HGH - Heartland Group Holdings

[Baa_Baa]

Mate up to this point Its actually done well relative to most of the major Aussie banks. Have a look at the charts of ANZ, WBC and NAB since August 2015 :eek2:...tells quite an interesting story about the banking sector as a whole.

Maybe so, relative to other banks, but still a falling knife albeit heavily oversold on the chart. Perhaps this coming week it finds antigravity, perhaps not? You can see how it responds to the moving averages, but finding support below the 200MA is anyones guess. As long as the international markets are soft or falling, this 'bank' will track the trend.

Daily chart:
7877

Weekly chart, was a sell three weeks ago.
7876

Monthly chart.
7878

jmo, dyodd
BAA

[nextbigthing]

I cannot seem to find this new announcement!

Sorry, it was but a wind up.


Nbt said that announcement was retracted - and replaced by the one that is now up on the NZX site

NBT is a liar.

[Raz]

Watch closely Dairy exposure with all the Banks, the first move to the exits by a Bank have started with one basically taking control of 35 dairy farms, freezing their accounts and requiring consulting on any expenditure moving forward , they have been advised they will be sold up by season end. The sell off alone could could reduce the market to 250-400$ per cow.

[blockhead]

Where have 35 farms been taken over Raz ?

[Beagle]

http://www.sharetrader.co.nz/showthread.php?10288-Cows-in-calf-and-other-dairy-issues

New Year and I'm trying to turn over a new leaf. Upon reflection in my time in Siberia I think what Percy suggested last year is fair and reasonable that we have a separate thread for the problems the dairy sector are posing to the banking sector as a whole. HNZ have only a moderate exposure. Its ANZ and Rabobank that are really worrying.

[winner69]

http://www.sharetrader.co.nz/showthread.php?10288-Cows-in-calf-and-other-dairy-issues

New Year and I'm trying to turn over a new leaf. Upon reflection in my time in Siberia I think what Percy suggested last year is fair and reasonable that we have a separate thread for the problems the dairy sector are posing to the banking sector as a whole. HNZ have only a moderate exposure. Its ANZ and Rabobank that are really worrying.

But Roger, Heartland shareholders need to keep abreast of 'dairy issues'

After all they have a $200m plus exposure to dairy loans and if you what you posted comes to fruition they could be a drag on Heartland's profits (and dividends) over the next year or so.

[Raz]

http://www.sharetrader.co.nz/showthread.php?10288-Cows-in-calf-and-other-dairy-issues

New Year and I'm trying to turn over a new leaf. Upon reflection in my time in Siberia I think what Percy suggested last year is fair and reasonable that we have a separate thread for the problems the dairy sector are posing to the banking sector as a whole. HNZ have only a moderate exposure. Its ANZ and Rabobank that are really worrying.

Ok it is Southland with high price inputs, clear area to begin with from a bank risk management exposure and the bank in not HNZ however have you considered...

If HNZ ended up having a substantially higher than average loss in regard its exposure would that be material to the share price? It seems interesting that one name comes up more often than not in discussions around acquiring market share they have taken on players no other bank wanted to retain or would fund.

Also has the total exposure increased materially given the banking community as a whole has increased, to this sector, facilities which total 4 Billion in the past season.

Simply that reflects funding working capital support, for now.

I think it all has the potential to at least increase share price volatility, that is where its relevance to HNZ certainly come in.

This is in similar vein to my original comments on Air NZ and see how the threat or risk of competition has cause some serious price volatility.

[winner69]

I reckon they will report H1 earnings as $25.8m which includes the $1m of non-recurring restructure costs they mentioned

Sets up a boomer H2 and I expect them to report $28.9m (+17%) for that half bringing FY to be $54.7m (+14%)

That's an eps of 11.5 cents on current number of shares so PE currently just over 10. Maybe the rerating down that often happens when capital restructuring takes place (more debt / less equity means higher risk for shareholders) is already underway in anticipation of the capital return.

I hope to be pleasantly surprised but doubt I will.

Hoping like hell they report something like $26m NPAT for H1

If not with the way the world is getting jitters about BANK stocks the Heartland share price could be hammered.

[winner69]

Ok it is Southland with high price inputs, clear area to begin with from a bank risk management exposure and the bank in not HNZ however have you considered...

If HNZ ended up having a substantially higher than average loss in regard its exposure would that be material to the share price? It seems interesting that one name comes up more often than not in discussions around acquiring market share they have taken on players no other bank wanted to retain or would fund.

Also has the total exposure increased materially given the banking community as a whole has increased, to this sector, facilities which total 4 Billion in the past season.

Simply that reflects funding working capital support, for now.

I think it all has the potential to at least increase share price volatility, that is where its relevance to HNZ certainly come in.

This is in similar vein to my original comments on Air NZ and see how the threat or risk of competition has cause some serious price volatility.

God post raz

Heartland wouldn't want 1 of those >$10m dairy loans to fall over would they.

[Yeshiva]

Wen I woke up at 6am, the clouds were touching the summit of the hills at the farms in the distance.

At 8am, the clouds had descended to around 25m from the top of the summit.

this is clear evidence that the sky is falling.

I have recited the shema relentlessly this morning to be on the safe side.

[Beagle]

Raz - A good Huntaway has already barked loudly about this issue, (well in advance of the trouble coming).
https://www.youtube.com/watch?v=dYW-0Ml1jg4

[winner69]

Wen I woke up at 6am, the clouds were touching the summit of the hills at the farms in the distance.

At 8am, the clouds had descended to around 25m from the top of the summit.

this is clear evidence that the sky is falling.

I have recited the shema relentlessly this morning to be on the safe side.

Can't understand why you thing the sky is falling ....it's all fine and dandy in this part of the world .....and in the Heartland world as well

[Balance]

Can't understand why you thing the sky is falling ....it's all fine and dandy in this part of the world .....and in the Heartland world as well

Banks are getting sold off overseas, hard to escape the ripples.

[NZSilver]

Downtrend forming - will we see sub 1.10? Banks are hurting with the current commodity crash...

[winner69]

At $1.15 Heartland trading at ~1.1 Book Value

Seems about right in these uncertain times.


So no more share price decline and compelling value at this level

[blockhead]

Watch closely Dairy exposure with all the Banks, the first move to the exits by a Bank have started with one basically taking control of 35 dairy farms, freezing their accounts and requiring consulting on any expenditure moving forward , they have been advised they will be sold up by season end. The sell off alone could could reduce the market to 250-400$ per cow.

Raz, tell me more about this, where have 35 farms been taken over by a Bank ?

Anyone else know anything about this ?

[mouse]

Watch closely Dairy exposure with all the Banks, the first move to the exits by a Bank have started with one basically taking control of 35 dairy farms, freezing their accounts and requiring consulting on any expenditure moving forward , they have been advised they will be sold up by season end. The sell off alone could could reduce the market to 250-400$ per cow.
I would think the price at the works would be around $1,000. Does anyone know the current works price?

[trader_jackson]

At $1.15 Heartland trading at ~1.1 Book Value

Seems about right in these uncertain times.


So no more share price decline and compelling value at this level

ANZ is in a similar basket (1.2 I think - lowest of the big aussie banks - should be no more decline for them one would expect... on PE and NTA value, ANZ is even cheaper I believe...)

Disclosure: not holding, but very interested in ANZ (holding heartland for a good 6 months)

[percy]

Australian banks face a few challenges Heartland don't;
Slow down in mining sector.
Slow down in manufacturing sector.
Slow down in the retail sector.
Slow down in real estate housing market.
Possible a tightening of European wholesale funding.
Possible Australian Reserve Bank requiring Australian banks to have a much greater capital base.

Above post #3921 posted 12-11-2014.
I therefore look forward, with confidence ,to Heartland Bank's interim result on the 23rd of this month.

[Beagle]

To be fair though Percy, since that post the Aussie banks have completed their capital raise through Tier 2 Basil 3 compliant subordinated debt issues. Its good that HBL are endeavouring to do a Tier 2 issue as well in April and I hope it goes well for them.

[percy]

The Australian Banks had to raise capital to stand still.
This extra capital will not grow eps or dividend.
On the other hand, Heartland have TOO MUCH capital,and the share buy back will raise eps and most probably the dividend.

[trader_jackson]

CBA just released their results... profit up, ahead of forecasts... one reasonable person would think banking stocks would get a lift or at least stabilize... instead heartland takes one of its biggest dives yet

[vin]

Looks like good buyin opportunity at these levels, sold my holding last year

[NZSilver]

Price of dairy cattle has a floor of cull (meat) price. Somewhere around that $1000 mark maybe a little less depending on breed - Jersey vs cross vs friesian. Milk price unlikely to have much change next season and payout this year likely to have a 3 in front of it based on current GDT prices. Many farms are running at a loss and high debt farmers and sharemilkers (lower order mainly 21-25% no cows) feeling the pinch - I have heard banks have told people to renegotiate contracts or walk as will owe even more at the end of the season. Service industries to dairy of which there are many are feeling pinch to - breeding/animal health/ products/earthworks/feed etc - flow on will have effect on NZ economy especially rural towns. I presume Heartland is exposed to these both dairy (more risky businesses - ie sharemilkers) and service industries. Looks like we will see sub 1.10 in the near future - sub $1 on the cards? I wouldn't count it out. HBL in Downtrend now.

[Baa_Baa]

Technically the clear 'rounded top' chart pattern is a bearish reversal (go figure at 18% off the recent highs and 21% off the $1.41 high) but the question is where is support for this falling knife? Seems to be modest chart support at $1.09 then stronger support at $1.06 being the August low. Picking a buy-in point is high risk any way you look at it, imho, until the trend reverses.

[NZSilver]

I agree Baa, I'm out for the time being - too risky until further information is at hand.

[Beagle]

The Tier 2 capital raise is planned for April (subject to satisfactory market conditions), or words to that effect. I hope we still have satisfactory market conditions in April and they get the issue done successfully. As for paying it out in terms of share buy-back I am not so sure that's a good idea in the current environment. Is it more prudent / conservative to have excess capital in uncertain times ?, I think it is wise. I watch and am interested if it gets down to my target price. Consumer loan provisioning in the interim result will be something that will be very interesting in light of their exposure to Harmoney loans. Dairy provisioning and comments will also be watched by many with great interest.

[percy]

Heartland Bank have a very experienced board and management.
They have a record of prudent stewardship,so I am sure they will weigh up "market conditions", before any decisions are made re share buyback or acquisitions.
They all have a great deal of "skin in the game" being significant Heartland Bank shareholders.

ps.
The little fellow at the bottom of the cliff waving,next to the large pile of Leemings, is me.!!What I am waving in my hand is my cheque book."Well positioned".!!!!!!!!!!!!!!!!!!...lol.

[mouse]

Price of dairy cattle has a floor of cull (meat) price. Somewhere around that $1000 mark maybe a little less depending on breed - Jersey vs cross vs friesian. Milk price unlikely to have much change next season and payout this year likely to have a 3 in front of it based on current GDT prices. Many farms are running at a loss and high debt farmers and sharemilkers (lower order mainly 21-25% no cows) feeling the pinch - I have heard banks have told people to renegotiate contracts or walk as will owe even more at the end of the season. Service industries to dairy of which there are many are feeling pinch to - breeding/animal health/ products/earthworks/feed etc - flow on will have effect on NZ economy especially rural towns. I presume Heartland is exposed to these both dairy (more risky businesses - ie sharemilkers) and service industries. Looks like we will see sub 1.10 in the near future - sub $1 on the cards? I wouldn't count it out. HBL in Downtrend now.
Many thanks for cull (meat) price. We need to avoid PANIC.
Heartland may take a hit, hopefully not a serious one.

[winner69]

Above post #3921 posted 12-11-2014.
I therefore look forward, with confidence ,to Heartland Bank's interim result on the 23rd of this month.

Yes Percy all on track

H1 earnings just under $26m (including the one off costs) and a boomer h2 bringing FY to $54m plus a bit.

It's next year fy17 that could be a problem, although to early for guidance to be given.

[Beagle]

I'm on record for months now as calling the SP as being too high and have been absolutely spot on. Notwithstanding that its anyone's guess when and if there might be a dairy recovery the current price around 112/113 feels like fair value to me. That is not to say it won't fall further, (it may well do exactly that with all the momentum with other banks world-wide) so I am a patient buyer provided their provisioning looks reasonable.

Based on a long term average PE of about 11, (this multiple I have chosen has come back a bit in line with other bank stocks region wide) and forward earnings of about 11 cps fair value in my opinion is about $1.21, (less provisioning for bad and doubtful debts that hasn't already been done to mark to their true market value).

To me it seems that Mr Market is saying that based on 473m shares at 112 there's really about .09 x 473m = $42m of irrecoverable loans somewhere on their balance sheet and given the dairy loan exposure of just over $200m this seems consistent with the nightmare scenario that's playing out in ultra slow motion before our very eyes that many dairy farmers will face receivership over the next few years.

So there you have it. I'm now neutral on the stock with a bias towards buying if there's further falls and provisioning looks reasonable. Pleased I sold at $1.31 just under one year ago but looking to be well positioned somewhere around the 52 week low of $1.06.

[percy]

Yes Percy all on track

H1 earnings just under $26m (including the one off costs) and a boomer h2 bringing FY to $54m plus a bit.

It's next year fy17 that could be a problem, although to early for guidance to be given.

I have no reason to doubt the NZ economy will stay in great shape.
The lower NZ$ is helping exporters and the tourism sector.
Lower oil prices will work their way through,lowering prices of not just fuel, but all the huge number of products that are petroleum based.
Low interest rates are also good for the economy.
As long as the NZ economy performs,Heartland Bank will out perform.!

.

[sb9]

So there you have it. I'm now neutral on the stock with a bias towards buying if there's further falls and provisioning looks reasonable. Pleased I sold at $1.31 just under one year ago but looking to be well positioned somewhere around the 52 week low of $1.06.

Agree there with you Roger, sold out at $1.28 last year and although its on my radar not in my price range atm. Too bearish outlook now to take a position, just my 2 cents...

[stoploss]

Sorry couldn't find the general banking thread , please forgive me .
Still plenty of money in banking .....Dairy not too much of a worry although provisions are up

http://www.stuff.co.nz/business/industries/76730420/asb-chief-executive-says-auckland-housing-slowdown-would-be-welcome

[Joshuatree]

[QUOTE=Roger;606722]I'm on record for months now as calling the SP as being too high and have been absolutely spot on.

Spot on for sure. Never mind a global meltdown in mkts happening right now especially banks; ASX big banks down 13% to 19% HBL down too 16%. On record alright , yes for months down ranting.. spot on

[winner69]

Spot on for sure. Never mind a global meltdown in mkts happening right now especially banks; ASX big banks down 13% to 19% HBL down too 16%. On record alright , yes for months down ranting.. spot on

Maybe, just maybe, Roger recognised that all banks were 'over priced' and that many of the issues that has caused this 'global meltdown' had a degree of commonality across all banks,

Heartland being no exception, they are not immune to market sentiment (perceived risk)

Maybe Roger was gloating but it was a good call eh - heartland down 21% since last Feb (or 18% since October after a recovery)

[goldfish]

Pity about the bot selling today and yesterday otherwise we may have bounced a bit today.
Wonder who wants out at these prices any ideas?

[winner69]

Phew - HBL near the top of the leaders board today.

Just behind Wellington Drive, Inteuri, Pumpkin Patch, NZO and Arvida

[winner69]

Heartland NTA ~90 cents and Book Value ~$1.04

[blockhead]

Heartland NTA ~90 cents and Book Value ~$1.04

Which counts for nothing (unfortunately) when everyone is running for the stairs !

[winner69]

Less than $1.10

You getting your way you guru

Backing the truck up are we?

[blackcap]

You getting your way you guru

Backing the truck up are we?

Is this causing some worries?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11588025

[Raz]

For me it was the main reason I got out last year..plus the regular details/stories of 80% LV @ 8% interest deals for marginal sharemilkers....

[winner69]

For me it was the main reason I got out last year..plus the regular details/stories of 80% LV @ 8% interest deals for marginal sharemilkers....

Now that's what I call buying business

The marginals must be repaying when due though as bad debt provisioning is very low.

[Raz]

Well we will see..just not with my money on the line with that one. IMHO that is crazy lending.

The point for me in the current environment is what would it do to the share price if we start getting share milker human interest stories from only one point of view....hitting the press with any particular funders name associated... The media negative side of Dairy is just starting...

[Snoopy]

Well we will see..just not with my money on the line with that one. IMHO that is crazy lending.




Heartland Bank


Annual Impaired Asset Expense (A)Total Impaired Asset Provision (B)(A)/(B)Net Receivables (impairment included)(B)/(C)EBT (before impaired asset exposure)(A)/(D)


2012$5.642m$27.426m21%$2,105.702m1.3%$29.337m19%


2013$22.527m$50.491m45%$2,060.867m2.4%$36.54062%


2014$5.895m$16.381m36%$2,623.767m0.6%$57.416m10%


2015$12.105m$25.412m48%$2,887.482m0.9%$76.304m16%



SNOOPY

[winner69]

Annual Impaired Asset Expense (A)Total Impaired Asset Provision (B)Net Receivables (impairment included)(B)/(C)


2012$5.642m$27.426m$2,105.702m1.3%


2013$22.527m$50.491m$2,060.867m2.4%


2014$5.895m$16.381m$2,623.767m0.6%


2015$12.105m$25.412m$2,887.482m0.9%



SNOOPY

Obviously only do high quality lending

[Sideshow Bob]

Obviously only do high quality lending

Or the brown cow stuff has yet to hit the fan......

[Raz]

Or the brown cow stuff has yet to hit the fan......

That is my thinking, given all the attempts to buy business I have heard about in the past few years. Although I have no idea what their uptake on these offers actually has been.

When it comes to impairment what I realise it is the hardest part of a balance sheet to assess, if you have actually tried to do the process in real life you will realise how inherently subjective those figures possibly are, inherently difficult for the auditors to assess and equally for upper management as those lower in the tree can be resistant to making objective assessments, to close to it or scared to convey what they know until it is beyond any doubt. It always seemed to be a lag indicator when I audited financials, more likely to be understated. However looking where we are in the economic cycle where would you expect the provision to be going as a trend in a transparent process...

[K1W1G0LD]

Good to see a reversal Now the Lemmings and nervous nellie's have moved all their funds back into bonds or savings or wherever.

[winner69]

Good to see a reversal Now the Lemmings and nervous nellie's have moved all their funds back into bonds or savings or wherever.

I think some were selling in readiness for piling into the subordinated bonds Heartland should be issuing soon.

Looking forward to the ~$26m H1 earnings (including the $1m for that 28 age book they sent us) - that'll get share price back to $1.30 and those Lemmings and nervous nellies will be feeling a bit sheepish.

(Not really fair calling people Ames though)

[Beagle]

What would be quite interesting, (I have noticed a fairly strong correlation between GDT prices and HBL's SP) is if someone has ready access to the data to do a chart overlaying one against the other over the last 12 months. The dairy futures are pointing to yet another 5-10% decline in the next GDT auction price...you be the judge if that signals more choppy water ahead.

[Raz]

I think some were selling in readiness for piling into the subordinated bonds Heartland should be issuing soon.

Looking forward to the ~$26m H1 earnings (including the $1m for that 28 age book they sent us) - that'll get share price back to $1.30 and those Lemmings and nervous nellies will be feeling a bit sheepish.

(Not really fair calling people Ames though)

Haha All I see is a non-performing share, there are only winners or losers nothing inbetween!

[winner69]

What would be quite interesting, (I have noticed a fairly strong correlation between GDT prices and HBL's SP) is if someone has ready access to the data to do a chart overlaying one against the other over the last 12 months. The dairy futures are pointing to yet another 5-10% decline in the next GDT auction price...you be the judge if that signals more choppy water ahead.

You have noticed well

But only interesting - even though it looks like there is a correlation its just coincidence because Heartland have very little exposure to dairy loans and are well provisioned and there are no problems coming up

Maybe a bit of deep thinking could explain why the Heartland share price does seem to follow whole milk prices as per GDT auctions

Another one this week - surely prices will go higher

[Beagle]

You have noticed well

But only interesting - even though it looks like there is a correlation its just coincidence because Heartland have very little exposure to dairy loans and are well provisioned and there are no problems coming up

Maybe a bit of deep thinking could explain why the Heartland share price does seem to follow whole milk prices as per GDT auctions

Another one this week - surely prices will go higher

Hmmm..many thanks Winner for your expert charting and effort. An astute investor in HBL might be keeping an eye on the GDT futures market to gain an advantage. Futures look very weak all the way out to July 2016.

[Snow Leopard]

You have noticed well

But only interesting - even though it looks like there is a correlation its just coincidence because Heartland have very little exposure to dairy loans and are well provisioned and there are no problems coming up

Maybe a bit of deep thinking could explain why the Heartland share price does seem to follow whole milk prices as per GDT auctions

Another one this week - surely prices will go higher

You should try those dairy prices against the AIR SP chart - it may well be a better fit.

Best Wishes
Paper Tiger

[Raz]

geographical concentration of loans, rural service industry/town linked loan book?

[winner69]

geographical concentration of loans, rural service industry/town linked loan book?

That 44% of total loans in provincial NZ?

[winner69]

You should try those dairy prices against the AIR SP chart - it may well be a better fit.

Best Wishes
Paper Tiger

Might look a bit similar - underlying meaning to this?

Even so wouldn't look as bad - over 1 year AIR still up while Heartland down 20% odd (WMP own 30% odd)

[percy]

Well I was in provincial Fairlie selling books a couple of weeks ago.
Sales were excellent, as you would expect in a town that was fair humming.
Shops were doing a good trade.The main road was flat out with rural servicing vehicles.
Great to see Heartland Bank finance benefiting the whole community.

[Beagle]

Honestly Percy..I was in St Lukes mall here in Auckland just after new year's and was absolutely amazed at how the Glassons store and Hallenstein's store were pumping. The stores were going off in such a crazy and crowded manner I thought that there must be a celebrity like Taylor Swift doing meet and greet and signing autographs...as it turned out, much to my surprise it meant very little for HLG's results.

Don't worry Winner. Many of us know it takes a lot of time and effort to put together such an informative graph as you did and appreciate your efforts. That correlation which is just as strong as I suspected it was does indeed give quite a useful insight irrespective of whether people wanted it too or not.

[percy]

The problem with HLG is they have to be located in Malls.
Very little profit left after increased costs of stock because of lower NZ $,higher wage costs, and Mall rents leave little or nothing for the retailer.
To get a better feel for the real economy, which is NZ's back bone ,I find provincial NZ gives the answers.
Last week sales were also higher in Rangiora,North Loburn,Loburn and Woodend, than last year.

ps.Offcourse Heartland Bank have a branch in Rangiora.
Do n't think they would be able to afford St.Lukes' rents.!!

[Raz]

Deleted as incorrect

[noodles]

Anyone else notice they have taken a couple of hits in the last couple of days in car finance market, lost Suzuki NZ to UDC while Nissan is setting up their own finance servicing company, two hits... what a start to the week..silver lining being no reaction in the share price.
You might want to fact check that post. They lost those back in 2013

[Raz]

You might want to fact check that post. They lost those back in 2013

Yes you are correct, apologies to all.

[percy]

You might want to fact check that post. They lost those back in 2013

Yet Heartland Bank survived and went from strength to strength.

[Beagle]

Well....they certainly had a great run up until about this time last year. $1.41 was the peak about 12 months ago if I remember correctly. Looking at Winners chart, WMP was aro9und $3.200 a ton a year ago..looking at just over half that now so it can't be dairy farmers that are buying your books Percy.

[winner69]

Westpac economists now see milk price of just $4.60 in 2017 as another fall in dairy prices looms in this week's auction

http://www.interest.co.nz/rural-news/79996/westpac-economists-now-see-milk-price-just-460-2017-another-fall-dairy-prices-looms


More opportunity for Heartland to do a bit more lending in this sector if Westpac believe their forecast and cut back on dairy lending

Ouch - 3 years in a row of low farm gate prices

[Beagle]

The real worry is they've now badly over estimated next season's price twice in a row. Here's what they were forecasting last year http://www.interest.co.nz/rural-news/75798/westpac-economists-lower-their-milk-price-forecast-new-season-after-sixth $5.20 - $5.75 And the final result maybe $1.50 - $2.00 kg shy of that around as little as $3.75. What next year's price will really be is anyone's guess at this very early stage of the game. With Fonterra's track record of forecasting in the last two years I honestly don't see any point in them issuing a forecast at all. We also now know today that all this is entirely relevant to HBL as there's a strong correlation between HBL's SP and the WMP GDT auction price.

[Raz]

Its not just price it is also volume, NZ Inc. WMP market share has fallen back in China - we have lost 10% of the China market in the past 12 months, lost entirely to the EU.

If you need forex for investments or play well worth getting into a good position.

[Marilyn Munroe]

The conern voiced about Heartlands rural exposure is surely over agitated

The provincial accountant who sits on the board of directors would have cut his teeth in the trade during the era of Supplimentary Minimum Payments and the havoc wrought on the rural sector by Rodgernomics.

He would have cautioned his fellow directors the winds of change in farming often blow with the ferocity of a Canterbury Nor-wester.

His fellow directors despite being latte sipping Dorklanders would have recognised the credibility of his concerns and acted with prudence.

Boop boop de do
Marilyn

[winner69]

Heartland says "Key drivers of growth for Heartland are GDP and employment"

Great news then -


@ANZ_cambagrie: Good Q4 retail sales. Volume up 1.2% qpc, core 1.4%. Value 1.2% qpc. Housing and tourism related industries led. Economy still rolling along

[winner69]

Good to see a reversal Now the Lemmings and nervous nellie's have moved all their funds back into bonds or savings or wherever.


More Lemmings today - looked good all day and then wham at the end - down to 112 (whoops 111)

Global Dairy Trade auction tonight .....hmmm

[Snoopy]

Obviously only do high quality lending

That really depends on what you choose as your measuring stick Winner. If you compare the annual impairment expense with Earnings Before Tax (with the impairment added back into that), a rather different picture emerges.





Heartland Bank


Annual Impaired Asset Expense (A)Total Impaired Asset Provision (B)(A)/(B)Net Receivables (impairment included)(B)/(C)EBT (before impaired asset exposure)(A)/(D)


2012$5.642m$27.426m21%$2,105.702m1.3%$29.337m19%


2013$22.527m$50.491m45%$2,060.867m2.4%$36.54062%


2014$5.895m$16.381m36%$2,623.767m0.6%$57.416m10%


2015$12.105m$25.412m48%$2,887.482m0.9%$76.304m16%




Now compare the above Heartland table with the equivalent table for UDC



UDC


Annual Impaired Asset Expense (A)Total Impaired Asset Provision (B)(A)/(B)Net Receivables (impairment included)(B)/(C)EBT (before impaired asset exposure)(A)/(D)


2012$6.031m$38.481m16%$2,052.954m1.9%$58.476m10%


2013$7.123m$37.460m19%$2,102.577m1.8%$66.78711%


2014$11.733m$31.805m37%$2,303.386m1.4%$83.501m14%


2015$10.427m$31.529m33%$2,378.692m1.3%$89.750m12%



You have to regard the FY2013 figures for Heartland as an outlier. This is because the 'non core legacy property portfolio was brought (and bought! {from PGC}) onto the books.

The impairment to earnings ratio for the last couple of years has been not so different. However the 'total impaired provision', a defacto balance sheet item (as noted in the financial recievables break down of each company), is consistently less at Heartland in comparison with UDC.

However the annual impairment charge verses total impairment value in balance sheet terms ( A/B ) is generally greater at Heartland. This is consistent with Heartland underestimating their impairments over the years. IOW the judgement of the Heartland team when evaluating loans is not as good as their UDC equivalents.

SNOOPY

[K1W1G0LD]

More Lemmings today - looked good all day and then wham at the end - down to 112 (whoops 111)

Global Dairy Trade auction tonight .....hmmm

Be good to see the s/p stabilise and advance when this relentless daily selldown stops..................whenever that might be!
Not what you'd call a tightly held register, the curse of relatively cheap shares.
Will have to wait for next tuesday to see where they're at.

[winner69]

Dairy Prices down again in latest auction - WMP down 3.7%

No comment because as Tiger, Marilyn and others say this doesn't have much impact on Heartland

[Raz]

Sure Dairy gets the headlines however have you consider the agricultural service industry loan book related to the regional economy as a whole give what area of farming actually is doing well? Interesting increases in impairment provision announced by a couple of banks yesterday..all state they not expecting any losses! Or nothing unexpected. I actually think the banks that can maintain the best margins on residential rates will come out best.

[winner69]

Dairy farm prices down in January, lifestyle block market buoyant - REINZ
http://www.interest.co.nz/rural-news/80045/dairy-farm-prices-down-january-lifestyle-block-market-buoyant-reinz

Wonder how the LVR % is holding up.

Looking at the numbers doesn't look like many of the farms Raz mentioned have been sold

[beetills]

Chris Lee on todays Taking Stock article questions the HBL share price going down and then says""Ïf the fall is for fear of rising rural loan write offs then the fear would seem to be misplaced""

[winner69]

Chris Lee on todays Taking Stock article questions the HBL share price going down and then says""Ïf the fall is for fear of rising rural loan write offs then the fear would seem to be misplaced""

Next week Heartland H1will be $26m plus or minus a bit.

Rural loans will show as being under control - 100% certain

But FY17?

[percy]

Chris Lee on todays Taking Stock article questions the HBL share price going down and then says""Ïf the fall is for fear of rising rural loan write offs then the fear would seem to be misplaced""

For the record.
Chris Lee's HBL's comments has been "on the money" for about 5 years.
An excellent record.
So worth taking what he says about Heartland Bank seriously.I do.

[Raz]

Next week Heartland H1will be $26m plus or minus a bit.

Rural loans will show as being under control - 100% certain

But FY17?

Naturally, its too early to force an impairment for next weeks result, all the banks say as expected or no losses currently on updates..standard fare as you would expect:-) No one should be expecting anything reflected in results for a few months yet, unless a material client falls over. One would hope all fear is price in. Might take a punt on an upswing based on next weeks result.

[K1W1G0LD]

Chris Lee on todays Taking Stock article questions the HBL share price going down and then says""Ïf the fall is for fear of rising rural loan write offs then the fear would seem to be misplaced""


Perhaps that should be repeated for the benefit of the hard of hearing who also seem to experience tunnel vision.
"Ïf the fall is for fear of rising rural loan write offs then the fear would seem to be misplaced""

[Fisherking]

It's also looking more and more likely interest rates will drop again which will assist the farmers.

[winner69]

Perhaps that should be repeated for the benefit of the hard of hearing who also seem to experience tunnel vision.
"Ïf the fall is for fear of rising rural loan write offs then the fear would seem to be misplaced""

WHAT YOU SAYING KIWIGOLD?

I can't hear you

[Baa_Baa]

With the recent demise of larger banks SP, be careful of a big sell into any positive news from HBL, the prelim sell has already happened. It has hardly begun to experience the ebb and flow of the banking sector, which is hurting in current climes. Jmo.

BAA

[kizame]

With the recent demise of larger banks SP, be careful of a big sell into any positive news from HBL, the prelim sell has already happened. It has hardly begun to experience the ebb and flow of the banking sector, which is hurting in current climes. Jmo.

BAA

Maybe after the dividend if the markets don't recover or plateau.

[beetills]

One more sleep.

[h2so4]

Good news from ABC news today. So far this reporting season Aussie banks haven't been increasing their bad debt provisions. Those bankers are not stupid probably realise they overdid it a tad.....posted here because I think it is relevant.

[pierre]

Still waiting for today's announcement of the half-year result. The chief bean counter at HBL must be rattling away on his abacus trying to find a few more dollars before 10am!

[nextbigthing]

Achievements for half year:





- Increase in profitability





- Strong growth in core receivables





- Return on equity (ROE) of 10.6%





- Amalgamation of Heartland New Zealand Limited and Heartland Bank Limited





- Announcement of a 16% increase in interim dividend to 3.5c per share

[winner69]

I reckon they will report H1 earnings as $25.8m which includes the $1m of non-recurring restructure costs they mentioned

Sets up a boomer H2 and I expect them to report $28.9m (+17%) for that half bringing FY to be $54.7m (+14%)

That's an eps of 11.5 cents on current number of shares so PE currently just over 10. Maybe the rerating down that often happens when capital restructuring takes place (more debt / less equity means higher risk for shareholders) is already underway in anticipation of the capital return.

I hope to be pleasantly surprised but doubt I will.

I give Simon a ring to find out what they did with the $200k - probably keeping it for a rainy day

So as expected - no pleasant surprises

[winner69]

No upgrade to FY16 guidance

[Balance]

No upgrade to FY16 guidance

Headwinds out there on requirements for bad debts provisioning - suspect HBL is keeping powder dry for the problems ahead as dairy sector problems bite.

[nextbigthing]

No upgrade to FY16 guidance

You're a hard man to please, the market seems very happy with the result, isn't that what matters?

Re FY16, they're just keeping it up their sleeves for now.

[iceman]

A pretty solid report with growth across all parts of the business. Steady as she goes.
Some of the highlights from preliminary browsing of the report :

# NPAT at top end of range as expected

# Strong balance sheet

# Household sector, particularly motor vehicle loans growing fast

# After recent negotiations, Harmoney facility has been doubled from $34.5m to
$70m. (The Harmoney stake now possibly quite valuable.)

# ROE continues to increase, now at 10.6%

# 16% increase in fully imputed interim dividend to 3.5

# Reverse mortgages in both NZ and Aus increasing.
Expect stronger growth in 2ndhalf

# Dairy loans 8% of loan books with an average
59% LVR PLUS other securities such
as personal guarantees. Low impairment charges
so far.

# Continued reduction of the legacy non-core property assets with no further losses attributable to this

# Current market volatility provides great opportunities for acquisitions !

Happy with this steady as she goes report

[percy]

CRACKER.Well done Heartland Bank.
ROE excellent at 10.6%.
Growth up 9%.
Increased dividend up 16% to 3.5 cents.Love them divies.!
The real pleasure was reading the outlook statement, as we know HBL deliver on what they say they will do.
Expecting underlying asset growth to continue across ALL divisions.
Higher growth in Consumer and HER loans.
Greater acquisition opportunities in current market conditions.
Continue to moniter capital position.
FY 16 NPAT $51-$55mil.

[Beagle]

But Percy how could you forget ??????...you forgot to say they're "well positioned" :)

[percy]

But Percy how could you forget ??????...you forgot to say they're "well positioned" :)

Thank you for reminding me Roger.
We certainly remain "well positioned."!!!!!!!!!!!!!!..lol.

[winner69]

Thank you for reminding me Roger.
We certainly remain "well positioned."!!!!!!!!!!!!!!..lol.

We are so well positioned we are expecting a 19% increase in 2nd half earnings over pcp - whoopee

And they only achieved 9% increase in H1

Heartland certainly firing up for the 2nd half - no wonder the share price is roaring ahead and back to former glorious heights

[percy]

We are so well positioned we are expecting a 19% increase in 2nd half earnings over pcp - whoopee

And they only achieved 9% increase in H1

Heartland certainly firing up for the 2nd half - no wonder the share price is roaring ahead and back to former glorious heights

I am more than happy with the 9% H1 increase,and the increased dividend.
I don't share your expectations.
So happy, I am buying back some of the shares I sold a few weeks ago.
Currently buying at $1.16,.

[SCOTTY]

I am more than happy with the 9% H1 increase,and the increased dividend.
I don't share your expectations.
So happy, I am buying back some of the shares I sold a few weeks ago.
Currently buying at $1.16,.
I'm with you Percy. HBL is a good solid Bank (without high risk residential lending) not a lotto ticket.����

[Beagle]

I am more than happy with the 9% H1 increase,and the increased dividend.
I don't share your expectations.
So happy, I am buying back some of the shares I sold a few weeks ago.
Currently buying at $1.16,.

There's currently only one buyer at $1.16...now filled. Market quite rightly, in my opinion, remains concerned about how long banks carry loss making customers whether its dairy, mining, whatever... in HBL's case obviously dairy is still a contingent issue and until there's a meaningful recovery in the GDT auction price, (strong correlation as suspected and subsequently demonstrated by Winner69 with his graph) I think it will be difficult for the HBL's SP to make real progress north. That said there's the good fully imputed yield at this price should be supportive of SP around these level's I would have thought.
Most Australasian banks have seen their forward PE's clipped back on asset quality concerns...HBL simply following the international trend in that regard.
Disc - Waiting to buy when GDT auction prices show a real recovery.

[winner69]

I am more than happy with the 9% H1 increase,and the increased dividend.
I don't share your expectations.
So happy, I am buying back some of the shares I sold a few weeks ago.
Currently buying at $1.16,.

The +19% increase in H2 earnings is not my expectations - it's Heartlands own expectations

Yes $1.16 is very cheap on those expectations

[eew59]

Headwinds out there on requirements for bad debts provisioning - suspect HBL is keeping powder dry for the problems ahead as dairy sector problems bite.



http://www.stuff.co.nz/business/77161218/failed-canterbury-businessman-paul-encell-charged-with-more-than-400000-fraud

[Snow Leopard]

The +19% increase in H2 earnings is not my expectations - it's Heartlands own expectations

Yes $1.16 is very cheap on those expectations

An expectation range from 2.8% to 19.0%.

Best Wishes
Paper Tiger

PS: Satisfied with the result.

[winner69]

An expectation range from 2.8% to 19.0%.

Best Wishes
Paper Tiger

PS: Satisfied with the result.

But they always do what they say they will do. - and deliver to just under top end of guidance

If it was only 2.8% wouldn't that be a disaster - or disappointing at least

[trader_jackson]

I really don't understand why after beating expectations, hiking the dividend (something Forsyth at least wasn't expecting) and showing robust strength all round, the share price didn't move...?!?

[nextbigthing]

I really don't understand why after beating expectations, hiking the dividend (something Forsyth at least wasn't expecting) and showing robust strength all round, the share price didn't move...?!?

Hi Michael,

I think it's simply to do with the global investment community being cautious in general, and the market factoring in a little bit of dairy induced weakness for the upcoming years. If you feel it's being incorrectly undervalued, then buy up large, then sit back, relax and enjoy your growth and divvys.

[winner69]

I really don't understand why after beating expectations, hiking the dividend (something Forsyth at least wasn't expecting) and showing robust strength all round, the share price didn't move...?!?

You should be pleased then t_j - still time to back the track up.

There was plenty of excitement early on today - reached 122

[trader_jackson]

Hi Michael,

I think it's simply to do with the global investment community being cautious in general, and the market factoring in a little bit of dairy induced weakness for the upcoming years. If you feel it's being incorrectly undervalued, then buy up large, then sit back, relax and enjoy your growth and divvys.

Yes I suppose its in the same boat that many Australian companies were (or are?) in... talks of recession, big slow down etc etc when last week, Australian earnings had an astonishing 10:1 Beat:Miss ratio.... maybe if people get really stupid and the price dips below the $1.10 mark (like mid way last year) I will be extremely tempted, right now HBL is just in the "very tempting" basket

[Raz]

Hi Michael,

I think it's simply to do with the global investment community being cautious in general, and the market factoring in a little bit of dairy induced weakness for the upcoming years. If you feel it's being incorrectly undervalued, then buy up large, then sit back, relax and enjoy your growth and divvys.

The market knows best, already priced in, if you were a trader you could have made some coin today off the reactionaries. To add to nextbigthing comments the investment community is currently looking at Dairy on a 7 multiplier effect to the NZ economy, 7x18 billion over 230 nominal GDP for NZ pa.

[nextbigthing]

NZ banks 'well positioned' for record profits apparently. I won't complain.

http://www.stuff.co.nz/business/77168431/banks-wellpositioned-to-keep-growing-record-profits-kpmg

[Joshuatree]

Craigs note
Slightly ahead of expectations
NPAT $25.6 m $26.1 adjusted

Loan book grew 7.6% Impairment expense up 10%
Loan growth in all 3 sectors
T/P unchanged $1.30

[goldfish]

I'd love to know who that bot is selling for, been at it for 4 days now I think.
Any ideas???

[cheeky]

Paid article on NBR today: "Heartland may buy a business instead of returning $100m to shareholders"

Jeff sees greater opportunity for acquisitions due to falling stockprices in the financial sector though there is nothing to "articulate in detail" at this stage

http://www.nbr.co.nz/article/heartland-may-buy-business-instead-returning-100m-shareholders-jr-p-185238

[K1W1G0LD]

I'd love to know who that bot is selling for, been at it for 4 days now I think.
Any ideas???

Goldfish, he's been at it for weeks , that's why the shareprice is'nt getting any upwards traction, soon as it goes up he sells it down.

[Snoopy]

An update from the previous reporting period, FY2013.

The underlying debt of the company according to the HY2014 statement of financial position is: $32.612m

To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the problem 'Investment Properties' and the unspecified 'Investments' from that total:

$2,492.090m - ($1,905.850m +$61.481m + $255.427m) = $269.332m

We are then asked to remove the intangible assets from the equation as well:

$269.332m - $22.891m = $246.441m

Now we have the information needed to calculate the underlying company debt net of all their lending activities:

$32.612m/$246.441m= 13.2% < 90%

Result: PASS TEST

This means the position has improved usefully over the latest half year.


An update from the previous reporting period, FY2014.

The underlying debt of the company according to the HY2015 statement of financial position is:

$38.666m + $4.109m = $42.775m

To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the problem 'Investment Properties' and the unspecified 'Investments' from that total:

$3,162.169m - ($2,722.443m +$25.831m + $209.544m) = $204.351m

We are then asked to remove the intangible assets from the equation as well:

$204.351m - $49.933m = $154.418m

Now we have the information needed to calculate the underlying company debt net of all their lending activities:

$42.775m/$154.418m= 27.7% < 90%

This compares unfavourably with the comparatuve half year period figure of 13.2%, but favourably with the 40.5% figure from FY2014 date (30th June 2014)

Result: PASS TEST

SNOOPY

[Snoopy]

Results are out for HY2014 so time to update.

Updating for the half year result HY2014. The EBIT figure is not in the financial statements. So I will use 'interest income' as an indicator for EBIT, once I have taken out the selling and administration costs

EBIT (high estimate) = $100.500m-$32.417m= $68.083m

Interest expense is listed as $48.114m.

So (EBIT)/(Interest Expense)= ($68.083)/($48.114)= 1.42 > 1.20

Result: PASS TEST, a significant improvement from the FY2013 position. Perhaps that drop in interest being paid to debenture holders as a result of becoming a bank is starting to come through?



Updating for the half year result HY2015. The EBIT figure is not in the financial statements. So I will use 'interest income' as an indicator for EBIT, once I have taken out the selling and administration costs

EBIT (high estimate) = $128.252m-$33.523m= $94.729m

Interest expense is listed as $62.577m.

So (EBIT)/(Interest Expense)= ($94.729m)/($62.577m)= 1.51 > 1.20

Result: PASS TEST, an improvement from the HY2014 (1.42) position. And also an improvement on the position 6 months ago FY2014 (1.44)

SNOOPY

[Snoopy]

Updating this number for the half year HY2014

Equity Ratio = (Total Equity)/(Total Assets)

Using numbers from the Heartland HYR2014

= $382.510m/$2492.090m = 15.3%

This is an improvement on the FY2013 position. It does not include any effect from the just announced reverse mortgage acquisitions. Nevertheless the underlying loan book continues to shrink away, albeit by a miniscule 0.5%.


Updating this number for the half year HY2015

Equity Ratio = (Total Equity)/(Total Assets)

Using numbers from the Heartland HYR2015

= $462.310m/$3162.169m = 14.6%

This is a decrease on the HY2014 position (15.3%). It is also a decrease on the FY2014 position of 6 months ago (15.0%)

SNOOPY

[macduffy]

Have any of the analytical types thought through the implications of the prospect of negative interest rates on the banks' margins and profits? Net interest margins have generally been under pressure for some time but negative rates, as in Japan and parts of Europe, take us into new territory again. Will charging depositors to deposit funds make up for the lower rates paid on loans? Will lending rates go negative too? What chance of NZ experiencing negative rates? All hypothetical questions, I know, but worth a bit of thought by those of us holding NZ and Aust bank shares.

[Beagle]

Paid article on NBR today: "Heartland may buy a business instead of returning $100m to shareholders"

Jeff sees greater opportunity for acquisitions due to falling stockprices in the financial sector though there is nothing to "articulate in detail" at this stage

http://www.nbr.co.nz/article/heartland-may-buy-business-instead-returning-100m-shareholders-jr-p-185238

Been crying wolf since mid 2014 but nothing has happened ? I think the Tier 2 capital raise is a good idea in these uncertain times..just forewarning shareholders their capital return is looking less likely.

[beetills]

I have no idea what all this analysis in the above threads mean,however in my opinion(uneducated as it is) it seems a good time to get in provided sp doesn't go above 116.

[Snoopy]

Once again there is no mention of Tier 1 or Tier 2 in the Heartland HY2014 report.

The 'best case' scenario is that all loans are Tier 1. $2,076.968m of loans are outstanding. 20% of that figure is:

0.2 x $2,076.968m = $415.4m

Heartland has total equity of $382.5m which is still below the 20% of loan target no matter what the tier classification of the loans.

Result: FAIL TEST

PS I do note that while other posters have protested at my 20% of equity to back up the loan measuring stick in the past, it is not too far away from the 17% which by implication is judged acceptable by management under the watchful eye of Reserve Bank chairman Graeme Wheeler. The reserve bank further qualifies their views that a company of Heartlands credit rating still has a 1 in 30 chance of going broke in any year. I prefer to think in business cycles and 30 years will contain around five of those. So you could restate the Reserve Bank's view as saying that HNZ has a one in five chance of going broke at the bottom of the business cycle. For me that investment risk is too high. So I am sticking to my 20% equity requirement, even if the Reserve Bank will settle for less.

Once again there is no mention of Tier 1 or Tier 2 in the Heartland HY2015 report.

The 'best case' scenario is that all capital is Tier 1, which is almost certainly correct. $2,657.084m of loans are outstanding. 20% of that figure is:

0.2 x $2,657.084m = $531.4m

Heartland has total equity of $462.310m which is still below the 20% of loan target no matter what the tier classification of the loans.

Result: FAIL TEST

PS I do note that while other posters have protested at my 20% of equity to back up the loan measuring stick in the past, it is not too far away from the 17% which by implication is judged acceptable by management under the watchful eye of Reserve Bank chairman Graeme Wheeler. The reserve bank further qualifies their views that a company of Heartlands credit rating still has a 1 in 30 chance of going broke in any year. I prefer to think in business cycles and 30 years will contain around five of those. So you could restate the Reserve Bank's view as saying that HNZ has a one in five chance of going broke at the bottom of the business cycle. For me that investment risk is too high. So I am sticking to my 20% equity requirement, even if the Reserve Bank will settle for less.

SNOOPY

[Snoopy]

New tactics for the HY2014 report. The word 'impairment' isn't even mentioned in the text, which is I suppose another way to make any impaired loans go away.

In the table on page 4 there is at least a nod to 'impaired asset expense' down to $3.3m (HY2014, ended 31st December 2013) from $5.3m in the corresponding prior period (HY2013) and $5.9m in the full year to 30th June 2014. By simple subtraction the bad debt expense for the period 1st January 2013 to 30th June 2013 ( 2HY2013 ) was $22.5m - $5.3m = $17.2m.

'Impaired Asset Expense' is code for having lost all hope. Almost no chance of getting the money back. 'Restructured' and 'past due loans' do not fall under that category. So comparisom with the previous comparable period are - deliberately? - difficult to make.



In the table on page 4 the 'impaired asset expense' has increased to $5.102m (HY2015, ended 31st December 2014) up from from $3.325m in the corresponding prior period (HY2014) and $5.895m in the full year to 30th June 2014 (FY2014). By simple subtraction the bad debt expense for the period 1st January 2014 to 30th June 2014 ( 2HY2014 ) was $5.895m - $5.102m = $0.793m.

In formation of the 'stressed - but not written off- loans' may be found in 'Financial Receivables', Note 12 from IRHY2015

Bad debts are outlined as follows:

At least 90 days past due $30.652m
Individually impaired $25.984m
Restructured assets $4.012m

Allowance for impairment ($19.870)m
PV of Future Losses Adjustment ($6.919)m

Total Stressed Loans (impairments deducted) $33.469m

Gross Financial Receivables $2,749.232m
Total Finance Receivables $2,722.443m

Stressed Loan Percentage (impairment removed)= $33.469 m/ $2,722.443m = 1.59%


SNOOPY

[Snow Leopard]

Once again there is no mention of Tier 1 or Tier 2 in the Heartland HY2015 report.

The 'best case' scenario is that all loans are Tier 1, which is almost certainly correct. $2,657.084m of loans are outstanding. 20% of that figure is:

0.2 x $2,657.084m = $531.4m

Heartland has total equity of $462.310m which is still below the 20% of loan target no matter what the tier classification of the loans.

Result: FAIL TEST

...

All though HBL will still not pass your test I would appreciate it if you got your facts and numbers right.

Best Wishes
Paper Tiger

[winner69]

Just as well dairy loans not a problem for Heartland

Dairy industry woes a long way from over

http://www.stuff.co.nz/business/farming/77247697/dairy-industrys-woes-a-long-way-from-over-says-new-yorkbased-analyst

[Snoopy]

All though HBL will still not pass your test I would appreciate it if you got your facts and numbers right.

Best Wishes
Paper Tiger


Thanks for the heads up PT. What you may have not noticed is that the six month reporting period I was looking at was HY2015, which ended on 31st December 2014.

So I am talking about figures generated more than a year ago. Why have I reached back into the past like this? Because once Heartland got their problem property portfolio under control, I let them off my 'tight observation leash'. Now since I have become a TNR shareholder, I need to update my semi-annual database for compartive purposes.

I was going to do HY2015 and HY2016 together. However, because of the confusion between what data related to 'Heartland' and what data related to 'Heartland Bank' (the two terms meant slightly different things until the recent merger), I have decided to wait until the release of the HY2016 Interim report. This will contain the extra information I need which is not in the press releases made already.

So despite what you thought, my data is accurate. But is it correct? This I am now having doubts about.

First to clear up a bit of 'cut and paste' sloppiness from previous years. 'Tier 1' is a term that refers to the quality of bank capital, not loans. The capital is there to support the loans of course. But it was wrong of me to refer to 'Tier 1 loans'. So I have corrected that.

My aim was to look at 'Risk share lending' by comparing 'bank equity' with the size of the loans on the books. But should I be comparing the bank capital (all Tier 1 in this case) with:

(1) The loans made to customers (listed as finance receivables). OR
(2) The loans made from customers, and parent banks (listed under borrowings)

Granted the two are related because one supports the other. So even if I have been using the wrong one that necessarily doesn't stop me from getting the right answer, by accident :-). Up to now I have been using (2). But now I wonder if I should be using (1)? What do you think?

SNOOPY

[macduffy]

If I may offer:

Bank capital rquirements are based on risk weightings of loans to customers, eg the preferential low risk rating afforded lending for housing compared to most commercial loans. Therefore (1) should be used.

[Snoopy]

If I may offer:

Bank capital rquirements are based on risk weightings of loans to customers, eg the preferential low risk rating afforded lending for housing compared to most commercial loans. Therefore (1) should be used.

Thanks Macduffy.

Following (1), the 'loan to' figure I should use is $2,722.443m
Following (2), the 'loan from' figure I should use is $2,657.084m

Given how little different those figures are, I am tempted to suggest that there are many things in life worth spending time in careful consideration and contemplation. And this isn't one of them!

The smaller figure, all other things being equal, requires a smaller amount of shareholder equity to support it. So you could argue that using (1) is more conservative, becasue the answer (0.2 x the figure) is a larger value of shareholder equity. That observation is not that useful though. Because in the previous comparative period:

Following (1), the 'loan to' figure I should use is $1,905.850m
Following (2), the 'loan from' figure I should use is $2,076.968m

So using (2) is more conservative. Oh dear!

SNOOPY

[percy]

I brought a few more HBL this afternoon at $1.13.
Over the next year or so I am expecting 8 cents dividend.
My target price is between $1.25 and $1.35.
At $1.25 I will make 12 cents sp gain + 8 cents divie.Total 20 cents or 17.7%.
At $1.35 I will make 22 cents sp gain + 8 cents divie.Total 30 cents or 26.5%.
Perhaps over the next year[or two], the market will value HBL on its own merits,rather than grouping it with the Australian Banks.
When that happens, I expect PE expansion which will take the sp above $1.35.Therefore I am "well positioned."

[SCOTTY]

I am very happy for the SP to stay low and the divi high for as long as the DRIP is operating. Keep up the good work all you HBL knockers with your negative comments. Suits me just fine thanks -:)

[Snoopy]

A change of tactic is required here as six months ago I was writing tosh. The revised HY2014 report is as follows:

Time to look at the Liquidity Buffer ratio, the balance between monies borrowed and monies lent and matching up those maturity dates using a one year time horizon. The equation we are looking to satisfy is:

(Total Current Money to Draw On)/(Net Current Loans Outstanding) > 10%

On one side of the equation, we have borrowings.

HNZ BORROWINGS

HNZ has total borrowings of $2,524.460m (see Statement of Financial Position). This is made up of:

1/ Term deposits ($1,805.954m) lodged with Heartland (see note 11).
2/ Securitized Borrowings total $267.645m
3/ Subordinated Bonds (new for HY2014 but only worth $3.369m)

Note 11 gives no clear breakdown given of current and longer-term borrowing maturity dates.

The group has securitized bank facilities totalling $400m, all in relation to the Heartland ABCP Trust 1 (ABCP Trust). ABCP Trust has a maturing facility of $400m maturing 7th August 2014 (barely 5 weeks away),

These facilities are drawn by $268m (c.f. FY2013: $259m).

All securitized asset activity relates to a time frame no more than one year out in the future, but in this case just 5 weeks. Nevertheless, maturity date rollover renegotiations have happened without trouble over the last two years.

The amount of securitized holdings drawn has increased by $8m (3.1%). The maximum amount that can be borrowed under securitized arrangements has dropped too, from $500m to $400m. This is because the extra CBS Trust securitisation arrangements, worth up to $100m, have been wound up. The net result of all this is that the borrowing headroom available using securitized bonds is now:

$400m - $268m = $132m

All three sources of funds (itemized above) have been on loaned to customers who want loans.


HNZ LENDINGS

Customers owe HNZ 'Finance Receivables' of $1.905.850m. There is no breakdown in note 10 as to what loans are current or longer term. However, if we look at note 18b, we can see the expected maturity profile of total finance receivables due over the next twelve months.

$180.669m + $463.129m + $349.681m = $993.479m

These are offset by short-term borrowings over twelve months of

$599.902m + $751.307m + $647.731m = $1998.980m

Thus, the net expected maturity of receivables is:

$993.479m - $1,998.980m = -$1,005.501m

The negative sign means that less money is coming in from loans to customers that have matured, than the amount of money due to be repaid to the debenture holders. Such a gap can be closed by simply taking on more debenture borrowings. Nevertheless, it is also prudent to have some back up bank borrowing headroom (HNZ has $132m) to partially close the gap.

$132m / $1,005.501m = 13.1% > 10%

=> Pass Short term liquidity test



Time to look at the Liquidity Buffer ratio, the balance between monies borrowed and monies lent and matching up those maturity dates using a one year time horizon. The equation we are looking to satisfy is:

(Total Current Money to Draw On)/(Net Current Loans Outstanding) > 10%

Numbers are taken from the interim report dated 31-12-2014.

On one side of the equation, we have borrowings.

HNZ BORROWINGS

HNZ has total borrowings of $2,657.084m (see Statement of Financial Position). This is made up of:

1/ Term deposits ($1,784.628m) lodged with Heartland (see note 14, IR2015).
2/ Bank Borrowings totalling $565.519m
2/ Securitized Borrowings totalling $303.558m
3/ Subordinated Bonds worth $3.379m.

IR2015 does not give a breakdown given of current and longer-term borrowing maturity dates.

The group has securitized bank facilities totalling $350m, all in relation to the Heartland ABCP Trust 1 (ABCP Trust). The ABCP Trust facility of $350m matures on 4th August 2015.

These facilities are drawn to $304m (c.f. FY2014: $229m).

Securitized asset maturity date rollover renegotiations have happened without trouble over the last two years.

The amount of securitized holdings drawn has increased by $75m (33%). The maximum amount that can be borrowed under securitized arrangements has dropped again too, from $400m to $350m. The borrowing headroom available using securitized bonds is now:

$350m - $304m = $46m

All four sources of funds (itemized above) have been on loaned to customers who want loans.


HNZ LENDINGS

Customers owe HNZ 'Finance Receivables' of $2,749.232m. There is no breakdown in note 12 IR2015 as to what loans are current or longer term. However, if we look at the legal declaration to the reserve bank

http://www.heartland.co.nz/_templates/default/default.aspx?documentid=5

and select that for December 2014 more detail is available. Note 19 from declaration DEC2014 , shows the expected maturity profile of total finance receivables due over the next twelve months.

$88.187m + $568.729m + $439.009m = $1,095.925m

These are offset by short-term borrowings expected to be repaid over the coming twelve months of

$5.132m + $310.986m + $184.161m = $500.279m

Thus, the net expected maturity of receivables is:

$1095.925m - $500.279m = $595.646m

The positive sign means that more money is expected coming in from loans to customers that have matured, than the amount of money due to be repaid to the debenture holders.

=> Pass Short term liquidity test

[Beagle]

I'd love to know who that bot is selling for, been at it for 4 days now I think.
Any ideas???

No idea but its relentless... like a dripping tap that never stops.

[winner69]

No idea but its relentless... like a dripping tap that never stops.

Maybe Percy programmed his computer wrong?

[Beagle]

Maybe Percy programmed his computer wrong?

:lol: :lol: :lol: :lol:

[winner69]

That bot (if there is actually one)

Saudi's selling bank stocks globally

Doubt if they have any Heartland though

[percy]

Maybe Percy programmed his computer wrong?

For the record.
I am not capable of programming my computer in any way.

[Trading]

I'd love to know who that bot is selling for, been at it for 4 days now I think.
Any ideas???
Relentless DRIP........might be the Guru haha

[trader_jackson]

Yes please! Dear Mr Market, please keep your head in the sand, and continue to ignore the great fundamentals and impressive first half report. It would be much appreciated for you to do what was done about 6 months ago, keep the share price low until Dividend reinvestment is complete, then begin a steady rise (except this time Mr Market maybe you'll wake up and not let the price drift down back into the bargain basement it is currently in)

[SCOTTY]

Yes please! Dear Mr Market, please keep your head in the sand, and continue to ignore the great fundamentals and impressive first half report. It would be much appreciated for you to do what was done about 6 months ago, keep the share price low until Dividend reinvestment is complete, then begin a steady rise (except this time Mr Market maybe you'll wake up and not let the price drift down back into the bargain basement it is currently in)you've been reading my mail TJ (post 7145) ��

[winner69]

Yes please! Dear Mr Market, please keep your head in the sand, and continue to ignore the great fundamentals and impressive first half report. It would be much appreciated for you to do what was done about 6 months ago, keep the share price low until Dividend reinvestment is complete, then begin a steady rise (except this time Mr Market maybe you'll wake up and not let the price drift down back into the bargain basement it is currently in)

Last year the DRIP was $1.32 .....hmmm

[SCOTTY]

Last year the DRIP was $1.32 .....hmmm

Sept 2015 Drip was $1.11

[winner69]

Sept 2015 Drip was $1.11

Not much return on them since eh

Maybe the capital return isn't really about capital management per se but a cynical way of improving TSR in the short term

[winner69]

Fed Farmers say 11%of dairy farmers were under scrutiny by their banks, compared with 7%in November and 6% in August.

Banks call this Strategic Debt Management - better outcomes in helping farmer out of the industry and hopefully recover more than just foreclosing / receivership

We should be grateful to Heartland management they have essentially avoided this impending fiasco

[percy]

Fed Farmers say 11%of dairy farmers were under scrutiny by their banks, compared with 7%in November and 6% in August.

Banks call this Strategic Debt Management - better outcomes in helping farmer out of the industry and hopefully recover more than just foreclosing / receivership

We should be grateful to Heartland management they have essentially avoided this impending fiasco

Yes Heartland Bank management/directors certainly need congratulating on their aggressive cautious stewardship.Perhaps having a lot of skin in the game makes them more focussed?
The Australian banks have not faired so well.Luckily HBL face fewer headwinds than them,yet they are being contaminated by association.!.
Over the past year ANZ sp is down 37%, BOQ down 24.43%,CBA down 23.2%,NAB down 31% and WBC down 32,7%
Growing roe, eps and dividends will eventually see a rising sp for HBL.In the meantime the ratios look very solid and modest to me.

[percy]

............this from ST Stocktastic 2016

SSP= Year start SP
CP= Current SP (as at Saturday 27 Feb 2016 - 11:18am)

Code Name SSP CP %Change
HBL Heartland Bank $1.280 $1.130 -11.72%
ANZ Australia and NZ Banking Group $27.200 $24.050 -11.58%
WBC Westpac Banking Corporation $32.970 $30.520 -7.43%



Edit: Disclosure; hold all stocks quoted.

I use Yahoo Finance .

[iceman]

So do I. ;):sleep:

Percy's numbers "over the past year"and your numbers from 1st day of trading in 2016. Probably both correct

[winner69]

?...

The Australian banks have not faired so well.Luckily HBL face fewer headwinds than them,yet they are being contaminated by association.!.
Over the past year ANZ sp is down 37%, BOQ down 24.43%,CBA down 23.2%,NAB down 31% and WBC down 32,7%
Growing roe, eps and dividends will eventually see a rising sp for HBL.In the meantime the ratios look very solid and modest to me.

And in same period HNZ only down 11% ....so not really contaminated by association with Aussie banks (who are down a lot more)

Just a general rerating downwards for Heartland reflecting greater risk aversion that punters have

[Beagle]

Just had a look on ANZ securities charts and yes indeed HBL has been a real out-performer against the backdrop of a severe general correction in banking stocks. Only down 15% from $1.33 to $1.13 over the last 12 months, mitigated further by good fully imputed dividends. Good result considering how poorly many of the other Australian and international banks have shocked their shareholders. No mining exposure has been a real blessing for HBL shareholders. That said until fears of a global recession ease and until there's a genuine bounce in commodity prices that ease asset quality concerns, I expect the banking sector to remain under pressure, (HBL probably continue to outperform on a relative basis). Its been a very tough start to 2016 for many stocks with many tigers, cats and dogs very busy licking their wounds.

[percy]

And in same period HNZ only down 11% ....so not really contaminated by association with Aussie banks (who are down a lot more)

Just a general rerating downwards for Heartland reflecting greater risk aversion that punters have

I still see it as a correlation with the Australian Banks,because of lower valuation multiples being applied to the banking sector at present.
"Punters" may have "greater risk aversion " but Heartland Bank's sound financials ,means " investors" can take advantage of "punters" folly.!!! lol.

[Snoopy]

Fed Farmers say 11%of dairy farmers were under scrutiny by their banks, compared with 7%in November and 6% in August.

Banks call this Strategic Debt Management - better outcomes in helping farmer out of the industry and hopefully recover more than just foreclosing / receivership

We should be grateful to Heartland management they have essentially avoided this impending fiasco

Huh? I don't think so. From a shareholder perspective, Heartland is a lot more exposed to agriculture & mining than the Aussie headquarted big banks.

See table below.



Loan CategoryANZ Loan Book FY2015 (gross)ANZ Loan Book FY2015 (%ge)WBC Loan Book FY2015 (gross)WBC Loan Book FY2015 (%ge)HBL Loan Book FY2015 (gross)HBL Loan Book FY2015 (%ge)


Agriculture, Forestry, Fishing and Mining$39,610m4.7%$22,671m2.9%$576m17.8%


Business and Property Services$51,000m6.1%$74,793m9.7%$396m12.2%


Construction$7,609m0.9%$7,682m1.0%


Entertainment, Leisure and Tourism$11,797m1.4%$8,416m1.1%


Finance and insurance$230,710m27.5%$95,694m12.4%$377m11.6%


Government and Local Authority$52,5246.2%$75,936m9.9%


Manufacturing$34,432m4.1%$18,501m2.4%$94m2.9%


Personal lending$330,925m39.5%$419,764m54.5%$1,397m43.1%


Electricity, Gas and Water Supplies$9,795m1.2%$7,445m1.0%


Retail & Wholesale trade$38,528m4.6%$22,774m3.0%$276m8.5%


Transport and storage$14,783m1.8%$13,895m1.8%$20m0.6%


Other$16,455m2.0%$2,358m0.3%$102m3.2%


Total$838,248m100%$769,929m100%$3,240m100%



SNOOPY

[percy]

I still see it as a correlation with the Australian Banks,because of lower valuation multiples being applied to the banking sector at present.
"Punters" may have "greater risk aversion " but Heartland Bank's sound financials ,means " investors" can take advantage of "punters" folly.!!! lol.

Offcourse there is an upside with lower valuation multiples....................
Means any acquisition Heartland Bank makes will be at these lower valuation multiples.....

[winner69]

Just had a look on ANZ securities charts and yes indeed HBL has been a real out-performer against the backdrop of a severe general correction in banking stocks. Only down 15% from $1.33 to $1.13 over the last 12 months, mitigated further by good fully imputed dividends. Good result considering how poorly many of the other Australian and international banks have shocked their shareholders. No mining exposure has been a real blessing for HBL shareholders. That said until fears of a global recession ease and until there's a genuine bounce in commodity prices that ease asset quality concerns, I expect the banking sector to remain under pressure, (HBL probably continue to outperform on a relative basis). Its been a very tough start to 2016 for many stocks with many tigers, cats and dogs very busy licking their wounds.

Yes, good to see Heartland outperformance against its peers

Long may it continue

[Beagle]

Yes, good to see Heartland outperformance against its peers

Long may it continue

Be even better if they actually do an acquisition rather than just talk about it regularly for the last 18 months. I guess you could argue they're better positioned now that sector PE's have compressed but OTOH one could argue they've compressed for a reason and with slower economic times an acquisition of say MTF while potentially less expensive is also potentially riskier. (e.g. I'd imagine some of the 430 Dick Smith employees could face serious challenges ahead meeting their loan payments).

Ouch Snoopy...your beagle nose has detected something interesting there. I guess HBL have only just over $200m dairy loans so about 7% of loan book but still much higher on a relative basis than ANZ !
Also as you noted recently, HBL have been less forthcoming with appropriate doubtful debt provisioning than UDC. Must be the was it 21% ? of ANZ assets in Asia that has spooked the market then ?

[percy]

Heartland Bank have already done a number of very successful acquisitions.
I am reminded of Rank Group in the late 1980s.Had plenty of cash but just kept delaying buying anything.The market just kept on and on about them talking about acquisitions,but not doing any.Yet Graeme Hart took his time.The rest is history.
Bit like Ebos,always three acquisitions in the pipeline at any one time.But very few ever get done.But the ones they do are great.
Heartland Bank's directors and management have significant share holdings,so any acquisition/acquisitions will be well thought out.
In the event of no further acquisition they still have court approved share buy back.
Either way shareholders will enjoy increasing ROE,EPS and higher dividends.

[Snoopy]

Snoops - your table would be clearer if you didn't have HBL numbers to 3 decimal points (assuming anz etc numbers are actual millions)

Yes you are right Winner. At your suggestion I have removed the 'three decimal places' on the statistics relating to Heartland.

The reason I put the decimal places in there was because Heartland did in their annual report. I thought that if I left them there it would be easier for those who wanted to check up on my work to find where I pulled the figures from. However, for comparison purposes, it looks like I may have made some transcription mistake with the decimal point. I didn't. ANZ and WBC really are over 200 times bigger than Heartland in loan book terms. That fact does ram home how very big those 'big' Aussie banks really are!

SNOOPY

[winner69]

Yes you are right Winner. At your suggestion I have removed the 'three decimal places' on the statistics relating to Heartland.

The reason I put the decimal places in there was because Heartland did in their annual report. I thought that if I left them there it would be easier for those who wanted to check up on my work to find where I pulled the figures from. However, for comparison purposes, it looks like I may have made some transcription mistake with the decimal point. I didn't. ANZ and WBC really are over 200 times bigger than Heartland in loan book terms. That fact does ram home how very big those 'big' Aussie banks really are!

SNOOPY

Well done Snoops

Your signature - in a weird sort of way it could have relevance to Heartland

[winner69]

Heartland announcement said this -

Given continued market interest in the dairy sector in New Zealand, Heartland advises that its direct exposure to dairy farmers is 8% of its total lending book as at 31 December 2015. The average loan to value ratio (LVR) for Heartland’s dairy is 57%

Good to see them still lending in an industry that has a bright future. As Heartland says ' cautious approach to new lending, but remain open to new customers and supportive'

Dairy exposure pretty low at 8% of receivables - say $234m

But it's LVR at 57% that's the real good news. Previous number they quoted was 61% so 57% is pretty amazing seeing farm prices are down.

Just shows that even though total loans are up the quality of those loans appear to be much stronger. Incredible really. This is reflected in a pretty minimal increase in impairments as well.

Seems all honky dory down on the farms that Heartland have an exposure to .....and Heartland prospering from it

[kiora]

Heartland announcement said this -

Given continued market interest in the dairy sector in New Zealand, Heartland advises that its direct exposure to dairy farmers is 8% of its total lending book as at 31 December 2015. The average loan to value ratio (LVR) for Heartland’s dairy is 57%

Good to see them still lending in an industry that has a bright future. As Heartland says ' cautious approach to new lending, but remain open to new customers and supportive'

Dairy exposure pretty low at 8% of receivables - say $234m

But it's LVR at 57% that's the real good news. Previous number they quoted was 61% so 57% is pretty amazing seeing farm prices are down.

Just shows that even though total loans are up the quality of those loans appear to be much stronger. Incredible really. This is reflected in a pretty minimal increase in impairments as well.

Seems all honky dory down on the farms that Heartland have an exposure to .....and Heartland prospering from it

You are assuming the loans are secured against land,sometimes they are on livestock and plant.
What has happened to stock and plant prices?How have they valued them?
How have they assessed land values?

[stoploss]

Heartland announcement said this -

Given continued market interest in the dairy sector in New Zealand, Heartland advises that its direct exposure to dairy farmers is 8% of its total lending book as at 31 December 2015. The average loan to value ratio (LVR) for Heartland’s dairy is 57%

Good to see them still lending in an industry that has a bright future. As Heartland says ' cautious approach to new lending, but remain open to new customers and supportive'

Dairy exposure pretty low at 8% of receivables - say $234m

But it's LVR at 57% that's the real good news. Previous number they quoted was 61% so 57% is pretty amazing seeing farm prices are down.

Just shows that even though total loans are up the quality of those loans appear to be much stronger. Incredible really. This is reflected in a pretty minimal increase in impairments as well.

Seems all honky dory down on the farms that Heartland have an exposure to .....and Heartland prospering from it

Just wondering how to factor in the loans the dairy farmers have to Fonterra ? Surely with extra debt it will make the serviceability a lot harder on their bank loans ? LVR might be better in the above picture however the overall situation has to be worse .

[winner69]

You are assuming the loans are secured against land,sometimes they are on livestock and plant.
What has happened to stock and plant prices?How have they valued them?
How have they assessed land values?

Kiora - You would have to assume that an institution of such good standing as Heartland has a robust and proper methodology to come up with a number like 57% LVR

[Beagle]

I have doubts from a practical viewpoint that they would really force their dairy customers to get fresh valuations every single year. If a customers account was badly in arrears or under review I can certainly understand that it would be reasonable to ask the customers for fresh valuation reports.

[Raz]

Its not just Dairy... it is the actual effect on the wider rural loan base which concerns me, I see wider rural financial distress showing now up everywhere, nine months after this started, for instance a larger commercial pump service and installer discussing dairy and wider farm accounts that have been dragging on for 9 months now. His bank is now demanding more reporting. Beef is also not great and many other farms have part dairy exposure as well, directly and indirectly. I initially picked on HB as it has a broad wider rural base and in my opinion the service sector to the farmers are where the real scale of the problem does lie.

[percy]

Its not just Dairy... it is the actual effect on the wider rural loan base which concerns me, I see wider rural financial distress showing now up everywhere, nine months after this started, for instance a larger commercial pump service and installer discussing dairy and wider farm accounts that have been dragging on for 9 months now. His bank is now demanding more reporting. Beef is also not great and many other farms have part dairy exposure as well, directly and indirectly. I initially picked on HB as it has a broad wider rural base and in my opinion the service sector to the farmers are where the real scale of the problem does lie.

Possibly the best barometer we have for rural servicing is PGW.
Their lastest result was not flash,be neither was it doom and gloom.
Their exposure to dairying is approx. 24% compared to HBL's under 8%,
I did sell my Tru-Test and PGW some time ago for the very reasons you pointed out.

[K1W1G0LD]

Up 2 . But good to see some buying going on and not the relentless selloff of the last few weeks. The tide may be turning.

[King1212]

Good reading


http://www.stuff.co.nz/business/farming/dairy/77428151/dairy-prices-rise-at-globaldairytrade-auction

[winner69]

Up 2 . But good to see some buying going on and not the relentless selloff of the last few weeks. The tide may be turning.

It has turned

Will be $1.20 by end of week

And $1.30 by Easter

Enriching times

[K1W1G0LD]

It has tuned

Will be $1.20 by end of week

And $1.30 by Easter

Enriching times

You can tune a Piano Winner, but you can't Tuna fish.

[winner69]

You can tune a Piano Winner, but you can't Tuna fish.

...bit its like a well tuned rocket engine to take off big time

[winner69]

You can tune a Piano Winner, but you can't Tuna fish.

Kiwi - it has turned eh .....and more fine tuned than I thought

Seeing its hit 120 already I now reckon 125 by weeks end and 135 by Easter

Last weeks announcement just confirmed heartlands greatness .....from here on it is all up.

Didn't somebody mention 160 a while ago?

[trader_jackson]

Mr Market! What are you doing! This is going to affect the price I have to pay for my dividend reinvestment! Why are you increasing? Now, instead of buying them at dirt dirt cheap, I have to buy them cheaply! I wanted to get my DRP at bargain basement price, but now you are finally (after weeks of the results being out) taking notice of how great they were?

Dam dam dam, could you not have held the price at $1.14 or so until 5:00 pm 25 March?

[winner69]

Mr Market! What are you doing! This is going to affect the price I have to pay for my dividend reinvestment! Why are you increasing? Now, instead of buying them at dirt dirt cheap, I have to buy them cheaply! I wanted to get my DRP at bargain basement price, but now you are finally (after weeks of the results being out) taking notice of how great they were?

Dam dam dam, could you not have held the price at $1.14 or so until 5:00 pm 25 March?

Last DRP was $1.32 and maybe cheaper this time - stop complaining (only joking)

You should have bought some last week until of waiting for the drip ones

[SCOTTY]

Last DRP was $1.32 and maybe cheaper this time - stop complaining (only joking)

You should have bought some last week until of waiting for the drip ones

Last drip price was $1.11

[Snow Leopard]

Dairy prices up (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11597975) = Heartland up - You know how some people think.

Best Wishes
Paper Tiger

[macduffy]

Dairy prices up (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11597975) = Heartland up - You know how some people think.

Best Wishes
Paper Tiger

Not to mention last night's US market rise; Aussie banks, like the sun, also rises!

(Yes, poor grammar. "Also rise!" )

[winner69]

Last drip price was $1.11

I always get the $1.11 and the $1.32 mixed up. Pease forgive me - the price is so up and down.

Probably be $1.32 again ......just like last year

[Beagle]

Dairy prices up (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11597975) = Heartland up - You know how some people think.

Best Wishes
Paper Tiger

There's another helping of correlation evidence freshly served today. It might eventually get back to $1.32 if the milk powder price get's back to $3,000 a ton.

[nextbigthing]

Last weeks announcement just confirmed heartlands greatness .....from here on it is all up.

Didn't somebody mention 160 a while ago?

Yes! $1.60 by Christmas is the word on the street.

[Grimy]

Be very careful of word on the street.........

[BlackPeter]

Dairy prices up (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11597975) = Heartland up - You know how some people think.

Best Wishes
Paper Tiger

Maybe ... but just check out how the big banks took off today: ANZ up 4.5%, the others around 3% similar to HBL . Sure this is just the milk?

[trader_jackson]

Yes! $1.60 by Christmas is the word on the street.

Just like last Christmas, right? ;)

[nextbigthing]

Just like last Christmas, right? ;)

Correct :D

But Grimy does raise a good point;


Be very careful of word on the street.........

He/she is right. It could be over $1.60, more like $1.80+. Don't forget to prepare for this possibility, be careful :D

[SCOTTY]

I always get the $1.11 and the $1.32 mixed up. Pease forgive me - the price is so up and down.

Probably be $1.32 again ......just like last year

You are forgiven W69

This is why I like the drip and want the share price to stay low ��:
5/4/16. $1.198 (3.5 CPS)
29/9/15. $1.11 (4.5CPS)
27/3/15. $1.32 (3.0 CPS)
29/9/14. $1.015 (3.5 CPS)
20/3/14. $0.8606 (2.5 CPS)
1/10/13. $0.826 (2.5 CPS)

The magic of compounding ��������

[axe]

You are forgiven W69

This is why I like the drip and want the share price to stay low ��:

29/9/15. $1.11 ( 4.5 CPS)
27/3/15. $1.32 ( 3.0 CPS)
29/9/14. $1.015 ( 3.5 CPS)
20/3/14. $0.8606 (2.5 CPS)
1/10/13. $0.826 (2.5 CPS)

The magic of compounding ��������

The magic of compounding with an increasing dividend :)

[SCOTTY]

The magic of compounding with an increasing dividend :)

Thanks axe :)

[winner69]

Westpac nz worried about stressed rural loans. Aren't we lucky that heartland have avoided such impending turmoil by their prudent approach

From sharechat.co.nz

Westpac’s New Zealand business has seen an increase in “stressed” loans amid a weakening of the country’s agricultural sector, which is highly exposed to the global crash in dairy prices.

Westpac said today its New Zealand arm, which accounts for 11 per cent of the bank’s total cash earnings, saw an increase in stressed lending in its agricultural loan portfolio over the three months through December, rising to 4.2 per cent of lending, up from 3.9 per cent in the September quarter.

Although the percentage of impaired loans held steady at 0.34 over the quarter, Westpac said low dairy payouts were causing a rise in stressed loans. Agricultural loans make up nearly 8 per cent of the NZ arm’s portfolio, with dairy accounting for around 70 per cent of the $NZ8 billion agricultural loan book.

[Raz]

Westpac nz worried about stressed rural loans. Aren't we lucky that heartland have avoided such impending turmoil by their prudent approach

From sharechat.co.nz

Westpac’s New Zealand business has seen an increase in “stressed” loans amid a weakening of the country’s agricultural sector, which is highly exposed to the global crash in dairy prices.

Westpac said today its New Zealand arm, which accounts for 11 per cent of the bank’s total cash earnings, saw an increase in stressed lending in its agricultural loan portfolio over the three months through December, rising to 4.2 per cent of lending, up from 3.9 per cent in the September quarter.

Although the percentage of impaired loans held steady at 0.34 over the quarter, Westpac said low dairy payouts were causing a rise in stressed loans. Agricultural loans make up nearly 8 per cent of the NZ arm’s portfolio, with dairy accounting for around 70 per cent of the $NZ8 billion agricultural loan book.

Sweet, simply excellent

[Snow Leopard]

Westpac nz worried about stressed rural loans. Aren't we lucky that heartland have avoided such impending turmoil by their prudent approach

From sharechat.co.nz

Westpac’s New Zealand business has seen an increase in “stressed” loans amid a weakening of the country’s agricultural sector, which is highly exposed to the global crash in dairy prices.

Westpac said today its New Zealand arm, which accounts for 11 per cent of the bank’s total cash earnings, saw an increase in stressed lending in its agricultural loan portfolio over the three months through December, rising to 4.2 per cent of lending, up from 3.9 per cent in the September quarter.

Although the percentage of impaired loans held steady at 0.34 over the quarter, Westpac said low dairy payouts were causing a rise in stressed loans. Agricultural loans make up nearly 8 per cent of the NZ arm’s portfolio, with dairy accounting for around 70 per cent of the $NZ8 billion agricultural loan book.

Couple of items:

Firstly --
You can see why the Reserve Bank does not worry about Heartland going phut:
Westpac has a dairy loan size of about portfolio of $5.5B;
Heartland has a TOTAL loan size of $2.9B.


Lastly --
Any idea how Westpac defines stressed?

Here is all the Heartland [I]Rural loans past due or impaired at end of Jun & Dec:
($ are thousands; big numbers at bottom: total rural loans)

http://i7.photobucket.com/albums/y269/TheTigerWithNoName/SharetraderImages/NZX-HBL/20160308-NZX-HBL.png

As you can see they shuffled a lot of the 90+ loans over to [individually] impaired (which essentially means there are keeping a closer eye on them).
Outside of that there is little change and so far, actual provision for impairment is still insignificant.

Best Wishes
Paper Tiger

[Beagle]

http://a.msn.com/r/2/AAgxhkS?a=0&m=en-nz

HBL wise not to foreclose on anyone. Little birdie told me the other day after talking to a leading farm broker they had "Listings for Africa" and anyone interested in buying could basically name their own terms.

[Joshuatree]

Prices hold despite dairy woes (https://farmersweekly.co.nz/section/dairy/view/prices-hold-despite-dairy-woes) Heres some actual FACTS

Innuendo unsupported from an self appointed industry expert, chinese whispers. Really unsupportive of dairy farmers doing it tough in the down cycle. Bluebirdie of happiness at others expense.

[Beagle]

Could it be that its only recently banks have started to take a dim view on the outlook for dairy and its only recently that banks are starting to pile the pressure on ?
What would a leading farm broker know about listings for Africa anyway ?
http://www.interest.co.nz/rural-news/80252/kpmg-partner-sees-glass-half-full-when-looking-agri-industry-says-sector-diverse
Some interesting debate in there. Best to look historically or well into the future because anyone looking at the fundamentals of a dairy farm right now would have good reasons to be deeply depressed.
Most banks are subscribing to the "it'll all come right in the end" school of thought, the real question is why ?

[Raz]

Could it be that its only recently banks have started to take a dim view on the outlook for dairy and its only recently that banks are starting to pile the pressure on ?
What would a leading farm broker know about listings for Africa anyway ?
http://www.interest.co.nz/rural-news/80252/kpmg-partner-sees-glass-half-full-when-looking-agri-industry-says-sector-diverse
Some interesting debate in there. Best to look historically or well into the future because anyone looking at the fundamentals of a dairy farm right now would have good reasons to be deeply depressed.
Most banks are subscribing to the "it'll all come right in the end" school of thought, the real question is why ?

Well said, if i was involved in strategy in the US or EU I would aim to take out Fonterra & NZ Dairy given Fonterra's current debt levels and their current cost advantages, look at the lower cost structure they face, as an example the dutch farmers currently have interest rates in the range 1.5-1.75% compared to...plus advantages being in the EU captive M. They are never going to clear the shadow NZ farm stock for sale at current asking prices..current land prices is one of the elements making us unable to compete on price....if you haven't worked it out yet.. serious blood in the water for Dairy and wider rural communities is just a matter of time...flowing onto Banking....

[winner69]

....
Most banks are subscribing to the "it'll all come right in the end" school of thought, the real question is why ?

Because John Key says the outlook for dairying is good. Heartland have no need to worry

PM says European dairy production surge in 2015 a one-off; banks tell him they're being cautious; but a few very indebted farmers will go under; Govt not taking action on Fonterra's tougher payment terms for suppliers
http://www.interest.co.nz/news/80478/pm-says-european-dairy-production-surge-2015-one-banks-tell-him-theyre-being-cautious-few

[winner69]

Well said, if i was involved in strategy in the US or EU I would aim to take out Fonterra & NZ Dairy given Fonterra's current debt levels and their current cost advantages, look at the lower cost structure they face, as an example the dutch farmers currently have interest rates in the range 1.5-1.75% compared to...plus advantages being in the EU captive M. They are never going to clear the shadow NZ farm stock for sale at current asking prices..current land prices is one of the elements making us unable to compete on price....if you haven't worked it out yet.. serious blood in the water for Dairy and wider rural communities is just a matter of time...flowing onto Banking....

Raz, Fonterra screwing contractors even more in the rural towns won't be helping will it

Your wider communities comment could be right

[Raz]

Because John Key says the outlook for dairying is good. Heartland have no need to worry

PM says European dairy production surge in 2015 a one-off; banks tell him they're being cautious; but a few very indebted farmers will go under; Govt not taking action on Fonterra's tougher payment terms for suppliers
http://www.interest.co.nz/news/80478/pm-says-european-dairy-production-surge-2015-one-banks-tell-him-theyre-being-cautious-few

How do we know it will be a one off, big assumption. What about the US? In the end given where we are strategically positioned no other positive position/spin you can now take. Yep a strategy based on hope. I know for a fact the US Dairy industry would take the opportunity to break us, they have feared Fonterra for so long.

[macduffy]

I know for a fact the US Dairy industry would take the opportunity to break us, they have feared Fonterra for so long.

The US dairy industry, yes. Not so sure about the US banks who hold a good chunk of Fonterra's hefty debt.

[Joshuatree]

Tough times and some farmers unfortunately will have to sell in this down cycle. We all know Heartlands small % exposure here. Factor that into your risk /reward decisions, margin of safety and make an informed decision whether to hold sell or buy . Big picture;the banking sector globally under the pump atm , another thing to consider.

[Beagle]

Because John Key says the outlook for dairying is good. Heartland have no need to worry

PM says European dairy production surge in 2015 a one-off; banks tell him they're being cautious; but a few very indebted farmers will go under; Govt not taking action on Fonterra's tougher payment terms for suppliers
http://www.interest.co.nz/news/80478/pm-says-european-dairy-production-surge-2015-one-banks-tell-him-theyre-being-cautious-few

Surely its not election year already :)

http://www.stuff.co.nz/business/farming/agribusiness/77646215/fonterra-cuts-payout-to-farmers?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+9 +March+2016

Nearly 100 staff at Fonterra on over $500K...maybe its time for them to get real and see a drop in their heavily bloated salaries in line with the reduction in the dairy pay-out from $8.40 to $3.90 ? What's the bet if they did that fewer than a small handful would resign ?

[stoploss]

Surely its not election year already :)

http://www.stuff.co.nz/business/farming/agribusiness/77646215/fonterra-cuts-payout-to-farmers?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+9 +March+2016

Nearly 100 staff at Fonterra on over $500K...maybe its time for them to get real and see a drop in their heavily bloated salaries in line with the reduction in the dairy pay-out from $8.40 to $3.90 ? What's the bet if they did that fewer than a small handful would resign ?
Roger if you do someone's accounts and for example say their business only made 100K this year as opposed to 200K the previous , do you halve your accountancy fees ?

[winner69]

Don't think Heartland will ever be in Pax Ellevate Global Women's Index Fund

Well done Ryman anyway.

[Beagle]

Roger if you do someone's accounts and for example say their business only made 100K this year as opposed to 200K the previous , do you halve your accountancy fees ?

Believe it or not people can live quite comfortably on $100K.

To rephrase your question and make it more relevant, if a client was making $200K per annum and for the last two years lost $200K per annum, believe me there is real pressure on all costs including their professional fees. Many accountants to their credit have been helping clients for free to do their best in the dairy industry to restructure their operations.

Meanwhile Fonterra exec's, nearly 100 of them on over $500K keeping sucking at the teat relentlessly. I suppose they deserve such great pay for making everyone else's life a misery including drivers, contractors, engineers and not too forget the farmers themselves. Why haven't they shifted to more value added exports year's ago...that's the real question !

But bringing this full circle, if Fonterra weren't so grossly inefficient then banks wouldn't be looking at so many distressed customers. Maybe if Fonterra were a highly efficient operation they wouldn't need to "lend" an extra 50 cents per kg as a one-off, it would be built into the pay-out every year !!

http://a.msn.com/r/2/AAgxVi9?a=0&m=en-nz Thankfully at least it looks like Bill English has a decent handle on reality.

JT - I recommend Maxwell winches for the upgrade..best way to retrieve that floating anchor of yours.

[GTM 3442]

"Why haven't they shifted to more value added exports year's ago...that's the real question !"

Fonterras strategy is to be a big player in the dairy commodities market. Value-added product doesn't feature too highly in this strategy. Commodity export is, after all, the mainstay of the New Zealand economy.

It is a valid strategy, but it is a high risk strategy. It necessitates being a price taker, not a price maker.

Part of the reason for the strategy is that New Zealand doesn't have any branded products. We can probably all name a few French cheeses, and a few Italian cheeses, but how many New Zealand cheeses are there?

I suspect that there's a large part of the world which would consider New Zealand Camembert on a par with Turkish Cognac.

[macduffy]

This isn't the Fonterra thread but the real answer to the "real question" boils down to the fact that Fonterra is a co-operative and that it is structured to pay its owners, the dairy farmers, primarily based on the quantity of milk produced. That's the incentive, not maximising value-added products.

[kiora]

Sharemilkers in negative equity
http://www.stuff.co.nz/business/farming/advice/77702630/cows-for-sale-but-no-one-is-buying?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+10 +March+2016

[winner69]

Sharemilkers in negative equity
http://www.stuff.co.nz/business/farming/advice/77702630/cows-for-sale-but-no-one-is-buying?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+10 +March+2016

Just as well Heartland aren't affected much by all this bad news

[Raz]

Just as well Heartland aren't affected much by all this bad news

The news is those cows will get cheaper...when the flood of stock happens where will that slaughter price head...somehow it is all contained and will not effect the wider rural communities...so HBL will be sweet.

[winner69]

All that good news this week been good for Heartland shareprice

Up to $1.22 - think it was $1.17 last week so 4% increase a great result

All going to plan,we are on a roll

[Joshuatree]

We sure are doing alright with the 92% not exposed to dairy and cow beef may be getting cheaper at the supermarket/ butcher, good for consumers , heart wrenching for some farmers/sharemilkers.

[percy]

For the record.
Thank you Mr.Wheeler for lowering the official cash rate.
Not only has it helped my HBL holding, with people chasing HBL's growing imputed dividend,but has also helped all my exporting holdings, which will benefit from a lower NZ $.

[Beagle]

Yes a good week for many N.Z. shares that's for sure ! It would be nice to think HBL would do the decent thing and pass on the full 25 bps cut to beleaguered dairy farmers interest rates unlike many of the greedy Australian banks which are making excuses why they need to keep some / most of it for themselves. http://www.interest.co.nz/opinion/80533/gareth-vaughan-argues-banks-not-passing-full-25-basis-points-ocr-cut-not-justified

http://www.nzherald.co.nz/dairy-industry/news/article.cfm?c_id=168&objectid=11602823

[winner69]

Heartland's strategy of competently benchmarking parallel niches seems to leading to improved financial performance.

Keep it up Heartland

[see weed]

The news is those cows will get cheaper...when the flood of stock happens where will that slaughter price head...somehow it is all contained and will not effect the wider rural communities...so HBL will be sweet.
Transferring this to the a2 milk thread.

[winner69]

All that good news this week been good for Heartland shareprice

Up to $1.22 - think it was $1.17 last week so 4% increase a great result

All going to plan,we are on a roll

Price got real momentum behind it at the moment

Back to all time highs of 140 plus by Easter

Price deserves to e that high

[trader_jackson]

Price got real momentum behind it at the moment

Back to all time highs of 140 plus by Easter

Price deserves to e that high

Certainly does deserve it! I look forward to it increasing steadily

[winner69]

[/FONT]
Certainly does deserve it! I look forward to it increasing steadily

That 140 by Easter j_j

The word on the street was 160 by Queens Birthday weekend

[macduffy]

[/FONT]

That 140 by Easter j_j

The word on the street was 160 by Queens Birthday weekend

That may depend on how banks in general are regarded over the next 2-3 months. Investor sentiment has improved recently - analysts are seeing value there again and the Aussie big four up around 2% today.

[pierre]

[/FONT]

That 140 by Easter j_j

The word on the street was 160 by Queens Birthday weekend

180 by Labour weekend

200 by Christmas

220 Waitangi Day

240 Easter

260 Anzac Day
etc

We need more public holidays - lol.

[Jantar]

Price got real momentum behind it at the moment

Back to all time highs of 140 plus by Easter

Price deserves to e that high
I hope it stays low till after the buyback. Greater EPS after the buy back if it happens at a lower price.

[winner69]

Coupe of weeks since 1/2 year announcement

I think the mover and shakers have seen the guidance Heartland for what it is - a load of the proverbial. They have done their own sums.

Good on them - they pushing up the share price nicely.

Never trust bankers, even in Australia and NZ. No wonder some are questioning whether for ethical reasons they should be investing in banks. CBA a good example but all banks tarred with the same brush

[Beagle]

180 by Labour weekend

200 by Christmas

220 Waitangi Day

240 Easter

260 Anzac Day
etc

We need more public holidays - lol.

And $3.00 by Queens birthday 2017 ?

[BlackPeter]

Hmm - extrapolations are always right, until they are wrong. And they always are.

Don't want to rain into the parade ... and while I agree that HBL (as well as some of the Ossie banks) look currently still reasonably priced (i.e. in my view more worth than what the shares currently cost) ... there are as well some risks hanging around.

The (though moderate) exposure to the dairy industry didn't go away overnight, Harmony does not always get the best press, and not sure how long their growth curve continues ... and haven't heard for some time how the reverse mortgage business is doing.

Consensus forecast is currently $1.30 ($1.25 ... $1.35) and while analysts have a track record in underestimating HBL's future share price, do I think that they are closer to the mark than some of the predictions in this thread.

(edit)
Discl: holding HBL (and ANZ) and NOT expecting a (huge) capital gain, but holding them for a dividend much better than bonds or bank accounts can deliver these days;

[Raz]

Hmm - extrapolations are always right, until they are wrong. And they always are.

Don't want to rain into the parade ... and while I agree that HBL (as well as some of the Ossie banks) look currently still reasonably priced (i.e. in my view more worth than what the shares currently cost) ... there are as well some risks hanging around.

The (though moderate) exposure to the dairy industry didn't go away overnight, Harmony does not always get the best press, and not sure how long their growth curve continues ... and haven't heard for some time how the reverse mortgage business is doing.

Consensus forecast is currently $1.30 ($1.25 ... $1.35) and while analysts have a track record in underestimating HBL's future share price, do I think that they are closer to the mark than some of the predictions in this thread.

Discl: holding HBL (and ANZ) and for a (huge) capital gain, but for a dividend much better than bonds or bank accounts can deliver these days;

All good, just time your exit right, right!

http://myob.co.nz/myob/news-1257828256743?articleId=1455183440230&year=2016

“It is important that the decline in revenue and consumer confidence in the dairy industry is not considered in isolation. What the MYOB Business Monitor results have shown is that dairy prices have a major impact on the whole economy, and particularly in key industries such as retail and hospitality,” says Mr Scollay.

[winner69]

All good, just time your exit right, right!

http://myob.co.nz/myob/news-1257828256743?articleId=1455183440230&year=2016

“It is important that the decline in revenue and consumer confidence in the dairy industry is not considered in isolation. What the MYOB Business Monitor results have shown is that dairy prices have a major impact on the whole economy, and particularly in key industries such as retail and hospitality,” says Mr Scollay.

Hey Raz, did you know that there is no correlation (if anything it is negative) between dairy prices (ANZ Dairy Commodity Price Index) and annual GDP growth.

Since 1992 there has been 7 significant falls in dairy prices (including this one) and in only one of these was there a recession and that coincided with the GFC so that probably was a key reason.

As usual maybe this time it's different

[Raz]

Hey Raz, did you know that there is no correlation (if anything it is negative) between dairy prices (ANZ Dairy Commodity Price Index) and annual GDP growth.

Since 1992 there has been 7 significant falls in dairy prices (including this one) and in only one of these was there a recession and that coincided with the GFC so that probably was a key reason.

As usual maybe this time it's different

Winner with an econometrics background I can data mine it either way if you want me to in an argument with GDP. GDP is a fuzzy measure of value at the best of times and I do not expect it to drop in proportion at all given all the clutter going on in Auckland. HBL has a large as a proportion of portfolio rural services portfolio and that really is the relevance and to be on point. Not just Dairy but wide rural/regional loan book.

Lets wait for the stress test which will all be fine. If so why the PR of stress test to start with...

A couple of positives recent developments coming the other way, the banks holding onto the last ORC rate allows them to allow the residential portfolio to cross subsidies the distressed loan book and maintain margin. Possibly knock back the interest rates for distressed farmers below 10% could be helpful. Also China launching a new venture fund aiming at buying AGIF so if the money comes our way they may buy up the dairy farms...limiting the impairment for the banks to a degree. Well i know that is what they are hoping for.

[Beagle]

All good, just time your exit right, right!

http://myob.co.nz/myob/news-1257828256743?articleId=1455183440230&year=2016

“It is important that the decline in revenue and consumer confidence in the dairy industry is not considered in isolation. What the MYOB Business Monitor results have shown is that dairy prices have a major impact on the whole economy, and particularly in key industries such as retail and hospitality,” says Mr Scollay.

Very interesting link and underscores the issues for the economy generally and the extent of the impact on the asset quality of consumer and bank loans not specifically related to dairy.

[winner69]

Dairy prices down a tad overnight

Heartland shareprice down a tad

Just saying

[winner69]

Man on radio saying problems in dairy not all that widespread

Said 10% owe 40% of the debt or something like that

Hope those >$10m loans that Heartland have are all OK

[BlackPeter]

Dairy prices down a tad overnight

Heartland shareprice down a tad

Just saying

Aussie banks went a bit down as well ...

7935

Notice the correlation?

HBL in my view just moving with the financial sector ...

[winner69]

Aussie banks went a bit down as well ...

7935

Notice the correlation?

HBL in my view just moving with the financial sector ...

Makes sense Heartland tarred with the same brush as those unethical Aussie banks.

[Beagle]

Chris Lee comes out and says he's not keen on the proposed financial engineering Heartland is contemplating. Suppose he must be genuine in his thoughts as he's talking himself out of shed loads of commission.

[BlackPeter]

Chris Lee comes out and says he's not keen on the proposed financial engineering Heartland is contemplating. Suppose he must be genuine in his thoughts as he's talking himself out of shed loads of commission.

Chris Lee might not be always right (though I found that I seem to win more often than not when following his recommendations), but I found that he is always genuine!

[percy]

Chris Lee has a record of being spot on with his Heartland comments,however I think he should have taken note of what Heartland said when reporting their interim result on 23-2-2016.
"In current market conditions,Heartland believes there is greater opportunity for acquisitions."
They then went on to say;"It wishes to assess opportunities [if any] that may arise during this period of volatility and will continue to monitor its capital position [including its Tier 2 regulatory capital position] during this period.The board continues to be of the view that,in the absence of other uses of capital,it's excess capital should be returned to shareholders."

As a side bar.A few years ago Ebos refunded capital,rather than have a "lazy" balance sheet.Director Peter Kraus told,then MD Mark Waller ;"if you come up with a sound acquisition, then shareholders will be happy to fund it."Which they did a couple or three years later.
I am sure should Heartland come up with a sound acquisition,then shareholders will back them too.

[winner69]

I agree with Mr Lee that Heartland should keep their 'excessive' capital.

Even a 14% /15% equity ratio or whatever it is is 'excessive' leverage

[winner69]

Mr Lee doesn't have much time for banks these days does he. (This weeks are)

He doesn't answer the question he asked "I wonder which of the New Zealand banks will be found to be putting profits ahead of their clients, and breaching standards such as the Code of Ethics, which is supposed to govern all involved in financial advice ..."

[winner69]

Chris Lee comes out and says he's not keen on the proposed financial engineering Heartland is contemplating. Suppose he must be genuine in his thoughts as he's talking himself out of shed loads of commission.

The capital return / bond issue will take place

Heartland need to be seen to be something ....anything .....even if it is just to keep the likes of you happy (based on your previous comments )

Just do, do. https://m.youtube.com/watch?v=R2RzO-DY72Q

[percy]

I agree with Mr Lee that Heartland should keep their 'excessive' capital.

Even a 14% /15% equity ratio or whatever it is is 'excessive' leverage

Does not worry me either way.Acquisition [ if sound] or capital return.As I stated before,if an acquisition stacks up,shareholders will front up with the funds..
Just pleased they are not getting complacent.

[winner69]

The REINZ Dairy Farm Price Index has dropped 21% in 12 months

http://www.interest.co.nz/rural-news/80655/reinz-dairy-farm-price-index-has-dropped-21-12-months

Just as well Heartland don't lend to buy farms .....but Mr Lee mentioned they probably have a few 2nd mortgages which might add a bit of stress for some.

[Beagle]

The REINZ Dairy Farm Price Index has dropped 21% in 12 months

http://www.interest.co.nz/rural-news/80655/reinz-dairy-farm-price-index-has-dropped-21-12-months

Just as well Heartland don't lend to buy farms .....but Mr Lee mentioned they probably have a few 2nd mortgages which might add a bit of stress for some.

14% in one month and banks have only very, very recently started to toughen up on who they are prepared to continue to support. With a massive number of listings and what few buyers there are holding back for lower prices I can't see any other result but further substantial falls from here. What's HBL's current LVR ratio based on the real current realisable value of farms, stock plant, and machinery ?

http://www.interest.co.nz/business/80613/rabobank-nz-braces-higher-bad-loan-provisions-dairy-sector Rabobank bracing for the forthcoming storm...maybe other banks should too ?

Outlook doesn't look good either
http://a.msn.com/r/2/BBqAZN0?a=0&m=en-nz

And Bernard Hickey weigh's In - http://www.nzherald.co.nz/rural-business-agriculture-farming/news/article.cfm?c_id=16&objectid=11604664

[winner69]

Interim Report out

I see the Tumu Whakarea managed to get his photo in the report twice.

No photos of dairy farms though

[Jantar]

Interim Report out

I see the Tumu Whakarea managed to get his photo in the report twice.

No photos of dairy farms though
On a first read I can see no mention of the proposed share buy back. Maybe that was only disclosed to the Maori readers of the report.

[winner69]

See ANZ need to increase 1/2 year credit charge (bad debts) by $100m to close to $1 billion

Just as well Heartland don't do much lending to dodgy industries else their Tumu Whakarea would need to make such announcements as well

[Cricketfan]

Notice of buyback: https://nzx.com/companies/SUM/announcements/279820

[BlackPeter]

Notice of buyback: https://nzx.com/companies/SUM/announcements/279820

You sure you posted this into the correct thread? Looks like a buyback of forfeited SUM shares (as part of a bonus schema) to me.

[King1212]

You sure you posted this into the correct thread? Looks like a buyback of forfeited SUM shares (as part of a bonus schema) to me.

I think criketfan meant to post it on SUM thread....or maybe HBL has invested heavily in SUM and their shares now connected:scared:

[Cricketfan]

I think criketfan meant to post it on SUM thread....or maybe HBL has invested heavily in SUM and their shares now connected:scared:

Oops! Doh, sorry!

[Beagle]

Net profit up 9% to $25.6m looks okay if you accept dairy loan provisioning at face value...(most dairy farmers can't pay interest bill http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11611251), but interestingly net profit after net change in foreign currency translation reserve, (lost money here in this half and pcp) is ostensibly unchanged at $21.8m v $21.2m last year.

[Snow Leopard]

Net profit up 9% to $25.6m looks okay if you accept dairy loan provisioning at face value...(most dairy farmers can't pay interest bill http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11611251), but interestingly net profit after net change in foreign currency translation reserve, (lost money here in this half and pcp) is ostensibly unchanged at $21.8m v $21.2m last year.

You really do see only what you want to see and hear only what you want to hear, don't you ?


http://i7.photobucket.com/albums/y269/TheTigerWithNoName/ShareTrader/DP.png

"Because although it has many omissions, contains much that is apocryphal - or at least wildly inaccurate - it scores over the older, more pedestrian work in two important ways: first, it is slightly cheaper, and second, it has the words ‘Don’t Panic’ inscribed in large, friendly letters on the cover"*

Best Wishes
Paper Tiger

*THHGTTG

[mouse]

Peabody Energy, it used to be Peabody Coal but coal became rather dirty, is the largest coal producer in the world.
Unfortunately, accountants got hold of it. I think they paid dividends but also borrowed a few dollars. Times were good.
Unfortunately, times are a little uncertain and a 70 million US interest payment is due. Ooops. No cash.
Can you wait a month???
(Plus lots of other debt with both interest and capital due).

Heartland should raise cash for takeovers. Not to return 'excess' capital to shareholders. And definitely not in our present climate.

[percy]

.

Heartland should raise cash for takeovers. Not to return 'excess' capital to shareholders. And definitely not in our present climate.

Sounds a good idea,but consider what possibly the company with the best capital management did a few years ago when they had excess capital.That company is Ebos which turns over its stock about 10 times a year.
Director Peter Klaus told then CEO/MD Mark Waller to return excess capital to shareholders.Waller then said,but we will most probably do an acquisition.To which Klaus replied,"if the acquisition stacks up shareholders will front up." "Having a lazy balance sheet with excess capital,tempts management doing a poor acquisition."
Ebos is offcourse a "medical supply logistics" company,but they know the real value of capital.Three or four years later Ebos did a massive acquisition which shareholders keenly supported.
So is it too much to expect HBL know the true value of capital.After all the directors and management have significant holdings,and the business is banking,not medical supplies.They may even decide it is prudent to retain their excess capital in present market conditions.
What has been proven is the fact that HBL have a record of prudent stewardship.So I have every confidence they will make the right decision with what to do with the excess capital.