HGH - Heartland Group Holdings

[percy]

He eventually proved himself to be a smarter investor than Kerr. He got shafted with the first two underwritings (88 and 65, I think) and from what I heard privately at the time, was mightily pissed off with his 'mate' when the price collapsed to 35 cents. He got the last laugh however, when he took advantage of the forced sale required by Kerr to cover the FMA's demand that Kerr's inter-entity 'loan' be repaid. IIRC he picked them up near 50, along with other astute investors (P Carter was one of them, I think) and the course for the share price has never looked back since that particular fog lifted.

As was said at the time, couldn't have happened to a nicer guy, and it was meant to apply to both parties:p

I have never met him and don't claim to know him at all, but I think he made his early money in healthcare and/or retirement villages, or perhaps it was mussels.......

Thanks Xerof and Winner69 for the background information of Tomlinson.

[Beagle]

http://www.stuff.co.nz/business/68455725/lendme-to-sidestep-home-deposit-rules

Another entrant in the P2P market.

[vorno]

Comments for the market reaction today? The "sudden" reaction from investors not paying enough attention to the recent events & then seeing Quadrant (https://ost.asbbank.co.nz/D3C15036E0B6AAD56D0B1225ED675197/companyannouncements/showannouncement/nzx/hnz?issuercode=hnz&number=264216&ispdf=false) leaving the scene?

Well, that's my guess anyway.

[Master98]

Comments for the market reaction today? The "sudden" reaction from investors not paying enough attention to the recent events & then seeing Quadrant (https://ost.asbbank.co.nz/D3C15036E0B6AAD56D0B1225ED675197/companyannouncements/showannouncement/nzx/hnz?issuercode=hnz&number=264216&ispdf=false) leaving the scene?

Well, that's my guess anyway.

maybe new tough auckland property lending rule?

[Billy Boy]

Comments for the market reaction today? The "sudden" reaction from investors not paying enough attention to the recent events & then seeing Quadrant (https://ost.asbbank.co.nz/D3C15036E0B6AAD56D0B1225ED675197/companyannouncements/showannouncement/nzx/hnz?issuercode=hnz&number=264216&ispdf=false) leaving the scene?


Profit Taking ??

[vorno]

Profit Taking ??

Don't think so, there was the official announcement yesterday avo of Quadrant's holdings being reduced to 0%. Hence "sudden"

[Beagle]

I think post 5058 explains it. Another entrant in the P2P market = more competition. There's really no stopping this new trend and I am sure this will not be the last entrant in this space so IMHO HNZ need to get ahead of the curve and start one themselves rather than pay millions of dollars for what amounts to a very small share of someone else's software.

[percy]

Comments for the market reaction today? The "sudden" reaction from investors not paying enough attention to the recent events & then seeing Quadrant (https://ost.asbbank.co.nz/D3C15036E0B6AAD56D0B1225ED675197/companyannouncements/showannouncement/nzx/hnz?issuercode=hnz&number=264216&ispdf=false) leaving the scene?

Well, that's my guess anyway.

Often after a share placement you find the share price drifts back to the placement price.
Appears this is what is happening at present.
The big take-outs of the placement were it was done at $1.30, and director Greg Tomlinson, increased his holding by just under $5mil worth,taking the amount he has invested in Heartland to over $60mil..A great vote of confidence in Heartland.

[sb9]

Well, I'm on board this ship with my parcel filled today at $1.30. Hoping for smooth ride along...

[RGR367]

I got my first bundle too at $1.30. This is one punt I let the discussions swayed me into joining the fun. Gut-o-meter siding on the feel good factor too so it should be swell.

[Joshuatree]

A broker on the radio suggested it was the Reserve banks new lending rules re deposits on houses increasing in Auck that suppressed the s/p.

[Harvey Specter]

A broker on the radio suggested it was the Reserve banks new lending rules re deposits on houses increasing in Auck that suppressed the s/p.
But Heartland dont do mortgages do they (they refer to Kiwibank). If anything they may do better as people get unsecured loans to top up the deposit?

[kizame]

But Heartland dont do mortgages do they (they refer to Kiwibank). If anything they may do better as people get unsecured loans to top up the deposit?

Unsecured?

[RTM]

Well...if it all doesn't go as you hope Kizame....here is the remedy.
They will be shaking in their boots !
http://edition.cnn.com/2015/05/13/asia/north-korea-executes-defense-chief/index.html




What!! You leave out my bank?

I bought the shares! CBDPRK Bank, Central Bank of the Democratic Peoples Republic of Korea.
Very powerful, I will bring the profit and shareprice of your dreams, or else!!!

[kizame]

Well...if it all doesn't go as you hope Kizame....here is the remedy.
They will be shaking in their boots !
http://edition.cnn.com/2015/05/13/asia/north-korea-executes-defense-chief/index.html

No kill goose lays gold egg!

[winner69]

http://www.interest.co.nz/business/75498/new-p2p-lender-lendme-talking-local-bank-fits-its-vision-kiwis-lending-kiwis


Partner is "This particular bank fits with our vision, which is basically kiwis lending to kiwis, "

Guesses?

[percy]

Partner is "This particular bank fits with our vision, which is basically kiwis lending to kiwis, "

Guesses?

Co-Op,HNZ,TSB,or SBS.

[winner69]

Co-Op,HNZ,TSB,or SBS.

They wouldn't want Heartland would they seeing Heartland shacked up with the competitor?

You left Kiwi of the list

[percy]

They wouldn't want Heartland would they seeing Heartland shacked up with the competitor?

You left Kiwi of the list

I think it was "our vision" that made me include HNZ.
Forgot Kiwi Bank.!

[kizame]

They wouldn't want Heartland would they seeing Heartland shacked up with the competitor?

You left Kiwi of the list

Wouldn't rule it out though, as they are also aiming at retirees and rural,but don't know how the residential mortgages fit with HNZ,I think it is quite different from Harmoney, so different client base maybe,also aiming towards a niche local chinese population,that would be very lucrative I suspect.

[Beagle]

http://www.interest.co.nz/business/75498/new-p2p-lender-lendme-talking-local-bank-fits-its-vision-kiwis-lending-kiwis

Pretty hefty cut taken by Lend Me. I have serious reservations about this sector and suspect the real winners will be the equity owners of the p2p lenders and the fraudsters who commit identity fraud and never make a payment.
Lots of risk of default all worn by the investors...hmmm.

[Baa_Baa]

Pretty hefty cut taken by Lend Me. I have serious reservations about this sector and suspect the real winners will be the equity owners of the p2p lenders and the fraudsters who commit identity fraud and never make a payment.
Lots of risk of default all worn by the investors...hmmm.

I share your reservations Roger. Although innovative, technically clever, and enabled by the FMC Act 2013, I can't help wondering if it's all a function of leveraging a frothy marketplace and is exposed to 'last in first out' risks. That and the nature of the low-doc arms length lending, has unquantifiable risks written all over it. LendMe (cheeky rip off brand name) does seem pitched at a much larger borrower though $20k - $2m. Their talk of aligning specific lender demographics with like borrowers is an interesting twist, it may even work. A league away from HNZ's Harmoney platform targeting the down and out's.

[iceman]

Co-Op,HNZ,TSB,or SBS.

I will narrow my punt down to SBS or Co-Op

[winner69]

That interest free period on the new lounge suite run out and payments now much higher? Contact XXX now to see what we can arrange to make your life easier. XXX a division of Heartland

Ad on the radio lately

Didn't properly catch who XXX was but not familiar

Any ideas

Growth must be getting hard to come by

[iceman]

That interest free period on the new lounge suite run out and payments now much higher? Contact XXX now to see what we can arrange to make your life easier. XXX a division of Heartland

Ad on the radio lately

Didn't properly catch who XXX was but not familiar

Any ideas

Growth must be getting hard to come by

Maybe this http://www.ifinanceloans.co.nz

[Beagle]

I share your reservations Roger. Although innovative, technically clever, and enabled by the FMC Act 2013, I can't help wondering if it's all a function of leveraging a frothy marketplace and is exposed to 'last in first out' risks. That and the nature of the low-doc arms length lending, has unquantifiable risks written all over it. LendMe (cheeky rip off brand name) does seem pitched at a much larger borrower though $20k - $2m. Their talk of aligning specific lender demographics with like borrowers is an interesting twist, it may even work. A league away from HNZ's Harmoney platform targeting the down and out's.

Good post. That's the part that concerns me the most. I finance website looks like a good clean one and is very well done but unsecured lending for weddings and travel and another subsidiary Holden financial services a division of Heartland bank is running a no wallet no worries marketing campaign on selected new Holden's, see www.holden.co.nz for details...basically marketing to people with no money to put down as a desposit and no payments till 2016. Prudent lending ? (shakes head :eek2:...did we learn nothing from the GFC) I dunno, none of my regular mates I communicate with by PM and e.mail seem concerned about this but I'm still really not so sure about this sort of lending...so just decided to air my concerns on the main forum and see what others think.
Does this sort of lending play out like a bad movie that we've seen before and don't want to see again ? Others would say this time its different....Hmmm

[axe]

Good post. That's the part that concerns me the most. I finance website looks like a good clean one and is very well done but unsecured lending for weddings and travel and another subsidiary Holden financial services a division of Heartland bank is running a no wallet no worries marketing campaign on selected new Holden's, see www.holden.co.nz (http://www.holden.co.nz) for details...basically marketing to people with no money to put down as a desposit and no payments till 2016. Prudent lending ? (shakes head :eek2:...did we learn nothing from the GFC) I dunno, none of my regular mates I communicate with by PM and e.mail seem concerned about this but I'm still really not so sure about this sort of lending...so just decided to air my concerns on the main forum and see what others think.
Does this sort of lending play out like a bad movie that we've seen before and don't want to see again ? Others would say this time its different....Hmmm



I am interested to see if it is HNZ thinking of transacting with Lendme. While HNZ strategy is to be where the BIG 4 are not, they may sense an opportunity to disrupt.
As Baa pointed out, Lendme seem to be targeting a different portion of borrowers to Harmoney, and the two may some synergies.

[percy]

Old story I heard about a finance company.This guy had so much money coming in from depositors he did not know what to do with it.Millions in the post everyday.All he could lend was a few thousand here and there on a car or two.Then a lovely chap walked in and said he wanted to borrow millions to buy The Whalers Inn in Picton,as he had a new way of valuing a hotel.Mr.Burberry was in heaven,here he could lend millions.!! Yes the Whalers Inn went broke as did Burberry Finance.
Then a few years later Prudential Finance had trouble lending until a group of Indian-South African car dealers committed a huge fraud and took Prudential down.The owner of Prudential,Mr.David Llyall a very honest gentleman.put the business straight into receivership and I believe all creditors and depositors were repaid.
Then South Canterbury started to have too much money coming in,so started to lend to property developers.
Marac seeing South Canterburu,Dominion and Hanover making huge profits from property developers joined the party.
Marac did not understand the property development business so they too lost their shareholders equity.[The Marac motor vehicle,equipment lending remained profitable]
HNZ was born out of Marac recap.Today we see the Australian Banks taking on huge risks with property lending,both in Australia and HN.In NZ they are joined by Kiwi Bank and others..
Heartland thankfully are staying away from taking on the Aussies.
Heartland has a diverse lending book,with no over exposure to any sector.P2P lending and I finance means Heartland are doing what they said they would do;"open new channels to reach customers."
They are testing "the waters".We have all thought/said Heartland should be looking at growing by new channels.Well they are!!!
Each new sector they will be watching carefully,guarding their risk,and ready to expand any area that shows growth.
Holden lending.I would expect Holden are carrying the risk.

[Under Surveillance]

I wonder, percy, whether what you call Prudential Finance was actually Provincial Finance. I think debenture holders got 95 or so in the dollar back from Provincial.

[percy]

I wonder, percy, whether what you call Prudential Finance was actually Provincial Finance. I think debenture holders got 95 or so in the dollar back from Provincial.

Correct.....Provincial Finance it was.
Help me out.Prudential Finance went broke years ago? Martin Coffey got caught carrying the can?????
Now back to "The Who Tommy Live+Encore 1989 Los Angeles." My Sunday night rave up.!!

[winner69]

Correct.....Provincial Finance it was.
Help me out.Prudential Finance went broke years ago? Martin Coffey got caught carrying the can?????
Now back to "The Who Tommy Live+Encore 1989 Los Angeles." My Sunday night rave up.!!

Percy dear fellow

You must have heard of the 'Man from the Pru' as The Prudential was fondly called

Still going strong in the UK

[pierre]

Holden lending.I would expect Holden are carrying the risk.

No way Jose, or Percy, will Holden be carrying the risk for vehicle financing. As a former motor industry exec (not GM) I can assure you that manufacturers will stand many miles (kilometres?) away from any involvement in the vehicle finance contracts written by independent financiers.

[winner69]

The Man from the Pru - The old door to door insurance salesman trick

OMG - I'll suggest to Jeff that as he seems intent on lending to every man and their dog that he get a team of door to door salesmwn and do the yard yakka - I reckon around parts of South Auckland they would drum up a fair bit. A bit short for your tinny today are we, no worries Heartland will fix you up

That's a new channel reaching out to a new set of customers, so all acceptable

[percy]

No way Jose, or Percy, will Holden be carrying the risk for vehicle financing. As a former motor industry exec (not GM) I can assure you that manufacturers will stand many miles (kilometres?) away from any involvement in the vehicle finance contracts written by independent financiers.

Looks very much a Holden promotion,;'On selected models",so I would take that as the same as a Noel Leeming or Harvey Norman, no deposit 3 years interest free promotion, where the retailer pays the interest in the free interest period.
Otherwise why would HNZ bother?

[percy]

Percy dear fellow

You must have heard of the 'Man from the Pru' as The Prudential was fondly called

Still going strong in the UK

Yes ,I may be getting a bit mixed up.Thought we had Prudential finance here in ChCh,that went broke years ago.,as well as Provincial Finance.Can't find any record of it a the companies office so my memory must be better than official records.!!! lol.

[winner69]

Looks very much a Holden promotion,;'On selected models",so I would take that as the same as a Noel Leeming or Harvey Norman, no deposit 3 years interest free promotion, where the retailer pays the interest in the free interest period.
Otherwise why would HNZ bother?

Why should they bother?

Because they seem desperate trying anything to get access to new customers .....grow the book.

Holden owners seen as good prospects who will come back for more loans in the future.?

HNZ seem to be moving down the old financing way path rather than banking, not surprising as that's what in their blood eh.

Becoming a bank was only a marketing ploy, that's what they said. Have they become just a 'respectable' finance business?

Next stop I reckon will be back into property development ... just too tempting maybe

[percy]

Why should they bother?

Because they seem desperate trying anything to get access to new customers .....grow the book.

Holden owners seen as good prospects who will come back for more loans in the future.?

HNZ seem to be moving down the old financing way path rather than banking, not surprising as that's what in their blood eh.

Becoming a bank was only a marketing ploy, that's what they said. Have they become just a 'respectable' finance business?

Next stop I reckon will be back into property development ... just too tempting maybe

Does not work for me.
Still see it as Holden moving "selected models." Just another retailer trying to move stock.The interest comes out of the retailers margin.
Yes I agree Heartland have become a "respectable" business, offering financial products to New Zealanders.The banking licence adds extra security to depositors and shareholders,as Heartland Bank needs to meet rating agency and The Reserve Bank requirements..
Property development.At the meetings I have attended Heartland have stated they will not renter this sector.
I am pleased Heartland are following up on what they said they would do, opening new channels.i finance and Harmoney offer interesting opportunities.

[winner69]

Yes Percy, a "respectable' finance company with 'respectable' in brackets

Get John Campbell or Richie McCaw to endorse relentlessly on TV and we have a new 'respectable' Hanover-like finance business.

Even 'respectable' has to be questioned - lending at 24% for punters to take that holiday doesn't seem too "respectable". Wonder what the penalty rate on that loan is?

Is the new channel 'LENDER OF LAST RESORT'

[Beagle]

This sort of Holden finance, also available on 2014 model run-out HSV's at 2% is known as non-recourse finance. Yes Holden and HSV are shifting slow moving product by effectively discounting tired old product and using that discount to fund cheap / zero interest finance...the customer thinks they're getting product interest free. There is no recourse against Holden N.Z. if customers default on cars they sell to people on no deposit nothing to pay till 2016. Most people will know new vehicles depreciate by ~ 20% the moment you drive out of the showroom and seeing as customers are paying nothing till January 2016 by then the customer is probably 30-35% underwater with their vehicle acquisition seeing as interest really is accruing throughout the loan term.

One thing I learned for sure during the GFC and with all the finance company debacles is if customers have no "skin in the game" in terms of no deposit the default rate is significantly higher. Factor in that they are specially marketing to people of the "calibre" that a "no wallet no worries" marketing campaign would appeal, and I think intelligent prudent business minded people can draw their own conclusions as to whether this is prudent lending and what the likely default rate will be down the road.

[winner69]

Mind you controlling the LENDER OF LAST RESORT channel is not all bad.

Fits with strategy, new channel and certainly niche relative to main banks

And a hugely profitable sector I hear. You don't hear of many loan sharks going broke do you.

[winner69]

Another idea

Heartland should go into pawn broking

Acquire Cash Converters?

[K1W1G0LD]

C'mon w69 , stop harassing poor old Percy...................like Heartland he's only doing his best.

[vorno]

Another idea

Heartland should go into pawn broking

Acquire Cash Converters?

...I do believe you are speaking in-jest good sir!

[iceman]

C'mon w69 , stop harassing poor old Percy...................like Heartland he's only doing his best.

No need to worry about our friend. He remains well positioned

[noodles]

This sort of Holden finance, also available on 2014 model run-out HSV's at 2% is known as non-recourse finance. Yes Holden and HSV are shifting slow moving product by effectively discounting tired old product and using that discount to fund cheap / zero interest finance...the customer thinks they're getting product interest free. There is no recourse against Holden N.Z. if customers default on cars they sell to people on no deposit nothing to pay till 2016. Most people will know new vehicles depreciate by ~ 20% the moment you drive out of the showroom and seeing as customers are paying nothing till January 2016 by then the customer is probably 30-35% underwater with their vehicle acquisition seeing as interest really is accruing throughout the loan term.

One thing I learned for sure during the GFC and with all the finance company debacles is if customers have no "skin in the game" in terms of no deposit the default rate is significantly higher. Factor in that they are specially marketing to people of the "calibre" that a "no wallet no worries" marketing campaign would appeal, and I think intelligent prudent business minded people can draw their own conclusions as to whether this is prudent lending and what the likely default rate will be down the road.

Customers will have skin in the game. I'm sure HNZ won't be lending to people with poor credit records. Thus, there credit score is their skin.

Wasn't the GFC mostly around property development lending?

Personally, I'm happy with both their Holden and iFinance initiatives. It means eps growth is not solely reliant on HER.

[percy]

This sort of Holden finance, also available on 2014 model run-out HSV's at 2% is known as non-recourse finance. Yes Holden and HSV are shifting slow moving product by effectively discounting tired old product and using that discount to fund cheap / zero interest finance...the customer thinks they're getting product interest free. There is no recourse against Holden N.Z. if customers default on cars they sell to people on no deposit nothing to pay till 2016. Most people will know new vehicles depreciate by ~ 20% the moment you drive out of the showroom and seeing as customers are paying nothing till January 2016 by then the customer is probably 30-35% underwater with their vehicle acquisition seeing as interest really is accruing throughout the loan term.

One thing I learned for sure during the GFC and with all the finance company debacles is if customers have no "skin in the game" in terms of no deposit the default rate is significantly higher. Factor in that they are specially marketing to people of the "calibre" that a "no wallet no worries" marketing campaign would appeal, and I think intelligent prudent business minded people can draw their own conclusions as to whether this is prudent lending and what the likely default rate will be down the road.

Yet when I spoke to Craig Stephen, when he was with Heartland, he told me they had less trouble with motor vechicle finance than house mortgages.Car is needed to get to work.No car,no job!

[Beagle]

Customers will have skin in the game. I'm sure HNZ won't be lending to people with poor credit records. Thus, there credit score is their skin.

Wasn't the GFC mostly around property development lending?

Personally, I'm happy with both their Holden and iFinance initiatives. It means eps growth is not solely reliant on HER.


Yet when I spoke to Craig Stephen, when he was with Heartland, he told me they had less trouble with motor vechicle finance than house mortgages.Car is needed to get to work.No car,no job!

Many of the problems with second and third tier lenders were around identity fraud and valuation fraud, known as hydraulicing in the motor vehicle industry. Jack the theoretical price of the vehicle sky high and give the illusion the customer paid a proper deposit. This is often run in tandem with minimum trade-in guarantee's e.g. $3,000 regardsless of condition provided you can drive it onto the yard. Skin in the game is genuine deposit money and in my opinion from what I have seen there is no substitute for genuine skin in the game.

A good credit record is something that can go bad quite easily in adverse circumstances. To the best of my knowledge I cannot recall this sort of no wallet no worries buying cars on no deposit and no repayments for eight months before. Anyway I've said enough, I'm not trying to talk this thing down as I still have a 10% portfolio allocation at this stage...just calling this as I see it and people can make their own minds up about whether this is prudent lending or something else.

Percy, mate you can flip that thing around the other way, no job, no need for a car. Commuting in Auckland is a nightmare in a car anyway and young people are mobile and are usually happy to shift near a transport hub.

[axe]

https://www.nzx.com/companies/HNZ/announcements/264616

Heartland Bank Releases Third Quarter Disclosure Statement9:35am, 21 May 2015 | QUARTERNZX Release
Heartland Bank Releases Disclosure Statement for Third Quarter
21 May 2015
Heartland Bank Limited (Heartland Bank), the banking subsidiary of Heartland New Zealand Limited (Heartland) (NZX: HNZ), today released its disclosure statement for the nine months ended 31 March 2015 in accordance with the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.
Unaudited net profit after tax (NPAT) for Heartland Bank was $30.9m for the nine months ended 31 March 2015. Unaudited NPAT for Heartland (parent company) over the same period was $36.1m. The difference in NPAT is primarily due to the portion of Heartland’s reverse mortgage book that is held outside Heartland Bank.

Heartland expects its NPAT for the year ended 30 June 2015 to be at the upper end of the previously advised NPAT range of $46m - $48m.
- Ends -

[winner69]

Q1 was $11.0m Q2 was $12.5 and Q3 looks like $12.6m and Q4 $11.5m if top end of guidance meet

So if this is true "Heartland expects its NPAT for the year ended 30 June 2015 to be at the upper end of the previously advised NPAT range of $46m - $48m." then profit growth momentum has come to an end and earnings are stagnating around $12m plus or minus a bit every quarter. that seems our lot.

Things not looking too bright ...or else some some subtle earning management taking place,

[winner69]

https://www.nzx.com/companies/HNZ/announcements/264616

Heartland Bank Releases Third Quarter Disclosure Statement9:35am, 21 May 2015 | QUARTERNZX Release
Heartland Bank Releases Disclosure Statement for Third Quarter
21 May 2015
Heartland Bank Limited (Heartland Bank), the banking subsidiary of Heartland New Zealand Limited (Heartland) (NZX: HNZ), today released its disclosure statement for the nine months ended 31 March 2015 in accordance with the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.
Unaudited net profit after tax (NPAT) for Heartland Bank was $30.9m for the nine months ended 31 March 2015. Unaudited NPAT for Heartland (parent company) over the same period was $36.1m. The difference in NPAT is primarily due to the portion of Heartland’s reverse mortgage book that is held outside Heartland Bank.

Heartland expects its NPAT for the year ended 30 June 2015 to be at the upper end of the previously advised NPAT range of $46m - $48m.
- Ends -





Bloody disappointing. Only decent thing is that the her stuff is making money

But percy will be rapt ....they continue to do as they say.

Well done heartland, if that's your full year expectations this year then not one would what one would expect from the previous hype.

Heartland at best seems to be have settled into being a steady as she goes finance company and will be valued accordingly.

That $1.60 plus shareprice is now years away

I was going to put something in Maori but my Maori mate said even you white guys might be offended so left it out.

[winner69]

Axe, you happy with that announcement?

[axe]

Axe, you happy with that announcement?

I am wondering if "at the upper end" actually means "more than" . Still learning to translate Jeffspeak. We will see at Q4.

Happy? No. Unhappy? No.

[Harvey Specter]

Q1 was $11.0m Q2 was $12.5 and Q3 looks like $12.6m and Q4 $11.5m if top end of guidance meet

So if this is true "Heartland expects its NPAT for the year ended 30 June 2015 to be at the upper end of the previously advised NPAT range of $46m - $48m." then profit growth momentum has come to an end and earnings are stagnating around $12m plus or minus a bit every quarter. that seems our lot.

Things not looking too bright ...or else some some subtle earning management taking place,mmm, would have been more promising if the moved the range up from 47 - 49 rather than keep the same upper of 48. WOuld be disappointing if the quarter is less than $12m

[winner69]

I am wondering if "at the upper end" actually means "more than" . Still learning to translate Jeffspeak. We will see at Q4.

Happy? No. Unhappy? No.

In Jeffspeak "at the upper end" is definitely not "more than" (the word range is key)....ie somewhere between $47.2m and $47.8m which sounds like $47.5m to me. Bugger that's only $11.4m in Q4

The optimists are hoping the next announcement is "pleased we delivered more than previous guidance" or something .....but heck the years almost over if Jeff came out with that all credibility would go out the window as far as I am concerned

[Beagle]

We've certainly has a stellar run in January and that after a strong run-up from $1.00 at the time of the ASM on 31 October to circa $1.16 around Christmas.
A 32% SP gain in the last 3 months is a great result in anyone's books. Now all the good news is out there, unless there's some surprise I'm not aware of it won't surprise me if we see a quieter period in the next three months and this won't concern long term holders many of whom I suspect will be quite happy to collect a nice divvy and know the company is doing the business for the long haul.
Its interesting to reflect back to the day of the ASM just 3 short months ago. Those there that I spoke too thought $1.10 - $1.20, (depending on how much they'd had to drink) was a fair SP target for the stock by the time of the 2015 ASM in late 2015 and I was in that range too at that time, to be honest.

HNZ is presently trading on 13.2 times forecast 2015 earnings of 10cps and this price seems fair and reasonable to me for now. I remain of the view that's is a great long term hold on the basis that the team can deliver EPS growth over time and as they continue to deliver on their promises and continue to build their already strong credibility some modest further PE expansion is possible.

Since the ASM I've developed my understanding of the company to the point where I can see it being around $2 in due course but in my view this will take quite some time, probably, realistically, 2-3 years. I guess I feel its perhaps appropriate that somebody sounds a little note of caution to any newbie considering getting on board on the basis of very strong recent SP gains. Rome wasn't built in a day and good things take time. I think anyone expecting another 32% SP gain in the next 3 months ($1.32 growing to $1.74), is highly likely to be disappointed. I hold a 10% portfolio allocation and am happy to hold at the current price level and expect a 4.0-4.5 cent fully imputed final divvy in a few months time.

On the other hand long term investors will I remain sure, be very happy with long term SP gains and will be happy to know they're being paid well to wait for long term growth with handsome fully imputed dividends, I estimate this year at 7 cps which equates to a gross divvy yield of 7.37% for 2015 based on a SP of $1.32 and I am sure those dividends will grow over the years ahead. Everyone has their own way of investing but for what its worth I won't let any stock get to a position of being worth more than 20% of my portfolio no matter how sure I am of their long term prospects.

It concerns me a little that the company appears to be considering accounting for its profit on the Harmoney investment ? While it was more than fair of them to note that their upgraded guidance excluded any increase in the value of their Harmony stake as a result of the Trade Me investment I struggle to see where they are coming from in terms of implying that it might be acceptable to account for theoretical gains in this non-listed associate company on the basis that this is in some way connected with operational profit ? I would have thought the team would have taken professional advice from their auditors rather than leaving this as an open question is a profit upgrade announcement. You been pushing them too hard Winner 69 ? :)

From 1 February 2015 when I basically came out and admitted the stock was fairly priced at $1.32 and no longer a bargain...sometimes I really hate it when I'm right and this is one of those occasions.
Impeccable timing by Quadrant, AGAIN. I think $2 is 4-5 years away now. Earnings growth in 2016 and 2017 will be likely to slow down with increased bad and doubtful debt provisioning for the reason's I've mentioned more recently. Very healthy sized fully imputed dividends means its a good hold for a sensible sized allocation in a well diversified portfolio in my opinion.

[winner69]

From 1 February 2015 when I basically came out and admitted the stock was fairly priced at $1.32 and no longer a bargain...sometimes I really hate it when I'm right and this is one of those occasions.
Impeccable timing by Quadrant, AGAIN. I think $2 is 4-5 years away now. Earnings growth in 2016 and 2017 will be likely to slow down with increased bad and doubtful debt provisioning for the reason's I've mentioned more recently.

Roger, It would also appear that underlying lending growth is slowing quite dramatically as well, in spite of all this tinkering around in niche areas

[Beagle]

Roger, It would also appear that underlying lending growth is slowing quite dramatically as well, in spite of all this tinkering around in niche areas

Economy is currently experiencing deflation in my opinion and is hardly going off like the rock star economy many were commenting it would last year is it !!
Good time to lean on a boat manufacturer for a good deal seeing as none of the farmers will be buying one. www.profileboats.co.nz I'm sure HNZ would loan me $100K with no payments till 2020 :D
Can you tell that I went to the boat show last weekend ?:lol:

Anyway getting back to being serious, I'm estimating a fully imputed final divvy of 4.5 cps up 1.0 cps on last year's final for a total of 7.5 cps this year fully imputed = 7.5 / 0.72 = 10.417 cents gross which on a SP of $1.29 gives us a current year gross dividend yield of 8.1% Prospects for growth in dividends for the next two years are fairly muted in my opinion but you are being paid quite well to wait for future growth when the economy is performing better so its a good hold in an ultra low interest rate environment, an environment that as I see it will remain for the foreseeable future.
Has HNZ become a dividend yield story now ?

[gv1]

If its quadrant, dont expect a big discount as market has factored in overhang. Once it is cleared, I expect the price to increase.
Yeah right mate. Need a tui?

[winner69]

Roger, from the Bank disclosure accounts I see your bad debt story is already unfolding

For 9 months the expense is a nice round $7m (nice round numbers in millions usually a guess?) compared to full year last year of $5.9m

The rate they are increasing full year probably $10m (more exact this time though) ....ouch

And that doesn't count any HER stuff

[Harvey Specter]

Roger, from the Bank disclosure accounts I see your bad debt story is already unfolding

For 9 months the expense is a nice round $7m (nice round numbers in millions usually a guess?) compared to full year last year of $5.9mOr you could say these unaudited results are conservative which gives an instant $1.1m boost to profit if the provision goes back down to $5.9m.

Or being unaudited, it could be understated and we could be in for a shocker

[Beagle]

Roger, from the Bank disclosure accounts I see your bad debt story is already unfolding

For 9 months the expense is a nice round $7m (nice round numbers in millions usually a guess?) compared to full year last year of $5.9m

The rate they are increasing full year probably $10m (more exact this time though) ....ouch

And that doesn't count any HER stuff

Yeah mate just a guess. All my regular mates and contacts think I'm a conservative old bugger thinking specific and general bad debt provisioning is going up rapidly...I guess some of us have longer memories than others when it comes to reckless lending policies of the finance companies pre GFC. Really it wasn't that long ago that all this no deposit lending got finance companies in big trouble, doesn't anyone at HNZ have a memory of these things for goodness sake ! No, lets lend to young people with a no wallet, no worries campaign targeting young people with no money, that's a good idea right, just like Harry and Lloyd from the memorable movie Dumb and Dumber, they're good for it right ?...(FFS shakes head and wonders what the marketing team were smoking at the time they had that idea)

You mark my words, EPS profit growth in 2016 will be very close to zero, (maybe even negative if Dairy stays really low or goes even lower and some of those sharemilkers with their herds as only security go under :eek2:), by the time the auditors force them to get real with their provisioning in their 2016 full year accounts. You read it from me first. Quadrant are good at seeing the over the horizon stuff aren't they mate !

Its become a dividend yield stock in my opinion. Still 8% as an shareholder has its virtues when you only get 4% as a depositor, thank God there's a silver lining in this somewhere :)

I'll have some hard questions for the board at the next ASM.

[Beagle]

Or you could say these unaudited results are conservative which gives an instant $1.1m boost to profit if the provision goes back down to $5.9m.

Or being unaudited, it could be understated and we could be in for a shocker

A finance company being conservative without the aid of their auditors :lol:

Cue... Percy's entry to remind us this is indeed a bank and as such is heavily regulated and overseen by the Reserve bank and they do as they say they will and this is one of if not THE safest company on the NZX.

[percy]

Well it is a wonderful life for me.
A very pleasant evening,and a nice meal last night at the sharetrader get-together.and some interesting tips from KW.
A beautiful day here in Christchurch, made even better with great book sales.
But the icing on the cake ,is Heartland confirming very thing is on track, to deliver a NPAT for the year, at the upper end of the previously advised range.
Thank you Heartland for delivering on what you say you will do.

[winner69]

Well it is a wonderful life for me.
A very pleasant evening,and a nice meal last night at the sharetrader get-together.and some interesting tips from KW.
A beautiful day here in Christchurch, made even better with great book sales.
But the icing on the cake ,is Heartland confirming very thing is on track, to deliver a NPAT for the year, at the upper end of the previously advised range.
Thank you Heartland for delivering on what you say you will do.

Heartland only working as hard as they have to to keep Percy happy .... so why work harder if Percy is happy and contented Jeff and his merry men say. If Percy was more demanding and asked Jeff for a bigger dividend for himself and his dear wife Jeff would probably deliver, they are capable of doing so.

[percy]

Heartland only working as hard as they have to to keep Percy happy .... so why work harder if Percy is happy and contented Jeff and his merry men say. If Percy was more demanding and asked Jeff for a bigger dividend for himself and his dear wife Jeff would probably deliver, they are capable of doing so.

I am very happy to grow rich [or richer] slowly and steadily.
Banks have a history of doing just that.
In the meantime the great dividends add to the enjoyment.
On checking yahoo finance charts ,I see Heartland's share price is up 67.53% in two years.
That is what I call delivering.!! Plus we have enjoyed fully imputed divies..
Could not ask for more!!!!
Slow down, Jeff I can't take too much more of the excitement!!!!

[winner69]

I am very happy to grow rich [or richer] slowly and steadily.
Banks have a history of doing just that.
In the meantime the great dividends add to the enjoyment.
On checking yahoo finance charts ,I see Heartland's share price is up 67.53% in two years.
That is what I call delivering.!! Plus we have enjoyed fully imputed divies..
Could not ask for more!!!!
Slow down, Jeff I can't take too much more of the excitement!!!!

On checking yahoo finance charts I see Heartlands share price is down 7% in the last 3 months

That's what I call slowing down, the kettle has come of the boil.

[percy]

On checking yahoo finance charts I see Heartlands share price is down 7% in the last 3 months

That's what I call slowing down, the kettle has come of the boil.

Thank goodness for that.
I enjoying just simmering along. !!!!!!!!!!!!!!!!!!!!

[kizame]

No, HNZ needs a good solid aquisition to keep it simmering along imop, the sooner this happens,with the likes of maybe MTF,the sooner the growth momentum continues. Obviously it has to be quality and at the right price.

[winner69]

Thank goodness for that.
I enjoying just simmering along. !!!!!!!!!!!!!!!!!!!!

No no Percy .....maybe simmer a bit more but really its starting to cool down.

[nextbigthing]

Heartland only working as hard as they have to to keep Percy happy .... so why work harder if Percy is happy and contented Jeff and his merry men say. If Percy was more demanding and asked Jeff for a bigger dividend for himself and his dear wife Jeff would probably deliver, they are capable of doing so.

Winner,

Put yourself in Jeffs shoes. What would you do with HNZ? What's their next step? Where to from here?

Cheers, NBT

[winner69]

Ok. In response to some PMs I will concede and say I am wrong and been unfair of my critical assessment of recent heartland performance.

Yes, Jeff and his team are doing their darnedest in making as much money as possible. The guys are really at it and their efforts will result in a full year NPAT of say $47m. Maybe a fraction more.

That's a fantastic result compared to the $36m made last year.

To align my financial model to HNZ forecast I have had to wind back growth expectations, reduced the NIM I was using to less than last year, increased bad debts but keep the cost of doing business much the same. HER seems to be doing better than I expected so left my assumptions about that the same. . So my forecast slightly above $47m now.

The worry is that H2 earnings will be the same as The first half. That still has me stuffed but a worrying sign that growth has stopped - and maybe earnings are starting to decline as the fourth quarter earnings are going to be less than the third quarter.

I don't think I'll bother to even try to forecast FY16 until after the full year announcement and hearing what Jeff says. Hope this half is just a blip on the long term growth path.

So all honky dory, esp if HNZ if is as roger says might now just be a yield play

[winner69]

Heartland guidance pre Seniors acquisition was $34m to $37m for FY14 - eps of 8.8-9.5 cents at the time.

This year NPAT say $47m - eps 10.0 cents.

If one assumes that even without Seniors acquisition FY15 would be better than FY14 than FY15 eps would probably have been in excess of 10 cents (up from the 8.8-9.5 cents FY14 expectations with the final number somewhere in the middle ).

The forecast FY15 eps of 10 cents of course includes the Seniors acquisition (which has made a positive contribution to HNZ earnings this year)

The Seniors acquisition was touted as being eps accretive. Doesn't look like it to me ...I am still to be convinced.

[winner69]

Looks like $47.0m NPAT our lot this year, maybe a fraction more

That's 10.2% ROE (on average equity but just 10.0% if rounded up on year end equity)

Bit higher than FY14 but seems a less (a lot less?) than what was implied from presentations last year

Priority FY15 was a "Focus on improving ROE" .......seem to have stopped improving over the last half year

[ziggy415]

Looks very much a Holden promotion,;'On selected models",so I would take that as the same as a Noel Leeming or Harvey Norman, no deposit 3 years interest free promotion, where the retailer pays the interest in the free interest period.
Otherwise why would HNZ bother?
Is this a way to get motor trade finance to the table or maybe weaken there hold over vehicle finance....or send a message that hnz will go in direct opposition to mtf

[percy]

Is this a way to get motor trade finance to the table or maybe weaken there hold over vehicle finance....or send a message that hnz will go in direct opposition to mtf

No.
It is not a promotion for Heartland to attract customers.
It is simply a promotion to move unsold Holden vehicles,by Holden dealers.
The interest on the interest free period will be paid by Holden Dealers.
Marac, part of Heartland,has been financing motor vehicles for over 55 years.Their records will give them a fair change of working out what the default rates will be.Just remember bankers do not give anything away.Even I-finance charge you a fee to refund any over payment you make.!
One must always remember the definition of a banker. "A banker is a man who lends you an umbrella when the sun is shining,and wants it back when it starts raining."
Heartland is run by bankers.They will be mindful of having the books watched carefully by the rating agency, and The Reserve Bank,so will not be putting a lot at risk.
Now back to Motor Trade Finance,MTF.Well a year ago I would have thought HNZ would have taken them over in the next few months.
They had a good sniff,but the court case liability, together with MTF not being interested in being taken over by HNZ,meant nothing has happened. Today I am still of the view MTF will be taken over,but I don't know whether the acquirer will be HNZ or TNR.
I am well positioned owning both HNZ and TNR..!!!

[percy]

New channels.
Heartland said they would open new channels.They are certainly doing this with I-finance and Harmoney.
As with any new business there will be success and failures.The directors will have viewed management's proposals,and set boundaries.
I expect Hearland will build on their successes and cut their losses.With not a "huge" amount at risk it is positive that HNZ are exploring these new channels.
REL.It would appear to be a great business with excellent margins and security,that is not expanding as quickly as we [or management]expected.Hopefully new channels and more promotion will be successful.It may be a sleeper,but long term I think the prospects are greatly improved by Australasia's rapidly growing "property rich,cash poor" aging population.

[winner69]

New channels.
Heartland said they would open new channels.They are certainly doing this with I-finance and Harmoney.
As with any new business there will be success and failures.The directors will have viewed management's proposals,and set boundaries.
I expect Hearland will build on their successes and cut their losses.With not a "huge" amount at risk it is positive that HNZ are exploring these new channels.
REL.It would appear to be a great business with excellent margins and security,that is not expanding as quickly as we [or management]expected.Hopefully new channels and more promotion will be successful.It may be a sleeper,but long term I think the prospects are greatly improved by Australasia's rapidly growing "property rich,cash poor" aging population.

I think you may be underestimating the contribution that HER is already making to Heartlands profitability.

The difference between the Banks profit as disclosed to RBNZ and HNZ profit is said to HER. For the last quarters that amounts to $5.2m and looking lie $7.5m for the full year.

But some additional HER lending is also included in the Banks numbers as well - suggesting that HER profit is in excess of $7.5m. How much more?

You mention 'excellent margins" in the HER business but I wouldn't be surprised if HER margins are lower than what they make on other business.

That TV ad seems to prompted more than expected enquiry from interested oldies and they are more than confident about converting these to real loans. Give praise and its amazing what underlings will tell you.

Seniors cost $87m so $8m odd profit first full year a good return.

So even if HER contributes only $8m this year (apparently $1m last year) then the old HNZ business has grown from $35m NPAT to $40m. Not too bad and makes sense. Pity Seniors not really eps accretive.

[percy]

I think you may be underestimating the contribution that HER is already making to Heartlands profitability.

The difference between the Banks profit as disclosed to RBNZ and HNZ profit is said to HER. For the last quarters that amounts to $5.2m and looking lie $7.5m for the full year.

But some additional HER lending is also included in the Banks numbers as well - suggesting that HER profit is in excess of $7.5m. How much more?

You mention 'excellent margins" in the HER business but I wouldn't be surprised if HER margins are lower than what they make on other business.

That TV ad seems to prompted more than expected enquiry from interested oldies and they are more than confident about converting these to real loans. Give praise and its amazing what underlings will tell you.

Seniors cost $87m so $8m odd profit first full year a good return.

So even if HER contributes only $8m this year (apparently $1m last year) then the old HNZ business has grown from $35m NPAT to $40m. Not too bad and makes sense. Pity Seniors not really eps accretive.

Thanks for your very interesting post.
Yes the HER is better than I thought.
You are right HNZ make lot better margins in their other forms of lending.I did not state it,but I meant the HER lending is more profitable than normal mortgage lending.

[K1W1G0LD]

Fascinating that W69 seems to have inherited Snoopy's mantle..................makes more sense too!!

[belted galloway]

Talking of opening new channels:

http://www.seek.co.nz/job/28707041?pos=7&type=standard

"Involve supporting the development and advancement of Heartland’s capabilities with a particular focus on Maori Banking products."

"Provide guidance on cultural protocols and there will be some face to face customer interaction as part of a team, to promote Maori Banking products."

Seems like a rather unusual path to go down.


Also, there seems to be a significant marketing push for Ifinance. I've heard extensive radio coverage across a range of stations.

[winner69]

Talking of opening new channels:

http://www.seek.co.nz/job/28707041?pos=7&type=standard

"Involve supporting the development and advancement of Heartland’s capabilities with a particular focus on Maori Banking products."

"Provide guidance on cultural protocols and there will be some face to face customer interaction as part of a team, to promote Maori Banking products."

Seems like a rather unusual path to go down.


Also, there seems to be a significant marketing push for Ifinance. I've heard extensive radio coverage across a range of stations.

I asked my Maori mate what he thought - katahi ra hoki

I gather that he not impressed

[percy]

I asked my Maori mate what he thought - katahi ra hoki

I gather that he not impressed

You wanted diversification.
You are getting it.!
Enjoy it !!!!!!!!!!!!!

[winner69]

You wanted diversification.
You are getting it.!
Enjoy it !!!!!!!!!!!!!

Agree percy

Looking forward to la femme as a niche

And I hope they don't forget the pink dollar is the most lucrative segment to be in

[percy]

Agree percy

Looking forward to la femme as a niche

And I hope they don't forget the pink dollar is the most lucrative segment to be in

Look forward to reading the seek job descriptions.??????????????????????????

[zigzag]

Look forward to reading the seek job descriptions.??????????????????????????

Sounds like a good job for Roger.

[iceman]

Agree percy

Looking forward to la femme as a niche

And I hope they don't forget the pink dollar is the most lucrative segment to be in

Too late. ANZ already has pink "GayTMs"

[nextbigthing]

Too late. ANZ already has pink "GayTMs"

Labour will help with ATM reassignment costs

[Beagle]

Talking of opening new channels:

http://www.seek.co.nz/job/28707041?pos=7&type=standard

"Involve supporting the development and advancement of Heartland’s capabilities with a particular focus on Maori Banking products."

"Provide guidance on cultural protocols and there will be some face to face customer interaction as part of a team, to promote Maori Banking products."

Seems like a rather unusual path to go down.


Also, there seems to be a significant marketing push for Ifinance. I've heard extensive radio coverage across a range of stations.

I'm "absolutely thrilled"

[winner69]

The next three months or so are going to see the share price inexorably grind its way down to $1.20 (or maybe less)

Only an acquisition will stop that happening

[winner69]

Anybody have any idea how much money they make from the transactional side of banking operations?

[percy]

The next three months or so are going to see the share price inexorably grind its way down to $1.20 (or maybe less)

Only an acquisition will stop that happening

Let it grind down.
Lower share price would mean I will get more shares when they pay the next divie as I have DRP,and shareholders taking the fully imputed cash, will receive a higher yield..
I don't mind how long the next acquisition takes so long as it is another good one.!

[winner69]

Let it grind down.
Lower share price would mean I will get more shares when they pay the next divie as I have DRP,and shareholders taking the fully imputed cash, will receive a higher yield..
I don't mind how long the next acquisition takes so long as it is another good one.!

What, make up for getting not so many last tome around. What price were they now ...forgotten

[vorno]

The next three months or so are going to see the share price inexorably grind its way down to $1.20 (or maybe less)

Only an acquisition will stop that happening

You seem awfully certain?

EDIT: With a director adding ~$5,000,000 to his holding at $1.29 I think it would make sense to believe the price should increase - or that he at least believes as much.

Why would he buy-in "now" if he could get it at a cheaper rate in ~3months time?
(forgive my young brain!)

[winner69]

Very little, if anything. It's not really a core business, done to provide a full range of product. The transactional operations are contracted
out to Westpac. If you look at the account numbers on your Heartland chequebook, you'll see they are for Westpac bank.

fool

So they not really a 'bank' then ....whoops I forgot they did say becoming a bank was only a marketing ploy.

Never mind as long as we just think of them as a finance business, and value them accordingly.

[percy]

So they not really a 'bank' then ....whoops I forgot they did say becoming a bank was only a marketing ploy.

Never mind as long as we just think of them as a finance business, and value them accordingly.

The ratings agency and The Reserve Bank do not share your view.
Neither do I.

[nextbigthing]

Winner, if you go from talking up its chances of getting to $1.60 soon to calling it a finance company worth less than $1.20, then a disclosure on your posts regarding your holdings would be nice. :)

NBT

Disc Hold.

[winner69]

You seem awfully certain?

EDIT: With a director adding ~$5,000,000 to his holding at $1.29 I think it would make sense to believe the price should increase - or that he at least believes as much.

Why would he buy-in "now" if he could get it at a cheaper rate in ~3months time?
(forgive my young brain!)

First point I am only talking about the share price movements between now and full year (or an acquisition). They have told us the FY is $47m .... as Percy says they always do what they say. If Jeff says nice things in August the share price should go up but I think seeing expectations have been diminished that $1.60 plus I said is now far away

Secondly Tomlinson looks like he took a chunk of the Quadrant shares. He was offered and took. He a long term investor and couldn't give a stuff about what the share price is in August. I doubt he would ever buy large amounts in dribs and drabs anyway.

Thirdly re the share price heading to $1.20 - have you noticed the trend down from late January - nearly four months. With the cat out of the bag about the FY result there is nothing to reverse that trend (except an acquisition). Given up on my up trending channels - that was depressing. Watching the down ward channels now

[winner69]

Winner, if you go from talking up its chances of getting to $1.60 soon to calling it a finance company worth less than $1.20, then a disclosure on your posts regarding your holdings would be nice. :)

NBT

Disc Hold.

Their guidance was a disappointed. My expectations are now much lower. As I said at the time $1.60 to $2.00 is now a very distant target, not by Christmas

Reckon price will drift down for the next few months .... and then depending on what they say in August might/should recover

If it means anything I have some

[iceman]

Kiwibank reporting net profit for 9 months to 31 March up 35% yoy and net interest income up a strong 25%.
Co-op also reporting a very strong result with net profit up 24%, bad debt expense down 32% and mortgage lending up 12%.
The sector seems to be going strong so HNZ hopefully on track to reach upper end or beat guidance !

[winner69]

A snippet from the Sea Dragon report

• Heartland Bank extends working capital facilities as the demand for working capital intensifies

Good on them supporting the smaller growth companies in NZ

[winner69]

Percy, you seem this before

https://vimeo.com/119552742?e=SWilson@edisongroup.com&j=184405&jb=0&l=62722_HTML&mid=6225031&u=5572505

Is also linked from heartland website and labelled as NEW

[winner69]

Last presentation had this as a strategic priority - "Focus on Sharemilkers enabling young NZ farmers commence dairy farming business"

Last accounts nearly 1/2 billion of exposure to agriculture. Outside of households/consumer the biggest portion of their loans, by far

With major concerns over the cash flows of dairy farmers with much reduced milk payments do we have a problem on our hand? Esp when Fed Farmers say it is the share milkers (and the young ones) that are at most risk.

Who are Heartland focusing on? Hmmmm

[winner69]

Jeff on EdisonTV. They obviously been to Heartland HQ

Maybe an upcoming Edison report and valuation coming up

Great news - if Edison true to form that will be $1.60 to $2.00


Pure conjecture but if true hopefully not a cynical bid to give the share price a boost

[percy]

Percy, you seem this before

https://vimeo.com/119552742?e=SWilson@edisongroup.com&j=184405&jb=0&l=62722_HTML&mid=6225031&u=5572505

Is also linked from heartland website and labelled as NEW

Yes I always watch it first thing in the morning and every night before I go to bed.Helps me to remain focussed on Heartland.!! lol

[percy]

Last presentation had this as a strategic priority - "Focus on Sharemilkers enabling young NZ farmers commence dairy farming business"

Last accounts nearly 1/2 billion of exposure to agriculture. Outside of households/consumer the biggest portion of their loans, by far

With major concerns over the cash flows of dairy farmers with much reduced milk payments do we have a problem on our hand? Esp when Fed Farmers say it is the share milkers (and the young ones) that are at most risk.

Who are Heartland focusing on? Hmmmm

Yes Heartland will be working with sharemilkers while they work their way through difficult times.It will be in no ones interest for sharemilkers to "walk away."
Sharemilkers make up part of Heartland's agriculture exposure.A sharemilker's income comes totally from sharemilking,so it is very important that all parties work together carefully.Heartland have the opportunity to prove to these young farmers, that Heartland Bank cares for them,and make them customers for life.
Heartland's agriculture loans cover livestock ;sheep,cattle,etc] seasonal loans [crops,fruit,vegetables etc] ,equipment,and land,so I do not know how large the exposure to sharemilkers is.

[blockhead]

It won't be just the sharemilkers who suffer, there is a lot of downstream farming activity directly related to dairy farm activity, run off farms, maize growers, silage growers, contractors and so on and on, Blockhead is normally doing 3-4 days a week working part time for a contractor here in Canterbury,....no work since Anzac day !
Chq books have been put under the mattress

[NZSilver]

If sharemilkers are cash strapped I'm sure they will require more loans for working capital - surely good for the banks.... (Banks are shops that sell debt?) As long as long term the milk price recovers and profitability increases (the low payout only lasts 1, 2 or 3 seasons. And it really depends on cost of production which is hugely variable between farms.

[Snoopy]

Last presentation had this as a strategic priority - "Focus on Sharemilkers enabling young NZ farmers commence dairy farming business"

Last accounts nearly 1/2 billion of exposure to agriculture. Outside of households/consumer the biggest portion of their loans, by far

With major concerns over the cash flows of dairy farmers with much reduced milk payments do we have a problem on our hand? Esp when Fed Farmers say it is the share milkers (and the young ones) that are at most risk.

Who are Heartland focusing on? Hmmmm

Winner, there is a taint to your recent posts on HNZ that suggests you are no longer a true believer. But this is nothing that a bit of re-education won't fix. The answer to your troubles is '4886', the universal answer. I am surprised that you have not memorized this thread post from PT which should allay any HNZ fears into the future.

-------

Histories are always written from a particular view-point usually to prove that particular view-point.

For the future:
There is ALWAYS Risk.

Much of it can be understood and quantified.

But there is always a possibility of a flock of Black Swans flying by and pooping on you.

Best Wishes
Paper Tiger

Disc: Still like the Risk/Reward ratio for HNZ - but that is just one view-point.

------

We all know the new 'Heartland' of New Zealand is Auckland. That is why Heartland have moved their headquarters there. The rural stench is no longer a problem up there, and the ventilation gets even better at the top of a glass tower. And when did you last see a black swan in New Zealand?

SNOOPY

P.S. If you don't mind me quoting your own advice back to you: "Believe the story"

[percy]

3 story building at 35 Teed Street,Newmarket could never be called a "glass tower."
The lack of Black Swans in NZ, I put down to Blockhead and his mates shooting them.

[Xerof]

Percy, you seem this before

https://vimeo.com/119552742?e=SWilson@edisongroup.com&j=184405&jb=0&l=62722_HTML&mid=6225031&u=5572505

Is also linked from heartland website and labelled as NEW

Would suggest Jeff pulls the curtains next time - Nice advert for ANZ over his left shoulder!!

[winner69]

Would suggest Jeff pulls the curtains next time - Nice advert for ANZ over his left shoulder!!

Trust you to see that mate

Besides being distracted were you impressed with Jeff

[Xerof]

Trust you to see that mate

Besides being distracted were you impressed with Jeff I had a client/banker relationship with Jeff when he was a boy in shorts at NBNZ. He is a guy I would trust, and as percy says he does what he says he will do. And from watching the video, if he ever wants a change in career, he'd make a great traffic officer :D

[winner69]

Winner, there is a taint to your recent posts on HNZ that suggests you are no longer a true believer. But this is nothing that a bit of re-education won't fix. The answer to your troubles is '4886', the universal answer. I am surprised that you have not memorized this thread post from PT which should allay any HNZ fears into the future.

-------

Histories are always written from a particular view-point usually to prove that particular view-point.

For the future:
There is ALWAYS Risk.

Much of it can be understood and quantified.

But there is always a possibility of a flock of Black Swans flying by and pooping on you.

Best Wishes
Paper Tiger

Disc: Still like the Risk/Reward ratio for HNZ - but that is just one view-point.

------

We all know the new 'Heartland' of New Zealand is Auckland. That is why Heartland have moved their headquarters there. The rural stench is no longer a problem up there, and the ventilation gets even better at the top of a glass tower. And when did you last see a black swan in New Zealand?

SNOOPY

P.S. If you don't mind me quoting your own advice back to you: "Believe the story"

Thanks for trying to comfort me Snoopy.

Yes, there is always risk and as PT much of it can be understood and quantified. Percy says no black swans left so we can even take that out of the equation.

A few months ago the Risk/Reward ratio was pretty good.

However recent developments suggest that Risk has increased. The factors I have mentioned and some of those things Roger has alluded to. So in my view risk up

Recent guidance implies growth has (temporarily? stagnated. The implication is that H1 earnings same as H2 and Q4 less than Q3. That's not growth. I am having doubts about 'believe the story'. So from a reward perspective the expected returns have diminished.

So Risk up and Reward down .....that ratio not so good as it was a few months ago.

Snoopy, you not suggesting I sit back, have faith in that the story will come true and just hope are you?

[blockhead]

3 story building at 35 Teed Street,Newmarket could never be called a "glass tower."
The lack of Black Swans in NZ, I put down to Blockhead and his mates shooting them.

Funny enough I spied a few Black Swans on the new Rangitata South Irrigation ponds last weekend when I was snooping around out there looking at the salmon spawning race incorporated in the scheme

[Beagle]

Very soothing words from Jeff while he paints the picture of his ideal personal loan customer, someone in their 30's e.t.c., all sounds robust and good BUT
These words are incongruous with their no wallet no worries marketing campaign using a young guy in his twenties who appears to be unable to find his wallet, much like my nephew would if I took him to the pub.
As mentioned before this sort of no deposit lending with no payments till 2016, ifinance lending targeting people coming off GE finance interest free terms along with lending through Harmoney which is mostly unsecured and the ongoing decline in the dairy sector payout in recent months has shifted the risk profile of the company at least in my eye's. Much of this sort of lending is the sort of thing that got a lot of finance companies into trouble during the GFC.

With the significant increase in world-wide dairy production there is no guarantee that what we have now is anything other than the new normal in which case a substantial proportion of HNZ's loans in the dairy sector are in serious trouble in due course in much the same way that small iron ore miners are in serious trouble if that commodity stays at its currently depressed level for several years. Many of their loans in this sector only have the cows themselves as security and who will want to buy them off the receiver if and when people are forced to liquidate some / all of their herd when returns are sub economic in much of this sector as a whole, (depending upon land fertility) e.t.c. ?

In my view events in 2015 have materially shifted the risk profile of HNZ and we are seeing that reflected in the SP. The type of new lending they are targeting makes me very tempted to review what an appropriate PE is for HNZ especially when the major Aussie banks aren't much more expensive on a relative PE basis. I had been using a 2015 of 13 which gave me fair value of $1.32- $1.33 based on consensus analyst forecasted EPS for FY15 of 10.2 cps.

Maybe given the risks a PE of 13 is no longer appropriate ?

[percy]

The type of lending that got finance companies into trouble in GFC was property development lending.Companies like FPF and UDC who lent on consumer goods came through in good shape.The other parts of Marac came through GFC in good shape. Heartland are not lending on property development.So to compare today's lending to GFC is misleading.
With three quarters of the year's business already done, the projected profit of $48mil is not a big call.This works out to the eps of 10.2 that analysts are using.
It therefore comes down to projected growth for year 2016,and what you expect the fully imputed dividends to be,that will govern your acceptable PE ratio.
When comparing HNZ to the Aussie banks,keep in mind HNZ do not have the need to raise their capital requirements.HNZ is not exposed to the Australian problems,such as ;minning,manufacturing,retail,and over valued property markets.
Neither do HNZ have to rely on European wholesale funding.

[Beagle]

http://www.stuff.co.nz/business/146416/Timeline-of-Kiwi-finance-company-collapses

[percy]

http://www.stuff.co.nz/business/146416/Timeline-of-Kiwi-finance-company-collapses

I think the lists confirms ;
1] Not one of those companies were registered as a bank by The Reserve Bank of NZ,nor did they have to report to The Reserve Bank.
2]None of those companies were rated by a "recognised" rating agency.
3]None of those companies had an experienced banker on the board.
4] None of those companies had an experienced banker as CEO.
5]Most of those companies were run by people who 'had history".
6] None of them had proper risk/management systems.
7]Most of those companies had huge related party lending.
8]Comparing any or all of them to HNZ, is as I pointed out,not appropriate.

[Baa_Baa]

Roger, it is concerning that your confidence in Heartland is being tested, even waning when it is likely or even probable, that your confidence in conjunction with Percy late '14 and into summer this year, may have brought new money to the table. Possibly quite a lot of new money.

I was convinced at the time, made a modest gain, but exited when the weekly price descended below the weekly 14EMA, which it has again and now sits on the 100day EMA. Money flow has declined but is still positive, RSI is declining below 50 and the Slow STO has crossed down, from overbought. (TA talk, in english .. SP is weak and weakening).

It would be helpful I think if you crunched the numbers again and provided your revised assessment of the fundamentals. All the talk of fringe finance lending etc obviously hasn't helped the SP, for that I'm apologetic having participated, but in the overall scheme of things Heartland as you say may have shifted from growth+yield to yield only, and may be exposed to second tier lender variables and risks.

BAA


http://www.stuff.co.nz/business/146416/Timeline-of-Kiwi-finance-company-collapses

[winner69]

Roger, it is concerning that your confidence in Heartland is being tested, even waning when it is likely or even probable, that your confidence in conjunction with Percy late '14 and into summer this year, may have brought new money to the table. Possibly quite a lot of new money.

I was convinced at the time, made a modest gain, but exited when the weekly price descended below the weekly 14EMA, which it has again and now sits on the 100day EMA. Money flow has declined but is still positive, RSI is declining below 50 and the Slow STO has crossed down, from overbought. (TA talk, in english .. SP is weak and weakening).

It would be helpful I think if you crunched the numbers again and provided your revised assessment of the fundamentals. All the talk of fringe finance lending etc obviously hasn't helped the SP, for that I'm apologetic having participated, but in the overall scheme of things Heartland as you say may have shifted from growth+yield to yield only, and may be exposed to second tier lender variables and risks.

BAA

Roger was bullish last year, justifiably so, but no one should blame him for buying into HNZ.

So was winner bullish. My detailed financial forecast based on reasonable growth assumptions that essentially tied in company narrative and presentations was earnings of $51m to $53m. Roger was quoting similar numbers (maybe a fraction less)

Company says we need to accept $47m this year (maybe a bit higher). That implies they have stopped growing - like H2 will be the same as H1 and worse still Q4 will be less than Q4. That say growth has stagnated. Reasons still be disclosed

I agree with Roger, there appears to be higher risk around Heartland at the moment and the rewards don't look like they are going to be as good as I expected a while ago. Going from growth + yield to just yield lowers the reward side of he equation doesn't it. Not good if perceived risk is increasing.

We just have to wait closer to August before we'll find out what's happening. But the last announcement was might disappointing when you look at the rosy picture they were painting in previous presentations.

You should post an updated chart BaaBaa ...mine looks rather sad, yours might cheer me up

[Baa_Baa]

snip .. You should post an updated chart BaaBaa ...mine looks rather sad, yours might cheer me up

My daily chart may not cheer you up winner, the SP is below the linear regression channel median, below the 50EMA which has defined the recent trading range. If you want a boost though, it has also closed Friday above the daily 100EMA and bounced off (exactly!) the 50% Fib retracement from the move Jan'12.

Charts tell you precisely what you want them to.

BAA7377

[percy]

Hogwash.!!!!!!!!!!!!!!!!!!!!!!!!
If you overlay the charts of the Australian Banks,ANZ,CBA,NAB,WBC with HNZ's, you will see the concerns the market has with Australian Banks is rubbing off on HNZ.
Yet, as I keep pointing out Heartland does not have the Australian Banks' problems.
But wait there's more.
The best moving average I have found for HNZ is the 200 day EMA.A true friend.
Don't look now,but all the Australian Banks are under their 200 day EMA.!!!
However Heartland remains above theirs.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Baa_Baa]

Hogwash or not Percy and with due respect, the souls who bought the story above the current share price are under water right now. This is not about whose right or wrong, it's about what is the best thing to do with your money if you are, in, or out, right now. If you advocate the 200EMA you're also saying it's OK if the holders lose another $0.19 (or thereabouts), because of what? All I'm saying is that Heartland has changed, it might not be a growth+yield story anymore, and I'd like you and Roger to put up a case, as there are attendant risks which might give cause for caution? That's not hogwash Percy, that's just putting it out there for discussion, you can't deny that Heartland SP has deteriorated and there is no telling where the floor is.

BAA


Hogwash.!!!!!!!!!!!!!!!!!!!!!!!!
If you overlay the charts of the Australian Banks,ANZ,CBA,NAB,WBC with HNZ's, you will see the concerns the market has with Australian Banks is rubbing off on HNZ.
Yet, as I keep pointing out Heartland does not have the Australian Banks' problems.
But wait there's more.
The best moving average I have found for HNZ is the 200 day EMA.A true friend.
Don't look now,but all the Australian Banks are under their 200 day EMA.!!!
However Heartland remains above theirs.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[percy]

Go to the great advice KW gave about using TA to time entry/exits.
As a long term shareholder the 200 day EMA has proved the only reliable indicator to use.
Many on this thread brought in at 50cents,60 cents 70,cents,80 cents,90 cents,and have remained holders.
It would take a definite break of the 200 day EMA before I conceded the uptrend is broken.
I am sorry the only advice I can give to those who have brought in at higher prices, is to watch the 200 day EMA,currently $1.20,and remember "the story remains" intact.
The sp has been affected by the rub off of the Australian banks,yet HNZ are on track to met their guidance.As always, it is HNZ's projections that we should watch,keeping in mind HNZ's history of doing what they say they will do.
In August we will get the year's result.
The sp will be affected by a number of things.Lower earnings with lower forecast will bring the sp down.
Another acquisition,a further credit rating upgrade,or an increase in profit will drive the sp higher.
My experience is good companies surprise on the upside.

[Xerof]

This might brighten up some folks' day. E&OE, and the flag could last a while. I still think there's a chance that gap will be filled at $1.18 level. But despite my flag-waving, think of this move as a healthy retracement after a strong run. Entirely natural market reaction, which can be seen on lots of stocks, bonds, FX, all day every day across the globe, on all timeframes. It depends how hard you look

[Balance]

Some buzz in the market that HNZ will need a capital raising to buy F&P Finance.

Short term negative but longer term, extremely positive.

[winner69]

This might brighten up some folks' day. E&OE, and the flag could last a while. I still think there's a chance that gap will be filled at $1.18 level. But despite my flag-waving, think of this move as a healthy retracement after a strong run. Entirely natural market reaction, which can be seen on lots of stocks, bonds, FX, all day every day across the globe, on all timeframes. It depends how hard you look

Funny, after percy and baabaa having a TA discussion of sorts I thought of those flags of yours and went back to the graphic I posted a while ago. Is below

Good stuff - $1.60 plus here we come (by Christmas I reckon)

[percy]

Funny, after percy and baabaa having a TA discussion of sorts I thought of those flags of yours and went back to the graphic I posted a while ago. Is below

Good stuff - $1.60 plus here we come (by Christmas I reckon)

Would tie in with Balance's post!!!!!
FPF would, as Balance says, be extremely positive.A capital raising for FPF would be well received, and I think we would see a rerating of HNZ very quickly.

[winner69]

Would tie in with Balance's post!!!!!
FPF would, as Balance says, be extremely positive.A capital raising for FPF would be well received, and I think we would see a rerating of HNZ very quickly.


As long it turns out to be EPS accretive

[percy]

As long it turns out to be EPS accretive

Sorry, I thought it goes with out saying.!
Other wise no point.!!
Heartland guys are bankers,not some charitable do gooders.!
They do not giveaway our money, or their own.!

[winner69]

Sorry, I thought it goes with out saying.!
Other wise no point.!!
Heartland guys are bankers,not some charitable do gooders.!
They do not giveaway our money, or their own.!

The last acquisition not really eps accretive was it Percy. You been watching that video of Jeff too much and been brainwashed.

You mentioned HNZ share price following the Aussie banks down so its really just market sentiment putting pressure on the price, nothing the company is doing eh.

The market is a funny place eh. You never know what might happen next do you. Like who would ever had thought that in a few short months the HNZ share price could fall by 10% ......at the same time that Nuplex's share price goes up 25%.

Never mind .....just shows that HNZ could go up 25% pretty quickly to $1.60 plus ....I love flags

[Beagle]

Roger, it is concerning that your confidence in Heartland is being tested, even waning when it is likely or even probable, that your confidence in conjunction with Percy late '14 and into summer this year, may have brought new money to the table. Possibly quite a lot of new money.

I was convinced at the time, made a modest gain, but exited when the weekly price descended below the weekly 14EMA, which it has again and now sits on the 100day EMA. Money flow has declined but is still positive, RSI is declining below 50 and the Slow STO has crossed down, from overbought. (TA talk, in english .. SP is weak and weakening).

It would be helpful I think if you crunched the numbers again and provided your revised assessment of the fundamentals. All the talk of fringe finance lending etc obviously hasn't helped the SP, for that I'm apologetic having participated, but in the overall scheme of things Heartland as you say may have shifted from growth+yield to yield only, and may be exposed to second tier lender variables and risks.

BAA

Yes mate as you suggest its probably time we had a look at the relative PE of HNZ compared to some of the Australian banks and see how they stack up.
Going off the 4 traders website the first thing I notice is there's only 3 analysts covering HNZ and consensus 2015 EPS is now 9.75 cents, previously 10.2 cps last time I looked. One of the brokers downgraded to under-perform in March and we've seen the SP correct materially since then. the other two brokers have HNZ as a Hold. Consensus EPS for 2016 is 10.4 cps.

Seeing as FY2015 is 11 months through its course I believe most astute investors will be looking to base investments on where they see EPS in FY16 and FY17.
In this regard I have zeroed in on FY16 as data is available from brokers for estimates and again off the www.4traders.com website I see based on FY16 consensus estimates and going off closing prices on Friday this week we have the following stocks on comparative multiples based on FY 16 of:-
HNZ 12.35
NAB 12.35, (this is not a typo the multiple is the same for HNZ)
WBC 13.13
ANZ 11.99
BEN 13.32
BOQ 12.94

Dairy in my view is to HNZ what iron ore is to the Australian banks. While I have the greatest respect for our dear friend Percy, there were many many consumer finance companies that collapsed in the GFC, most of which were not in that list I provided a link for recently and I have intimate knowledge of how one of them was behaving, (Geneva finance). HNZ's activities in the www.ifinance.co.nz, harmony and through lending like the aforementioned no wallet no worries campaign plays like a very bad groundhog day movie to me.

I think the current PE considering the risks have changed is about right. My gut feel is extra delinquencies in the riskier consumer finance sector they appear to be targeting as well as problem dairy loans will make net effective earnings growth more challenging. I think the brokers have this about right as a hold with a slight bias towards under-perform. In my view its become a yield story for the foreseeable future and I struggle to see the SP getting much northward traction this year. I guess a good and strong EPS accretive acquisition could change that, (risk to the upside) and likewise extra problems than currently foreseen with consumer and dairy loans could ameliorate consensus broker EPS growth forecast for 2016 and if especially bad could provide some EPS downside risk.

I think on balance its a hold for its good dividend yield and for growth in more favourable times ahead maybe FY2017 will see the dairy sector performing better but who would know, its a lottery really... In my view the SP could potentially track sideways for a considerable period of time and the chart quite obviously is suggesting there may be more downside risk.

This begs the question of how well we are being paid to wait ?

I'm forecasting total fully imputed divvy's this year of 7.5 cents, that's 10.42cps gross which @ $1.28 provides a 8.14% gross return which gives a reasonably supportive argument towards being on the right side of the ledger in terms of having your money as a shareholder with HNZ as opposed to earning ~ 4.5% on deposit :) Its also an attractive yield especially by virtue of its full imputation credits compared to the Australian banks.

Whether Australian banks have more headwinds than HNZ, who could reasonably say ?, but my gut tells me they face similar challenges, with quite obviously the Aussie banks under pressure to increase their capital ratio, which possibly gives those banks that haven't done so already, some specific downside risk ?

In terms of relative PE its perhaps worth noting the types of business the various banks do and the superior credit rating of the larger Aussie banks as well as their vastly longer track records.
On this basis you'd have to say the FY16 HNZ PE looks very fulsome as a ratio on a relative basis.

Hold an appropriate moderate allocation in anticipation of better economic times in the long run. FWIW that's what I'm doing at present. I mainly see it as a good yield story for the foreseeable future.

[stoploss]

Hi Roger ,
While I can see the dairy sector being depressed for a while , I disagree with your comparison to finance companies .
From my understanding they loaned ( a lot of it inter company /related ) on undeveloped land . Brooklyn rise Wellington in one case , that massive hole North of Queenstown , bare sections at Jacks Point to name a few .
In most cases there was no interest being paid monthly on these loans as the developers had no cash flow . So the interest was capitalised ( not sure if that's the right word but I know you will understand what I'm saying ).
That was the undoing ....I mean how could you lose $ 500 Mio !!! Hanover .......
As for Dairy farmers you will know that the farming sector is / has been the backbone of the country . Most farmers are salt of the earth, hard working people . They are used to drought/ flood etc so good years bad years . So the dairy payout going South
will hurt them but they have cashflow and loans will get paid . Sure some might be stretched but with relatively low interest rates and an accommodative bank looking at helping farmers for the long term , I can't see this being a finance company debacle .
Where Heartland will go wrong is if they stray too far from their bread and butter/ traditional business. I know you have eluded to this re Harmony . I still scratch my head re SCF ( I always thought they had lent on SC farms/ stock ) After the Americas Cup
it was astounding to see all those bars on the waterfront go under and SCF as an interested party .

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10670482

[winner69]

Here's a video of a chat with a heartland guy talking about equity release loans
http://www.interest.co.nz/business/75716/reverse-mortgages-or-equity-release-loans-socially-responsible-finance-senior

A banker talking about being 'socially responsible' while screwing the oldies, he my man. Probably convinced himself that Heartland are doing this is a public service as well. Gives me the warm fuzzies

[Baa_Baa]

Yes mate as you suggest its probably time we had a look at the relative PE of HNZ compared to some of the Australian banks and see how they stack up.
Going off the 4 traders website the first thing I notice is there's only 3 analysts covering HNZ and consensus 2015 EPS is now 9.75 cents, previously 10.2 cps last time I looked. One of the brokers downgraded to under-perform in March and we've seen the SP correct materially since then. the other two brokers have HNZ as a Hold. Consensus EPS for 2016 is 10.4 cps.

Seeing as FY2015 is 11 months through its course I believe most astute investors will be looking to base investments on where they see EPS in FY16 and FY17.
In this regard I have zeroed in on FY16 as data is available from brokers for estimates and again off the www.4traders.com (http://www.4traders.com) website I see based on FY16 consensus estimates and going off closing prices on Friday this week we have the following stocks on comparative multiples based on FY 16 of:-
HNZ 12.35
NAB 12.35, (this is not a typo the multiple is the same for HNZ)
WBC 13.13
ANZ 11.99
BEN 13.32
BOQ 12.94

Dairy in my view is to HNZ what iron ore is to the Australian banks. While I have the greatest respect for our dear friend Percy, there were many many consumer finance companies that collapsed in the GFC, most of which were not in that list I provided a link for recently and I have intimate knowledge of how one of them was behaving, (Geneva finance). HNZ's activities in the www.ifinance.co.nz (http://www.ifinance.co.nz), harmony and through lending like the aforementioned no wallet no worries campaign plays like a very bad groundhog day movie to me.

I think the current PE considering the risks have changed is about right. My gut feel is extra delinquencies in the riskier consumer finance sector they appear to be targeting as well as problem dairy loans will make net effective earnings growth more challenging. I think the brokers have this about right as a hold with a slight bias towards under-perform. In my view its become a yield story for the foreseeable future and I struggle to see the SP getting much northward traction this year. I guess a good and strong EPS accretive acquisition could change that, (risk to the upside) and likewise extra problems than currently foreseen with consumer and dairy loans could ameliorate consensus broker EPS growth forecast for 2016 and if especially bad could provide some EPS downside risk.

I think on balance its a hold for its good dividend yield and for growth in more favourable times ahead maybe FY2017 will see the dairy sector performing better but who would know, its a lottery really... In my view the SP could potentially track sideways for a considerable period of time and the chart quite obviously is suggesting there may be more downside risk.

This begs the question of how well we are being paid to wait ?

I'm forecasting total fully imputed divvy's this year of 7.5 cents, that's 10.42cps gross which @ $1.28 provides a 8.14% gross return which gives a reasonably supportive argument towards being on the right side of the ledger in terms of having your money as a shareholder with HNZ as opposed to earning ~ 4.5% on deposit :) Its also an attractive yield especially by virtue of its full imputation credits compared to the Australian banks.

Whether Australian banks have more headwinds than HNZ, who could reasonably say ?, but my gut tells me they face similar challenges, with quite obviously the Aussie banks under pressure to increase their capital ratio, which possibly gives those banks that haven't done so already, some specific downside risk ?

In terms of relative PE its perhaps worth noting the types of business the various banks do and the superior credit rating of the larger Aussie banks as well as their vastly longer track records.
On this basis you'd have to say the FY16 HNZ PE looks very fulsome as a ratio on a relative basis.

Hold an appropriate moderate allocation in anticipation of better economic times in the long run. FWIW that's what I'm doing at present. I mainly see it as a good yield story for the foreseeable future.

Thanks for sharing your thoughts Roger, appreciated.

[nextbigthing]

BAA mate, good on you for thanking Roger, but did you have to quote the whole post? Blocks the thread. Roger was unlikely to delete it. Cheers :)

[Beagle]

I can't delete it now LOL. No intention to delete the truth as I see it, no matter how much of hard reality it contains. Maybe I should change my user name to "Reality Check" or a "Balanced Perspective". Most of my mates think I'm crazy getting less bullish on HNZ. Maybe I need to see a shrink to get over my hang-up's from the dozens of finance debacles of the GFC...who's right and who's wrong, only time will tell :) Market as a whole looks like tracking sideways and HNZ with it.

[Baa_Baa]

Apologies fair enough, that wasn't my intention, just habit.

[winner69]

This might brighten up some folks' day. E&OE, and the flag could last a while. I still think there's a chance that gap will be filled at $1.18 level. But despite my flag-waving, think of this move as a healthy retracement after a strong run. Entirely natural market reaction, which can be seen on lots of stocks, bonds, FX, all day every day across the globe, on all timeframes. It depends how hard you look

Xerof .....the HNZ flag is at half mast now

Somebody must have died

Could be worse though

[kizame]

Gentlemen and Ladies (maybe).
Lets not forget this stock had a 40% move a while back,I think the only reason it hasn't continued (yet) is that there hasn't been a new aquisition.
But if you are really concerned about where the shareprice is going,have a look at the weekly charts going back past 2012,you will see HNZ still in an upwards channel,just popping below the line of linear regression.
INMOP the weekly charts are more important than the daily,it gives great perspective as to what is happening and probably why.
PEG whichever way I look at it,even going down to a 15% growth rate,still looks very attractive.

[Xerof]

Xerof .....the HNZ flag is at half mast now

Somebody must have died

Could be worse though lol, well, if you're getting all Fibby, I have found 61.8 to be more reliable, even 78.6. Those are retracement levels of course. Fibonacci extensions are interesting too (might find that 1.40 sat at a powerful extension level of the original move down 88 to 30's) I'm guessing 1.618% as not near a chart with the right tools atm

[winner69]

The slow grinding down of the HNZ share price is sure getting painful .... worse than going to the dentist .... hopefully not an extraction next week

But there's always a bright side - that being HNZ hasn't been this cheap for 4 months. It's sale time .... c'mon guys and gals roll up and get the bargain of the century. Probably never to be repeated prices .... the bargain of the century

Be in early ....plenty of sellers on the sideline but I think 125 is the lowest they want to go

[Joshuatree]

Brave call(have you got a tardus:). $1.24 atm

[Xerof]

Well, we've got the cartridge in the caulking gun... filling that $1.18 to $1.26 gap

7390

[winner69]

Brave call(have you got a tardus:). $1.24 atm

Its all percy's fault mentioning the aussie banks

SMH say Banks sink ASX .....Banks are driving the losses as investors continue to take profits, or jump ship ahead of worst times to come, depending on your point of view

So in NZ it could be Heartland sinks NZX - is the story the same

But the bright side is that the sale is still on .... cheap shares and yes we are open tomorrow for you to pick up your bargain

[winner69]

Well, we've got the cartridge in the caulking gun... filling that $1.18 to $1.26 gap

7390

Hope its that Space Invader expanding foam stuff .... fill big gaps faster and might be the boost needed

[Beagle]

Its all percy's fault mentioning the aussie banks

SMH say Banks sink ASX .....Banks are driving the losses as investors continue to take profits, or jump ship ahead of worst times to come, depending on your point of view

So in NZ it could be Heartland sinks NZX - is the story the same

But the bright side is that the sale is still on .... cheap shares and yes we are open tomorrow for you to pick up your bargain

Yep, lets blame it all on Uncle Percy...(big Rodge slinks away and hides under his desk)

[percy]

Its all percy's fault mentioning the aussie banks

SMH say Banks sink ASX .....Banks are driving the losses as investors continue to take profits, or jump ship ahead of worst times to come, depending on your point of view

So in NZ it could be Heartland sinks NZX - is the story the same

But the bright side is that the sale is still on .... cheap shares and yes we are open tomorrow for you to pick up your bargain
As Warren Buffett said;"Only when the tide goes out do you discover who's been swimming naked."
Nude Australian banks are not a pretty sight.!

[percy]

Alternative futures look more challenging for Australian Banks than NZ's Heartland.
Australian Mining Industry;In decline.
Australian Manufacturing,In decline.
Australian Automotive Industry,In decline.
Australian Retail Stores.In decline.
Australian Qantas.In decline.
One wonders whether Australian banks will look after Australian interests before NZ intersts.Will NZ Reserve Bank ask the Australian Banks to shore up their capital ratios for their NZ subsidiaries?
The future for Heartland looks a lot more secure to me.! New Zealanders serving New Zealanders.

Posted 28-02-2014.
Now we are seeing the Australian Banks having to raise capital to meet their new capital ratios.
No surprises there.!
Yet on 21/5/2015 Heartland stated " Heartland expects its NPAT for the year ended 30 June 2015 to be at the UPPER end of the previously advised NPAT range of $46mil -$48mil."
Just doing what they say they will do.
No surprises there.!

[winner69]

Posted 28-02-2014.
Now we are seeing the Australian Banks having to raise capital to meet their new capital ratios.
No surprises there.!

That's a truly depressing post of yours Percy, just as I was coming to terms with things and seeing he bright side.

You said the other day that HNZ is (rightly or wrongly) being tarred with the same brush as these Aussie banks and that is the reason why the HNZ share price is falling.

Does this mean that if things continue to get worse for the Aussies then HNZ will be rerated and won't trade at lofty multiples and we will see the share price continue to fall?

Doesn't look too good for the nextvyear or two does it?

[percy]

That's a truly depressing post of yours Percy, just as I was coming to terms with things and seeing he bright side.

You said the other day that HNZ is (rightly or wrongly) being tarred with the same brush as these Aussie banks and that is the reason why the HNZ share price is falling.

Does this mean that if things continue to get worse for the Aussies then HNZ will be rerated and won't trade at lofty multiples and we will see the share price continue to fall?

Doesn't look too good for the nextvyear or two does it?

No.Once the year end result is announced, the market will realise Heartland do not share the Aussie Banks problems [which could include the Auckland property sector,and even the odd dairy farm!!!].
I would expect the odd brighter analysts can already see the difference.
I am off course mindful that Heartland will give us another pleasant surprise before the result is announced late August,either with a great acquisition,or a further credit rating upgrade.

[Beagle]

No.Once the year end result is announced, the market will realise Heartland do not share the Aussie Banks problems [which could include the Auckland property sector,and even the odd dairy farm!!!].
I would expect the odd brighter analysts can already see the difference.
I am off course mindful that Heartland will give us another pleasant surprise before the result is announced late August,either with a great acquisition,or a further credit rating upgrade.

Nice attempt there mate. So....If you can get your eyeball right down below the level of the table, the glass sitting on the edge thereof still looks half full.

[percy]

Nice attempt there mate. So....If you can get your eyeball right down below the level of the table, the glass sitting on the edge thereof still looks half full :D

No,the glass is three quarters full.The last announcement,two weeks ago was for 9 months trading.!

[Beagle]

No,the glass is three quarters full.The last announcement,two weeks ago was for 9 months trading.!

That'd be looking upwards from the floor mate.

[Joshuatree]

And singing "the piano hass been drrin king ;.... but not meee." hic
know when to hold emm ; no when to fold emmm ehh Rog



love tom waits music

[percy]

Nice to see a solid first half from UDC.[Owned by ANZ Bank ]
Another very well run,and profitable business in the finance sector.

[winner69]

Nice to see a solid first half from UDC.[Owned by ANZ Bank ]
Another very well run,and profitable business in the finance sector.

Big boss really happy with the really sold growth in loans on transport stuff and motor vehicles. I think she said motor vehicles growth up 23%

Would seem higher than Heartlands in this area ......are Heartland (Marac) losing share?

[percy]

Big boss really happy with the really sold growth in loans on transport stuff and motor vehicles. I think she said motor vehicles growth up 23%

Would seem higher than Heartlands in this area ......are Heartland (Marac) losing share?

Always possible?
I think you have to expect the business will see saw between them.
Yet, there seems to be plenty of room for both in this sector.
Both have enjoyed years of success in this sector.
Going from remarks, both are confident of years to come.
I share their confidence.

[winner69]

This paragraph in this article caught my eye
http://www.interest.co.nz/rural-news/75798/westpac-economists-lower-their-milk-price-forecast-new-season-after-sixth


"The Financial Stability Report was silent on what action would the RBNZ take if it believed the dairying sector was becoming a threat to financial stability. But we think the most likely response is that the RBNZ would require banks to hold a larger capital buffer against their existing agricultural loans, to absorb an expected rise in defaults"

Of course the farmers would be paying for this in higher rates, couldn't expect shareholders to cover that could we.

Then again Heartland is already so over capitalised it won't affect them.

[winner69]

Always possible?
I think you have to expect the business will see saw between them.
Yet, there seems to be plenty of room for both in this sector.
Both have enjoyed years of success in this sector.
Going from remarks, both are confident of years to come.
I share their confidence.

Could e one of the reasons why Heartlands profits have stagnated recently, like Q4 being less than Q3 and H2 being same as H2

[percy]

Could e one of the reasons why Heartlands profits have stagnated recently, like Q4 being less than Q3 and H2 being same as H2

You see stagnation,I see solid growth, Heartland achieving their stated objectives.

[winner69]

You see stagnation,I see solid growth, Heartland achieving their stated objectives.

So just a temporary blip earnings not growing .....or is Jeff not being up front with what is really going on.

I only seeing what they put out ...and that's H2 the same as H1, after several years of continuous growth

[percy]

This paragraph in this article caught my eye
http://www.interest.co.nz/rural-news/75798/westpac-economists-lower-their-milk-price-forecast-new-season-after-sixth


"The Financial Stability Report was silent on what action would the RBNZ take if it believed the dairying sector was becoming a threat to financial stability. But we think the most likely response is that the RBNZ would require banks to hold a larger capital buffer against their existing agricultural loans, to absorb an expected rise in defaults"

Of course the farmers would be paying for this in higher rates, couldn't expect shareholders to cover that could we.

Then again Heartland is already so over capitalised it won't affect them.

I think you must keep in mind Warren Buffett's quote;"when the tide goes out, we will see who is swimming naked."
The big losers in the dairy sector will most probably be the lenders who have lent on dairy farm conversions.I expect we will see some surprises,with 1st mortgages over land looking "at risk".
And yes some banks will have to shore up their capital.
As I have pointed out,and you noted the SMH article,the Aussie banks face challenges that are putting their share prices under pressure.
Heartland do not face these pressures,however they are suffering the "rub off"of investors avoiding, or leaving the sector.
With increasing profits,and dividends,Heartland will recover.Any acquisition, or credit rating upgrade will speed up the recovery.

[noodles]

Could e one of the reasons why Heartlands profits have stagnated recently, like Q4 being less than Q3 and H2 being same as H2
HNZ is a seasonal business. I don't think their is much value comparing quarters in the same year. Better to compare q315 vs q314

Banking NPBT for 9mths to 31 march 15 43527
Banking NPBT for 9mths to 31 march 14 36980
Growth 17.7%

But maybe there has been a slowdown in the last 3 months?

Banking NPBT for 3mths to 31 march 15 15245
Banking NPBT for 3mths to 31 march 14 12891
Growth
18.2%

No slowdown. So if anything, the foot is going down on the accelerator over the last 3 months.

Given HNZ is now trading on a FY15 pe=12, and growth of 18%, I'm quite comfortable with valuation.

This analysis excludes the HER business as I don't have quarterly data for this. Remember, the HER business also includes some tax losses.

[noodles]

I think you must keep in mind Warren Buffett's quote;"when the tide goes out, we will see who is swimming naked."
The big losers in the dairy sector will most probably be the lenders who have lent on dairy farm conversions.I expect we will see some surprises,with 1st mortgages over land looking "at risk".
And yes some banks will have to shore up their capital.
As I have pointed out,and you noted the SMH article,the Aussie banks face challenges that are putting their share prices under pressure.
Heartland do not face these pressures,however they are suffering the "rub off"of investors avoiding, or leaving the sector.
With increasing profits,and dividends,Heartland will recover.Any acquisition, or credit rating upgrade will speed up the recovery.

So to summarise percy,

Aussie banks need additional capital to stand still.
HNZ has excess capital to apply to loan growth

HNZ is clearly on a much faster growth path than the aussie banks.

Why are we comparing pe ratios between them?

[winner69]

Noodles, maybe seasonal business but for several years any half year earnings have been more than previous half year

Have you ever tried a seasonally adjusted earnings series, interesting

[noodles]

Noodles, maybe seasonal business but for several years any half year earnings have been more than previous half year

Have you ever tried a seasonally adjusted earnings series, interesting

Please show your analysis:)

I think comparing quarters should do the same job.

[percy]

So to summarise percy,

Aussie banks need additional capital to stand still.
HNZ has excess capital to apply to loan growth

HNZ is clearly on a much faster growth path than the aussie banks.

Why are we comparing pe ratios between them?

Yes................
Yes.............
Yes..............
Maybe because we have no other listed NZ bank.

[Beagle]

So to summarise percy,

Aussie banks need additional capital to stand still.
HNZ has excess capital to apply to loan growth

HNZ is clearly on a much faster growth path than the aussie banks.

Why are we comparing pe ratios between them?

Aussie banks have an enviable record of profit growth and have built their credibility over many decades through all sorts of economic conditions.
Yes the regulator wants them to recapitalise to international standard capital ratio's but they're not doing this to "stand still"
We're comparing PE ratio's because they're quite obviously the relevant comparisons. Consensus EPS forecast is 9.75 cps this year v 9.0 cps last year, hardly stellar growth and not especially inspiring compared to the Aussie banks.
Consensus EPS for 2016 is 10.4 cps so consensus implied growth in 2016 is 6.6%. Quite clearly I am more bearish on bad and doubtful debtors in FY16 and especially FY17 and doubt we'll see much EPS growth, if any.
Aussie banks have the runs on the board over a vastly greater timeframe than HNZ and also a much stronger credit rating and are operating in a lower risk sector than HNZ, (mining company loans excluded).

At the risk of sounding like a broken record, Dairy is potentially to HNZ what Iron ore is to the Aussie banks so to me its somewhat disingenuous to suggest HNZ doesn't face its own unique set of challenges of a very similar nature to the Australian entities. Selling Holden's to sharemilkers on no deposit no payment terms till 2016...they're good for it right ?

[winner69]

Please show your analysis:)

I think comparing quarters should do the same job.

Stats NZ released the Building Activity Survey and headlined Non-residential activity down 1% - seasonally adjusted of course even though actual activity was up more than 10%

You pointed out heartland earnings are seasonal, I had never thought so.

Applying a basic seasonality factor based on half year earnings then Heartlands H2 earnings guidance of $23.5m (actual) is a seasonally adjusted 9% DOWN on previous half year .....even though 24% more than the same half year a year earlier in actual terms.

Load of **** eh .... Methinks heartland earnings aren't really seasonal and the fact that in the past H2 is higher than H2 is more to do with an underlying growth trend (not seasonal) which has now come to an end.

Whatever come August Jeff will be touting the huge growth achieved and saying well positioned for this to continue .....and hoping like hell H1 will be better than The current half year.

Share price cheap as eh ......if Roger used his graham formula and your 18% growth we would get $2 plus .....wouldn't we?

Have a nice chart showing thee seasonally adjusted earnings but cant load from a ipad

[percy]

Was not me.!!!!!!!!!!!!!!!!!!!
Well we can't complain about liquidity.
Nearly 10mil shares traded today.

[cheeky]

Big volume through went through from 4.30pm - around $10m traded.

[Beagle]

Vast majority traded in big blocks at $1.22. It occurs to me there's some very smart minds at work at Quadrant private equity. You boys at Quadrant can feel free to flick me a PM if you want a Kiwi consultant on your team.

[winner69]

Was not me.!!!!!!!!!!!!!!!!!!!
Well we can't complain about liquidity.
Nearly 10mil shares traded today.

With so many up for sale from punters deserting the good ship I thought you would have been backing the track up percy

[percy]

Possibly I have the wrong attitude.I don't often set target number of shares I want to hold.As you know my biggest mistake in the market has been selling down my Ebos stake over the years.I decided early last year to rectify that, and set a target number of Ebos shares I wanted to hold.At the same time I set a target figure I wanted to hold of Heartland shares.I achived both targets by selling a number of my spec Australian shares.For once I got my timing right.
Recently I set a modest target holding figure for SEK,which I have now achieved.
With EBO,HNZ,and SEK I have dividend reinvest.My wife takes the cash with her EBO and HNZ.I am not looking to buy any more shares of these companies.
With HNZ,should I need funds I would most probably sell the shares I receive with the DRP.
I have always found well managed companies surprise on the upside,so therefore I think I am "well positioned."

[winner69]

Another trip to church needed for me

I sold some of my heartland shares (hard far far too many) and moved some cash from one socially responsible company in Heartland to an even more socially responsible one in Restaurant Brands.

[couta1]

Another trip to church needed for me

I sold some of my heartland shares (hard far far too many) and moved some cash from one socially responsible company in Heartland to an even more socially responsible one in Restaurant Brands.
You would have been better off buying Air NZ shares as only an infinitesmal number of people will ever die in an air disaster compared to the multitudes whose death would have and will be largely influenced by their daily/weekly visits to KFC:eek2: PS- Those not in the know, winner has stated he would never buy airline shares because he couldnt live with himself if their was a plane crash.

[winner69]

You would have been better off buying Air NZ shares as only an infinitesmal number of people will ever die in an air disaster compared to the multitudes whose death would have and will be largely influenced by their daily/weekly visits to KFC:eek2:

Yeah i agree, but plane crashes are so horrific and hundreds dead at a time. I wouldn't want that on my conscience, never.

[couta1]

Yeah i agree, but plane crashes are so horrific and hundreds dead at a time. I wouldn't want that on my conscience, never.
Fare enough mate, deaths we can't see or don't know about are much nicer aye.

[winner69]

Good day on the bourse today, Heartland didn't go down even though the Aussie banks took another pummelling.

That No More Gaps not working Xerof, what's up

[Xerof]

1.22 low is filling the gap. Just need to squeeze the trigger a bit harder, or clean your nozzle of dry material:D

[Beagle]

Basically what I've been saying for many weeks now.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11460713

[percy]

I wonder about Fitch's comment about NZ banks having ample capacity to absorb impaired - loan levels similar to 2009-2010.Were they meaning NZ banks,or were they forgetting that the Australian banks need to shore up their capital?
Heartland with their "niche", "diversified" rural lending should not face the challenges the likes of the Australian Banks, such as BNZ ,whose rural exposure is mainly mortgage lending.

[noodles]

Basically what I've been saying for many weeks now.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11460713
The article is not all doom and gloom

"Fitch said farmers were well placed to withstand weaker prices because of the substantial cash payout by Fonterra from the record 2013-2014 season.Smaller payouts this season were widely anticipated following last year's drop in global dairy prices, and farmers have generally used last season's high prices and dividends to pay down debt or invest, Fitch said."
It also points out that 25% of farmers would experience negative cashflow.

But clearly there will be pain, but what is not clear or quantifiable is the impact on HNZ. For instance, how many farmers will actually go under? Of the 25% mentioned above, how many will be able to extend their existing mortgage facilities? How many will be able to get loans from family? Will the RBNZ lower the OCR and mortgage rates drop. How low will the currency fall with RBNZ drops rates? If in fact a HNZ loan does go into default, how much will the security (cows or equipment) be worth when HNZ repossess?

Even after all these unknowns, rural lending only represents 17% of the HNZ loan book. And not all of that is dairy!

So even if the recent HNZ price weakness is due the dairy price, I think it is well and truly priced in.

[Baa_Baa]

The whole Banking sector has caught gravity, has had it for a few weeks. Some chart comparisons/overlays show in first few weeks there was only vague correlation with HNZ but as the Aussies/Kiwi banks began moving further down HNZ seems more tightly correlated. Perhaps HNZ may now be part of the broader de-risking going on in banking/finance generally? The HNZ daily price gap hasn't quite closed and it's correct, that HNZ showed fortitude when the big banks sold off Fri but the weekly chart tells a story with weekly 39EMA (approximates to the daily 200EMA) at around $1.20 now close at hand and below that some horizontal price support between $1.18 and $1.12, though the 200EMA traders would be out by then. Other chart indicators are weak/down and arguably not yet oversold. If the banking sector rout continues, HNZ may well drop with it. Thoughts?


Good day on the bourse today, Heartland didn't go down even though the Aussie banks took another pummelling.

That No More Gaps not working Xerof, what's up

[Joshuatree]

Im thinking you are right re "broader derisking going on in banking....etc"
ASX down 4.8% this week ; worst in 3 years; lead by the banks

[percy]

The whole Banking sector has caught gravity, has had it for a few weeks. Some chart comparisons/overlays show in first few weeks there was only vague correlation with HNZ but as the Aussies/Kiwi banks began moving further down HNZ seems more tightly correlated. Perhaps HNZ may now be part of the broader de-risking going on in banking/finance generally? The HNZ daily price gap hasn't quite closed and it's correct, that HNZ showed fortitude when the big banks sold off Fri but the weekly chart tells a story with weekly 39EMA (approximates to the daily 200EMA) at around $1.20 now close at hand and below that some horizontal price support between $1.18 and $1.12, though the 200EMA traders would be out by then. Other chart indicators are weak/down and arguably not yet oversold. If the banking sector rout continues, HNZ may well drop with it. Thoughts?

I think the market reacts to results.Should earnings meet or exceed management's and analysts projections,the share price usually goes up.Should the earnings be lower than expected the share price goes down.
Once we have Heartland's result in late August we can work out the ratios, ROE,EPS, PE,dividend,provisions, and hopefully we can get some idea of projected growth.
At this time I think we will see that Heartland are in better shape than the Australian banks,with better growth prospects,so I expect they will be rated differently.[positively].
We should note two weeks ago Heartland had 9 months trading under their belt and said they should be at the top end of their forecast.
The Australian Banks have shown remarkable strength,a huge capacity to grow and pay increasing dividends.They bounce back.
In 1991 Westpac had huge loses on commercial property.At one stage it looked like Kerry Packer would take them over at under $4.On Friday they were down to $31.19,so someone who brought in 1991 would be up 732% plus they would have enjoyed lovely dividends.
From 1991 the others were up as follows [does not include dividends] ANZ 917%,CBA 1076% and NAB 671%.

[percy]

On 21st May Heartland announced their 9month result to 31st March.
So from 31st March to 21st May they had another 6 weeks trading.They would have had a fair idea how those 6 weeks had gone.Had they not gone well you would not announce expects;" npat to be upper end"!
Heartland's year ends 31st June.So from 21st May to end of June they had to guess how the next 6 weeks would go.
I would think that would have been a piece of cake.
I therefore think all the headlines of doom have been overdone as far as Heartland are concerned.

[winner69]

On 21st May Heartland announced their 9month result to 31st March.
So from 31st March to 21st May they had another 6 weeks trading.They would have had a fair idea how those 6 weeks had gone.Had they not gone well you would not announce expects;" npat to be upper end"!
Heartland's year ends 31st June.So from 21st May to end of June they had to guess how the next 6 weeks would go.
I would think that would have been a piece of cake.
I therefore think all the headlines of doom have been overdone as far as Heartland are concerned.

Spot on Percy, you are so so right.


So NPAT will be $47.0m to $47.9m. Nothing more, nothing less. Anything more they haven't really been upfront and telling porkies. So close to the end of the year they already knew the answer within a few bucks.

I think Roger highlighting dairy lending is relevant. He is not saying it might hurt heartland this year but has a genuine concern about the next year or so. Things slowly get worse.

I think taking the associated risks into account is wise. Ignoring the potential risk and not assessing its impact is folly. Your assessment no doubt will differ from Rogers

[winner69]

Doesn't heartland only use Fitch as its rating agency? They sacked the other one I think.

Methinks those comments from Fitch is a veiled warning to the likes of Heartland, probably reinforcing 'publicly' what has been said in private.

[winner69]

Noodles mentioned maybe OCR go down and lower interest rates will help stretch dairy farmers.

Bagrie from ANZ says a certainty next week, good old Cam (are ally good bloke).

That Herald piece said "Reserve Bank data show that floating-rate loans amounted to 72 per cent of total dairy lending in June 2014, up from 16 per cent in 2008"

That's good then, most dairy farmers (and every one else) will have heaps less interest to pay and the pressure is off. But then they will like all us moan like hell when inflation goes way over 3%

Conversely if interest rates go up life becomes tough for the stretched ones. Say a 1% point increase in rates would lead to roughly 15% more on the interest bill - heck reduced income and much higher outgoings.

Really tough for those 10% who have 33% of sector debt .....bet you they are the highly leveraged ones. (I won't mention farm prices)

Ignore the potential risks not assessing its impact is folly

[percy]

Spot on Percy, you are so so right.


So NPAT will be $47.0m to $47.9m. Nothing more, nothing less. Anything more they haven't really been upfront and telling porkies. So close to the end of the year they already knew the answer within a few bucks.

I think Roger highlighting dairy lending is relevant. He is not saying it might hurt heartland this year but has a genuine concern about the next year or so. Things slowly get worse.

I think taking the associated risks into account is wise. Ignoring the potential risk and not assessing its impact is folly. Your assessment no doubt will differ from Rogers

All lending has associated risks.All banks take some "big hits".Nature of the beast.Over lending in any one sector,often leads to big loses for banks.
What we can learn from the history of the Australian banks,is their capacity to recover very quickly from "big hits".
I will point out again the challenges the Australian banks face;over valued property market,both Aussie and Auckland,mining,manufacturing,and retail, and in NZ their exposure to rural mortgages.Plus the fact they need to improve their capital ratios.Yet they will get over these hurdles quickly.
Heartland will take hits also.Nature of the beast as I have said.
Yet I feel the prospects for NZ banks is a lot better over the next two or three years than for the Australian banks.This is based on the economic forecast for NZ being so much better than the forecast for the Australian banks.Yet some NZ sectors will face challenges,
so I can see where Roger is coming from,yet with such a widespread diversified portfolio HNZ is "well positioned."

[winner69]

...........
In 1991 Westpac had huge loses on commercial property.At one stage it looked like Kerry Packer would take them over at under $4.On Friday they were down to $31.19,so someone who brought in 1991 would be up 732% plus they would have enjoyed lovely dividends.
From 1991 the others were up as follows [does not include dividends] ANZ 917%,CBA 1076% and NAB 671%.

Even the$16 punters fronted up with to shore up Westpac in 2008 not too shabby now either is it

[percy]

Even the$16 punters fronted up with to shore up Westpac in 2008 not too shabby now either is it

Not too shabby at all.!!
I was rather hoping you or Macduff ,would correct me and say it was 1992, when it looked as though Kerry Packer would take over Westpac at under $2. !!! lol.

[winner69]

Not too shabby at all.!!
I was rather hoping you or Macduff ,would correct me and say it was 1992, when it looked as though Kerry Packer would take over Westpac at under $2. !!! lol.

Even I would front up with if heartland needs to boost its balance sheet when the next crisis hits ....at $1

[winner69]

Not too shabby at all.!!
I was rather hoping you or Macduff ,would correct me and say it was 1992, when it looked as though Kerry Packer would take over Westpac at under $2. !!! lol.

http://www.independent.co.uk/news/business/turmoil-as-packer-quits-westpac-after-week-1478651.html

[percy]

Even I would front up with if heartland needs to boost its balance sheet when the next crisis hits ....at $1

Me too.!!!
Then we can say we are "well positioned" to wait for the time we receive a $1 a year dividend.!! Bring it on.! lol.
I keep forgetting the huge dividends the Australian banks have paid over the years,but going back to basics we must remember, "it is better to own a bank,than have money in a bank."

[percy]

http://www.independent.co.uk/news/business/turmoil-as-packer-quits-westpac-after-week-1478651.html

Wonderfull.
Thank you.
I was a year and a $1 out.!!!!
Gee that was fun!!!!!!!!!!!!!!!!
Would love to have a video of Kerry explaining the facts of life to the Westpac board.!!!

[winner69]

I had forgot about Al Dunlap becoming involved .... Chainsaw Al

He had an inglorious ending to his career.

Best insult thrown at him was being voted 6th worst CEO of all time

All these good times even before Rogers time eh Percy ....ha ha

[iceman]

Basically what I've been saying for many weeks now.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11460713

Not all bad mate. Many cutting back on cattle numbers and costs a bit during the dry season to relieve the cashflow, by taking advantage of high prices at the meatworks http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11461065

[percy]

http://www.independent.co.uk/news/business/turmoil-as-packer-quits-westpac-after-week-1478651.html

At the time Westpac shares were trading at $2.91....Last year Westpac paid out $1.85 in dividends.!!
I seem to remember Al Dunlap was feared more than his boss Kerry Packer.!!!!!!
I also remember Kerry Packer asking some accountant of a firm he was looking to/or had just taken over,what that was in the accountants.Oh that's our rainy day fund."Look son,its pissing down outside."
He had a certain way with words that focused people's attention.!!! lol.

[percy]

Not all bad mate. Many cutting back on cattle numbers and costs a bit during the dry season to relieve the cashflow, by taking advantage of high prices at the meatworks http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11461065

Thanks Iceman.Adds balance to the discussion.

[nextbigthing]

If good growth has done its thing, let's say Heartland continue to grow at a long term growth rate (g) of just 3%
Assume they move to a 100% payout ratio making them a divvy stock. Next dividend (D1) is equal to earnings per share, around 10 cents. Let's say a required return (k) of 10%. Ignore tax/imputation for simplicity.


SP = D1/(k-g)
SP = 0.1/(0.1-0.03)
SP = $1.43


This is assuming only 3% growth. Ie the market is seemingly currently factoring in either
a) lower growth than 3%
b) A higher required return than 10%
c) Or the market is discounting the stock for some other factor. Perhaps people are selling to raise some cash, anticipating a cap raising for a takeover of something like Fisher and Paykel which has been rumoured and therefore putting sell pressure on the price? Or perhaps some are anticipating a meltdown soon and are getting out early?

$1.43? Must be on sale at current.

[couta1]

NBT does there always have to be a logical reason for a share price drop in an illogical market?

[winner69]

If good growth has done its thing, let's say Heartland continue to grow at a long term growth rate (g) of just 3%
Assume they move to a 100% payout ratio making them a divvy stock. Next dividend (D1) is equal to earnings per share, around 10 cents. Let's say a required return (k) of 10%. Ignore tax/imputation for simplicity.


SP = D1/(k-g)
SP = 0.1/(0.1-0.03)
SP = $1.43


This is assuming only 3% growth. Ie the market is seemingly currently factoring in either
a) lower growth than 3%
b) A higher required return than 10%
c) Or the market is discounting the stock for some other factor. Perhaps people are selling to raise some cash, anticipating a cap raising for a takeover of something like Fisher and Paykel which has been rumoured and therefore putting sell pressure on the price? Or perhaps some are anticipating a meltdown soon and are getting out early?

$1.43? Must be on sale at current.

You greedy bugger, wanting 10% return

Its better owning the bank than putting money in the bank so 7% these days should be more than OK for a well managed BANK

Geez that's $2.50 v your $1.43

Bring it on eh

[Baa_Baa]

NBT does there always have to be a logical reason for a share price drop in an illogical market?

What is illogical about the market selling to de-risk its exposure to capital loss? It is more illogical to hold an entire portfolio in a sellers market and experience the capital loss.

If one decided for example to allocate say 33% of their holding to trading for equity growth and the balance just ride it out either way (assuming a long term confidence in the fundamentals), then selling that 33% when the chart screams .. 'sell' is not illogical, particular if that 33% is used to buy again when the chart screams .. 'buy'.

The alternative is to watch ones capital be eroded by the market sentiment and call it illogical. It is not the retail investors who drive the market, sometimes it's better just to follow the money.

[couta1]

Baa Baa the studies done on selling and buying based on market movements versus just holding for a given long term time frame show stuff all difference in end profit excepting that the buy and sell group have to work hard and suffer more stress to gain the same profit.

[nextbigthing]

You greedy bugger, wanting 10% return

Its better owning the bank than putting money in the bank so 7% these days should be more than OK for a well managed BANK

Geez that's $2.50 v your $1.43

Bring it on eh

I thought divvy stock to keep Roger happy, almost no growth to keep you happy Winner and premium to current price to keep Percy happy.

How do you arrive at $2.50 Winner?

[winner69]

I thought divvy stock to keep Roger happy, almost no growth to keep you happy Winner and premium to current price to keep Percy happy.

How do you arrive at $2.50 Winner?

Your DDM formula - your 10 cents dividend and your 3% growth but only 7% required return

[nextbigthing]

Your DDM formula - your 10 cents dividend and your 3% growth but only 7% required return

Aha quite right. Thanks. Lets then roll with $2.5, looks much better than $1.43

Can you dust off the fax machine and inform all the large brokers that that is in fact what HNZ is actually worth?

[Baa_Baa]

Baa Baa the studies done on selling and buying based on market movements versus just holding for a given long term time frame show stuff all difference in end profit excepting that the buy and sell group have to work hard and suffer more stress to gain the same profit.

Perhaps we don't read the same studies couta, the point is leveraging a holding to increase equity, using the obvious indicators to sell some when it's overbought, then buy it again later when it's oversold (assuming long term fundamentals) to gain the the same profit on a larger holding (or in your case recently with XRO to apply capital to increase equity when the price is depressed to average down) they're very similar but one approach doesn't require more capital, it just leverages capital invested before it is eroded by market sentiment. I don't mind working for that, and it's not nearly as stressful as watching my capital get eaten away while passively blaming an illogical market. A market imho is not, and cannot be illogical, or logical, a market just ... is.

[sb9]

Vast majority traded in big blocks at $1.22. It occurs to me there's some very smart minds at work at Quadrant private equity. You boys at Quadrant can feel free to flick me a PM if you want a Kiwi consultant on your team.

https://nzx.com/companies/HNZ/announcements/265350

Seems ACC has been gobbling them up....

[winner69]

https://nzx.com/companies/HNZ/announcements/265350

Seems ACC has been gobbling them up....

Is that good or bad?

Somebody was willing to discount those 7 mill odd them on the day, just to get out?

[sb9]

Is that good or bad?

Somebody was willing to discount those 7 mill odd them on the day, just to get out?

Me thinks its good....

[nextbigthing]

Is that good or bad?

Somebody was willing to discount those 7 mill odd them on the day, just to get out?

They hadn't seen your $2.50 valuation yet Winner. Their loss.

[winner69]

Me thinks its good....

Some say if you have a bundle of anything to sell just knock on ACC's door and they take them off your hands. All that dosh that has to find a home somewhere.

They did have 20 mill before this.

[winner69]

'The Halo Effect' (Rozenzweig, 2007) is a brilliant book. I re-read it quite often, esp when things are going well.

I sometimes wonder whose 'halo' is going to lose its lustre first?

[winner69]

After Percy's rave I re-read the Scales annual report. Couldn't but notice that Andy Borland's total remuneration was shown as $600k. Seems fair enough

But in comparison to Greenslades $1.6m (last annual report) it palls into insignificance. Suppose you cant really blame those who keep reminding us that bankers are greedy as and ......(not for this forum)

[percy]

After Percy's rave I re-read the Scales annual report. Couldn't but notice that Andy Borland's total remuneration was shown as $600k. Seems fair enough

But in comparison to Greenslades $1.6m (last annual report) it palls into insignificance. Suppose you cant really blame those who keep reminding us that bankers are greedy as and ......(not for this forum)

Here's a nice exercise for you.
1] Find out whether any of the CEOs of the Australian banks are paid under A$6mil a year.
2] Let us know what they are paid.
3] Find out what the CEOs of Co-Op Banks,TSB,and SBS are paid.
4] Compare the pay rates of CEOs of PGW,SML,SCL,and SEK.
5]Then work out how many years I would have to work to earn the same as the lowest paid CEO.!? lol.\

[winner69]

Hey Xerof ....that gap not filling very fast

If you can't have half a hole can you have half a gap?

[Xerof]

Yes, you can have a partial gap-filler, but very satisfying if it does it to the pip, 118 in this case

There is no time limit on these things, and I never have half a pint, do you?

But one needs to keep an open mind and watch the action as it plays out

It's put in a low of 122, so now look for the higher lows for confirmation of the support level perhaps. 122 could have been where the caulking gun ran out of sealant:D

[winner69]

Here's a nice exercise for you.
1] Find out whether any of the CEOs of the Australian banks are paid under A$6mil a year.
2] Let us know what they are paid.
3] Find out what the CEOs of Co-Op Banks,TSB,and SBS are paid.
4] Compare the pay rates of CEOs of PGW,SML,SCL,and SEK.
5]Then work out how many years I would have to work to earn the same as the lowest paid CEO.!? lol.\

Good questions Percy. Here goes -

1) and 2) if size mattered Greenslade would be nowhere near $1.6m. As the custodian of a corner dairy sized finance company relative to those mentioned he worth about $200k .....but seeing he needs to be paid more than CFO lets give him $600k

3) from what I can find out the $1.6m Greenslade gets would cover the CEO rem for 2 of those institutions mentioned.

4) what 1) and 2) tell us is that bankers think that they are so important that they need to be paid outrageous fortunes. Greedy lot and a scourge on society. One day the world will see what they really are and bring them into line, unfortunately only after they have stuffed the world up again

4) continued ...... the good guys who run companies who actually make and do things get a decent salary for doing that. Good hardworking honest souls who toil hard being productive as opposed to shuffling financial assets around. They deserve a pat on the back.

5) best answered this way. If your HNZ dividend was your sole source of income (you can spend the national super on a few treats but doesn't count as income) you would need to own 8% to 9% of Heartland to get what Greenslade gets paid - outrageous

But at the end of the day you are a good soul Percy and the type of person that makes NZ what it is. That can't be measured in monetary terms but its heaps.

[percy]

Always difficult subject what CEOs get paid,compared with what us Percys earn.
In his defence we could say he has been responsible for adding at least $200mil to the market cap of HNZ.[or 43cps]
Indeed value for money for shareholders.

[Xerof]

If you can believe what you read in the paper, F&PF will be bought by KKR...the "investment banking source", who sang like a canary to NBR, reckons everyone else, including HNZ are wasting their time.

Such arrogance and complete lack of confidentiality is mind-boggling, but then almost every new item in the media these days emanates from a leaked document, so why should I care, hence telling you whats behind the paywall:t_up:

[winner69]

If you can believe what you read in the paper, F&PF will be bought by KKR...the "investment banking source", who sang like a canary to NBR, reckons everyone else, including HNZ are wasting their time.

Such arrogance and complete lack of confidentiality is mind-boggling, but then almost every new item in the media these days emanates from a leaked document, so why should I care, hence telling you whats behind the paywall:t_up:

Did you ever read "Barbarians at the Gate" ---- good story of how the rat bags KKR work

I got lectured at a highly powered management course once. The guy running it said we should read it as it was a great case study in successful negotiation, I said I had read it and it was a great case study in arrogance and corporate greed and what's wrong with the financial world today (back then so things haven't changed) ----- tut tut winner I got told.

[Beagle]

Good questions Percy. Here goes -

1) and 2) if size mattered Greenslade would be nowhere near $1.6m. As the custodian of a corner dairy sized finance company relative to those mentioned he worth about $200k .....but seeing he needs to be paid more than CFO lets give him $600k

3) from what I can find out the $1.6m Greenslade gets would cover the CEO rem for 2 of those institutions mentioned.

4) what 1) and 2) tell us is that bankers think that they are so important that they need to be paid outrageous fortunes. Greedy lot and a scourge on society. One day the world will see what they really are and bring them into line, unfortunately only after they have stuffed the world up again

4) continued ...... the good guys who run companies who actually make and do things get a decent salary for doing that. Good hardworking honest souls who toil hard being productive as opposed to shuffling financial assets around. They deserve a pat on the back.

5) best answered this way. If your HNZ dividend was your sole source of income (you can spend the national super on a few treats but doesn't count as income) you would need to own 8% to 9% of Heartland to get what Greenslade gets paid - outrageous

But at the end of the day you are a good soul Percy and the type of person that makes NZ what it is. That can't be measured in monetary terms but its heaps.

Good post. $1.6m is right up there with what Chris Luxon the CEO at Air N.Z. is paid. A vastly more complex organisation with international operations and turnover approaching $5B and is ultimately responsible for millions of passenger's safety and managing a staff of 11,000. Its doesn't really stand up to too much scrutiny does it ?...oh but wait, he's a "banker" so that's okay then. Maybe there whould be a "W" in there somewhere if you catch my drift.

[mis chief]

Good post. $1.6m is right up there with what Chris Luxon the CEO at Air N.Z. is paid. A vastly more complex organisation with international operations and turnover approaching $5B and is ultimately responsible for millions of passenger's safety and managing a staff of 11,000. Its doesn't really stand up to too much scrutiny does it ?...oh but wait, he's a "banker" so that's okay then. Maybe there whould be a "W" in there somewhere if you catch my drift.

Is it wine o'clock then??? Think you should be very careful.

[winner69]

Percy's exercise again.

Lowest paid front line Hesrtland staff on about $50k (prob an over estimate anyway)

So 32 years working to get what MD gets in 1 year

The 32 gets bigger as no doubt MD salary goes up much faster than the mere workers.

Maybe everybody is happy. Some for just having a job and the other proud he can drink Ut if the pigs trough

Incredible eh

[Beagle]

He must be pretty clever though Winner because you and I know its a very risky game lending money on new vehicles with no deposit and no payment's for nearly a year...meanwhile interest is accruing on the loans and that vehicle has probably depreciated by 30% from its retail price before the first payment is even due, all up close to 40% underwater on that vehicle before the first payment is scheduled to be due.

You see this is a very cunning plan that only a top executive would understand. People can't be late on their payments if their first payment isn't due till 2H FY16 year !! so no delinquencies are possible for quite a while as no payments are due and management can slap themselves on the back, (or even pay themselves big bonus), for the superb job they're doing growing the loan book, pretty cunning eh ?

Remind me again, how many shares does Jeff own ?

[noodles]

He must be pretty clever though Winner because you and I know its a very risky game lending money on new vehicles with no deposit and no payment's for nearly a year...meanwhile interest is accruing on the loans and that vehicle has probably depreciated by 30% from its retail price before the first payment is even due, all up close to 40% underwater on that vehicle before the first payment is scheduled to be due.

You see this is a very cunning plan that only a top executive would understand. People can't be late on their payments if their first payment isn't due till 2H FY16 year !! so no delinquencies are possible for quite a while as no payments are due and management can slap themselves on the back, (or even pay themselves big bonus), for the superb job they're doing growing the loan book, pretty cunning eh ?

Remind me again, how many shares does Jeff own ?
What you are implying scares me a little. So I looked up the last annual accounts.

Firstly, he has not been buying of late. He took up his SPP last year.

He has a beneficial interest in 880K shares. So not a great deal compared to his salary.

However, the rest of the board own a good percentage of the company. We should take some comfort from that.

[Zaphod]

Percy's exercise again.

Lowest paid front line Hesrtland staff on about $50k (prob an over estimate anyway)


Most banks have similar salary structures for front line staff due to both competitive pressures and collective agreements with Unions.

New CSR staff (which would be generally regarded as the entry level position in a bank) salaries typically start at $36K and can earn up to $45K + Bonus. One of the banks mentioned above pays $34k to new CSR's but offers a more generous bonus scheme.

[winner69]

Macduffy said on another thread about this impact othis weeks OCR cut ---- And savers, once again, come to the rescue of over-committed dairy farmers and Auckland property owners!

Over committed from easy money that banks are falling over themselves to lend

That then begs the question --- what right (moral or whatever) have the shareholders of banks have when yhey expect that bank to make a ROE of over 10% when they only offer depositors 3%-4% pa return to depositors hardly commensurate with the risks is it?

Are banks making excessive profits from these high ROEs which reflect increased leverage since the debt boom started in the 70's

[Beagle]

http://beehive.govt.nz/release/government-issues-responsible-lending-code

[winner69]

Read somewhere today (can't find it now) that banks aren't that concerned about dairy debt. It appears that growth in lending to rural clients has outpaced the growth in other lending. They also think that farm prices will hold up, if not increase --- I think the comment was farms remain very 'bankable' is spite of the cut in farm gate milk prices (a certainty to recover they say)

So it seems nothing to worry about any stress from rural lending.

All honky dory in the countryside so it seems.

Found it - Rod Oram in SST - interesting what the bankers told him
http://www.stuff.co.nz/business/69318309/rod-oram-dairy-discord

[winner69]

FY15 earnings about 10.2 c/s

My forecasts are rubbish following that disappointing (to me anyway) guidance

Leaving it to the experts I note consensus for FY16 is 10.5 cents

Seems fair enough .....a million or so more than this year.

[noodles]

FY15 earnings about 10.2 c/s

My forecasts are rubbish following that disappointing (to me anyway) guidance

Leaving it to the experts I note consensus for FY16 is 10.5 cents

Seems fair enough .....a million or so more than this year.

Two brokerages have eps>11c for FY16. Perhaps the others are out of date and have not updated guidance since the 3rd qtr report?

[winner69]

Two brokerages have eps>11c for FY16. Perhaps the others are out of date and have not updated guidance since the 3rd qtr report?

Hope springs eternal eh

Jeez >11 cents is a big improvement on current performance.

What's your own estimate / guidance noodles?

[kiora]

Read somewhere today (can't find it now) that banks aren't that concerned about dairy debt. It appears that growth in lending to rural clients has outpaced the growth in other lending. They also think that farm prices will hold up, if not increase --- I think the comment was farms remain very 'bankable' is spite of the cut in farm gate milk prices (a certainty to recover they say)

So it seems nothing to worry about any stress from rural lending.

All honky dory in the countryside so it seems.

Found it - Rod Oram in SST - interesting what the bankers told him
http://www.stuff.co.nz/business/69318309/rod-oram-dairy-discord

"Found it - Rod Oram in SST - interesting what the bankers told him"
Really ??? Hmm Maybe smoke & mirrors as I have heard the bankers are seriously worried about their equity as they should be.Its in their self interest to keep farm values up there as high as possible and hope like hell dairy commodity prices recover quickly but maybe this down turn indicates a fundamental change in dairy commodity prices.

[winner69]

"Found it - Rod Oram in SST - interesting what the bankers told him"
Really ??? Hmm Maybe smoke & mirrors as I have heard the bankers are seriously worried about their equity as they should be.Its in their self interest to keep farm values up there as high as possible and hope like hell dairy commodity prices recover quickly but maybe this down turn indicates a fundamental change in dairy commodity prices.

Just like they don't want to see property prices either, along with government, councils and many others.

They keep pumping eh kiora?

[noodles]

Hope springs eternal eh

Jeez >11 cents is a big improvement on current performance.

What's your own estimate / guidance noodles?
I don't have one. I'm comfortable with the estimates given by First NZ.

I tend to do my own estimate for companies are not covered by brokers or where the research is out of date.

[Fuzzy Dunlop]

Some of you may be interested to know that the subject of reverse mortgages appears to be popping up ever more frequently in the Australian media. Hopefully there will be some informed debate on reverse mortgages in the future.

http://www.smh.com.au/business/banking-and-finance/experts-talk-up-reverse-mortgages-but-asic-warns-of-risks-20150614-ghmivb

[mouse]

I think the best investment is a major airport atm. I have just paid $12.00 to park at Christchurch airport for half an hour. Plus it was a six mile walk to the domestic terminal. Anyway, the cash is going to a good cause, so I should not beef.
Which brings me to cows. It looks bad. Of course banks will whistle in the wind, but the economics of the situation must affect them. Heartland looks as if it spread over several lending areas, so should not be so affected. At the moment we should be glad to have a reasonable company to invest in.

[Xerof]

Mouse, thats the 'short stay' park, for rodents and people who fly out of town for the day. Can I suggest you park your cheesemobile in the 'express' building, within a minute from the terminal, at $4.00 for up to 40 minutes, free if under 15 minutes. Is this the HNZ thread? Sorry perc

[percy]

Mouse, thats the 'short stay' park, for rodents and people who fly out of town for the day. Can I suggest you park your cheesemobile in the 'express' building, within a minute from the terminal, at $4.00 for up to 40 minutes, free if under 15 minutes. Is this the HNZ thread? Sorry perc

Now look here Xerof you will get both of us "yellow carded".
Just between us, I have all day free parking.!!
I hit Robin Mann place about 5.30 am ,and enjoy a brisk 10 minute walk to the terminal.Then on my return I enjoy another brisk walk, happy in the knowledge I have saved enough parking money to buy another 25 HNZ shares.!!! lol.

[mouse]

Mouse, thats the 'short stay' park, for rodents and people who fly out of town for the day. Can I suggest you park your cheesemobile in the 'express' building, within a minute from the terminal, at $4.00 for up to 40 minutes, free if under 15 minutes. Is this the HNZ thread? Sorry perc

Many thanks for the advice. I managed to time the arrival of my wife for 15 mins after her landing at Christchurch. Waited a minute or so and she arrived. Still pretty annoyed about the $12.00.

[winner69]

I was a bit sceptical about Xerof's gap - couldn't happen to HNZ I thought

At first I didn't even believe there is a GAP but there is one (not even photoshopped like some models do)

And hack .... that gap is filling ever so slowly

When filled the price might be below that 200EMA - time for Percy to sell then?

[Beagle]

Looking at the chart the rot for the SP started when they released their half year report with part of it in Maori, completely unnecessary and to the best of my knowledge a first for a listed company in N.Z.
Sent a signal that these guys are thinking well and truly a very long way outside the box, (completely unconventional thinking for a white male dominated board ?). Quite obviously Mr market is most unimpressed with this and some of their unconventional new lending.

[percy]

Since 18th June 2013 the share price of Heartland has stayed above the 200 day EMA.
On 20th May last year was the only time the share price at 86 cents hit the 200 day EMA.
Unlike Roger I am still most impressed with HNZ.A company that delivers on what they say they will do.
I have two large holdings;EBO,and HNZ.Both are excellent companies and I can't see any reason why I would ever sell either.Taken too much hard a work to get to the holdings I want in them.

[Beagle]

Looks like we're about 3 cents away from a breech of the 180 day MA...one more reduction in the dairy auction price.

[Xerof]

Xerof's gap......sounds like a John Wayne movie, winner......


118 looks about where the 200 ema lies. Should be support, not the cliff the lemmings jump off into Xerof's gap (but good management should have a stop a few cents on the other side of the canyon)

"lifes tough......it's even tougher if you're stupid" Marion Morrison