling mistakes so not many. I deleted that line because you a good guy and didn't want Snoopy to go looking for them

Reckon HNZ a $1.05 by the end of this week?

Not with the uncertainty of the election on Saturday. Possibly if National scores an outright victory, then we could see $1.05 by Monday next. I wouldn't mind if they price weakened a tad though, as I would like to buy a few more. One could say that I am not quite well-positioned just yet.

[Beagle]

Some of words with red squiggly lines under them weren't spelling mistakes so not many. I deleted that line because you a good guy and didn't want Snoopy to go looking for them

Reckon HNZ a $1.05 by the end of this week?

I will shout all attendees a beer at the next Auckland ST meeting if that happens...I think my wallet is pretty safe regarding $1.05 ex divvy by Friday 19th Sept...I think you've forgotten we're talking about a boring bank here mate.
If it could hold $1.00 ex divvy by the end of the week that would be a fantastic SP performance in my books.

[vorno]

Auckland ST meeting

Auckland ST meeting?

[Beagle]

Whenever the next one is, I'm not sure :) Okay, Okay, I will also shout a beer to all attendees at the Chch St meeting on 30 September if said event occurs and I am sure Percy will be very happy to shout the next round, won't you Percy ? ( Hint, if the accountant thinks his wallet is very safe you should be all good too ) :)

[winner69]

No laughing at me please

I have never bailed out of my multi year trade in RBD. The shareprice keeps going up and up and it pays divies as well. Some trades last much longer than ever envisages.

From this day year ago my return on RBD is in excess of 30%

From this day a year ago HNZ would have delivered 20% if I had been holding for that long.

Just hope that HNZ can perform much better than RBD over the next year seeing I have heaps more HNZ than RBD .....and HNZ has to prove themselves to me.

If the market can see the potential in Carls Jnr surely thy can see the potential in equity release lending. Hope so

[zigzag]

This months issue of "Consumer" magazine has a chapter on reverse mortgages, for a bit of background reading.

[NZSilver]

This months issue of "Consumer" magazine has a chapter on reverse mortgages, for a bit of background reading.

https://www.consumer.org.nz/articles/reverse-mortgages#article-enter-reverse-mortgages

[Beagle]

https://www.consumer.org.nz/articles/reverse-mortgages#article-enter-reverse-mortgages

Don't suppose you could cut and paste for those of us who aren't subscribers to Consumer ?

[NZSilver]

Don't suppose you could cut and paste for those of us who aren't subscribers to Consumer ?

Im not a member either, however thought they might give some info, if someones a consumer member can you please put up the main points - cheers

Im a saver and investor not a cosumer like the majority of the population - so dont require consumer mag.

My portfolio has been consuming a few more HNZ shares lately though!

[mouse]

Im not a member either, however thought they might give some info, if someones a consumer member can you please put up the main points - cheers

Im a saver and investor not a cosumer like the majority of the population - so dont require consumer mag.

My portfolio has been consuming a few more HNZ shares lately though!

A fellow Miser and Scrooge, eh?

[BlackPeter]

Im not a member either, however thought they might give some info, if someones a consumer member can you please put up the main points - cheers

Im a saver and investor not a cosumer like the majority of the population - so dont require consumer mag.

My portfolio has been consuming a few more HNZ shares lately though!

Starting with a generic article about reverse mortgages and the pitfalls to avoid. Mentioning the standards of Ministry of Social Development - and comparing the offers of the four NZ players: SBS, ASB, Heartland and TSB. They offer some examples what a reverse mortgage would mean to people of different ages and have a quite extensive table comparing the conditions of the four players (which I won't copy /paste - I assume copyright law apply as well for discussion forums).

Just in a nutshell .. on face value the SBS offer looks best (all the guarantees, but lowest interest rate). ASB and Heartland look pretty similar (though ASB's cool off period is much longer but ASB's loan is not transferrable to a retirement village, Heartland's is - and Heartland features the highest application fee as well as the highest interest rate of all four lenders). TSB is not really comparable (no negative equity guarantee). As well some differences in maximum loan as percentage of house value (HNZ in the middle) and whether they allow transfer of a security to a retirement village (some - incl HNZ do, others don't).

If I wanted a reverse mortgage, than based on this article I would first talk with SBS (but might change my mind based on further investigations I am now not going to do) - and Heartland would be the last cab off the rank. Wouldn't consider TSB.

Sorry - probably shouldn't put this summary into a thread full of Heartland fans ....

Discl: was holding but sold out some time ago and based on the article unlikely to buy in soon again ...

[Beagle]

Thanks for the succinct summary BP.

[percy]

BlackPeter,thank you.

[Harvey Specter]

If I wanted a reverse mortgage, than based on this article I would first talk with SBS (but might change my mind based on further investigations I am now not going to do) - and Heartland would be the last cab off the rank. Wouldn't consider TSB. So from this I take out two things:

1. the scheme is the second best on the market from a banks/shareholders perceptive.
2. if they want to increase demand/market share, they have scope to do so without forcing a price war.

As such, once this gets fully integrated, HNZ will either be able able to reap the benefits of the higher returns or meet the market price to increase market share. Great to have options.

[Beagle]

So from this I take out two things:

1. the scheme is the second best on the market from a banks/shareholders perceptive.
2. if they want to increase demand/market share, they have scope to do so without forcing a price war.

As such, once this gets fully integrated, HNZ will either be able able to reap the benefits of the higher returns or meet the market price to increase market share. Great to have options.

I agree and I am not at all concerned that HNZ are not the cheapest in the market. You need to make decent margins considering the nature of the product.

[percy]

Not with the uncertainty of the election on Saturday. Possibly if National scores an outright victory, then we could see $1.05 by Monday next. I wouldn't mind if they price weakened a tad though, as I would like to buy a few more. One could say that I am not quite well-positioned just yet.

What sad news.!

[janner]

What sad news.!

:-)))))))))))))))))))))

[NZSilver]

A fellow Miser and Scrooge, eh?
Too right!

[NZSilver]

Starting with a generic article about reverse mortgages and the pitfalls to avoid. Mentioning the standards of Ministry of Social Development - and comparing the offers of the four NZ players: SBS, ASB, Heartland and TSB. They offer some examples what a reverse mortgage would mean to people of different ages and have a quite extensive table comparing the conditions of the four players (which I won't copy /paste - I assume copyright law apply as well for discussion forums).

Just in a nutshell .. on face value the SBS offer looks best (all the guarantees, but lowest interest rate). ASB and Heartland look pretty similar (though ASB's cool off period is much longer but ASB's loan is not transferrable to a retirement village, Heartland's is - and Heartland features the highest application fee as well as the highest interest rate of all four lenders). TSB is not really comparable (no negative equity guarantee). As well some differences in maximum loan as percentage of house value (HNZ in the middle) and whether they allow transfer of a security to a retirement village (some - incl HNZ do, others don't).

If I wanted a reverse mortgage, than based on this article I would first talk with SBS (but might change my mind based on further investigations I am now not going to do) - and Heartland would be the last cab off the rank. Wouldn't consider TSB.

Sorry - probably shouldn't put this summary into a thread full of Heartland fans ....

Discl: was holding but sold out some time ago and based on the article unlikely to buy in soon again ...

Thanks - appreciate it.

[winner69]

This months Consumer has an article about these products.

They write-off the TSB product because no guarantee of staying in the house and if the outstanding amount at the end of the day is more than the sale price the difference needs to be paid.



So discerning oldies won't be using TSB

[percy]

I think since GFC there has not been a lot of interest in reverse mortgages.
I feel this is changing,and with reputable people such as ASB,HNZ,SBS and TSB offering them,RELs will gain respectability and become more acceptable,therefore the market for them will grow quickly .
A lot of us would not use them,and most of us would not buy a car on HP either,but there is a growing market for them.Advertising will help grow the market.

[kizame]

I think since GFC there has not been a lot of interest in reverse mortgages.
I feel this is changing,and with reputable people such as ASB,HNZ,SBS and TSB offering them,RELs will gain respectability and become more acceptable,therefore the market for them will grow quickly .
A lot of us would not use them,and most of us would not buy a car on HP either,but there is a growing market for them.Advertising will help grow the market.
I like your logic Percy.

[psychic]

Seniors Money is to sell 9.4% Heartland stake when escrow lifts

http://www.nbr.co.nz/article/seniors-money-would-sell-94-heartland-stake-when-escrow-lifts-bd-162489

[Beagle]

Seniors Money is to sell 9.4% Heartland stake when escrow lifts

http://www.nbr.co.nz/article/seniors-money-would-sell-94-heartland-stake-when-escrow-lifts-bd-162489

Excellent opportunity for institutions to acquire a meaningful stake.

[psychic]

Excellent opportunity for institutions to acquire a meaningful stake.

Yes, hopefully they do it without upsetting the rest of us eh

[percy]

Seniors Money is to sell 9.4% Heartland stake when escrow lifts

http://www.nbr.co.nz/article/seniors-money-would-sell-94-heartland-stake-when-escrow-lifts-bd-162489

Thanks for the link.
Been a great deal for both parties.
Seniors will receive this final dividend, and next year's interim dividend, before they can sell in April 2015.
I think most investors in HNZ have expected this "overhang" to have held back HNZ's share price,but the recent strong surge seems to have proved us wrong.

[percy]

I note ANZ Securities are this morning showing HNZ as XD.[ex dividend].

[artemis]

I note ANZ Securities are this morning showing HNZ as XD.[ex dividend].

Unless I have completely missed the info, HNZ did not publish the record date or the payment date. And yes I checked their Key Dates page, which shows only last year's annual meeting.

[Derain]

Unless I have completely missed the info, HNZ did not publish the record date or the payment date. And yes I checked their Key Dates page, which shows only last year's annual meeting.

Would it be the date listed on NZX? the 3rd of October? See Link: https://www.nzx.com/markets/NZSX/securities/HNZ/dividends

[percy]

The Heartland announcement on 25th August;Heartland Full year profit of $36mil on NZX site ,stated
Record date 19th Setember,dividend payment 3rd October.
I did not know the ex date,however Roger did post it.

[Beagle]

For the sake of clarity, the shares will trade ex divvy on Wednesday 17th.

Guys, just a reminder that whenever you see the record date mentioned in a company announcement, track back 3 working days and because all trades are executed on the NZX on a T + 3 basis the last date you can buy a share cum dividend is always 3 working days before the record date and it follows that two working days before the record date is the ex divvy day.

[Xerof]

Rule of thumb: (I haven't actually checked, but then I haven't won a Pullitzer for investigative journalism)

Record dates are usually Fridays

Shares are Cum Dividend until the end of trading on the date which is 3 days prior to the Record date. So shares begin trading Ex Divi from opening 2 days before the Record Date

HNZ was CD yesterday, EX today

and wot roger said too!

[777]

If you use Direct/ANZ securities all the required info is on their Diary page.

[RTM]

That looks interesting T7......hate to be a dumb A. but where do I find the diary page ?
Thanks in advance.


If you use Direct/ANZ securities all the required info is on their Diary page.

[777]

Click on NZ/AU Markets under trading menu and select NZXDiary adjustment from sub menu.

Trading
NZ/AU Markets

[iceman]

That looks interesting T7......hate to be a dumb A. but where do I find the diary page ?
Thanks in advance.

You are not alone RTM. I've been using ANZ/Direct Broking for many years and didn't know about this ! Thanks 777 for the info.

[RTM]

Thanks T7, that was simple.
Appreciated.


You are not alone RTM. I've been using ANZ/Direct Broking for many years and didn't know about this ! Thanks 777 for the info.

[RTM]

I hate the way the ANZ/DB site adjusts the SP down by the amount of the dividend when the share goes XD. I assume that this is what is happening anyway. Anyone have any idea of the rational for this ? Do the other sites (ASB ? ) do this as well ? Doesn't make much sense to do this to me.

[winner69]

I hate the way the ANZ/DB site adjusts the SP down by the amount of the dividend when the share goes XD. I assume that this is what is happening anyway. Anyone have any idea of the rational for this ? Do the other sites (ASB ? ) do this as well ? Doesn't make much sense to do this to me.

ASB has HNZ down 3 cents today so they don't seem to adjust for divies

Trap - on some sites the change shown is from the days opening price, on others from the previous days close.

But what ws your question?

[RTM]

I was wondering what the rationale was ? And if other sites did the same ? It seems that ASB does not...thanks.

[Okebw]

ASB has HNZ down 3 cents today so they don't seem to adjust for divies
?

It was adjusted 3.5c at opening this morning. It's just fluctuated a bit since. Also, I assumed all trades were adjusted by the amount of the divie but apparently they just clear the lot

[777]

It was adjusted 3.5c at opening this morning. It's just fluctuated a bit since. Also, I assumed all trades were adjusted by the amount of the divie but apparently they just clear the lot

All the trades yesterday were cd therefore were correct. Every morning the prior day trades (in all stocks whether dividend involved or not) are removed as they are now history. New day begins.

First trade gives new share price and that is compared with the previous days closing price and the difference , up or down, is indicated. ASB obviously don't adjust for the dividend and ANZ do. As long as you know is all that matters. Personally I think ANZ's way reflects the true situation.

[Okebw]

I see what you mean now. I was going off the current price ( currently $1 up 1.5c) and was using that as the opening which would be correct. However it doesn't match the open box in the summary statistics

[777]

The first trade of the day was 99c. The theoretical price was 98.5 (102-3.5) therefore up by .5c. Latest trade is 100 therefore up 1.5c.

Not sure what you refer to when saying summary statistics.

[Cool Bear]

777 thanks for the tip on the diary on ANZ/DB site.

And I fully agree with you on them showing the +/- based on previous price less div. That is the correct way. Sometime I forgot to check whether it is CD or XD and was wondering why ANZ/DB show + when the SP clearly drop and then realised it is XD.

But your post on all previous bids removed each morning is not right. They are only removed when a share goes from CD to XD. I often leave a buy or sell order for days and sometimes it gets fill a few days later.

[777]

Cool Bear I was referring to trades being deleted as alluded to by Okebw (post 3241) not the bids. He may of course have meant to say bids.

[Cool Bear]

Cool Bear I was referring to trades being deleted as alluded to by Okebw (post 3241) not the bids. He may of course have meant to say bids.
oops sorry, my mistake.

[Okebw]

Cool Bear I was referring to trades being deleted as alluded to by Okebw (post 3241) not the bids. He may of course have meant to say bids.

My bad. I did indeed.

Also, by summary stats I meant the matrix containing the bid/ask/PE ratio etc. It looks like the summary stats output in excel so I've taken to calling it that. It completely escaped me that no one else does :p

[winner69]

Back to 100 again

Only 6 weeks to the Annual Shareholders Meeting

Upgraded guidance then .... and the standing ovation from happy shareholders

Doubt we will get to hear much beforehand, but then again good announcements just before an ASM are quite common

Shareprice well over 110 by then?

[Beagle]

You should come along and help quaff some of their fine refreshments :D

[winner69]

Well well a close at 101. Not surprising really

A pretty solid day as well. The price didn't fall once.

Is this essentially a new HIGH then, allowing for the recent dividend?

Makes a mockery of the broker targets eh, must be some new reports coming out now. Methinks they haven't done their sums right.

When will they publish the book with the pretty pictures Percy? Might even mention diversity.

[janner]

Well well a close at 101. Not surprising really

A pretty solid day as well. The price didn't fall once.

Is this essentially a new HIGH then, allowing for the recent dividend?

Makes a mockery of the broker targets eh, must be some new reports coming out now. Methinks they haven't done their sums right. .


percy is probably quietly rubbing his hands together..

Polishing those knuckles..

Oyveh !!.. Aye percy :-)))

[iceman]

Well well a close at 101. Not surprising really

A pretty solid day as well. The price didn't fall once.

Is this essentially a new HIGH then, allowing for the recent dividend?

Makes a mockery of the broker targets eh, must be some new reports coming out now. Methinks they haven't done their sums right.

When will they publish the book with the pretty pictures Percy? Might even mention diversity.

Yes this has been quite a remarkable increase in the last couple of weeks. All during which no real new financial information has come to hand.
The purchase of Sentinel and HarMoney got a lot of media coverage and Heartland has noticeably increased advertising on both radio and TV since then as well as Jeff giving interviews suggesting further acquisitions are being considered. I think this has really put Heartland on the radar screens of investors, a place they had limited exposure to before. So the market has finally woken up to what great value HNZ was and still is :t_up:

Roger I would have loved to come to the AGM with you but am traveling overseas tomorrow. Want to be offshore just in case the election goes the wrong way :scared:

I trust you to keep our Percy in check at the meeting and suggest you use some of your HNZ, AIR & GMT divies to buy him (and others) a beer. I would hate to see Percy pushed into having to take a HER loan (house gone) to buy you young fellas a beer and possibly even contact HarMoney (HNZ shares gone) to keep it going into the wee hours of the morning :)

Look forward to your "steady as she goes report" !!

[Beagle]

Hey Iceman,

Mate sadly I think the moths will have to stay in my wallet as rumour has it HNZ are good for their own quality refreshments, especially at annual meetings on a Friday afternoon :)
I'm glad I had a good look at the relative PE's of those Aussie banks including regional ones and whilst acknowledging they're all bigger sometimes smaller and growing fast can be a good thing.
In terms of value I remain with a view a PE of 12 is good value and appropriate which based on the mid point of the forecasted profit range gives fair value as $1.12 (12 x 9.3 eps), so there's still room for 10% price appreciation over the next year as well as circa 10% gross in divvy's (20% gross return). Then there's always the possibility of acquisition's being EPS accretive or the Harmony one already done adding to previously forecasted EPS so the risk is definitely to the upside with my intrinsic valuation. Got to do something constructive with all those divvy's and a National win just around the corner. Maybe that reinvestment plan you suggested isn't such a bad idea after all :)

[winner69]

Hey Iceman,

Mate sadly I think the moths will have to stay in my wallet as rumour has it HNZ are good for their own quality refreshments, especially at annual meetings on a Friday afternoon :)
I'm glad I had a good look at the relative PE's of those Aussie banks including regional ones and whilst acknowledging they're all bigger sometimes smaller and growing fast can be a good thing.
In terms of value I remain with a view a PE of 12 is good value and appropriate which based on the mid point of the forecasted profit range gives fair value as $1.12 (12 x 9.3 eps), so there's still room for 10% price appreciation over the next year as well as circa 10% gross in divvy's (20% gross return). Then there's always the possibility of acquisition's being EPS accretive or the Harmony one already done adding to previously forecasted EPS so the risk is definitely to the upside with my intrinsic valuation. Got to do something constructive with all those divvy's and a National win just around the corner. Maybe that reinvestment plan you suggested isn't such a bad idea after all :)

After the ASM guidance will be equivalent to 10 cents (rounded)

I like your PE of 12 Roger

So $1.20 early next year eh

And then we have the half year result in February. We'll find out then what they holding back.

[winner69]

Still going up .... good one

Aussie banks took a thrashing today ....hope the gloom and doom stays over there

Still planning on 130 at least this time next year

[Beagle]

Yeap overall its good to see a good stable political platform that should provide a positive environment for corporate growth.
I'm a little underwhelmed by the market's reaction today but given the Nat's were short priced favourites the market by close seems to have taken the near certainty of the election result in its stride and its a marathon not a sprint.
There's good opportunities for people to put cash to work and this is definitely one of best of them, one of the few companies on the NZX with sound growth prospects a great dividend yield and trading on a very reasonable price earnings ratio. We are well positioned :)

[percy]

Well well a close at 101. Not surprising really

A pretty solid day as well. The price didn't fall once.

Is this essentially a new HIGH then, allowing for the recent dividend?

Makes a mockery of the broker targets eh, must be some new reports coming out now. Methinks they haven't done their sums right.

When will they publish the book with the pretty pictures Percy? Might even mention diversity.

Closed tonight at $1.04 [ex 3.5cents div last week].
I am very pleasantly surprised,as I thought the share price may have got ahead of itself.
Maybe the modest PE and increasing fully imputed divie are attracting more investors?
Do you think we can look forward to a new round of broker targets?

[stoploss]

Yeap overall its good to see a good stable political platform that should provide a positive environment for corporate growth.
I'm a little underwhelmed by the market's reaction today but given the Nat's were short priced favourites the market by close seems to have taken the near certainty of the election result in its stride and its a marathon not a sprint.
There's good opportunities for people to put cash to work and this is definitely one of best of them, one of the few companies on the NZX with sound growth prospects a great dividend yield and trading on a very reasonable price earnings ratio. We are well positioned :)

Rog , think you might owe Percy a royalty for that last line !!!!

[winner69]

Do you think we can look forward to a new round of broker targets?


If the broker / analysts are doing a quarter decent job there will be a new round of targets

The analysts have been wimps to date

They sometime forget that their role (along with insto shareholders) is to set HNZ a target which will stretch them a bit. Analysts et all have been too soft on HNZ to date - they need to get a bit more demanding to make sure HNZ deliver what they are capable off.

Shouldn't worry HNZ - they have plenty of petrol in the tank. The guidance of $42-$45m is just a start, hell they made that number up zonks ago didn't they

[Beagle]

Rog , think you might owe Percy a royalty for that last line !!!!

LOL, I think you might be right :)

[noodles]

If the broker / analysts are doing a quarter decent job there will be a new round of targets

There won't be any new targets unless there is some news to report. Harmoney does not count as it is not really material to earnings. Perhaps the AGM will provide a profit upgrade. I doubt it. More likely a new acquisition. Happy to be wrong.

[percy]

There won't be any new targets unless there is some news to report. Harmoney does not count as it is not really material to earnings. Perhaps the AGM will provide a profit upgrade. I doubt it. More likely a new acquisition. Happy to be wrong.

That makes sense to me.

[winner69]

The believers and devoted followers already know this good stuff but it will give you the warm fuzzies anyway

http://www.kpmg.com/NZ/en/IssuesAndInsights/ArticlesPublications/FIPS-quarterly/Documents/KPMG-FIPS-Quarterly-June-2014.pdf

Main point is look at some June Qtr ratios v the trend (esp MIM and expenses) and ask yourself how the heck can HNZ come up with a $42m guidance number for FY15. They must think we are stupid and the broker analyst have fallen for it as well.

Practice your standing ovation at the ASM Roger - it needs to be a rousing one

[percy]

The believers and devoted followers already know this good stuff but it will give you the warm fuzzies anyway

http://www.kpmg.com/NZ/en/IssuesAndInsights/ArticlesPublications/FIPS-quarterly/Documents/KPMG-FIPS-Quarterly-June-2014.pdf

Main point is look at some June Qtr ratios v the trend (esp MIM and expenses) and ask yourself how the heck can HNZ come up with a $42m guidance number for FY15. They must think we are stupid and the broker analyst have fallen for it as well.

Practice your standing ovation at the ASM Roger - it needs to be a rousing one

Thanks for the link Winner69.
I look forward to finding time to read the article properly later today.On a quick skim through I am very pleasantly surprised at how quickly Heartland have achieved such good ratios amongst their peers.The interest rate margin stood out.
Future projections are "interesting" and I look forward to Heartland's update at the agm,and brokers updates,?!
However what makes me really confident, is the fact Heartland is proving what a fine ,well managed,well funded business it is.Future growth,with growing dividends has been assured by the very sound solid foundations Heartland put in place.

[Beagle]

The believers and devoted followers already know this good stuff but it will give you the warm fuzzies anyway

http://www.kpmg.com/NZ/en/IssuesAndInsights/ArticlesPublications/FIPS-quarterly/Documents/KPMG-FIPS-Quarterly-June-2014.pdf

Main point is look at some June Qtr ratios v the trend (esp MIM and expenses) and ask yourself how the heck can HNZ come up with a $42m guidance number for FY15. They must think we are stupid and the broker analyst have fallen for it as well.

Practice your standing ovation at the ASM Roger - it needs to be a rousing one

Thanks for the link W69. That's very impressive margin expansion from already impressive level's !!

[winner69]

Thanks for the link W69. That's very impressive margin expansion from already impressive level's !!

Yes indeed

Reading between the lines of HNZ presentations and reports and public statements those June quarter numbers just show that currently there is real earnings momentum embedded in HNZ. That momentum is not reflected in a guidance figure of $42m

Broker / Analysts need to do a better job in keeping HNZ honest. I posted something along those lines last might but it was suggested / advised by someone to delete the post so I did. Strange world we live in.

[Beagle]

For those that don't have the time or inclination to read the full report what is extremely impressive is that the interest rate margin for the June 2014 quarter was 4.94% up from 4.45% in the previous quarter and 4.27% in the previous corresponding period. This is a key leading indicator for the current years profit.

HNZ's margins are significantly more than double the entire sector average which was 2.28%.

http://www.sharechat.co.nz/article/32451f76/westpac-kiwibank-lead-earnings-growth-among-banks-in-june-quarter.html?utm_medium=email&utm_campaign=Westpac+Kiwibank+lead+earnings+growth +among+banks+in+June+quarter&utm_content=Westpac+Kiwibank+lead+earnings+growth+ among+banks+in+June+quarter+CID_f68b57e154efb5b8dd 68485d40d75230&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle32451f76westpa c-kiwibank-lead-earnings-growth-among-banks-in-june-quarterhtml

[In4a$]

For those that don't have the time or inclination to read the full report what is extremely impressive is that the interest rate margin for the June 2014 quarter was 4.94% up from 4.45% in the previous quarter and 4.27% in the previous corresponding period. This is a key leading indicator for the current years profit.

HNZ's margins are significantly more than double the entire sector average which was 2.28%.
Thanks Roger, I was trying to get my head around it all, but your summary makes it easy. Disc: Happy holder

[winner69]

For those that don't have the time or inclination to read the full report what is extremely impressive is that the interest rate margin for the June 2014 quarter was 4.94% up from 4.45% in the previous quarter and 4.27% in the previous corresponding period. This is a key leading indicator for the current years profit.

HNZ's margins are significantly more than double the entire sector average which was 2.28%.

Yes NIM very good

You didn't mention the declining cost of doing business.

And this snippet - A notable change from prior quarters is Heartland, who managed to increase their gross loans and advances for the first time since they announced their change in strategy in June 2013, which involved taking their focus away from non-core lending property assets.


Earnings driven by core lending growth, NIM, productivity and the new HEL activity gives more than $42m for FY15

Think I upset an analyst they not doing a good job or maybe it was HNZ who were upset about me thinking they were managing brokers expectations but in interim I withdrew my post of last night. Awaiting a reply from whoever.

[percy]

The believers and devoted followers already know this good stuff but it will give you the warm fuzzies anyway

http://www.kpmg.com/NZ/en/IssuesAndInsights/ArticlesPublications/FIPS-quarterly/Documents/KPMG-FIPS-Quarterly-June-2014.pdf

Main point is look at some June Qtr ratios v the trend (esp MIM and expenses) and ask yourself how the heck can HNZ come up with a $42m guidance number for FY15. They must think we are stupid and the broker analyst have fallen for it as well.

Practice your standing ovation at the ASM Roger - it needs to be a rousing one

I think brokers' analysts do a pretty good job,however I think they have been concentrating on Heartland growing their book too much,rather than Heartland's stated policy of recycling lower yielding loans [ie home mortgages] to more profitable loans [motor vehicles,reverse mortgages etc].
Kpmg's figures prove Heartland's stated policy is being achieved.

[bunter]

Yes NIM very good

Think I upset an analyst they not doing a good job or maybe it was HNZ who were upset about me thinking they were managing brokers expectations but in interim I withdrew my post of last night. Awaiting a reply from whoever.
Interesting and puzzling....


HNZ has a history of out-performing its forecasts.
In my opinion, their profit for FY15 will be significantly more than their August guidance of 42-46m, and significantly more that broker estimates.

There.

[winner69]

Interesting and puzzling....


HNZ has a history of out-performing its forecasts.
In my opinion, their profit for FY15 will be significantly more than their August guidance of 42-46m, and significantly more that broker estimates.

There.

I think we are on same wavelength

[percy]

Interesting and puzzling....


HNZ has a history of out-performing its forecasts.
In my opinion, their profit for FY15 will be significantly more than their August guidance of 42-46m, and significantly more that broker estimates.

There.
I await with bated breath, both you and Winner69 being proved correct.!!

[Beagle]

Crappy day on the market for HNZ. Market worried about rising delinquencies in the Dairy sector perhaps ?

[percy]

Crappy day on the market for HNZ. Market worried about rising delinquencies in the Dairy sector perhaps ?

Some times I enjoy a few good crappy days,particularly if it helps me get more shares through having dividend reinvestment.
You win if the share price goes down,as you get more shares,and you win if the share price goes up as the value of your holding increases.!!

[Snoopy]

Think I upset an analyst they not doing a good job or maybe it was HNZ who were upset about me thinking they were managing brokers expectations but in interim I withdrew my post of last night. Awaiting a reply from whoever.


Since when do 'analysts' have the power to censor someone else's opinion on Sharetrader? That is ridiculous. I may not agree with everything Winner writes on this forum. But his opinions are usually based on doing his homework. If Winner looks at the figures and comes up with a different opinion from the analysts, then so be it. The purpose of a forum is to have an informed discussion on different opinions. Not to 'tow the analyst line.'

Part of the reason that Heartland is growing interest margin is that they are shrinking their existing loan portfolio, even as they grow by acquisition. There is no need to pay top dollar for new deposits because they don't need the money. On the other side of the ledger, Heartland are replacing low margin loans by higher margin loans. So the margin string is extending at both ends. However future trends do not always follow past trends.

Heartland may be touting for increased money from customers in the future, so they may have to rasie deposit rates. I notice that with the exception of SBS bank, Heartland have the most bad debts (still) too. So Heartland needs higher margins just to get the same earnings margin as banks with lower risk lending portfolios. Higher interest margins do not necessarily mean that shareholders will benefit immediately.

SNOOPY

[The Grinch]

Snoopy you beat me to it,

Not wanting to be doom and gloom as I'm a firm believer but I looked at both those graphs and saw 2x margin of other players but 4x higher impairment/Gross loans ratio and 5.5x higher than the sector average. Now I haven't crunched the numbers to get a feel as to how much of that is related to there legacy property portfolio etc but it would be an interesting one to know; What would there impairment ratio look like exclusive of the portfolio?

Could easily be this risk/reward factor that means the company is a little conservative on there profit announcement.

Thanks for posting Winner

Disc: Hold but have not done anywhere near enough research so don't value my opinion.

Cheers
TG

[Beagle]

From a super brief read of that report impairments were only 0.08% of gross loans at extremely low level's so even if their impairments were 4 x higher than other banks, (i.e 0.32%) and all of it was related to current lending, (which it certainly isn't), hardly makes a dent in the extra 2.70% margin HNZ has compared to sector average margin.
I like their business model and as long as they take a nice conservative approach to growth we're all good.

[noodles]

There has been some comment that HNZ would be affected by the downturn in agriculture. I thought it was worth investigating. Their June 14 bank disclosure(pg.47) states 20% of the loan book is in agriculture.

[percy]

There has been some comment that HNZ would be affected by the downturn in agriculture. I thought it was worth investigating. Their June 14 bank disclosure(pg.47) states 20% of the loan book is in agriculture.

Nice to know 80% of Heartland's loan book is not in agriculture.
Diversification policy is a nice safeguard for us.
The agriculture loan book is very spread between seasonal,livestock and equipment.
We must also remember some agriculture sectors are still doing very well.

[RTM]

And that the dollar drop from 0.88 -> 0.79(so far) will assist the rural sector.


Nice to know 80% of Heartland's loan book is not in agriculture.
Diversification policy is a nice safeguard for us.
The agriculture loan book is very spread between seasonal,livestock and equipment.
We must also remember some agriculture sectors are still doing very well.

[Tevita]

What sort of FURTHER exchange rate drop a exports would equate to the 45% auction price deterioration since February? Consequent higher import costs would share the farmer`s burden around within the economy.

[RTM]

That's just dairy Tevita. There are other sectors in the industry. And that was from a record high ! Not I think what most dairy farmers would have been planning on.


What sort of FURTHER exchange rate drop a exports would equate to the 45% auction price deterioration since February? Consequent higher import costs would share the farmer`s burden around within the economy.

[winner69]

Nice to know 80% of Heartland's loan book is not in agriculture.
Diversification policy is a nice safeguard for us.
The agriculture loan book is very spread between seasonal,livestock and equipment.
We must also remember some agriculture sectors are still doing very well.

Farmers are the most resilient of all business managers and manage things over the cycle.

They know there will be boom years and average years and bad years but handle all the things like milk prices, weather etc that a re thrown at them. Pity many industries are not so resilient,

Milk prices are still pretty high. Even the forecast 2015 payout number is above average. (below)

Heartland shouldn't worry too much

As an aside I see global beef prices are taking off. Good for part of the agriculture sector

[Beagle]

I think if I remember correctly the 5 year Fonterra average is just above $6kg so farmers are coming off the back of a record pay-out so should have been prudent enough to be repaying debt and hopefully not out buying new cars for all their family members. Its swings and roundabouts, Beef had a truly exceptional year last year and this one is shaping up even better and Sheep did well too.
Interesting article on CNBC about how Warren Buffett likes banks heaps, I'll post a link later if I get time.

[winner69]

Annual Report didn't have many exciting pictures in it

Diversity obviously don't matter at Heartland (except in the context of lending and borrowing)

Doesn't that little table showing the gender breakdown of the Board and Officers stand out like a sore thumb in complete isolation and and completely out of context. Well they had to put in the report somewhere.

Never mind = lack of response from the Company and this effort gives them one black mark on my scorecard anyway.

[bunter]

HNZ report out today - no update to the forecasts.

But - one of their all-male board is retiring.
Time for HNZ to put an end this male hegemony and do something about their obvious gender diversity problem.
Maybe one of the Pumpkin Patch team could help out?

Just imagine how successful they could have been without this appalling patriarchy.

[winner69]

I think if I remember correctly the 5 year Fonterra average is just above $6kg so farmers are coming off the back of a record pay-out so should have been prudent enough to be repaying debt and hopefully not out buying new cars for all their family members. Its swings and roundabouts, Beef had a truly exceptional year last year and this one is shaping up even better and Sheep did well too.
Interesting article on CNBC about how Warren Buffett likes banks heaps, I'll post a link later if I get time.

And looking at the Soil Moisture Maps one would think that this summer is going to be a boomer for production

[percy]

Annual Report didn't have many exciting pictures in it

Diversity obviously don't matter at Heartland (except in the context of lending and borrowing)

Doesn't that little table showing the gender breakdown of the Board and Officers stand out like a sore thumb in complete isolation and and completely out of context. Well they had to put in the report somewhere.

Never mind = lack of response from the Company and this effort gives them one black mark on my scorecard anyway.

I look forward to next year's annual report, with the huge photo of Winner69 singing the new company song, he composed and sung at the agm,with his diversified backing group looking so colourful in their native costumes.!! lol.

[Beagle]

+1 for more pretty pictures in the annual report, numbers are boring, (opps is an accountant allowed to say that) lol.

All looks good to me and not worried about diversity or lack thereof, the board appears to have heaps of experience. Looking forward to the AGM.
Company is...wait for it Percy...Yes there it is..."well positioned" to meet 2015 guidance of $42-$45m :D

[percy]

+1 for more pretty pictures in the annual report, numbers are boring, (opps is an accountant allowed to say that) lol.

All looks good to me and not worried about diversity or lack thereof, the board appears to have heaps of experience. Looking forward to the AGM.
Company is...wait for it Percy...Yes there it is..."well positioned" to meet 2015 guidance of $42-$45m :D

Yes I saw that and had a chuckle to myself. lol.

[percy]

Well I have read the Chairman's and Managing Director's report in the Heartland annual report.
I congratulate them for clear plain English.They set out everything I wanted to know clearly, and simply.
To any one on sharetrader who wants to know more about Heartland,and where they are headed, I recommend they read it for themselves.

[winner69]

Hope the shareprice doesn't go below a $1

Maybe the guru brokers are right after all and it will be 96/97 after Xmas

Bugger

[percy]

Hope the shareprice doesn't go below a $1

Maybe the guru brokers are right after all and it will be 96/97 after Xmas

Bugger

Ha ha ha, made my day.!!!!!! lol.

[Beagle]

Harmony lent $2m already, rejecting 70-80% of loan applicants
http://www.interest.co.nz/news/72146/harmoney-has-lent-2-million-date-aims-lend-more-100-million-first-year

[Baaarney]

Nice to see plenty of Heartland adverts rolling over on the electronic signage here at the Waikato vs Manawatu game. Ads for invoice & livestock finance as well as working capital and asset finance.