HGH - Heartland Group Holdings

[winner69]

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.

Interesting view there Roger

If the lines on the chart reflect market sentiment then one could say that the direction of that chart to a large extent is a forward looking indicator of market players expectations of future performance,

The market has probably worked out that Heartland earnings aren't going to grow much over the next year or so. The company itself did tell us that after many years of every half year being better than the previous one this is now not happening (H2 being about the same as H1). They then might have adjusted their thinking and instead of seeing really strong growth going forward it is going to be a lot less subdued. Valuations fall from being rerated (a drop in PE of 2 is equivalent to 20 cents and there is lower eps expectations than previously)

The reasons for this being signalled by the charts you covered off Roger (except maybe the Maori bit) and no doubt several more things that apparently outweigh the positives.

What a load of the proverbial, can't be right can it.

I seez nothing as Schultz says

[winner69]

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

Very good Xerof. Been a few old westerns on Sky lately.

[winner69]

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

Findata says only 2 cents away from todays close .... and 1 cent away from todays low. Bit of a headroom with the 200MA at 119 though.

Those 180MA and 200MA definitely flattening out aren't they - the long uptrend maybe come to an end

Just as well such things as squiggly lines don't mean wery much

[winner69]

Warren wants to buy into Aussie banks. Market all excited, besides bubbles we now have Buffetmania.

I have sent warren an email saying there is neat little bank in New Zealand. For US$500m he can have the whole bank.

I told him one of the perks of owning heartland would be the preferential rate he and any member of his family would get on a home equity release mortgage.

I also told him that contrary to popular belief speaking Maori is not a pre-requisite for doing the deal



http://www.smh.com.au/business/warren-buffett-eyes-more-australian-deals-targets-banks-20150616-ghpce8.html

[percy]

Thanks for posting the link.
I concur with Warren.!!!!!!!!!!!!!!!!!!!! lol.

[percy]

Reverse mortgages.
Another very good article in this morning's The Press;page A13; Agony Aunt;Sell or borrow?
The same article is at www.stuff.co.nz and is headed;Agony Aunt;Reverse mortgages are a solution for the asset rich but money poor.
Again I concur.!

[percy]

Page A14 of this morning's The Press.
OWNING THE BANK BEATS JUST DEPOSITING....
No surprises there.!!
Mark Lister from Craigs pointed out you receive around 5% to 6% dividends from the Australian banks.It would be higher,but for the failure of successive NZ governments to arrange use of "franking dividends".Yeah right!!
So investors in Heartland do not have this problem, as they enjoy "fully imputed" dividends.
Huge difference between 5% to 6% fully taxable and 5% to 6% "fully imputed."
Sorry Mark,but again you score 4 out of 10.You must try harder,You have let yourself and Craigs down!

[winner69]

The story Percy referred to
http://www.stuff.co.nz/business/money/69398925/Own-the-bank-and-neither-a-borrower-nor-a-lender-be

Points in that article interesting.

Nobody's answered that question yet ---- what right do shareholders have to demand returns on equity >10% when the banks only offer depositors (lenders) 3%-4% (a return not commensurate with risk taken)

[percy]

The story Percy referred to
http://www.stuff.co.nz/business/money/69398925/Own-the-bank-and-neither-a-borrower-nor-a-lender-be

Points in that article interesting.

Nobody's answered that question yet ---- what right do shareholders have to demand returns on equity >10% when the banks only offer depositors (lenders) 3%-4% (a return not commensurate with risk taken)

As any business they have the right to ensure the business is profitable.A profitable business offers staff,investors,suppliers safety.It has the capacity to pay staff,suppliers,investors,and taxes on time.
Margins in any business can vary from a mark up of 5% to 200%.A bakery will most probably be at the higher end while a super market may work on 20%.
It pays to compare businesses with other businesses in the same sector.
Would you ask your fish and chips shop his margin?.Most probably 100% to 200% I don't, I only compare the taste.
Now back to your 10% on ROE.You may note Heartland have a long way to go, to catch up the over 14% the Aussie banks achieve.
I look forward to Heartland achieving a better ROE than the Aussies.!!!

[winner69]

Percy, so you are asking Heartland to take more risks and/or increase leverage?

[winner69]

Reverse mortgages.
Another very good article in this morning's The Press;page A13; Agony Aunt;Sell or borrow?
The same article is at www.stuff.co.nz and is headed;Agony Aunt;Reverse mortgages are a solution for the asset rich but money poor.
Again I concur.!

I am told that Heartland are converting more of the enquiries about her (from the TV campaign) into loans than they anticipated.

[percy]

Percy, so you are asking Heartland to take more risks and/or increase leverage?

Being a lot smaller and being more mobile than the big Aussie banks ,I think Heartland can develop their niche sectors, and grow their ROE to be higher than the Aussie banks.
Heartland is being run by very experienced bankers,who will look at sectors that provide better ROE, without necessarily taking higher risks.
For example Heartland's REL mortgages enjoy about [from memory] 2% higher interest rates than standard mortgages.

[Hoop]

The downtrend is 4 months old

http://i458.photobucket.com/albums/qq306/Hoop_1/HNZ%2016062015_2.png (http://s458.photobucket.com/user/Hoop_1/media/HNZ%2016062015_2.png.html)

[winner69]

Being a lot smaller and being more mobile than the big Aussie banks ,I think Heartland can develop their niche sectors, and grow their ROE to be higher than the Aussie banks.
Heartland is being run by very experienced bankers,who will look at sectors that provide better ROE, without necessarily taking higher risks.
For example Heartland's REL mortgages enjoy about [from memory] 2% higher interest rates than standard mortgages.

Analysts in their reports imply that NIM on HER stuff has a negative impact on overall NIM because they have lower margins than a lot of their business.

[winner69]

The downtrend is 4 months old

http://i458.photobucket.com/albums/qq306/Hoop_1/HNZ%2016062015_2.png (http://s458.photobucket.com/user/Hoop_1/media/HNZ%2016062015_2.png.html)




......and the gap is still to be filled

Yes, 4 months downtrend - must be a story there somewhere.

[couta1]

......and the gap is still to be filled

Yes, 4 months downtrend - must be a story there somewhere.
A story that's means nothing if your a long term holder just wiggly, whoops I mean squiggly lines on a chart. Disc-Holding lots long term.

[percy]

Analysts in their reports imply that NIM on HER stuff has a negative impact on overall NIM because they have lower margins than a lot of their business.

This is correct.
Reverse mortgage lending is a lot lower interest rates than say motor vehicle finance.
Heartland have a very diversified lending book,therefore the analysts should be comparing REL with ordinary mortgages.
And then they could say HNZ are achieving a lot more on their mortgages than Westpac.Correct but wrong.Different types of mortgages.
It is interesting to note TNR are running down their REL book to recycle the funds into motor vehicle lending,as it is more profitable.
There fore TNR's ROE will exceed HNZ's.

[percy]

The downtrend is 4 months old

http://i458.photobucket.com/albums/qq306/Hoop_1/HNZ%2016062015_2.png (http://s458.photobucket.com/user/Hoop_1/media/HNZ%2016062015_2.png.html)

Great to have you back.
Only wish it was with you posting the charts have HNZ as a must buy.!!!!!!!!!!!!!!!!!!!!!!! lol.

[sb9]

I almost sense the downtrend is doing reversal now, thanks to Warren Buffet and co....

[noodles]

Great to have you back.
Only wish it was with you posting the charts have HNZ as a must buy.!!!!!!!!!!!!!!!!!!!!!!! lol.

On the contrary Percy. The stock is in a short term downtrend, but a long term uptrend. Some would say this is the perfect time to buy as it is approaching 200MA and support levels. A low risk entry.

[noodles]

Looks like we're about 3 cents away from a breech of the 180 day MA...one more reduction in the dairy auction price.
lower dairy price, but higher HNZ price. Go figure.

Maybe dairy has not been the driver for HNZ price declines. Maybe it is simply a lack of buying demand after everyone got their full in the Quadrant sell-down?

This happened to AIR after the Government sell down as well.

[winner69]

I almost sense the downtrend is doing reversal now, thanks to Warren Buffet and co....

Warren got my email, the reply said I should get a reply soon. Haha

Maybe Warren has made a few enquiries about heartland and word has got out

[kizame]

I wish I knew how to post the chart.

BUT if you look at the weekly chart,hnz is still in a longterm upwards channel, The more recent downtrend has not quite touched the bottom boundary of that channel.
It is more important to see what is happening on the weekly chart,for your longer term comfort.Dailys for timing.

[vorno]

Warren got my email, the reply said I should get a reply soon. Haha

Maybe Warren has made a few enquiries about heartland and word has got out

You be sure to let us know if he does, I could look forward to a 10% rise in a day ;)

[RTM]

lower dairy price, but higher HNZ price. Go figure.

Maybe this means more finance needed for dairy farmers to see them through. And that this would be a positive for HNZ ?

[winner69]

Just as well Heartland doesn't fall into this

http://www.smh.com.au/business/banking-and-finance/stop-excessive-bank-lending-to-households-cap-finance-executive-pay-oecd-20150617-ghq9ea.html

[Harvey Specter]

Just as well Heartland doesn't fall into this

http://www.smh.com.au/business/banking-and-finance/stop-excessive-bank-lending-to-households-cap-finance-executive-pay-oecd-20150617-ghq9ea.htmlWish I could get paid to write reports like this:


The report found that the rich have better access to capital than the poor. no sh!t Sherlock.

[Food4Thought]

Wish I could get paid to write reports like this:

no sh!t Sherlock.

I think they got their data from stuff.co.nz

[winner69]

Hey Roger, you moaned about the size of your rates bill the other day. Just after Len put them up

No worries mate - Heartland will look after you

Just saw a bit of a n ad on TV - you struggling to pay your rates (and other home bills) just give Heartland a ring

Good to see them trying to help out families in need

[Xerof]

Do they mention if there's been much uptake for school fee loans? That's another niche market they promoted a while ago

Winner, to answer your post from over on the don't dis Our favorite airline thread, the HNZ gap might not get filled. Needs a higher high at the moment

[winner69]

Do they mention if there's been much uptake for school fee loans? That's another niche market they promoted a while ago

Winner, to answer your post from over on the don't dis Our favorite airline thread, the HNZ gap might not get filled. Needs a higher high at the moment

Think they may have stopped those school fees loans. The link to where the details are goes to empty page.

Maybe only a start of year thing?

[Beagle]

Hey Roger, you moaned about the size of your rates bill the other day. Just after Len put them up

No worries mate - Heartland will look after you

Just saw a bit of a n ad on TV - you struggling to pay your rates (and other home bills) just give Heartland a ring

Good to see them trying to help out families in need

Mate...don't start me about that philandering arrogant little weasel.

[winner69]

Warren says thanks winner for the heads up Heartland but not really interested in a small finance company at the bottom of the world.

Bugger ....back to gap filling I fear

[percy]

Warren says thanks winner for the heads up Heartland but not really interested in a small finance company at the bottom of the world.

Bugger ....back to gap filling I fear

Great news.!!!
Heartland remains NZ owned working hard,and providing finance for NZders.!!
And the profits remain in NZ too.!
May pay for you to run The Co-Op Bank past him!!

[winner69]

El Zorro posted this link on another thread

In or outs of a dairy farmer
http://www.stuff.co.nz/business/farming/agribusiness/69484820/dairy-recovery-could-take-five-years

One paragraph - Sharemilkers usually fell outside a normal lending criteria on a two to three year cycle and few were pushed out of the industry because suddenly bankers got cold feet, he said.


Hope bankers are more sympathetic this time around

[percy]

El Zorro posted this link on another thread

In or outs of a dairy farmer
http://www.stuff.co.nz/business/farming/agribusiness/69484820/dairy-recovery-could-take-five-years

One paragraph - Sharemilkers usually fell outside a normal lending criteria on a two to three year cycle and few were pushed out of the industry because suddenly bankers got cold feet, he said.


Hope bankers are more sympathetic this time around

It will be different this time, as NZ now has a bank with a heart. They even have it in their name !!!!!!!!!!!!.
May help to deter the heartless Aussie banks from acting in an arrogant mean way too?

[janner]

[QUOTE=percy;577158] They even have it in their name !!!!!!!!!!!!. QUOTE]

Remember the oxymoron percy.. WESTPAC TRUST..

They were rid of that about 2002..

Hope that HNZ can retain the HEARTLAND bit with pride :-))

Also making more than a little money at the same time :-)))))))))))))

[winner69]

Wonder what Simon and Jeff discuss as year comes to end.

Methinks Simon is telling Jeff he has to come clean with the market, maybe saying 'the friggen share price is collapsing Jeff and I hear there's a gap to fill. Jeff, you have to come out with an earnings upgrade. There's enough in the bottom drawer to cover $50m plus'

But Jeff will retort and say 'now now Simon. I always deliver on what I say I will ...nothing more or nothing less. So keep on doing that tricky stuff accountants are good at Simon and make sure its that $48.1m I told First NZ Capital. Got that Simon, and forget about that friggen share price as that will fix itself when we tell the market in August that next years looking like $56m"

[janner]

when we tell the market in August that next years looking like $56m"

Ramping .. or... Pumping ????

Just be patient W69.

Disc. Holding.. Not adding outside of the DRP..

[winner69]

Good grief, that gap is getting filled.

Xerof, what happens when the gap is filled?

A new flag pole ......or does the hole get deeper and the price keeps going lower.

Maybe Jeff saying to Simon ' its not going to plan is it Simon'
'No Jeff, lack growth and increasing bad debts really stuffing us up"
'Bugger it Simon, none of this niche **** anymore. We now going for aggressive growth. That Auckland housing market, esp apartments, is too big to miss out on'
'Friggen good idea Jeff, after all apartments are niche and Auckland is really heartland isn't it?'

[Xerof]

Well, all I have said is the gap should get filled at some stage, and it's pretty much done that. One more chocolate or two Mr Creosote?

What happens after that is anyone's guess, but I noted that the bottom of the gap coincided with previous resistance levels (should now be support levels), and the EMA200.

Jeff to Simon: crikey, if that 118 level goes, I'm knackered for a bonus this year. Is Hendo interested in building all these apartments? Give him a ring.......

[winner69]

Well, all I have said is the gap should get filled at some stage, and it's pretty much done that. One more chocolate or two Mr Creosote?

What happens after that is anyone's guess, but I noted that the bottom of the gap coincided with previous resistance levels (should now be support levels), and the EMA200.

Jeff to Simon: crikey, if that 118 level goes, I'm knackered for a bonus this year. Is Hendo interested in building all these apartments? Give him a ring.......

No no xerof, I wasn't thinking of lending to the developers - just to the punters and first home buyers who are forming the new gold rush in Auckland (the heartland of New Zeeland) ..... but lending to the likes of Hendo would be very lucrative - better still fund the developers as well as the buyers .... 'now that's niche' I can hear Simon telling Jeff

[Beagle]

They might as well start lending to property developers in Auckland...at least there's a well documented history of real estate prices going up...

[percy]

Well I think the Heartland success remains on track to deliver both increasing dividends and a growing share price.
The last update,only a few weeks ago,confirmed Heartland were on track to deliver what they said they would.
The Holden promotion has been explained to me by management,and as you would expect, it has been carefully thought out.It has generated a lot of business,and with most people trading a vehicle in,the deal works out the same as a usual vehicle finance deal,with customers preferring to have a smaller amount owing.
All banks, including Heartland,will have "issues" with the dairy industry,yet under continuous disclosure,no one has put up their hand to say they have a "big" problem.I am sure Heartland will update us when they report in late August.
For me nothing has chanced.

[winner69]

How the leading banks went in the march quarter

http://www.interest.co.nz/sites/default/files/embedded_images/PwC%20release.pdf

Interest margins under pressure the story says. Just as well heartland is niche and not competing to get business.

[Beagle]

All the banks are praying dairy doesn't turn out to be N.Z's "iron ore" problem. Where is the light at the end of the tunnel for either commodity ?...sooner or later when their customers continue to lose money the banks will have to stop digging a bigger hole for themselves by continuing to support them. It won't affect this year's profit so yes, they're doing what they say they will but make no mistake folks, if dairy stays depressed for 2-3 years there's big changes coming for the industry and Fonterra won't be the only one doing some major restructuring. In a sustained low dairy environment its almost inevitable that some people with moderate to high debt will have to be forcibly disestablished from the industry. The extent of the losses to the banks could be quite material and is obviously worrying the market, just look at the SP.

Whilst it is true that most people trade a car in, many don't so they are lending to some customers on no deposit, deferred payment terms and those customers will be circa 40% underwater on the value of the second hand vehicle by the time the first payment is due and then of course we have all this new unsecured consumer lending through www.ifinance.co.nz and www.harmoney.co.nz. This sort of lending and ongoing lending to cash flow negative dairy farmers, prudent lending ?...you be the judge. All my mates on here thought I was crazy ringing the alarm bell on here when it was $1.32 when I sold most of my shares and didn't seem to want to acknowledge there was an emerging problem. Crazy or just using my knowledge of finance companies and how slow they are to recognise bad and doubtful debtors to see a little further over the horizon ?

[vin]

This decline is driving me insane

[iceman]

This decline is driving me insane

Don't let it ! Many stocks have seen some declines recently, including AIR and SCL as I am sure my mate Roger can confirm :)

[couta1]

This decline is driving me insane
I know the feeling were probably both wishing we had sold at $1.30 plus and bought back around nowish aye.

[blockhead]

On the day newspapers are screaming headlines like this, HNZ tumbles !

"NZ's big banks continue record run with $1.69b three-month profit"

http://www.stuff.co.nz/business/industries/69620243/nzs-big-banks-continue-record-run-with-169b-threemonth-profit

[percy]

This decline is driving me insane

Stay strong.!!! lol.
Just think of the extra shares you will receive if you have DRP.!!!
I always think if you have done your research right,good companies like Heartland just keep performing.
The directors of Heartland have a lot of skin in the game,as do management.Chairmans Ricketts is a director of Suncorp in Australia,Chairman Irvine has a huge lot of experience,director Tomlinson is a savvy businessman and recently brought shares at $1,30.
Managing director Jeff Greenslade is a well reguarded banker,who has attracted other experienced bankers to his management team.
The business is well funded,has a strong equity ratio,diversified lending book, and has the capacity to grow dividends.
As I would expect, any future acquisitions will be well thought out.Although the market want another quick acquisition I prefer quality rather than quantity.
Those who have recently brought at lot higher prices, will be hurting,while holders who brought sometime ago will be taking the ups and downs in their stride.I am one of those.

[Antipodean]

This decline is driving me insane
Never hold something that keeps you up at night.

While I'm not a fan of the fall, still content to hold and ride out the years on this one.

[Joshuatree]

Depth is very weak; sellers outnumbering 10 to 1. More dropping to come unfort by the look of it.

[vorno]

Depth is very weak; sellers outnumbering 10 to 1. More dropping to come unfort by the look of it.

Yip, feeling the hurt that's for sure.

[winner69]

Will the GAP been well and truly filled now.

A new flag pole being secured by the No More Gaps .....maybe

But I fear the hole is getting bigger ......any more Fib supports below this Xerof or is free fall back to the 90s

Maybe Jeff was right ...it's only $47m NPAT after all .....a shocking H2 flowing into the new year and punters don't like that

[janner]

Will be opening the cheque book at under a dollar :-))))

[nextbigthing]

If the market wants to be crazy, let it be crazy. It's only a problem if you have to sell because you need the cash, so obviously, don't need the cash! :) . Otherwise just sit back and watch the divvys roll in knowing your yield is still amazing and you can top up more on the way back up. In the meantime who cares if the market has it at an irrational price.

[Beagle]

Yep Iceman, plenty of pain around at the moment that's for sure, some of it caused by temporary issues and others more fundamental systemic matters. Whether you believe the potential headwinds facing HNZ in due course regarding bad debtors are temporary or systemic clearly affects one views on the seriousness of this...so perhaps we should ask the farmers themselves and see what they think.
How bad is it down on the farm ? 450 of them give their response, Dairy confidence at a decade-low.
http://www.sharechat.co.nz/article/ed29eea5/nz-farmer-confidence-slumps-to-decade-low-on-dairy-woes.html?utm_medium=email&utm_campaign=NZ+farmer+confidence+slumps+to+decade-low+on+dairy+woes&utm_content=NZ+farmer+confidence+slumps+to+decade-low+on+dairy+woes+CID_06de57f04df8c0bacc2fd7af2b61 1074&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleed29eea5nz-farmer-confidence-slumps-to-decade-low-on-dairy-woeshtml

[gv1]

A while back I said about quadrant...they always bring bad omen in any company they are involved in.

[Beagle]

Quadrant seem to have an uncanny knack of knowing when to sell up, take their profit and move on.

[sb9]

Well, someone senses a bargain at these levels and are accumulating quietly...

[Beagle]

To be honest mate that's not how I see it or read the chart. Any support is pretty much just getting smashed. Now broken through 200 day moving average so technically also looking very vulnerable.
Recent SP declines prove that the companies ability to achieve FY15 projected profit isn't what people are focusing on...its the effect the headwinds may have on FY16 and FY17 that's occupying the minds of investors.

[couta1]

Quadrant seem to have an uncanny knack of knowing when to sell up, take their profit and move on.
Very savvy lot and perhaps we should take more notice of their actions in the future. Right back to pruning the roses, just can't seem to get away from thorns today.

[percy]

Most great companies face head winds at some time or another,yet great management see them as opportunities.I am thinking of companies such as EBO,FRE,IFT,MFT,POT and RYM.I see Heartland too looking for opportunities. The more headwinds, the more opportunities for a niche player.Heartland are "well positioned."
I actually think Heartland were the savvy ones, buying the REL business from Quadrant.

[iceman]

Yep Iceman, plenty of pain around at the moment that's for sure, some of it caused by temporary issues and others more fundamental systemic matters. Whether you believe the potential headwinds facing HNZ in due course regarding bad debtors are temporary or systemic clearly affects one views on the seriousness of this...so perhaps we should ask the farmers themselves and see what they think.
How bad is it down on the farm ? 450 of them give their response, Dairy confidence at a decade-low.
http://www.sharechat.co.nz/article/ed29eea5/nz-farmer-confidence-slumps-to-decade-low-on-dairy-woes.html?utm_medium=email&utm_campaign=NZ+farmer+confidence+slumps+to+decade-low+on+dairy+woes&utm_content=NZ+farmer+confidence+slumps+to+decade-low+on+dairy+woes+CID_06de57f04df8c0bacc2fd7af2b61 1074&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleed29eea5nz-farmer-confidence-slumps-to-decade-low-on-dairy-woeshtml

I don't think anyone disagrees Roger that dairy farmers are facing a tough time. For how long we don't know. It doesn't translate into all of them defaulting on their liabilities. I had a beer with a couple of dairy farmers in the Waikato on Friday. They both told me they can see this and 2-3 more years possibly very tough. But they also told me that the last couple of years have been the best years they've had since they started farming (both 20+ years) and they've used them to prepare for the inevitable leaner years. No doubt those that have bought into the industry in the last few years and are highly geared will find it much tougher though.

[winner69]

A while back I said about quadrant...they always bring bad omen in any company they are involved in.

And probably most of those shares they off loaded at 129 or whatever it was are now being offloaded by disillusioned punters

[Xerof]

Will the GAP been well and truly filled now.

A new flag pole being secured by the No More Gaps .....maybe

But I fear the hole is getting bigger ......any more Fib supports below this Xerof or is free fall back to the 90s

Maybe Jeff was right ...it's only $47m NPAT after all .....a shocking H2 flowing into the new year and punters don't like that

Started buying this afternoon winner.

percy, you'll need to take a nap after hearing that.:D

It's just got to the support zone, so nibble, nibble between 117 and 114, for me anyway

each to their own I guess

[Beagle]

I don't think anyone disagrees Roger that dairy farmers are facing a tough time. For how long we don't know. It doesn't translate into all of them defaulting on their liabilities. I had a beer with a couple of dairy farmers in the Waikato on Friday. They both told me they can see this and 2-3 more years possibly very tough. But they also told me that the last couple of years have been the best years they've had since they started farming (both 20+ years) and they've used them to prepare for the inevitable leaner years. No doubt those that have bought into the industry in the last few years and are highly geared will find it much tougher though.

Absolutely agree with what you've said mate and never meant to imply that any sort of majority in the industry will be in trouble. The majority of dairy farmers who've been in the industry for a long time and have little or no debt have seen the cycles come and go and will have stored away plenty of reserves in the last year or two to cover the lean times. On the other hand those relatively new to the industry including many dairy conversions done on 100% debt in recent years and including the sharemilkers HNZ are lending too based on the value of their herd only will be doing it really, really tough, especially the latter who have to survive on only 50% of Fonterra's pay-out and service their debt. Sharemilkers have no real ability to manipulate their cash flow like most farmers by deferring maintenance on fencing, roads and tracks and such like. How long is a bit of string in terms of this dairy decline ?...who knows but I'll bet you a couple of beers there's a few miners in Aussie who figured base metal prices would have recovered by now.

[percy]

Started buying this afternoon winner.

percy, you'll need to take a nap after hearing that.:D

It's just got to the support zone, so nibble, nibble between 117 and 114, for me anyway

each to their own I guess

Xerof the great gap filler!! Or is is it the great bottom feeder?
Whatever welcome aboard.
Hope you have picked the bottom.
I am neither buying or selling,just trying not to listen to all the noise.!! lol.

[winner69]

ANZ up 2% and HNZ down 3% odd ---- go figure

Oh I forgot its just noise

But a lot of noise lately - wiping $120 million of the market cap in a few months .....heck that's a lot

[iceman]

ANZ and Rabobank not too worried about farmers debt levels despite low dairy payouts. They are the 2 biggest agri lenders I believe.

http://www.interest.co.nz/rural-news/76127/anz-says-dairy-farms-managed-boards-are-more-resilient-falling-dairy-prices

And the banks, big and small, continue making record profits

http://www.interest.co.nz/business/76106/big-banks-march-quarter-profit-6-lending-grows-and-expenses-are-cut-net-interest

http://www.interest.co.nz/business/76115/sbs-bank-highlights-capital-expenditure-and-simplification-programmes-it-posts-record

Percy, we are well positioned

[percy]

ANZ up 2% and HNZ down 3% odd ---- go figure

Oh I forgot its just noise

But a lot of noise lately - wiping $120 million of the market cap in a few months .....heck that's a lot

ANZ,CBA,NAB,and WBC have all "turned up".HNZ has not.
Tried figuring,and can't figure.? Beyond my figuring capabilities!
I look forward to the $120 mil being regained just as quickly.
Will leave that for the big figurers to figure out.I guess I am figured out.

[winner69]

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.

Well, almost 2 years to the day the 200EMA has been broken ......spooky in a way

Does this mean the long uptrend is broken .....no, it's only noise

Believing in 200EMA is ok as long as shows what you want to see ....when it doesn't you do your Sergeant Schultz thing 'I seez nothing, nothing'

[percy]

Well, almost 2 years to the day the 200EMA has been broken ......spooky in a way

Does this mean the long uptrend is broken .....no, it's only noise

Believing in 200EMA is ok as long as shows what you want to see ....when it doesn't you do your Sergeant Schultz thing 'I seez nothing, nothing'

ANZ,HNZ,NAB,and WBC are trading below their 200 day EMA.CBA has just gone up through theirs.
I expect all the banks will do the same,including HNZ,so Sergeant Schultz could teach us all.!!
I thought HNZ would stay above theirs,so I was wrong.

[Master98]

ANZ,HNZ,NAB,and WBC are trading below their 200 day EMA.CBA has just gone up through theirs.
I expect all the banks will do the same,including HNZ,so Sergeant Schultz could teach us all.!!
I thought HNZ would stay above theirs,so I was wrong.
so percy you agree with winner69 that HNZ trading below 200 EMA is normal as all other major banks, that's not "well positioned"

as i known nz biggest dairy export market china, dairy farmers start dumping milk because over supply and milk power producers refuse to collect more liquid milk from farmers, and price paid to farmers is less than 1 chinese dollar( 20c nzd) per kg, that is cheaper than bottle water, their said the soft dairy market won't expect recovery in next two years, this is a terrible picture for nz dairy sector a major part of HNZ.

[percy]

so percy you agree with winner69 that HNZ trading below 200 EMA is normal as all other major banks, that's not "well positioned"

Certainly not "well positioned",however I am expecting to be "well positioned" again soon.Whether or that is very soon, or just soon, time will tell.lol.

[Master98]

Certainly not "well positioned",however I am expecting to be "well positioned" again soon.Whether or that is very soon, or just soon, time will tell.lol.

percy i just edit my post.

[percy]

percy i just edit my post.

As far as I know NZ dairy sector is not a major part of HNZ.
I don't think it is even. a major part of HNZ's rural lending book.
Rural lending is made up of land,equipment,seasonal lending,livestock,crop lending etc.
I can't remember seeing a break up of each part,so I can't qualify the amount HNZ have affected by the dairy sector concerns.What I do know is all banks have some exposure.I am expecting comment from HNZ in the annual result.

[winner69]

As far as I know NZ dairy sector is not a major part of HNZ.
I don't think it is even. a major part of HNZ's rural lending book.
Rural lending is made up of land,equipment,seasonal lending,livestock,crop lending etc.
I can't remember seeing a break up of each part,so I can't qualify the amount HNZ have affected by the dairy sector concerns.What I do know is all banks have some exposure.I am expecting comment from HNZ in the annual result.

From half year presentation under business update and strategies

- Active management of dairy farming clients
- Focus on Sharemilkers enabling young NZ farmers commence dairy farming business

They seem pretty keen on this dairy sector to me. That focus on sharemilkers a bit of a worry in light of Rogers comments re such things

Or just weasel words in a presentation?

[Master98]

As far as I know NZ dairy sector is not a major part of HNZ.
I don't think it is even. a major part of HNZ's rural lending book.
Rural lending is made up of land,equipment,seasonal lending,livestock,crop lending etc.
I can't remember seeing a break up of each part,so I can't qualify the amount HNZ have affected by the dairy sector concerns.What I do know is all banks have some exposure.I am expecting comment from HNZ in the annual result.

the reverse mortgage is not performing well and will not, at least not working for me, if i do need cash i will downsize my property instead let bank control my property, and p2p lending is extra high risk for bank and i don't like it, so what else left , motor loan? no idea.

i was HNZ holder, sold at $1.4, may come back if sp drop under $1.0.

[winner69]

Lot of noise on this thread at the moment

There was similar noise in late 2007 and early 2008 as well .....banks crossing over their 200MA lines ....and then a month or so later the big crash / correction

Just going from memory, noise can be a funny thing sometimes - especially an annoying / nagging noise that just doesn't stop.

[percy]

From half year presentation under business update and strategies

- Active management of dairy farming clients
- Focus on Sharemilkers enabling young NZ farmers commence dairy farming business

They seem pretty keen on this dairy sector to me. That focus on sharemilkers a bit of a worry in light of Rogers comments re such things

Or just weasel words in a presentation?

They don't do weasel words.
Still only a part of HNZ's rural lending.

[percy]

the reverse mortgage is not performing well and will not, at least not working for me, if i do need cash i will downsize my property instead let bank control my property, and p2p lending is extra high risk for bank and i don't like it, so what else left , motor loan? no idea.

i was HNZ holder, sold at $1.4, may come back if sp drop under $1.0.

I think the REL sector will be a great earner for HNZ .
Downsizing a property would be the right thing to do,however for people not wanting to,a REL suits.
I would not buy a car on finance,yet thousands of people do.I would not want a mortgage on my property,yet most NZders do.Heartland are a bank.Banks lend money to people for a number of reasons.

[couta1]

Lot of noise on this thread at the moment

There was similar noise in early 2008 as well .....banks crossing over their 200MA lines ....and then a month or so later the big crash / correction

Just a thought, noise can be a funny thing sometimes - especially an annoying / nagging noise that just doesn't stop.
Are the lambs upsetting you winner?

[Baa_Baa]

Well, almost 2 years to the day the 200EMA has been broken ......spooky in a way

Does this mean the long uptrend is broken .....no, it's only noise

Believing in 200EMA is ok as long as shows what you want to see ....when it doesn't you do your Sergeant Schultz thing 'I seez nothing, nothing'

Interesting observation winner, all the touters of the 200EMA will be out by now surely, or shrugged off the ultimate long-hold safety net and gone against their own best advice.

The medium/longer term rising trend line is still in place, but we're on it, today. $1.12 offers support below here if required. Money flow is into negative territory.

[Master98]

Are the lambs upsetting you winner?
dear couta, did not realise you are HNZ holder, luckily i already sold mine:D

[winner69]

Are the lambs upsetting you winner?

Now you have woken BaaBaa - he just posted

[winner69]

Looked up the bible - Bulkowski

That flag pattern still a real possibility - if it eventuates expect $1.60 plus .....around October / November .......oops that's just after Jeff next year will be $54m-$$56m (another 15% noodles)

[couta1]

dear couta, did not realise you are HNZ holder, luckily i already sold mine:D
Sure am and a good number as well ( Every cent down on share price equals over $1000 for me) but still in the blue currently, always a shame to see a 35k paper profit a few months ago reduced to under 10k but youd know all about that aye me old Spark buddy:D PS-How come your still holding Spark.

[Baa_Baa]

Now you have woken BaaBaa - he just posted

Some of us don't do buy hold and pray.
I could put aside my misgivings, if it wasn't losing capital faster than it returned it.
But the other point you made about 2008 trading under the 200EMA should give pause for thought.
Greece looks to be still in the Euro though.
Maybe it'll be alright.
Dairy will come back.
Old people need cash, not equity.
People buy cars they can't afford.
Desperate people need loans they can't afford.

She'll be right mate.

[Master98]

Sure am and a good number as well ( Every cent down on share price equals over $1000 for me) but still in the blue currently, always a shame to see a 35k paper profit a few months ago reduced to under 10k but youd know all about that aye me old Spark buddy:D PS-How come your still holding Spark.

bought some more spk at $2.645, finer cross.

[couta1]

bought some more spk at $2.45, finer cross.
Don't you mean $2.65-$2.75, hasn't been $2.45 for over a year?

[Master98]

Don't you mean $2.65-$2.75, hasn't been $2.45 for over a year?

sorry $2.645

[noodles]

Looked up the bible - Bulkowski

That flag pattern still a real possibility - if it eventuates expect $1.60 plus .....around October / November .......oops that's just after Jeff next year will be $54m-$$56m (another 15% noodles)
Given their strong track record for earnings growth, I think 54-56 might be achievable. If they did make this, I don't think the share price will still be at $1.16. But the easy margin growth days are behind them now. Loan growth will be the key going forward. I'm comfortable with their growth initiatives.

Regarding the price chart, I notice that the RSI is reading 20. This represents an extremely oversold instrument. However, given the weak close on massive volume yesterday, you would be brave to catch the falling knife.

[Beagle]

I had a good chat with my big farmer client just after market close yesterday. Owns several farms and talks to everyone. Feedback - A lot of the dairy conversions in recent years were debt funded and on assumptions of well over current pay-out level's. Sharemilkers with significant debt on their herds are in really serious trouble. HNZ have been lending too aggressively on sharemilkers herd's, he's hearing over 50% of their value. Talk around the cattle yards is all doom and gloom. Other countries are ramping up dairy production and doing it quickly.

Even his HSBC shares are in perpetual decline with a forward PE of less than 10. Virtually all the Australasian banks have breeched their 200 day MA for good reasons as all the indicators are that loan defaults from depressed commodities will dramatically rise in the foreseeable future on both sides of the Tasman. Well positioned, yes HNZ are well positioned to withstand this with a good capital ratio but the reality is they have no plan to deal with a sustained downturn in dairy and neither does any other bank. My guy thinks HNZ will cop "plenty of pain" from dairy in the years ahead...but expect to hear the usual stoic talk about supporting our clients and growing our loan book.
Ever seen an Ostrich with its head in the sand ? "I see nothink"

Fitch, (the only credit rating agency HNZ now use) recently gave a coded warning regarding the dairy sector and possible credit rating downgrades...surely even people who believe in indicators like the 200 day MA must be starting to scratch their heads ? What if HNZ got a credit rating downgrade ?

[robbo24]

Talk around the cattle yards is all doom and gloom.

Them's fighting words, Rodge. :D

[winner69]

I had a good chat with my big farmer client just after market close yesterday. Owns several farms and talks to everyone. Feedback - A lot of the dairy conversions in recent years were debt funded and on assumptions of well over current pay-out level's. Sharemilkers with significant debt on their herds are in really serious trouble. HNZ have been lending too aggressively on sharemilkers herd's, he's hearing over 50% of their value. Talk around the cattle yards is all doom and gloom. Other countries are ramping up dairy production and doing it quickly.

Even his HSBC shares are in perpetual decline with a forward PE of less than 10. Virtually all the Australasian banks have breeched their 200 day MA for good reasons as all the indicators are that loan defaults from depressed commodities will dramatically rise in the foreseeable future on both sides of the Tasman. Well positioned, yes HNZ are well positioned to withstand this with a good capital ratio but the reality is they have no plan to deal with a sustained downturn in dairy and neither does any other bank. My guy thinks HNZ will cop "plenty of pain" from dairy in the years ahead...but expect to hear the usual stoic talk about supporting our clients and growing our loan book.
Ever seen an Ostrich with its head in the sand ? "I see nothink"

Fitch, (the only credit rating agency HNZ now use) recently gave a coded warning regarding the dairy sector and possible credit rating downgrades...surely even people who believe in indicators like the 200 day MA must be starting to scratch their heads ? What if HNZ got a credit rating downgrade ?

Good to hear from old heads and minds from the farm gate as it is.

I think fonterra (and maybe others) have so much milk powder in storage waiting for better prices its not funny ......surely depress the global price for longer than many anticipate.

Heartland strategic focus on sharemilkers a real worry I think.

[nextbigthing]

Good post Roger, cheers.

What do you make of Buffet sniffing around the Australian banks though? Hard to argue with him.

[winner69]

Good post Roger, cheers.

What do you make of Buffet sniffing around the Australian banks though? Hard to argue with him.

As KW pointed out ...Warren getting ready to pick up the pieces and save them in year or so

[vorno]

A fair amount of worry, yes. However on the brighter-side of things Buyers are picking up now:




Buyers
Buy Quantity
Prices


4
124,743
$1.160


7
177,578
$1.150









Prices
Sell Quantity
Sellers


$1.170
121,816
2


$1.190
100,000
1

[Beagle]

Good post Roger, cheers.

What do you make of Buffet sniffing around the Australian banks though? Hard to argue with him.

Tough one to figure mate. According to CNBC the average PE of the financials sector in the U.S. is 12 so Aussie banks aren't a screaming bargain by international standards and as mentioned in that recent post prospective PE for HSBC bank is Just on 10. Maybe he sees trouble coming and looking for a cheap entry in due course ? Yes, definitely not a good idea to be arguing with Warren :)

[warthog]

Sellers picking off buyers right now, BUT long-term trend unbroken.

Will it bounce or remain above and continue in uptrend or will mounting global financial issues combined with NZ's over-reliance on farming be the chooks that come home to roost?

Disc.: not holding

[winner69]

Sounds horrendous


“However 25% of farmers have debt of $33 per kilogram of milk solids produced, and this is difficult to sustain in anything but the most efficient of operations. The high pay-outs of 2013-14 have provided some wriggle room for farmers – but this has now run out in the 2015/16 dairy season.”

http://www.interest.co.nz/rural-news/76127/anz-says-dairy-farms-managed-boards-are-more-resilient-falling-dairy-prices


Just as well Heartland would allow a farmer to get this stretched. Whew

[vin]

Nice bumpup in SP today so far

[winner69]

Nice bumpup in SP today so far

How much 'pleasure' does it take to offset the 'pain' of the last few weeks.

They say punters feel heaps more 'pain' when prices go down than 'pleasure' when they go up.

Xerof buying - giving some relief to the market

[winner69]

I think this is the base of the new flag pole ........160 plus here we come

[vorno]

How much 'pleasure' does it take to offset the 'pain' of the last few weeks.
...

...$1.29 would make me happy :)

[couta1]

Sold out my holding at $1.17 this morning (Average buy price $1.07) Most unlike me as I normally watch my large paper profits head back to buy price and then become as negative as they were positive so thought I'd take my profit and watch this one for now, can always buy back in later meantime off to have some fun over on planet Spark and maybe catch some more Air:cool:

[Master98]

Sold out my holding at $1.17 this morning (Average buy price $1.07) Most unlike me as I normally watch my large paper profits head back to buy price and then become as negative as they were positive so thought I'd take my profit and watch this one for now, can always buy back in later meantime off to have some fun over on planet Spark and maybe catch some more Air:cool:

just can't say you didn't made the right decision, you could do better. anyway i have been some fun with Spark and now with AIR,bought at $2.36.

[couta1]

just can't say you didn't made the right decision, you could do better. anyway i have been some fun with Spark and now with AIR,bought at $2.36.
Yeah selling at $1.40 ish would have been great in hindsight but then there was no need to everything was all rosey at that point, looks uncertain where the price is going to head over the next while. PS- Well done on the Air buy.

[warthog]

Sold out my holding at $1.17 this morning (Average buy price $1.07) Most unlike me as I normally watch my large paper profits head back to buy price and then become as negative as they were positive so thought I'd take my profit and watch this one for now, can always buy back in later meantime off to have some fun over on planet Spark and maybe catch some more Air:cool:

Couta has sold and run for the hills, so it's time to pile in chaps.

[couta1]

Couta has sold and run for the hills, so it's time to pile in chaps.
I'll be sure to let you know when I have bought back in so you can all sell up:eek2: PS- I hope your taking your own advice and buying tomorrow.

[Xerof]

I'll be sure to let you know when I have bought back in so you can all sell up:eek2: PS- I hope your taking your own advice and buying tomorrow.
yep, I took my own advice and bought yesterday:scared:

It's what makes a market eh couta:confused:

[winner69]

Sea Dragon were touting Heartland as the best bank in the world a month or so ago. Obviously no accommodative enough with even mote shareholder money being pumped in to keep SeaDragon afloat.

Just as well heartland have strong processes in place to manage these sort of loans / overdrafts

[winner69]

Sitting in the Heartland board room Jeff looks out the window and surveys the Auckland landscape, heartland New Zealand he says to himself. Beyond the ANZ sign he sees many cranes. Jeez there is a lot of building activity going on. Probably many apartments, he knows there is a housing shortage in Auckland.

Michael wanders in with a freshly brewed coffee.

You look in thoughtful mood Jeff. What's going through that brain of yours

Michael, I think we have a social responsibility to help out and try to solve thris housing shortage. Apartments is the answer, as long as not in my neighbourhood.

That would be very noble of us. Important to think of the community isn't it Jeff.

Yes Michael. We are going into apartment finance. The opportunity is just friggen too big miss out on .....and apartments are niche aren't they Michael.

Ok Jeff. I'll set things in motion. Lending to prospective apartment owners easy done. With our cost of funds being so low we could offer 5% mortgages and tie in with a special rate to furnish it.

Great Michael. But don't forget the developers need money as well. That's where the money is I am told.

Agree Jeff. I ll get the boys out doing a few deals


This is good Michael. I get a buzz with being socially responsible and lending into niche areas in heartland New Zealand ......and that $56m for 2016 looking good now. I was a bit worried about how we would meet that expectation.

All makes sense Jeff

As Jeff looks out over Auckland again he says Michael, I can this working out well.

[couta1]

Gee winner is that an old transcript from Handover finance, I'm sure Hotchins and Watson had that conversation back in 2006:eek2: PS-They sure had a lot of lovely half completed apartments in Queenstown back then aye.

[winner69]

Gee winner is that an old transcript from Handover finance, I'm sure Hotchins and Watson had that conversation back in 2006:eek2: PS-They sure had a lot of lovely half completed apartments in Queenstown back then aye.

Things come around again every 7 to 8 years eh couta

Do you think they can resist the temptation to enter lucrative markets

Being niche = no growth = boring

[couta1]

In other news I see Landcorp doggidly pressing ahead with their Waikato dairy conversion expansion plans so they are obviously still bullish but then again they reckon their profit forecasts still good for the year despite sector downturn.

[blockhead]

Blockhead was yarning to a 60 odd year old lifelong sheep farmer the other day in the midst of a dairy farm conversion, there were patches in his already thinned hair where he was frequently scratching and asking "what am I doing"

Before his first season is even started he has reduced staff by around 1.5 units, he can't turn back now, all the infrastructure is there glistening and waiting to be paid for.

Not so many new Hyundai and Kia SUV's parked outside the coffee shops in Geraldine these days either, dairy incomes not being spread as lavishly as a couple of seasons ago.

[Beagle]

Heads Up to Jeff - Greece is looking for a big loan, I'm sure they're good for it :)

[winner69]

Heads Up to Jeff - Greece is looking for a big loan, I'm sure they're good for it :)
Bit big for Jeff I think

Hmm ....think opportunity ......niche thinking ......maybe some Greek money has found its way to NZ before their banks go broke ..... Think niche .....hmm .....invest in apartments ..... special deal for Greeks .....yes we have a deal for you ......and a promise of a page in Greek in the annual report.

Yes, growth, niche, heartland, social responsibility, diversity ....all boxes ticked

[Onion]

Blockhead was yarning to a 60 odd year old lifelong sheep farmer the other day in the midst of a dairy farm conversion, there were patches in his already thinned hair where he was frequently scratching and asking "what am I doing"

Before his first season is even started he has reduced staff by around 1.5 units, he can't turn back now, all the infrastructure is there glistening and waiting to be paid for.

Not so many new Hyundai and Kia SUV's parked outside the coffee shops in Geraldine these days either, dairy incomes not being spread as lavishly as a couple of seasons ago.

I know someone in the first 2 years of dairy farm ownership. He acquired Fonterra "wet" shares (at a higher value than now) when he bought the farm but under the supplier rules was allowed to sell some of them to reduce bank debt (some leeway -- can't remember how long -- is given to new suppliers NOT to own their full "wet" share obligation). He has been steadily buying shares cheaply as the SP has dropped as he eventually needs to own shares to match productivity.

[vin]

http://www.heartland.co.nz/news/219/heartland-corrects-media-speculation.aspx

"Heartland confirms that it is not currently participating in any process to acquire F&P."

[Xerof]

http://www.heartland.co.nz/news/219/heartland-corrects-media-speculation.aspx

"Heartland confirms that it is not currently participating in any process to acquire F&P."but we'll look at ANZ if the price is right :D

[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

I love these bull flags

Now the gap has been filled and current level is showing strong support I can see a new flag pole being formed.

The price has fallen 25 cents from the top of he previous pole .....some books say that the top of the new flag pole will now be 25 cents higher than the previous high .....ie about $1.60 plus

Sounds fair enough, bring it on

[Xerof]

Yeah, funny how some go to plan isn't it Winner. I was too early at 117, bugger, could have got them at 116:D

What do you make of the last sentence regarding capital management to improve returns on equity? Just Jeff pushing the rhetoric or is he about to buy some shares back?

[Joshuatree]

http://www.heartland.co.nz/news/219/heartland-corrects-media-speculation.aspx

"Heartland confirms that it is not currently participating in any process to acquire F&P."

Thanks vin.

It also confirms profit will be in the upper end of $46-$48 mill:D

[sb9]

I sense a little surprise at release of FY results, be it through an slight tick up on earnings or divvy...

[macduffy]

but we'll look at ANZ if the price is right :D

May have to outbid Warren Buffett if reports are to be believed. Said to be interested in acquiring stakes in 4 or 5 Aust stocks, probably including one of the big four banks. :D

[winner69]

Yeah, funny how some go to plan isn't it Winner. I was too early at 117, bugger, could have got them at 116:D

What do you make of the last sentence regarding capital management to improve returns on equity? Just Jeff pushing the rhetoric or is he about to buy some shares back?

Well done Mr Xerof ...you are doing well.

If this flag pattern eventuates again how high will the flag pole go this time? For you though just a new high will be great.

Signal is a share buy back. One way to increase ROE (increase leverage) but not as good as actual growth. I know what I would prefer.

[janner]

Well done Mr Xerof ...you are doing well.

Signal is a share buy back. One way to increase ROE (increase leverage) but not as good as actual growth. I know what I would prefer.

A two edged sword.. Happy holder either way..

[tim23]

Winner69 - I like your theory about $1.60 but not sure of the logic, happy holder they owe me a lot less but do reckon they are worth a bit more!

[K1W1G0LD]

Maybe now that we've had an assurance that everything is "still" on track the "noise" will abate somewhat .All this crystal ball gazing is just BS anyway .

[winner69]

Maybe now that we've had an assurance that everything is "still" on track the "noise" will abate somewhat .All this crystal ball gazing is just BS anyway .

In light of Jeff and Simon's reassuring words yesterday I have raised my forecast from $47.1m to $47.8M

Whoopee, H2 now higher than H1 ...... growth is back on track

[Beagle]

In light of Jeff and Simon's reassuring words yesterday I have raised my forecast from $47.1m to $47.8M

Whoopee, H2 now higher than H1 ...... growth is back on track

I'll translate that for anyone with any doubts. Winner bought some more last week :D

I don't have confidence that much of their current lending meets my definition of prudent lending and I have seen this movie play out before

[Baa_Baa]

Back testing; the 200EMA; the underside of the channel (reentry); and Fib. 4cps is not a recovery, looks more like speculation on technical oversold.

[K1W1G0LD]

In light of Jeff and Simon's reassuring words yesterday I have raised my forecast from $47.1m to $47.8M

Whoopee, H2 now higher than H1 ...... growth is back on track

Haha , you're a funny guy W69 , too much time on your hands!!

[couta1]

Back testing; the 200EMA; the underside of the channel (reentry); and Fib. 4cps is not a recovery, looks more like speculation on technical oversold.
I'm watching this closely before a re-entry, I was thinking breaking $1.25 would be a positive sign thoughts Baa_Baa? Roger your obviously not too keen on this stock going forward? Maybe a year or so before any imprudent lending affects the bottom line but maybe the market is pricing that in now?

[tim23]

Why not buy now at $1.20 instead of $1.25?

[couta1]

Why not buy now at $1.20 instead of $1.25?
Because I sold out at this week as a precaution and as $1.20 is on the MA200 line it doesn't confirm a lasting uptrend, also the MACD isnt confirming an uptrend yet im thinking $1.25 would.

[tim23]

Interesting - sounds like you are not interested too much on the dividend side of things then?

[couta1]

Interesting - sounds like you are not interested too much on the dividend side of things then?
Got the last divvy and currently the sale money is in Spark shares so still divvy bearing, basically I didn't want to see all my profit eaten up by a downtrend as has happened so many times before so just being proactive for once. PS- If I wrote a book of my share market journey over the last few years you would understand where I'm coming from.

[Zaphod]

Got the last divvy and currently the sale money is in Spark shares so still divvy bearing, basically I didn't want to see all my profit eaten up by a downtrend as has happened so many times before so just being proactive for once. PS- If I wrote a book of my share market journey over the last few years you would understand where I'm coming from.

Hopefully we won't find it in the horror section at the book store!

[Beagle]

I'm watching this closely before a re-entry, I was thinking breaking $1.25 would be a positive sign thoughts Baa_Baa? Roger your obviously not too keen on this stock going forward? Maybe a year or so before any imprudent lending affects the bottom line but maybe the market is pricing that in now?

Based on how I've seen finance companies manage their problem debts I'd suggest we won't see any meaningful effect on their profit for FY16. In a nutshell, most banks and finance companies bend over backwards to try and help customers weather a storm so if dairy stay's subdued expect them to be working with their clients to reschedule payments, interest only, restructure, maybe downsize the herd or sell part of the farm, payment holidays all that sort of thing. With so much new dairy production in other countries coming on stream there's a very real possibility as mentioned before that it becomes the Kiwi version of the Australian banks iron ore problem, although well worth noting that all the Australian banks have a massive exposure to dairy in N.Z. too. If it stays at current level's FY17 and beyond is where the rubber is going to meet the road and reality bites on whether simply supporting customers through a tunnel without any light at the end thereof, continues to be appropriate.

This new (I will call it Holden lending), where they lend with deferred payment terms starting in early 2016 can't go bad in FY16 because even if customers default early in the loan they'll be trying to work with them that year so they might be okay for some modest EPS growth in FY16...(I think the brokers consensus is about 10.4 cps from memory) but its the "quality" of this new no deposit and unsecured lending which has me spooked and feels like groundhog day pre-GFC finance company activity all over again.

I am sure they will tout their loan growth at the next ASM and in their annual report in due course. In my view the market is right to have significantly marked down the banks on both sides of the Tasman. Clearly Fitch see real risks and other do too and the PE's of the banks have come back a bit reflecting their increasing risk. I think the stock was better value at $1.32 on 1 February when I commented it was basically fully priced back then. There's been a lot of water under the bridge since then and unfortunately its all been going in the wrong direction.
HNZ looks fully priced now at $1.20 with all the headwinds that have built in the economy in recent months. Really a dividend yield story for now in my opinion.

[winner69]

Roger, you could be right about HNZ being valued 'about right' by the market at the moment

I have given up this flag pole charting stuff. To work properly the price needs to go straight up to $1.60 and that aint going to happen

So belief in Heartland in delivering is necessary.I reckon 27% return over the next 12 months (from $1.20). OKish maybe. Based on these assumptions -

1 - I should never have asked whose halo is going to lose its lustre first (from our current list of esteemed and most loved leaders who are benefiting from the Halo Effect). It is not going to be Jeff's

2 - Heartlands earnings growth is going to slow but still be a respectable 17% in FY16 (see top half of table below, it all makes sense)

3 - Jeff 'hinted' at the ASM that the market needs to rerate HNZ. Whereas currently priced at 1.2 times Book Value a step up to 1.4 times is a good start to get anywhere near its peers.

4 - Not allowing for capital initiatives in all this.

So this time next year a share price of $1.44 and a 27% return for the year methinks. Sep in the table should be June

[SCOTTY]

Based on how I've seen finance companies manage their problem debts I'd suggest we won't see any meaningful effect on their profit for FY16. In a nutshell, most banks and finance companies bend over backwards to try and help customers weather a storm so if dairy stay's subdued expect them to be working with their clients to reschedule payments, interest only, restructure, maybe downsize the herd or sell part of the farm, payment holidays all that sort of thing. With so much new dairy production in other countries coming on stream there's a very real possibility as mentioned before that it becomes the Kiwi version of the Australian banks iron ore problem, although well worth noting that all the Australian banks have a massive exposure to dairy in N.Z. too. If it stays at current level's FY17 and beyond is where the rubber is going to meet the road and reality bites on whether simply supporting customers through a tunnel without any light at the end thereof, continues to be appropriate.

This new (I will call it Holden lending), where they lend with deferred payment terms starting in early 2016 can't go bad in FY16 because even if customers default early in the loan they'll be trying to work with them that year so they might be okay for some modest EPS growth in FY16...(I think the brokers consensus is about 10.4 cps from memory) but its the "quality" of this new no deposit and unsecured lending which has me spooked and feels like groundhog day pre-GFC finance company activity all over again.

I am sure they will tout their loan growth at the next ASM and in their annual report in due course. In my view the market is right to have significantly marked down the banks on both sides of the Tasman. Clearly Fitch see real risks and other do too and the PE's of the banks have come back a bit reflecting their increasing risk. I think the stock was better value at $1.32 on 1 February when I commented it was basically fully priced back then. There's been a lot of water under the bridge since then and unfortunately its all been going in the wrong direction.
HNZ looks fully priced now at $1.20 with all the headwinds that have built in the economy in recent months. Really a dividend yield story for now in my opinion.

Hi Roger

Do you know what if any exposure HNZ has to dairy/share milker leading? Where and how much is it? Other than your posts, I am unable to find any data for this.

Cheers

[tim23]

Wonder if the market underestimating value of Harmoney share and reverse equity loans which have been getting an okay rap recently.

[couta1]

Hopefully we won't find it in the horror section at the book store!
Would make the cut, probably on a par with the Texas chainsaw massacre:eek2:

[Baa_Baa]

I'm watching this closely before a re-entry, I was thinking breaking $1.25 would be a positive sign thoughts Baa_Baa? Roger your obviously not too keen on this stock going forward? Maybe a year or so before any imprudent lending affects the bottom line but maybe the market is pricing that in now?

The Weekly chart suggests that a long term rising price channel/trendlines is still in place, this week the SP breached the rising support trendily briefly but recovered to the support, now resistance, previously mentioned. There is no suggestion that a new uptrend in in place, daily, weekly or otherwise. As said, the recovery from $1.16 looks speculative, it could go either way imho.

[Beagle]

Roger, you could be right about HNZ being valued 'about right' by the market at the moment

I have given up this flag pole charting stuff. To work properly the price needs to go straight up to $1.60 and that aint going to happen

So belief in Heartland in delivering is necessary.I reckon 27% return over the next 12 months (from $1.20). OKish maybe. Based on these assumptions -

1 - I should never have asked whose halo is going to lose its lustre first (from our current list of esteemed and most loved leaders who are benefiting from the Halo Effect). It is not going to be Jeff's

2 - Heartlands earnings growth is going to slow but still be a respectable 17% in FY16 (see top half of table below, it all makes sense)

3 - Jeff 'hinted' at the ASM that the market needs to rerate HNZ. Whereas currently priced at 1.2 times Book Value a step up to 1.4 times is a good start to get anywhere near its peers.

4 - Not allowing for capital initiatives in all this.

So this time next year a share price of $1.44 and a 27% return for the year methinks. Sep in the table should be June

I think a LOT depends on where the price of dairy goes over the next year. If it drops further or stays the same we'll see brokers pulling back their EPS estimates for FY16 and FY17.


Hi Roger

Do you know what if any exposure HNZ has to dairy/share milker leading? Where and how much is it? Other than your posts, I am unable to find any data for this.

Cheers

According to Craigs at the end of 1H 15 rural lending was $455m up from $416m in the previous corresponding period.
More of a worry is that HNZ are on record in their 1H FY15 report as saying they're targeting rural lending including dairy and sharemilkers for growth. (in my view that's banking code speak for they're the customers that keep coming back to us for more money). Am a perhaps being cynical with my view here or just being realistic ?... you be the judge.

[vorno]

...
More of a worry is that HNZ are on record in their 1H FY15 report as saying they're targeting rural lending including dairy and sharemilkers for growth. (in my view that's banking code speak for they're the customers that keep coming back to us for more money). Am a perhaps being cynical with my view here or just being realistic ?... you be the judge.

Well, locally whenever I've seen someone walk into a Heartland branch they've at least looked like a farmer (gumboots & all!).

However, given that the dollar will continue to fall it has dampened the effect I do believe.
The main question(s) over the next 1-2 years for me is: When the next recession comes into play, what will the affect on demand on the markets be? And what will the interest rates be? (remembering that prior to 2007 I'm pretty sure my savings account was getting 8% interest).

[SCOTTY]

Thanks for that Roger.

Cheers

[winner69]

Radio says Greek situation hurting share prices today

Heartland share price tumbling

Surely Heartland doesn't have any exposure to Greece, does it?

[Xerof]

Surely Heartland doesn't have any exposure to Greece, does it?
It would be a tragedy if they do :D

[Master98]

Radio says Greek situation hurting share prices today

Heartland share price tumbling

Surely Heartland doesn't have any exposure to Greece, does it?
winner, i do have to say you don't have common sense about sharemarket.;)

[Marilyn Munroe]

Surely Heartland doesn't have any exposure to Greece, does it?

It won't do the cedibility of Kiwi Saver or the Cullen Fund any good if widows orphans and ordinary jokers are told they are the counter-party to Greek credit default swaps.

U'no like Credit Sails investors found out their money had been invested in Icelandic Banks.

Boop boop de do
Marilyn

[winner69]

It would be a tragedy if they do :D

Euripides would have had something to say if they did.

[davflaws]

Euripides proposals up I breaka your Eurozone!

[Beagle]

http://www.sharechat.co.nz/article/0ff751f2/nzx-milk-powder-futures-point-to-further-declines-at-gdt-auction.html?utm_medium=email&utm_campaign=NZX+milk+powder+futures+point+to+furt her+declines+at+GDT+auction&utm_content=NZX+milk+powder+futures+point+to+furth er+declines+at+GDT+auction+CID_c6a9aeb25ac5b18bcaf 937ffdb1fe72f&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle0ff751f2nzx-milk-powder-futures-point-to-further-declines-at-gdt-auctionhtml

Oh dear...it just goes from bad to worse.

[Beagle]

:scared:And then even worse than the futures were indicating.... down a shocking 10% hard on the back of all the other recent declines.
This is not good for the economy, not good at all.

[Harvey Specter]

:scared:And then even worse than the futures were indicating.... down a shocking 10% hard on the back of all the other recent declines.
This is not good for the economy, not good at all.NOt good at all. At least two bank economists are now revising their forecasts down -> Fonterra payout will probably be lower and maybe 3 OCR cuts down to 2.5% by year end.

[percy]

:scared:And then even worse than the futures were indicating.... down a shocking 10% hard on the back of all the other recent declines.
This is not good for the economy, not good at all.

Changing economic fortunes offers opportunities.While some sectors are weak, others are strong.I note Percy Book Corporation sales are running 8.95% ahead of last year, while the general book industry sales are declining.
Heartland has stable funding,and a diverse lending book,overseen by experience board, and experienced bankers in management rolls.
I would think it will be proved, when their result comes out HNZ has only a modest exposure to dairying.Heartland like PGW, have been looking to increase their exposure to this sector as this has been not been a strong area of their rural lending.
I did point out once before Heartland did take a lot of trouble explaining the Holden finance deal to me.As I said then it is a well thought promotion,attracting customers into their local Holden dealer.Most people have a trade in and are going for having a smaller loan outstanding.
Heartland have opened up new channels for lending,as they said they would.
I have neither brought or sold any shares in Heartland since last Christmas,and would think any one looking for a buying opportunity,would be wise to take advantage of the share price as it is a present.I think the sp got ahead of itself and now has over reacted the other way.My fair value would be between $1.25 and $1.35,with the prospects of organic growth and possible share buy back EPS will increase.Heartland like all banks has a good capacity to pay increasing dividends.In Heartland case they are fully imputed.Should Heartland fund a fantastic acquisition shareholders will gladly subscribe to a fund raising.

[Harvey Specter]

Changing economic fortunes offers opportunities.While some sectors are weak, others are strong.I note Percy Book Corporation sales are running 8.95% ahead of last year, while the general book industry sales are declining.Two family business I am involved with are growing at over 10% a year - no bull (or cows involved).

[percy]

Two family business I am involved with are growing at over 10% a year - no bull (or cows involved).

Good news.
Confirms not all is doom and gloom.

[gv1]

:scared:And then even worse than the futures were indicating.... down a shocking 10% hard on the back of all the other recent declines.
This is not good for the economy, not good at all.

Ha!Ha!..I did mention earlier on...NZ economy is on borrowed time. Exactly similar thing happened to Aussie, they relied on mining. But HNZ will still make money, as farmers have to live as well.

[percy]

Looking at this;

http://www.goodreturns.co.nz/article/976503126/please-sir-can-i-borrow-more.html


seems demand is strong.
Rogers point about credit quality is the potential problem. Hard to call at present, methinks.

Holding. (Roger isn't. :cool:)

Any fool can lend money.Getting it back with interest is a little harder.!!
Therefore it only pays to invest with experienced bankers.
Heartland is made up of experienced bankers,so the risks greatly diminish.Diversified sector lending is important.
Banks who are over committed with household mortgages could face some issues.Note Heartland clip the ticket ,and pass these onto Kiwi Bank.

[Beagle]

Looking at this;

http://www.goodreturns.co.nz/article/976503126/please-sir-can-i-borrow-more.html


seems demand is strong.
Rogers point about credit quality is the potential problem. Hard to call at present, methinks.

Holding. (Roger isn't. :cool:)

Please Sir, can I have some more ?.... Oliver Twist anyone ? What happens when the little boy develops a systemic problem with bad behaviour and even then goes back for more porridge ?
No matter what one's will is or intentions are, its bloody hard for "little Johnny" to do his chores when both his hands are tied behind his back by extremely unfavourable circumstances.
I don't know how others feel but to me it seems this dairy thing is getting really ugly.
I'm not normally one to feel sorry for farmers but crikey this looks really tough. All the banking experience in the world won't help anyone, including HNZ shareholders if there a really prolonged iron ore type price problem with dairy.

As well as the latest extremly severe drop in dairy overnight have a look at the overall commodity price drops month on month on month over the last quarter.
http://www.sharechat.co.nz/article/64db2526/nz-commodity-prices-fall-for-third-month-in-june-to-3-year-low.html?utm_medium=email&utm_campaign=NZ+commodity+prices+fall+for+third+mo nth+in+June+to+3-year+low&utm_content=NZ+commodity+prices+fall+for+third+mon th+in+June+to+3-year+low+CID_5c2dacc810ac00d32361e692fd36ecf9&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle64db2526nz-commodity-prices-fall-for-third-month-in-june-to-3-year-lowhtml
If that isn't cause for concern for the N.Z. banking sector and "N.Z. Inc" then whatever drugs you're taking to see the glass half full, will you please flick some my way :D

[percy]

How is your big farmer client facing the challenges?
Head in the sand,or looking for opportunities?

[Beagle]

As I am sure you can understand mate, I can't share confidential client information other than to comment generally that those with no debt at all are in better shape to weather this storm.
I really hope for the sake of the country I am wrong but this is starting to look pretty scary from where I sit. Where's the light at the end of the tunnel ?
I think a full half a percent should come off immediately at the next RBNZ interest rate review, (basically they currently have the interest rate setting woefully wrong in my opinion) with a bias towards a further two or perhaps even three quarter percent cuts this year /; early 2016. We need to be about 1.5 - 1.75% on the OCR in my opinion to get the economy on some sort of equilibrium.
RBNZ an ostrich with its head in the sand moving at the pace of a snail ? Remind me again, why did we have those 4 quarter percent interest rate increases last year ? Oh that's right, the Auckland property market. Hmmmm, at the expense of the rest of the country ?

[percy]

As I am sure you can understand mate, I can't share confidential client information other than to comment generally that those with no debt at all are in better shape to weather this storm.

Pleased he is not looking for a cheaper accountant...
If you are really lucky he may pay you is good Heartland shares.!
ps.I always find it disappointing when farming suffers a slow down, that those who have not borrowed come through OK, while those who have borrowed to improve their farm often face hardships.I sold books to a rural school ,and the librarian told me it was only her modest wage that kept the farm going.A couple of years later their small farm was sold for over $4mil..!!

[Beagle]

unforetunately it looks like the dairy industry in on the verge between difficult times and a disaster.
Would I be right to assume if the negatives continue in the dairy sector that HNZ will probably recieve an investment downgrade shortly.
IMHO The current interest rates on offer from HNZ do not reflect thier current exposure to the dairy sector so I am with drawing my cash deposits.

Just one persons opinion and not meant as financial advice.

Fitch came out a while back and gave a strong hint that they are watching this space very closely and expressly hinted at the possibility of credit downgrade(s) in the banking sector. There's been a fair bit of water under the bridge since they said that and unfortunately its all gone in the wrong direction.

[percy]

unforetunately it looks like the dairy industry in on the verge between difficult times and a disaster.
Would I be right to assume if the negatives continue in the dairy sector that HNZ will probably recieve an investment downgrade shortly.
IMHO The current interest rates on offer from HNZ do not reflect thier current exposure to the dairy sector so I am with drawing my cash deposits.

Just one persons opinion and not meant as financial advice.

I think you will find Heartland have a very small dairy sector loan book,however the Aussie Banks could face challenges with mortgages on dairy conversions.

[percy]

I hope you are right Percy but I was told they have a fair bit of exposure to loans on dairy herds the value of which is decreasing rapidly.

I have heard they have only modest exposure to dairying,of which dairy herds would make up a good part of their dairying exposure.
Now you are most probably more up to date than me,but I was told on Saturday prices of cows had not dropped. We must also remember, a cow is a milk producing machine, that provides solid cash flow.No cow,no cash flow.An investment of $1,700 to $1,800 will provide you with a mini milk factory providing approx. $1,300 of milk solids. You may wish to correct my figures as I can't find where I wrote them down.

[Xerof]

Funny how the problems of the dairy industry seem to want to be discussed on a Bank thread, and a Bank which has limited exposure to farmland asset funding.

Funding cows is an entirely different kettle of, well, cows - exposure would never be above 60%, a cow is a cash cow as percy says, and if you bothered to look at the meat company schedules, prices are at elevated levels historically, so farmers can always just trade the cash cows in. Marcus Kight will tell you all about it - excellent business through all business cycles

The real exposure as percy again said, is from the recent conversions - highly unlikely to be the realm of HNZ, more likely to be ANZ(NBNZ)

where's your money going snap - under the mattress?

[percy]

Funny how the problems of the dairy industry seem to want to be discussed on a Bank thread, and a Bank which has limited exposure to farmland asset funding.

Funding cows is an entirely different kettle of, well, cows - exposure would never be above 60%, a cow is a cash cow as percy says, and if you bothered to look at the meat company schedules, prices are at elevated levels historically, so farmers can always just trade the cash cows in. Marcus Kight will tell you all about it - excellent business through all business cycles

The real exposure as percy again said, is from the recent conversions - highly unlikely to be the realm of HNZ, more likely to be ANZ(NBNZ)

where's your money going snap - under the mattress?

What a breath of fresh air you are.
Thank you for a well thought out post.

[Beagle]

I think you should do more home work on the cull value of a dairy cow.
so over the last 2 years a good producing dairy cow was worth about $2200....this year that same cow is worth on ave $1750 a decline of about 20%.
Your so called savoir in the beef cull price is just ridiculous as current meat schedule for a cull cow ave about $4.35 and given diary cows genetics are made to produce milk and not meat your ave dairy cow is not that heavy once dressed out and on the hook....... so would weigh about 180kg on the hook.
So last years milking cow that was valued at $2200 on the books would be worth about $780 on the hook..............
I run over 100 head of cattle so are well aware of the schedules.
here's a link to this weeks north island meat schedules....prices are lower in the south island.
The relevant section for cows is listed under COW
http://www.taylorpreston.co.nz/schedules/
probably buy more NZR shares with the money.
might even buy some more beefies as I am a little under stocked at the moment.

Client told me an AWFUL lot of dairy cows in calf are going to the works at present.
2015 National Average market values http://www.ird.govt.nz/technical-tax/determinations/livestock/national-averages/livestock-nationalavemarketvalues-2015.html
2014 National average market values http://www.ird.govt.nz/technical-tax/determinations/livestock/national-averages/livestock-nationalavemarketvalues-2014.html

Pretty simple really, if HNZ were lending 60% on a sharemilkers herd at $2,200 a head, loan value per head $1,320 last year and the sharemilker is now staring down the barrel of a gun at 50% of $4.40 a kilogram of milk solids last year and this year and so on, said sharemilker is right in the **** right up to his eyeballs and sending stock to the works won't recover what HNZ lent them so HNZ have no real option but to "support them through this" but seeing as there's no light at the end of the tunnel I fail to understand why some can't see HNZ are simply digging a bigger hole for themselves by continuing to support this negative cash flow business operation ?

[percy]

Right dairy team I have started a new thread for you on Off Market Discussions;Cows in calf and other dairy issues.
Enjoy it, you have earnt it.!!!

[Beagle]

Sits and waits for Winner to say I see nothing...nuthing at all. Speaking of ostrich farming let's all stick our heads in the sand and pretend Fitch are too..I guess that would be called finding you're happy place :lol: Sorry Percy, mate, I simply couldn't resist :D I leave you in peace for the evening now.

[winner69]

Seeing not allowed to talk about cows I'll change the subject - I hope that Seadragon liability isn't going to be a problem. Seems heartland the bank of last resort

Reading that threat is a worry

[ziggy415]

Right dairy team I have started a new thread for you on Off Market Discussions;Cows in calf and other dairy issues.
Enjoy it, you have earnt it.!!!
are these cows A2

[percy]

lol....point taken............. but it is totally relivant to discuss capital stock investments and value's on this thread........can we talk about ostrich farming on the new farming thread.:p


You can discuss ostrich farming,or whatever you want.Love to know how you can relate ostrich farming to dairy issues,but you managed dairy issues on a bank thread,so I am sure you will think of a way.
Go for it,do it now.!

[couta1]

lol....point taken............. but it is totally relivant to discuss capital stock investments and value's on this thread........can we talk about ostrich farming on the new farming thread.:p
My Father in law was an ostrich farmer all his life and i picked up quite a few ostrich characteristics over the years some useful and some not:eek2:

[Beagle]

My Father in law was an ostrich farmer all his life and i picked up quite a few ostrich characteristics over the years some useful and some not:eek2:

:lol: :lol: :lol: That's the best post of the thread mate !! Gotta give you some rep for that.

[Marilyn Munroe]

Below is a link to an article in the Christchurch Press about irrigation. Of perticular interest is the farmers obsevations about rural lenders hawking money.

http://www.stuff.co.nz/business/farming/agribusiness/69289686/exorcising-the-spectre-of-drought


Boop boop de do
Marilyn

[percy]

Seeing not allowed to talk about cows I'll change the subject - I hope that Seadragon liability isn't going to be a problem. Seems heartland the bank of last resort

Reading that threat is a worry

Certainly is.
Will be a great test of Heartland Bank's bankers' skills.

[percy]

Below is a link to an article in the Christchurch Press about irrigation. Of perticular interest is the farmers obsevations about rural lenders hawking money.

http://www.stuff.co.nz/business/farming/agribusiness/69289686/exorcising-the-spectre-of-drought


Boop boop de do
Marilyn

Clever farmer using irrigation to give himself profitable options.

[percy]

Nice ready this week's "taking stock" on www.chrislee.co.nz;Heartland earning close to $48 NPAT works out eps 11cents.That might imply a full dividend of nearly 8cents...

[winner69]

Nice ready this week's "taking stock" on www.chrislee.co.nz;Heartland earning close to $48 NPAT works out eps 11cents.That might imply a full dividend of nearly 8cents...

Wrong thread Percy .....I read it on the other thread.

Totally confused now - this thread has people telling Percy he is an ostrich. (With his head in the sand?) and all the Heartland stuff is on another thread

[K1W1G0LD]

Nice ready this week's "taking stock" on www.chrislee.co.nz;Heartland earning close to $48 NPAT works out eps 11cents.That might imply a full dividend of nearly 8cents...y

Memo to Jeff.............I'd be really happy with a (nearly) 5 cent final divvy . See if you can arrange that Percy!
Now the noise on here is deafening...............think I'll go read a quiet ebook , "War and Peace" sounds good.

[Beagle]

Hmmmm A "heartless" pedantic type might note that $48m on 469,890,280 shares gives 10.2 cents per share but let's not split hairs because we've all found our happy place tonight:)

[percy]

Wrong thread Percy .....I read it on the other thread.

Totally confused now - this thread has people telling Percy he is an ostrich. (With his head in the sand?) and all the Heartland stuff is on another thread

Now why does your post not surprise me?

[percy]

Hmmmm A "heartless" pedantic type might note that $48m on 469,890,280 shares gives 10.2 cents per share but let's not split hairs because we've all found our happy place tonight:)

Hmmmmmmmmmmmmmmmmmm His record on Heartland has over the years been pretty right.
Go with his maths.........................

[Xerof]

Yeah, horribly confusing isn't it Winner. So are they funding seadragon farms now too ? Gee, I'll have to take my boner (cow) elsewhere.

Here I was thinking banks play a role in smoothing out business cycles - silly me

[Beagle]

Hmmmmmmmmmmmmmmmmmm His record on Heartland has over the years been pretty right.
Go with his maths.........................

Yeah mate, lets pretend there's really not 469,890,280 shares currently on issue. I am sure Chris has his calculations right and the NZX are wrong and my calculator isn't working properly.
http://www.4-traders.com/HEARTLAND-NEW-ZEALAND-LTD-11344518/revisions/
Lets also pretend the consensus analyst forecast of 10 cps is nonsense too because we're all looking for our happy place tonight :)
zzzzzzzzz

[percy]

Yeah mate, lets pretend there's really not 469,890,280 shares currently on issue. I am sure Chris has his calculations right and the NZX are wrong and my calculator isn't working properly.

Pedantic Roger.
His history writing on Heartland for over three years has been excellent.
When brokers were ignoring Heartland, Lee and Kevin Gloag were attending agms ,talking to management and directors,doing research and sharing it on his site..
He has been right on the money the whole time. So lets give him some Leeway.

[winner69]

Below is a link to an article in the Christchurch Press about irrigation. Of perticular interest is the farmers obsevations about rural lenders hawking money.

http://www.stuff.co.nz/business/farming/agribusiness/69289686/exorcising-the-spectre-of-drought


Boop boop de do
Marilyn

The critical two paragraphs

The change water has made to the prospects for farmers in the area covered by CPW hasn't gone unnoticed by banks and Cookson says financiers he's never dealt with before have been keen to talk to him.

"A friend down the road banks with another bank and he's had my bank driving up his driveway and I've had his bank driving up my driveway. They're really keen to lend money for irrigation development – they obviously see it as a safe and good thing to get into."

Hope that these really keen bankers are the Heartland bannkers

This is real down to earth gutsy niche lending .... and to the cleverer farmers as well

[Beagle]

What's eight tenths of a cent EPS between friends eh ?. I shall consider myself told off like a naughty mischievous troublemaking dog and go and sit in the corner with my tail firmly between my legs :) Have a good evening mate.

[janner]

and my calculator isn't working properly.

Should that not be .. " Correctly "..

[winner69]

Roger, you could be right about HNZ being valued 'about right' by the market at the moment

I have given up this flag pole charting stuff. To work properly the price needs to go straight up to $1.60 and that aint going to happen

So belief in Heartland in delivering is necessary.I reckon 27% return over the next 12 months (from $1.20). OKish maybe. Based on these assumptions -

1 - I should never have asked whose halo is going to lose its lustre first (from our current list of esteemed and most loved leaders who are benefiting from the Halo Effect). It is not going to be Jeff's

2 - Heartlands earnings growth is going to slow but still be a respectable 17% in FY16 (see top half of table below, it all makes sense)

3 - Jeff 'hinted' at the ASM that the market needs to rerate HNZ. Whereas currently priced at 1.2 times Book Value a step up to 1.4 times is a good start to get anywhere near its peers.

4 - Not allowing for capital initiatives in all this.

So this time next year a share price of $1.44 and a 27% return for the year methinks. Sep in the table should be June

Back to being serious and looking at HNZ as a good investment just repeating last weeks thoughts

[noodles]

HNZ back above 200D EMA at 1.20.

This is on a week that dairy prices dropped 10%.

And today HNZ rose 2.6% when all the aussie banks dropped.

I suspect if Greece votes 'Yes', then we might see a bit of a rally in HNZ.

[percy]

HNZ back above 200D EMA at 1.20.

This is on a week dairy prices dropped 10%.

And today HNZ rose 2.6% when all the aussie banks dropped.

I suspect if Greece votes 'Yes', then we might see a bit of a rally in HNZ.

I find myself "well positioned."!!!

[Xerof]

Back to being serious and looking at HNZ as a good investment just repeating last weeks thoughts

Winner, you are clearly a man of influence

:cool:

And no silly cow talk today either....ooops

[couta1]

HNZ back above 200D EMA at 1.20.

This is on a week that dairy prices dropped 10%.

And today HNZ rose 2.6% when all the aussie banks dropped.

I suspect if Greece votes 'Yes', then we might see a bit of a rally in HNZ. And if Greece votes no are we to expect a retraction? Going by the last couple of days the NZX seems to be saying it doesn't matter either way to us.

[warthog]

And if Greece votes no are we to expect a retraction? Going by the last couple of days the NZX seems to be saying it doesn't matter either way to us.

If couta1 buys, expect a retraction.

:eek2:

[noodles]

And if Greece votes no are we to expect a retraction? Going by the last couple of days the NZX seems to be saying it doesn't matter either way to us.
No one knows what will happen if the Greeks vote 'No'. I reckons it will lie somewhere between a murmur and a meltdown.

I read somewhere that the China stock market meltdown has costed more loss of value than the entire Greek GDP. Maybe a "Yes" will just focus attention elsewhere.

[winner69]

Why Percy is getting excited about these impending capital management initiatives, a la a capital return to those shareholders who want it. He be a bit pissed if everybody has take some of it.

Lets for the sake of simplicity say a 10% capital return and assume this years Eps is 10.2 fcents (actually could be 10.19837591257 cents to Rogers calculator)

On these assumption eps would be 11.3 cents (better than 10.2cents eh) and ROE would be 11.4% instead of 10.3% (magic - ROE has gone up on same profit, objective achieved)

Impact on share price. Say a PE of 12 is maintained it adds another 12/13 cents to the share price.

And if that happens the P/B ratio goes up from 1.23 to 1.37 - real magic that is,a market rerating and even closer to those awful Aussie banks

Those numbers are just FY15 numbers and a 'before' and 'after' case. But imagine this time next year when $56m is NPAT. That be an EPS of 13.3 cents ....now we are firing, a PE of 12 is $1.60. Spooky how that $1.60 keeps popping up isn't it.

Hope it all goes to plan eh, no wonder Percy is excited. I am

[couta1]

If couta1 buys, expect a retraction.

:eek2:
Gee and here i was thinking i was just another insignificant minnow swimming around in a shark pool:cool:

[Xerof]

Spooky how that $1.60 keeps popping up isn't it.

Sorry to keep raising your flagpole Winner, but you're about 4 cents too conservative. If we are seeing the start of the new rally, then the target will be $1.64, being the height of the previous flagpole added to the nexus of the new rally. Looking for lower lows and higher highs from here, otherwise I will be out at b/e.

Percy, when we were getting thrashed by the queen street farmers yesterday, I was waiting for you to raise the issue of the security that HNZ take over these (I'll whisper it) cow loans. Not only do they have security over the 'asset', but they also require a guarantor, GSA I would guess, whose assets would be picked over in the event of default. You know, like the Dads who risk life and limb as guarantors for son's car with the lowered door handles, and no suspension. Sounds like good smart niche banking practise to me. Anyway, seeing you didn't enter stage right with that killer blow, I thought I would mention it myself

[iceman]

Percy, when we were getting thrashed by the queen street farmers yesterday, I was waiting for you to raise the issue of the security that HNZ take over these (I'll whisper it) cow loans. Not only do they have security over the 'asset', but they also require a guarantor, GSA I would guess, whose assets would be picked over in the event of default. You know, like the Dads who risk life and limb as guarantors for son's car with the lowered door handles, and no suspension. Sounds like good smart niche banking practise to me. Anyway, seeing you didn't enter stage right with that killer blow, I thought I would mention it myself

Like they apparently have done with the Seadragon facility Xerof. Thankfully !

[winner69]

This guy recommends HNZ, good on him

http://www.stuff.co.nz/business/money/69914860/a-brokers-view-heartland-new-zealand

[percy]

Sorry to keep raising your flagpole Winner, but you're about 4 cents too conservative. If we are seeing the start of the new rally, then the target will be $1.64, being the height of the previous flagpole added to the nexus of the new rally. Looking for lower lows and higher highs from here, otherwise I will be out at b/e.

Percy, when we were getting thrashed by the queen street farmers yesterday, I was waiting for you to raise the issue of the security that HNZ take over these (I'll whisper it) cow loans. Not only do they have security over the 'asset', but they also require a guarantor, GSA I would guess, whose assets would be picked over in the event of default. You know, like the Dads who risk life and limb as guarantors for son's car with the lowered door handles, and no suspension. Sounds like good smart niche banking practise to me. Anyway, seeing you didn't enter stage right with that killer blow, I thought I would mention it myself

Thank you Xerof.I did not realise they would have had a guarantor.So that is great to know.You also were clear on what % they would lend on livestock,which again I did not know.
The thrashing I took was not helping me, as I was very concerned when HNZ broke below the 200 day EMA.I had expected it to stay above it. After clearing my mixed up head,[not reading sharetrader for a few days and a couple of great book selling trips to The west Coast] I decided I had no cause to be concerned about Heartland's share price,or my overweight position. Now the tide has turned we can start thinking about Heartland's eps growth for 2016.There will be three areas that will drive this eps growth.
1] Organic growth.REL may start getting traction.Ifinance and Harmoney will be interesting.Ever changing economics in NZ will offer HNZ opportunities.I see between 5% and 12%.
2]Possible share buy back.Possibly between 2% and 10%.
3]Acquisitions.Possibly between 0% and 3%.
I look forward to reading updated brokers' reports, and more keenly to Heartland's own update, which will most probably be given later in the year at the AGM.

[percy]

This guy recommends HNZ, good on him

http://www.stuff.co.nz/business/money/69914860/a-brokers-view-heartland-new-zealand

Winner69.
As always thank you for posting the link.

[percy]

Thank you Xerof.I did not realise they would have had a guarantor.So that is great to know.You also were clear on what % they would lend on livestock,which again I did not know.
The thrashing I took was not helping me, as I was very concerned when HNZ broke below the 200 day EMA.I had expected it to stay above it. After clearing my mixed up head,[not reading sharetrader for a few days and a couple of great book selling trips to The west Coast] I decided I had no cause to be concerned about Heartland's share price,or my overweight position. Now the tide has turned we can start thinking about Heartland's eps growth for 2016.There will be three areas that will drive this eps growth.
1] Organic growth.REL may start getting traction.Ifinance and Harmoney will be interesting.Ever changing economics in NZ will offer HNZ opportunities.I see between 5% and 12%.
2]Possible share buy back.Possibly between 2% and 10%.
3]Acquisitions.Possibly between 0% and 3%.
I look forward to reading updated brokers' reports, and more keenly to Heartland's own update, which will most probably be given later in the year at the AGM.

I recently posted I thought present fair value for Heartland was between $1.25 and $1.35.I still hold that view.
So where will HNZ's share price be in a year's time.?
The above post I stated where I saw eps growth was coming from. That will drive the sp.
Other factors will be;
1] Growing acceptance of Heartland as a credible bank.
2]Growing acceptance that Heartland Bank do not have to raise capital.[as do the Aussie Banks].
3]Acceptance Heartland do not have the loan risks the Aussie Banks do.[Aussie/Auckland housing ,mining,and dairy conversion loans].
4]Acceptance Heartland have secure funding and a diversified lending book,in most areas earning higher margins, with little or no increase in risks.
5] Yield driven investors chasing Heartland's growing fully imputed dividends.[7 to 8 cents per share]
So that adds up to me a sp of between $1.45 and $1.65 plus fully imputated dividends.So depending how you account for the imputated dividends I see total returns over the next year of between 26% and 45%.
More astute investors will work out that in just under 18 months they will receive three dividends from Heartland.

[winner69]

Share price in a years time

That $1.65 keeps coming up a lot in different discussions and methodologies

Xerof mentioned $1.64 above

Percy has $1.65 (top of his range)


So it looks like $1.60 something July / August next year (no acquisitions and no takeover)

Yippee

[kizame]

It is interesting to see that the market seems to think that 114c is too cheap for this stock,the kangaroo tail on the daily and two tails on the weekly chart tends to show this. Kangaroo tails are pretty reliable turning points. Reasonable volume also during this time.
I'm all in and pretty bullish on this one now. Picked up lots more at 119.Interestingly 163 is 38.2% on fibonacci extensions and 170 = 50%

[winner69]

V = 10 (8.5 + 2g) according to Benjamin


Lets say g is a miserable 4% pa (been going at 15% lately) but this is meant to be a medium / long term rate

Heck we get $1.65 as intrinsic value

[ziggy415]

V = 10 (8.5 + 2g) according to Benjamin


Lets say g is a miserable 4% pa (been going at 15% lately) but this is meant to be a medium / long term rate

Heck we get $1.65 as intrinsic value

you and Kisame may as well be talking chinese for what i understand from your posts.....but i got the $1.65
:t_up:

[kizame]

you and Kisame may as well be talking chinese for what i understand from your posts.....but i got the $1.65
:t_up:

Yeah it does sound like chinese,its what we do either as chartists or fundermentalists to justify what we have bought,and why we paid what we did. haha

[Joshuatree]

Read more » (http://sendy.tarawera.co.nz/l/QQMrKma8h6MjbHw96gBRew/X763mRz2Klx6dG7Wt892rt4eMA/eu1ZrzyWcFw8ZcDN6RVyvQ) For those few that haven't read this. A bit lightweight but a positive view .Sitting on my shares too atp.

[percy]

There's been some obligatory Aussie bank bashing on this thread so thought I'd pluck some
numbers to demonstrate the thrashing the market has been giving this poor fool.

Stocktastic says;

(ytd returns)https://www.stocktastic.co.nz/stocks


ANZ $33.520 $36.780 9.73%


HNZ $1.130 $1.200 8.85%


WBC $34.600 $37.000 6.94%


Dividends


https://www.stocktastic.co.nz/dividends
HNZ 02/04/2015 Interim $0.03000 $0.00529 $0.01167


No stocktastic report on dividends from ANZ and WBC, so I've turned to NZX
both having paid a divy in the past week.


https://www.nzx.com/markets/NZSX/securities/ANZ/dividends
Interim 86.000c 0.000c 10.000c 01/07/2015 AUD


https://www.nzx.com/markets/NZSX/securities/WBC/dividends
Interim 93.000c 0.000c 6.000c 02/07/2015 AUD

So there. Seems I'm getting a terrible market thrashing by holding those 'orrible aussie banks.
Just as well I'm holding a wedge of HNZ alongside them.

cheers, da fool

Sorry to be always bashing the Aussie Banks.
Just trying to make a point that HNZ can hold its head up high with them.
I think the Australian Banks have a great record of growth and paying excellent dividends.
And contrary to what I have been saying on this thread, I think the Australian banks will continue to give their shareholders excellent returns in the future.

[Beagle]

Wow, an amazing lot of enthusiasm yesterday and today almost has me wondering if I've got this wrong, emphasis on almost.
Reality check. Consensus broker forecast for 2016, (which hasn't changed for quite a while and thus hasn't factored in the recent months of dramatic declines in dairy or emerging talk by leading economists of a recession), is for EPS of 10.4 cps.
The risks for those that have studied economics and understand the overall effect on the economy and bad and doubtful debtors on banks and finance companies are definitely too the downside. Potentially headwinds could be quite strong and building. Most of the PE's of the Aussie banks have come back and are sitting at circa 12-13. HNZ has historically been about 12 so that's 12 x 10.4 cents = $1.25 by say early 2016 if the **** doesn't hit the fan in terms of economic effects.

Within Percy's range though and as he's quite correctly noted there a final divvy due in the next few months so as long as the economy doesn't go into recession and as long as Fitch keeps their finger off the downgrade trigger, (the effect of which could be pretty serious), its not the worst investment on the NZX by any means collecting three fully imputed dividends in fifteen months will have the brave / hungry divvy hounds sniffing around) but certainly not without meaningful risk.
Disc - Don't hold.

[percy]

Roger.
I would not be surprised to see Fitch's upgrade Heartland's credit rating.
Sound diversified lending,secure lower cost funding,growing profitability,and high capital ratios,should be recognised.

[Beagle]

I think its helpful to have another look at what they actually said on 4 June 2015.
http://www.reuters.com/article/2015/06/05/idUSFit92494520150605
Clearly we've had a couple of really big drops in the GDT auction prices since then although the dollar has dropped a fair bit too cushioning that to some extent.

[percy]

I think its helpful to have another look at what they actually said on 4 June 2015.
http://www.reuters.com/article/2015/06/05/idUSFit92494520150605
Clearly we've had a couple of really big drops in the GDT auction prices since then although the dollar has dropped a fair bit too cushioning that to some extent.

With HNZ low exposure to dairy farm conversions,secure lending on livestock, I am sure I will not be surprised with a Credit rating upgrade from Fitch's.
Possibly October?

[winner69]

With HNZ low exposure to dairy farm conversions,secure lending on livestock, I am sure I will not be surprised with a Credit rating upgrade from Fitch's.
Possibly October?

Currently BBB

Next step up would be A - that will impress punters eh

Would be only one notch down from the AA thatNZ Sovereign debt has

Heartland that strong?

[Beagle]

With HNZ low exposure to dairy farm conversions,secure lending on livestock, I am sure I will not be surprised with a Credit rating upgrade from Fitch's.
Possibly October?

Sharemilkers:- A significant percentage of HNZ's customers would be farmers going backwards at present and they wouldn't get $1k a head at the works so its not well secured if they loaned 60% at close to $3K a head when dairy was at its peak is it mate !!

Fitch work at a macro economic level and work downwards from there to identify specific risks to its rated clients. NZ Inc isn't in the fantastic shape it was last year by any means.
Let's be clear they are talking about a risk to asset quality and go on to say if there isn't any recovery before mid 2015 then concerns increase.
This is not the sort of macro economic environment where any N.Z. bank gets a credit rating upgrade. Okay, let me help spell it out. Look at this, emphasis added.


What is Heartland Bank's credit rating and what does it mean?

Heartland Bank has a long-term issuer rating of BBB (Outlook Stable) issued by Fitch Ratings.

Fitch Ratings BBB (Outlook Stable) A rating of BBB from Fitch Ratings indicates that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.

I'd say we now have those adverse economic conditions despite what Stephen Joyce tried to argue today.

[winner69]

Sharemilkers:- A significant percentage of HNZ's customers would be farmers going backwards at present and they wouldn't get $1k a head at the works so its not well secured if they loaned 60% at close to $3K a head when dairy was at its peak is it mate !!
Fitch work at a macro economic level and work downwards from there to identify specific risks to its rated clients. NZ Inc isn't in the fantastic shape it was last year by any means.
Let's be clear they are talking about a risk to asset quality and go on to say if there isn't any recovery before mid 2015 then concerns increase.
This is not the sort of macro economic environment where any N.Z. bank gets a credit rating upgrade. I there's a change to HNZ's rating it won't be in the direction you want.
BBB- is on the cars I reckon.

You forgot about the personal guarantees Roger

[percy]

Well lets look at the time line.
25th August 2014; HNZ announces full year npat of $36mil..
29th October 2014; Fitch raises HNZ Credit rating.
14th January 2015; RBNZ Reduces Regulatory Capital Requirements for HNZ.
26th June 2015,HNZ confirms profit of approx. $48mil.This is up 33% from the profit Fitch used for their last upgrade.
So sound diversified lending,secure lower cost of funding,growing profitability,and extremely high capital ratio.
So no I would not be surprised at a credit rating upgrade.

[Beagle]

The full detail of what Fitch said when they upgraded in October 2014 - emphasis added.


Heartland Bank Limited KEY RATING DRIVERS - IDRs AND VR The upgrade of HBL's Long- and Short-Term IDRs and VR reflect the bank's consistent reduction in non-core assets resulting in improved asset quality and stronger earnings. At the financial year end 30 June 2014 (FY14) HBL's noncore asset portfolio stood at NZD41m. HBL expects to reduce the portfolio to NZD26m by end-2014, while maintaining current provisioning levels. At this point the portfolio would be unlikely to present a material risk to the bank's capitalisation and profitability.
HBL's funding and liquidity profile is adequate for its rating level. It makes greater use of wholesale funding relative to most of its domestic peers, with a loan/ deposit ratio of 116% at FYE14, leaving it somewhat susceptible to investor confidence. In addition, HBL's on-balance sheet liquidity is lower than domestic peers. This risk is partly offset by HBL's shorter duration loan portfolio. Around 53% of HBL's liabilities maturing within 12 months are covered by maturing assets at FYE14.
HBL's business model focuses on lending niche markets in which it has a leading market share. As a result, HBL generates a stronger net interest margin than peers despite the riskier lending profile. Fitch expects HBL's core asset quality to remain sound, benefiting from strengthened underwriting standards and good economic conditions. In addition, HBL's capital ratios are adequate relative to its risks.
RATING SENSITIVITIES - IDRs AND VR HBL's IDRs and VR are sensitive to changes in its company profile and risk appetite. A weaker company profile - mainly reflected in its business model and franchise, could impact the bank's earnings performance and could lead to a change in risk appetite, placing negative pressure on HBL's asset quality and/or capital, funding and liquidity positions. Positive rating action is unlikely in the short- to medium-term.
There's been a lot of economic water under the bridge since October 2014 and unfortunately its all been going in the wrong direction.
I also note in the context of what Fitch were talking about in terms of changes to their business model that HNZ are aggressively targeting more unsecured consumer lending and poorly / moderately secured vehicle lending, some of it on deferred payment terms plus as the as yet unproved and mostly unsecured lending through Harmoney. All lending that changes their business model to a somewhat higher risk one in my opinion. I wonder how Fitch will see this ?

[percy]

The full detail of what Fitch said when they upgraded in October 2014 - emphasis added.

[/B]
There's been a lot of economic water under the bridge since October 2014 and unfortunately its all been going in the wrong direction.
I also note in the context of what Fitch were talking about in terms of changes to their business model that HNZ are aggressively targeting more unsecured consumer lending and poorly / moderately secured vehicle lending, some of it on deferred payment terms plus as the as yet unproved and mostly unsecured lending through Harmoney. All lending that changes their business model to a somewhat higher risk one in my opinion. I wonder how Fitch will see this ?

I am sure that is how Fitch's saw the outlook in October LAST year.
Excellent water under the bridge for Heartland since then.In fact very fast flowing fresh water!
14 th January THIS year RBNZ reduces regulatory capital requirements for HNZ.
26th June THIS year, ie under two weeks ago, HNZ confirms their npat will be close to $48mil,up from last year's $36mil.Up approx 33%.Now that is a lot of fast flowing water under the bridge.!! Fresh water too.!!
And Heartland are "assessing possible capital management options to improve ROE."
Now that sounds very much like a bank which deserves to have their credit rating upgraded,[again].

[Baa_Baa]

Obviously someone didn't sell their 200EMA trigger, which the SP is still under and below a massive rising channel since Apr2012. Some would call it a breakdown, others an anomaly and market ignorance of the quality of HNZ, which could go either way, it's on a tipping point right now. No reason though why it won't be sucked along with the sentiment of the banking / finance sector regardless of all the fine details, most of which are thinly elaborated here.

[percy]

I note according to Yahoo the sp is $1.20,the 200day EMA is $1.20 and the 50 day EMA is $1.24.Poised?
Yes I was very concerned when HNZ broke down through the 200 day EMA.
I thought long and hard about the reasons,and decided the market would recover reasonably quickly, to my fair value of between $1.25 and $1.35.
I still hold that view.

[Master98]

In US raw milk is over supply and demand is less,farmers start dumping raw milk, Greece referendum tomorrow adds more uncertain on Monday, all looks not good. wish HNZ is not dead cat bounce.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11475226

[percy]

In US raw milk is over supply and demand is less,farmers start dumping raw milk, Greece referendum tomorrow adds more uncertain on Monday, all looks not good. wish HNZ is not dead cat bounce.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11475226

I think your post is on the wrong thread.
Most probably should be on OffMarket Discussions;"Cows in calf and other dairy issues".
The Greek situation is being well covered on NZX"Is This Bull Cycle over.?" thread.
As for HNZ: I expect the article, Winner69 gave the link to in his post No.5518, will drive the market into a HNZ buying frenzy.!!!

[Master98]

I think your post is on the wrong thread.
Most probably should be on OffMarket Discussions;"Cows in calf and other dairy issues".
The Greek situation is being well covered on NZX"Is This Bull Cycle over.?" thread.

percy, i thought you were a brave person can face reality, in fact HNZ do financially link to dairy sector, isn"t it? and no one can avoid from uncertain financial market.

[percy]

percy, i thought you were a brave person can face reality, in fact HNZ do financially link to dairy sector, isn"t it? and no one can avoid from uncertain financial market.

HNZ have exposure to all financial sectors.
Their exposure to dairy...From what we can understand it is ANZ and NAB[via BNZ]who have the most at risk with dairy conversion loans,which appears to be the most at risk sector in dairying.
Livestocks loans.Xerof's posts have been very interesting.HNZ lend up to 60% and insist on a guarantor.I have also pointed out a cow costs approx. $1700 and earns $1200 in milk solids,.
So the reality is Off Market Discussions "Cows in calf and other dairy issue'.or possibly ANZ Bank,or Aussie Banks threads,as HNZ have very little exposure to the dairy sector,and what they do is covered by guarantors..

[Master98]

HNZ have very little exposure to the dairy sector,and what they do is covered by guarantors..

I doubt about it, percy maybe its time for you to call HNZ CEO or CFO to give market clarification how heavily their invested in dairy sector, just like their market correction which didn't intend to acquire FPA finance.

[percy]

I doubt about it, percy maybe its time for you to call HNZ CEO or CFO to give market clarification how heavily their invested in dairy sector, just like their market correction which didn't intend to acquire FPA finance.

The Quandrant sell down. together with the market expecting HNZ to have to raise a lot of capital to buy FPF appears to have caused the sp weakness of HNZ. With no FPF deal it looks as though the sp will recover quickly.
If you have any concerns about HNZ's dairy exposure ring them yourself.I do not.
I did ring the CFO as I had concerns about the Holden Finance deals.Simon Owen took a lot of time explaining "the promotion " to me.I think it was a well thought out promotion.
And yes I would have liked to see HNZ acquire FPF.However as Chris Lee stated it appears it was too pricy.HNZ have stated they will not over pay for acquisitions,and from their latest announcement they may be looking to do a share buy back.
I expect HNZ most probably have in their livestock lending, lent on horses.I expect John Key's action in pulling a pony tail to have little affect on HNZ sp in the short term,as I don't think HNZ had any exposure to that Filly.

[kizame]

I expect HNZ most probably have in their livestock lending, lent on horses.I expect John Key's action in pulling a pony tail to have little affect on HNZ sp in the short term,as I don't think HNZ had any exposure to that Filly.

Haha finally I think you have a sense of humour,very good.

But the fact that they are not also interested in buying Fillies for Potential Folling finance should help see the share price rally a 1c or two.

[belted galloway]

I doubt about it, percy maybe its time for you to call HNZ CEO or CFO to give market clarification how heavily their invested in dairy sector, just like their market correction which didn't intend to acquire FPA finance.

Maybe it would be worthwhile reviewing their half year/annual report, where segment information relating to the rural sector is provided?

The 2014 half year notes show total rural assets as $454.564m over total group assets of $3,162.169m, which means rural assets make up 14.4% of heartlands total assets.

Net operating income from the rural segment is $11.755m over total operating income income of $70.109m, or 16.8%.


Also regarding security:

"Although the Group relies primarily on the integrity of borrowers and their ability to make contracted repayments, the Group also requires appropriate collateral for loans. This collateral is usually by way of first charge over the asset financed and usually includes personal guarantees from borrowers and business owners."

[Joshuatree]

Touche; great info thanks bg.

[percy]

Maybe it would be worthwhile reviewing their half year/annual report, where segment information relating to the rural sector is provided?

The 2014 half year notes show total rural assets as $454.564m over total group assets of $3,162.169m, which means rural assets make up 14.4% of heartlands total assets.

Net operating income from the rural segment is $11.755m over total operating income income of $70.109m, or 16.8%.


Also regarding security:

"Although the Group relies primarily on the integrity of borrowers and their ability to make contracted repayments, the Group also requires appropriate collateral for loans. This collateral is usually by way of first charge over the asset financed and usually includes personal guarantees from borrowers and business owners."



Thank you belted galloway.
Confirms we have no reason to be concerned over dairy lending.Dairy lending only makes a part of HNZ's profitable rural lending,and of that dairy lending we would expect it to be livestock,rather than the risky dairy conversion loans.
As always, experienced bankers are making sure they have good security and guarantees in place.

[winner69]

Percy, Heartland can't be perfect

What is the one thing you have a slight concern about, must be something.

[percy]

Percy, Heartland can't be perfect

What is the one thing you have a slight concern about, must be something.

The Sea Dragon loan.
Can't see the sale of their plant being easy or profitable to sell, should HNZ end up with it.

[noodles]

The Sea Dragon loan.
Can't see the sale of their plant being easy or profitable to sell, should HNZ end up with it.

My understanding of the Seadragon loan was that Heartland was only providing finance on the raw material (fish). Given how hard it has been for Sea Dragon to secure supply, I would expect that it should not be a big deal to find a buyer.

[winner69]

Percy, Moody's upgrade Air New Zealand credit rating

Jeez, obviously no 'country risk' in their thinking

Heartland upgrade more likely now?

[winner69]

My understanding of the Seadragon loan was that Heartland was only providing finance on the raw material (fish). Given how hard it has been for Sea Dragon to secure supply, I would expect that it should not be a big deal to find a buyer.

It's only a few mill anyway, small fish compared to the billions Heartland have out.

More of a concern is that Heartland might be seen as lender of last resort by some businesses and the Sea Dragon facility is just one of a few more.

[percy]

My understanding of the Seadragon loan was that Heartland was only providing finance on the raw material (fish). Given how hard it has been for Sea Dragon to secure supply, I would expect that it should not be a big deal to find a buyer.

But wait.!!!!!
I know just the buyer...!!!
PAZ[unlisted market] Pharma Zen .
And yes I do have a few shares in them.

[percy]

It's only a few mill anyway, small fish compared to the billions Heartland have out.

More of a concern is that Heartland might be seen as lender of last resort by some businesses and the Sea Dragon facility is just one of a few more.
Those of that opinion would find they are in for an early wake up call.!

[percy]

Percy, Moody's upgrade Air New Zealand credit rating

Jeez, obviously no 'country risk' in their thinking

Heartland upgrade more likely now?
Yes certainly looking that way.
1]Diversified lending book.
2]Lower funding costs.
3]Secure funding base.[No overseas wholesale funding].
4]Increasing profits.
5]Higher "niche" margins,ie REL loans being 2% higher than standard mortgages,
6]No large exposure to NZ housing market.