HGH - Heartland Group Holdings

[percy]

Yeah ....but they will be out in droves pushing the price up after Christmas when the big end of town has a break at their holiday villas

Looks to me as though it could be a big out of town/or country buyer.
Back of my mind I agree with Janner, it may be linked in some way to UDC.
"We live in interesting times."

[value_investor]

I was expecting it to float with the $2 mark and have some resistance before actually pushing through it in 2018 but I guess not. I'm continually a bit flabbergasted by how the bull is behaving, not just with HBL but I have a few examples from the year.

"Beware the bull"

Literally take it as you will.

[Snow Leopard]

$2.14 ?

Has HBL released it's own cryptocurrency ?

Best Wishes
Paper Tiger

[couta1]

Holy crap. $2.14 this is one crazy bull market Lots of overpriced shares out there, except the three I own. PS-This isn't one of the three. PPS-I do bank with HBL though.

[777]

May be that guy Robertson is about to open an account there for government.

[janner]

$2.14 ?

Has HBL released it's own cryptocurrency ?

Best Wishes
Paper Tiger

One of the most logical statements this week :-))))))))))

[Beagle]

Holy crap. $2.14 this is one crazy bull market

I agree. It would appear relative PE's with its peer group is no longer relevant ? Index rebalancing ? Normal (if you can call it that), $2.07 sort of price to return on Monday ?

[iceman]

I agree. It would appear relative PE's with its peer group is no longer relevant ? Index rebalancing ? Normal (if you can call it that), $2.07 sort of price to return on Monday ?

$2.07 or $2.14. :rolleyes: Steady as she goes and has for years :-)

[janner]

Over half the days turn over in the last minute... Nothing steady about that..

Ramping ??????

Beginning to defy logic..

Time for Percy to get on the phone ..

[iceman]

Over half the days turn over in the last minute... Nothing steady about that..

Ramping ??????

Beginning to defy logic..

Time for Percy to get on the phone ..

Do you care janner or will you just sail through it all as I suspect you will !! Agree with Percy going on the phone. Just hope he can hear them correctly on the other end :-)

[janner]

Do you care janner or will you just sail through it all as I suspect you will !! Agree with Percy going on the phone. Just hope he can hear them correctly on the other end :-)

Spot on iceman.. However I do like your word sail.. Have been pondering another yacht for some time.. Wondering whether I am getting to old to handle one Certainly able to afford it . :-)))) Waiting with bated breath to hear from Percy..

[Beagle]

Over half the days turn over in the last minute... Nothing steady about that..

Ramping ??????

Beginning to defy logic..

Time for Percy to get on the phone ..

As near as I can figure it there was a substantial disturbance in the NZX50 yesterday with index rebalancing. With Rod Drury in his "infinite wisdom" deciding that XRO should exit the NZX on the face of it PPH simply replaced it and that was that, (apart from the obvious displeasure of XRO shareholders and pleasure of PPH holders)...but my sense is there is more to it than that.
It looked to me that a large number of stocks in the NZX50 came under serious buying pressure in the last 15 minutes of that closing match process. I suspect there is far more to it that simply PPH replacing XRO in the index and that holdings by tracker funds following that index had to rebalance quite a number of their holdings due to the substantial market capitalization difference between XRO and PPH. This is a highly irregular situation because normally the size of the incoming stock coming into the NZX50 is slightly more than the lowest former ranking NZX50 stock. That's my theory on it anyway but its just a theory and I'm not pretending to know exactly how these index rebalancing process's work. I suspect that any holder who sold at $2.14 on Friday can thank Rod Drury for his kindness and I would put a cider or two on normal market pricing resuming next week.

[percy]

Spot on iceman.. However I do like your word sail.. Have been pondering another yacht for some time.. Wondering whether I am getting to old to handle one Certainly able to afford it . :-)))) Waiting with bated breath to hear from Percy..

With all the $2.14 large trades crossing at, and after closing, HBL may not "yet" be aware of who is buying/selling.
Ringing on Monday I would most probably get,"we will have to wait to receive details of buy/sell from Link Market Services, before we know ourselves."
Or else, should they know,they may not be in the position to tell me.They may have to inform NZX?
HBL is trading above Craigs,FNZC and Hobson Wealth's target prices,so it does not appear to be in reaction to an urgent upgrade buy from these brokers.
Often after a rights issue or placement, we see the share price come back towards the placement/rights issue price.This has not been the case with HBL's rights issue.
Like every one else, I may just have to wait and see.
However like Iceman and Janner, I will continue to enjoy sailing along with the strong tail wind.

ps.Since writing this I notice Beagle's post.Makes sense to me.

[777]

Didn't Mr Orr get a big cheque from Grant Robertson yesterday?

[horus1]

I am not selling. This is a solid stock which I think will do what it says. Overprice at 2.14 but has a floor at2.02 I think. It is an example of why owning tracker funds have a risk. Market usually goes too high at xmas.

[janner]

As near as I can figure it there was a substantial disturbance in the NZX50 yesterday with index rebalancing. With Rod Drury in his "infinite wisdom" deciding that XRO should exit the NZX on the face of it PPH simply replaced it and that was that, (apart from the obvious displeasure of XRO shareholders and pleasure of PPH holders)...but my sense is there is more to it than that.
It looked to me that a large number of stocks in the NZX50 came under serious buying pressure in the last 15 minutes of that closing match process. I suspect there is far more to it that simply PPH replacing XRO in the index and that holdings by tracker funds following that index had to rebalance quite a number of their holdings due to the substantial market capitalization difference between XRO and PPH. This is a highly irregular situation because normally the size of the incoming stock coming into the NZX50 is slightly more than the lowest former ranking NZX50 stock. That's my theory on it anyway but its just a theory and I'm not pretending to know exactly how these index rebalancing process's work. I suspect that any holder who sold at $2.14 on Friday can thank Rod Drury for his kindness and I would put a cider or two on normal market pricing resuming next week.

Looks as if you were correct ..

Still a very good price with a good number going through already .

[Beagle]

Yeap I hear its also common for the index tracker funds to mop up any shares they are missing from the rebalance on the Monday following the big closing Friday match process. We'll know where the true price is by mid week I would say. Possibly a tad over full value at the current price but then again its getting quite hard to find any real value on the NZX so probably a reasonable hold for 2018 but I don't think total shareholder return next year is going top anything like what it was this year.

[RTM]

Yeap I hear its also common for the index tracker funds to mop up any shares they are missing from the rebalance on the Monday following the big closing Friday match process. We'll know where the true price is by mid week I would say. Possibly a tad over full value at the current price but then again its getting quite hard to find any real value on the NZX so probably a reasonable hold for 2018 but I don't think total shareholder return next year is going top anything like what it was this year.

There are lots of people retiring and selling their Auckland houses. They need somewhere to put their money and given interest rates are so pitiful, they will look to the stock market as an option for some or all of those funds. Even tho it seems expensive......their options aren't very attractive. So I see them continuing to underpin our sharemarket.

[Beagle]

There are lots of people retiring and selling their Auckland houses. They need somewhere to put their money and given interest rates are so pitiful, they will look to the stock market as an option for some or all of those funds. Even tho it seems expensive......their options aren't very attractive. So I see them continuing to underpin our sharemarket.

Agreed and one of the key themes I am working on for 2018 and beyond is interest rates staying very very low for the foreseeable future which will underpin the attractiveness of our high dividend yield market.

[Beagle]

Hey Winner, do you think your old GDT auction price and HBL SP correlation theory still holds any water ? Maybe $2.14 was the top...for a while...
https://www.nbr.co.nz/article/dairy-product-prices-retreat-biggest-decline-early-march-b-211376

[winner69]

Hey Winner, do you think your old GDT auction price and HBL SP correlation theory still holds any water ? Maybe $2.14 was the top...for a while...
https://www.nbr.co.nz/article/dairy-product-prices-retreat-biggest-decline-early-march-b-211376

Not as strong as it was a while ago but then this what you would expect as the HBL share price behaviour is defying all sort of logic as it soars to record highs and outrageous valuations.

Punters can’t understand why Bitcoins are worth so much - maybe same applies to Heartland,

But we’ll live with that - esp if HBL goes to $2.50 over the holiday break.

[Bjauck]

There are lots of people retiring and selling their Auckland houses. They need somewhere to put their money and given interest rates are so pitiful, they will look to the stock market as an option for some or all of those funds. Even tho it seems expensive......their options aren't very attractive. So I see them continuing to underpin our sharemarket. That could be an influence - especially if they are moving into a retirement village and if the children or grandchildren already have their own homes. Otherwise buying a smaller but newer home won't leave an awful lot of change from big but old house. Also The Bank of Mom and Pop is often an even bigger part behind many people being able to afford a deposit for a first house these days.

[Beagle]

Not as strong as it was a while ago but then this what you would expect as the HBL share price behaviour is defying all sort of logic as it soars to record highs and outrageous valuations.

Punters can’t understand why Bitcoins are worth so much - maybe same applies to Heartland,

But we’ll live with that - esp if HBL goes to $2.50 over the holiday break.

You said it mate. Price does seem very fulsome on a trailing PE of 17...forward PE is probably as high as 16 given all the shares they've issued.
Maybe Heartland are about to launch their own cryptocurrency and existing shareholders will get in at the ground floor on another rights issue :)
HBL have had a great 12 months, up 41% from $1.47 a year ago plus dividends plus two lots of heavily discounted rights issues, sees most long term holders nab more than a 50% return overall...and all that on ~ 10% EPS growth...hmmm

[winner69]

UDC sale to HNA unlikely now
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ANB/312300/272218.pdf

Wonder if Heartland is part of ANZ's 'strategic options'

Where's Jeff today?

[percy]

UDC sale to HNA unlikely now
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ANB/312300/272218.pdf

Wonder if Heartland is part of ANZ's 'strategic options'

Where's Jeff today?

Thanks for the link W69.
We continue to live in interesting times.

[iceman]

No surprise there winner. And you and Beagle think the SP has reached unexplainable heights !!

[Beagle]

There would be grounds for optimism if ANZ were forced sellers but I think they will still want a fulsome price if they decide to continue with selling it at all.
They flicked off some funds management thing the other day in Aussie for a couple of billion odd so I doubt they're too worried by this.

[percy]

Would some kind poster put the correct link to the David Hargreaves article on ANZ/UDC interest ,co,nz article.
www.interest.co.nz/opinion/91502/david-hi
Although my link comes up error if you click onto David Hargreaves photo in the top right corner, the article will come up.


Funding.Would be a "game" changer for both,and intos would want on board.The sp would head north straight away [over $2.50], and a "huge" rights issue would be well supported.HBL would need to raise about 72 cents per share.ie approx. $400mil.
HBL would most probably need ANZ's support for a year or so, to give them time to get bond depositors onboard.
UDC bond depositors who left because of their worries about HNA, would most probably support HBL as a NZ bank owning UDC.

[winner69]

Re percy post - link to interest.co.nz article re UDC

https://www.interest.co.nz/opinion/91502/david-hargreaves-believes-sale-udc-finance-credible-new-zealand-financial-institution

[percy]

Re percy post

https://www.interest.co.nz/opinion/91502/david-hargreaves-believes-sale-udc-finance-credible-new-zealand-financial-institution

Yet again, thanks W69.

[Joshuatree]

Yes cheers w69. Not a lot of other contenders besides kiwibank? At a cheaper price too. The mind boggles at the supersize me that would be created.Maximas merrimas :).

[beetills]

Might be easier if ANZ took out HBL, combined it with UDC.
It would make a very attractive business to purchase.

[Joshuatree]

Thats pretty HEARTless / outLANDish beetills. But would have to consider it @$3.32;)

[winner69]

Disappointed that Jeff not recognised in the New Years Honours list. He deserved one for services to banking. After all he has taken something on its last legs to be one of the most successful bank in NZ. Another time maybe

Good to see ‘diversity’ to the fore with the top Honours this time round. More new Dames than new Knights. That’s good ...maybe Heartland are on the track with their commitment to diversity.

[percy]

Disappointed that Jeff not recognised in the New Years Honours list. He deserved one for services to banking. After all he has taken something on its last legs to be one of the most successful bank in NZ. Another time maybe

Good to see ‘diversity’ to the fore with the top Honours this time round. More new Dames than new Knights. That’s good ...maybe Heartland are on the track with their commitment to diversity.
Maybe the New Years Honours list mistakenly concentrated too much on "diversity", over looking Grant Dalton and Team NZ.?
Would think you would have meant Geoff,not Jeff.?..lol.

[winner69]

Maybe the New Years Honours list mistakenly concentrated too much on "diversity", over looking Grant Dalton and Team NZ.?
Would think you would have meant Geoff,not Jeff.?..lol.

Geoff(rey) OK but probably lost points for looking shocked when a shareholder called the front bench full of fuddy daddies.

Sir Grant .....no way should rich dudes get recognised for playing rich men’s games

[percy]

Sir Grant .....no way should rich dudes get recognised for playing rich men’s games

Really.??????????????????????????/

[Marilyn Munroe]

Disappointed that Jeff not recognised in the New Years Honours list. He deserved one for services to banking. After all he has taken something on its last legs to be one of the most successful bank in NZ. Another time maybe


Your view of Jeffs "last legg" achievements would depend on whether you were a PGG shareholder or a CBS Canterbury member.

Boop boop de do
Marilyn

[percy]

Your view of Jeffs "last legg" achievements would depend on whether you were a PGG shareholder or a CBS Canterbury member.

Boop boop de do
Marilyn
CBS would not have survived on its own.
And that is why they merged ,so CBS shareholders would receive shares that would grow in value.
Certainly was the clever thing to do.

[kizame]

Disappointed that Jeff not recognised in the New Years Honours list. He deserved one for services to banking. After all he has taken something on its last legs to be one of the most successful bank in NZ. Another time maybe

Good to see ‘diversity’ to the fore with the top Honours this time round. More new Dames than new Knights. That’s good ...maybe Heartland are on the track with their commitment to diversity.

OMG Really. A little OTT I hope you are tongue in cheek.

[value_investor]

In terms of valuation this one is still way over the original guidance given by management. Still not sure if this one will hold over 2.10 like it has done going into January now.

Given with the positive Q1 12% gain in net profit, the market has already priced in an revised upwards guidance by the looks of it. How high can this one go?

[JeremyALD]

In terms of valuation this one is still way over the original guidance given by management. Still not sure if this one will hold over 2.10 like it has done going into January now.

Given with the positive Q1 12% gain in net profit, the market has already priced in an revised upwards guidance by the looks of it. How high can this one go?

This one still amazes me. Not much has changed in relation to company performance or guidance since it was down at $1.20 18 months ago, yet it's nearly doubled in price. It's gone from a low PE with high dividend yield to the highest bank PE and moderate yield. Personally I can't see huge gains this year, but the market is loving growth at the moment and HBL continues to deliver that so who knows.

[Beagle]

Agree JeremyALD. It was a great year to be a HBL shareholder last year with a total shareholder return of over 50% inclusive of two deeply discounted rights issues..fantastic returns considering modest EPS growth, really surprising and most enjoyable indeed. Fact is HBL outperformed the NZX50 by well over double the index gain for the year. Disc: Sold out completely at $2.14 in December.

[horus1]

I hold a lot and will not sell. The Management do what they say. It is the only NZ bank and has an advantage over AU banks in that their are imputation credits on the div's. Worth around 2.00

[stoploss]

I hold a lot and will not sell. The Management do what they say. It is the only NZ bank and has an advantage over AU banks in that their are imputation credits on the div's. Worth around 2.00
“ only NZ bank “ SBS, TSB , Kiwibank ???

[winner69]

This one still amazes me. Not much has changed in relation to company performance or guidance since it was down at $1.20 18 months ago, yet it's nearly doubled in price. It's gone from a low PE with high dividend yield to the highest bank PE and moderate yield. Personally I can't see huge gains this year, but the market is loving growth at the moment and HBL continues to deliver that so who knows.

I thought this is what ‘value investors’ like you loved .....buying ‘under valued’ stocks and seeing them be recognised and rerated by the market and making zillions in the process through the rerating on top of profit growth.

You shouldn’t be amazed ...it’s all gone to plan eh

They say true value investors sell when their target price is reached .....is this where you are now with your thinking.

I still hold ....when Jeff mentions $72m plus we’ll see $2.30 plus. That will be soon.

[horus1]

Stop loss . It is the only listed NZ bank which I can buy shares in. You have to be an investor to get the benefits of increases in value it seems to me. Govt ownership puts me of Kiwibank as over the years politicians dont tend to be good owners.

[JeremyALD]

I thought this is what ‘value investors’ like you loved .....buying ‘under valued’ stocks and seeing them be recognised and rerated by the market and making zillions in the process through the rerating on top of profit growth.

You shouldn’t be amazed ...it’s all gone to plan eh

They say true value investors sell when their target price is reached .....is this where you are now with your thinking.

I still hold ....when Jeff mentions $72m plus we’ll see $2.30 plus. That will be soon.

Yes it was very good value play up until the last 6 months, but it has exceeded my expectations in its re-rating. I think HBL is more exposed to a economic downturn than other banks so at this level I think there's more long term downside than up.

[percy]

. I think HBL is more exposed to a economic downturn than other banks so at this level I think there's more long term downside than up.

How so??????????????????????????????

[hardt]

How so??????????????????????????????

Fitch has a BBB rating on HBL... lowest amongst its larger peers. 4 ticks under the likes of ANZ/CBA/WBC

[percy]

Fitch has a BBB rating on HBL... lowest amongst its larger peers. 4 ticks under the likes of ANZ/CBA/WBC

With the lowest exposure to the NZ residential property market, I would think they are in better shape to weather an economic down turn.I would expect any big downturn in NZ would be lead by residential property.

[Marilyn Munroe]

How so??????????????????????????????

I have been told of someone who took out a car hire purchase loan from MARAC for no deposit.

I have no information about the credit worthiness of the borrower or the due diligence undertaken by MARAC, but I would classify this type of lending as adventurous as well as sensitive to negative economic changes.

Boop boop de do
Marilyn

[percy]

I have been told of someone who took out a car hire purchase loan from MARAC for no deposit.

I have no information about the credit worthiness of the borrower or the due diligence undertaken by MARAC, but I would classify this type of lending as adventurous as well as sensitive to negative economic changes.

Boop boop de do
Marilyn

Both Heartland [Marac] and Turners have very few motor vehicle loans go bad.
In fact people pay their car loans before they pay their house mortgages,'
They need their car to get to work.
Both Turners and Heartland have good records of checking borrowers' credit worthiness.
Neither do adventurous.

[Marilyn Munroe]

Neither do adventurous.

To be fair this loan may be bundled into their securitisation channel and the losses endured by the widows and orphans who are dependent on the pension funds who buy this stuff.

I have no problem with this buccaneering style of lending it is covering it with a cloak of probity that concerns me.

Boop boop de do
Marilyn

[Beagle]

Holders will of course say its justified based on superior earnings growth whereas those who have recently sold such as myself would say its got a little ahead of itself and as primarily a value investor I see better value elsewhere. I simply present the information and its up to readers to assess for themselves.
FY18 PE's according to 4traders average brokers forecasts based on Friday's closing price, (all figures rounded to the nearest single decimal point).
ANZ 12.2
NAB 13.1
WBC 12.8
BEN 13.0
CBA 13.8
BOQ 13.2
HBL 17.0

As JeremyALD astutely noted, not a huge amount has changed to HBL in the last eighteen months other than moderate EPS growth but mainly the extraordinary SP outperformance is simply a function of the fact that its been rerated from a considerable discount to its peer group to quite a considerable premium. Whether that premium is warranted or a whether a reversion towards the mean average of its peers is more likely in the medium term is of course the question. Some might even try and make the case that an even bigger PE premium is warranted and I wish them good luck with that.

[beetills]

I had shares in cbs so was handed shares when HBL took over.
I have since increased my meagre shareholding only because unlike the big Aussie banks i thought that this would be my one chance to get into a bank at a resonable cost.
Enjoyed the ride so far.

[JeremyALD]

How so??????????????????????????????

HBL play in niche areas and have grown small business lending significantly. These are the types of areas that will have lower take up rates and higher levels of default in the times of economic crisis. They also have a stake in the likes of Harmoney which haven't been through an economic crisis as of yet and have a lower credit rating which means their cost of credit will be higher. They also won't be able raise capital as easily in a recession and they are one of the only big banks that has chosen to come to shareholders for cash.

The big banks in ANZ have performed fairly well in recessions and property downturns. With HBLs new model and large amounts of lending in small business, personal and reverse mortgages I see it as riskier in hard times.

[percy]

HBL play in niche areas and have grown small business lending significantly. These are the types of areas that will have lower take up rates and higher levels of default in the times of economic crisis. They also have a stake in the likes of Harmoney which haven't been through an economic crisis as of yet and have a lower credit rating which means their cost of credit will be higher. They also won't be able raise capital as easily in a recession and they are one of the only big banks that has chosen to come to shareholders for cash.

The big banks in ANZ have performed fairly well in recessions and property downturns. With HBLs new model and large amounts of lending in small business, personal and reverse mortgages I see it as riskier in hard times.

Thanks for your reply.

[SCOTTY]

HBL play in niche areas and have grown small business lending significantly. These are the types of areas that will have lower take up rates and higher levels of default in the times of economic crisis. They also have a stake in the likes of Harmoney which haven't been through an economic crisis as of yet and have a lower credit rating which means their cost of credit will be higher. They also won't be able raise capital as easily in a recession and they are one of the only big banks that has chosen to come to shareholders for cash.

The big banks in ANZ have performed fairly well in recessions and property downturns. With HBLs new model and large amounts of lending in small business, personal and reverse mortgages I see it as riskier in hard times.
I’m probably wrong but my understanding of Harmoney is that they don’t actually lend their own money but act as a facilitator for others to lend money through their platform. Harmoney clip the ticket on the way through?

[777]

I’m probably wrong but my understanding of Harmoney is that they don’t actually lend their own money but act as a facilitator for others to lend money through their platform. Harmoney clip the ticket on the way through?

But as I understand it Heartland are also one of the "others" you refer to.

[Beagle]

My understanding is that HBL have in fact funded a substantial amount of the lending that's happened on the Harmony platform and that all the lending is unsecured. I believe it runs to many tens of millions of dollars but Percy might know more about it, could be closer to $100m by now ? Like Jeremy I wonder about the default rate of this sort of lending if the economy ever goes pear shaped, ditto small business lending and dairy lending if there's another crisis in that sector which is already affected by farmers carrying much higher than normal level's of legacy debt from the last dairy crisis. March 2018 marks the nine year anniversary of the great bull market. I'd like to think there's a tenth year in this great bull market and maybe even an eleventh ?... but time will tell, we must get another recession sooner or later.

[percy]

My understanding is that HBL have in fact funded a substantial amount of the lending that's happened on the Harmony platform and that all the lending is unsecured. I believe it runs to many tens of millions of dollars but Percy might know more about it, could be closer to $100m by now ? Like Jeremy I wonder about the default rate of this sort of lending if the economy ever goes pear shaped, ditto small business lending and dairy lending if there's another crisis in that sector which is already affected by farmers carrying much higher than normal level's of legacy debt from the last dairy crisis. March 2018 marks the nine year anniversary of the great bull market. I'd like to think there's a tenth year in this great bull market and maybe even an eleventh ?... but time will tell, we must get another recession sooner or later.

Yes Heartland own 10% of Harmony.Yes Heartland appear to have first pick of the loans.Yes Heartland have lent approx. $30mil via Harmony.Yes Heartland are more than happy with the arrangement.
Secured lending.All lending carries risk.With secured lending the asset borrowed against may not realise the full value of the loan.
Unsecured lending.Lenders will check the borrower's credit history,and financial and personnel details very carefully.
We can argue all we like,however the likes of HBL and TRA have extremely low default rates.
Talking to Heartland I have learnt the following.
Yes you could drive out of the dealer's yard with a new Holden, with no deposit.However you would need to have one of the best credit ratings in NZ.The promotion was to get customers into the Holden dealers.Most people wanted to trade their car in,and did not want a huge finance package.A successful promotion.
Open for business.Open for etc.The take up has been excellent.More products,and even trialling some products in Australia.So far defaults are well below budget.Small business owners rely solely on their business for their livelihood,Borrowings are used in their businesses,to produce profits.
Reverse Equity Mortgages.Good security and higher interest charged.Heartland hold a very small portfolio of residential mortgages, other than RELs.
Niche lending.Heartland have stayed away from competing with the Aussie banks.Heartland's expertise in niche lending has helped Heartland to achieve the highest net interest margin.Very profitable lending adds to the overall strength of Heartland.
Cost of funds.Heartland do not use European wholesale funding.Heartland have proved investors support them via capital raisings,bonds and general deposits,both term and on call.
The Reserve Bank of NZ's outlook is positive for NZ,so the doomsters will have to wait a few years.In the meantime I will continue to enjoy growing fully imputasted divies,because I remain well positioned.

[mfd]

Yes Heartland own 10% of Harmony.Yes Heartland appear to have first pick of the loans.Yes Heartland have lent approx. $30mil via Harmony.Yes Heartland are more than happy with the arrangement.

Minor quibble, but I believe both the shareholding and amount lent is larger than this

"Harmoney has Heartland Bank as a 12.9% shareholder. Heartland also lends money through Harmoney, and as of June 30 had lent $78 million through the P2P lender. A Heartland spokeswoman says this has continued to grow since, and Heartland’s lending through Harmoney represents around one-third of the Harmoney loan book."

Between Heartland, TSB, and other institutional investors, approx. 75% of Harmoney's funding is wholesale.

https://www.interest.co.nz/opinion/91093/fma-statistics-show-fledgling-nz-p2p-lending-sector-serving-banks-and-fund-managers

Whether this poses a risk to Heartland I couldn't say, but I sold out at about 1.80 as I felt the price was getting a little rich. Is it purely being bumped up by speculation regarding UDC now the planned sale has fallen through?

[percy]

Minor quibble, but I believe both the shareholding and amount lent is larger than this

"Harmoney has Heartland Bank as a 12.9% shareholder. Heartland also lends money through Harmoney, and as of June 30 had lent $78 million through the P2P lender. A Heartland spokeswoman says this has continued to grow since, and Heartland’s lending through Harmoney represents around one-third of the Harmoney loan book."

Between Heartland, TSB, and other institutional investors, approx. 75% of Harmoney's funding is wholesale.

https://www.interest.co.nz/opinion/91093/fma-statistics-show-fledgling-nz-p2p-lending-sector-serving-banks-and-fund-managers

Whether this poses a risk to Heartland I couldn't say, but I sold out at about 1.80 as I felt the price was getting a little rich. Is it purely being bumped up by speculation regarding UDC now the planned sale has fallen through?

Thank you for the link.
I could not find where I had filed the facts, and quoted from "failing" memory.
A good profitable channel for Heartland,and TSB.

[iceman]

Yes Heartland own 10% of Harmony.Yes Heartland appear to have first pick of the loans.Yes Heartland have lent approx. $30mil via Harmony.Yes Heartland are more than happy with the arrangement.
Secured lending.All lending carries risk.With secured lending the asset borrowed against may not realise the full value of the loan.
Unsecured lending.Lenders will check the borrower's credit history,and financial and personnel details very carefully.
We can argue all we like,however the likes of HBL and TRA have extremely low default rates.
Talking to Heartland I have learnt the following.
Yes you could drive out of the dealer's yard with a new Holden, with no deposit.However you would need to have one of the best credit ratings in NZ.The promotion was to get customers into the Holden dealers.Most people wanted to trade their car in,and did not want a huge finance package.A successful promotion.
Open for business.Open for etc.The take up has been excellent.More products,and even trialling some products in Australia.So far defaults are well below budget.Small business owners rely solely on their business for their livelihood,Borrowings are used in their businesses,to produce profits.
Reverse Equity Mortgages.Good security and higher interest charged.Heartland hold a very small portfolio of residential mortgages, other than RELs.
Niche lending.Heartland have stayed away from competing with the Aussie banks.Heartland's expertise in niche lending has helped Heartland to achieve the highest net interest margin.Very profitable lending adds to the overall strength of Heartland.
Cost of funds.Heartland do not use European wholesale funding.Heartland have proved investors support them via capital raisings,bonds and general deposits,both term and on call.
The Reserve Bank of NZ's outlook is positive for NZ,so the doomsters will have to wait a few years.In the meantime I will continue to enjoy growing fully imputasted divies,because I remain well positioned.

Thank you for this Percy, even though as mfd has pointed out the numbers about Harmoney may be a little higher. The main point is that HBL has consistently achieved higher interest margins than other banks and defaults have consistently been very low. As you pointed out, people tend to continue paying their car finance as they need their car and in the event of them not continuing payments, default amounts are normally quite low.

HBL also continues as recently proved to be well supported for funding from shareholders and do not hold large amounts in the risky home mortgage business, which I "astutely note" will suffer much more in any economic crisis than the niche lending HBL does.
Yes HBL is "fully priced" on historical earnings as has often been discussed on this platform over the years, but it is worth reminding that nobody on here foresaw their forays into reverse mortgages or P2P lending the way they have done. This includes becoming one of the largest players in reverse mortgages in Australia. I believe this lending will continue to grow significantly, particularly in any economic crisis where older generations (i.e. Beagle) may help the younger generations (i.e. Beagle's daughters) using such tools.

[percy]

Thank you for this Percy, even though as mfd has pointed out the numbers about Harmoney may be a little higher. The main point is that HBL has consistently achieved higher interest margins than other banks and defaults have consistently been very low. As you pointed out, people tend to continue paying their car finance as they need their car and in the event of them not continuing payments, default amounts are normally quite low.

HBL also continues as recently proved to be well supported for funding from shareholders and do not hold large amounts in the risky home mortgage business, which I "astutely note" will suffer much more in any economic crisis than the niche lending HBL does.
Yes HBL is "fully priced" on historical earnings as has often been discussed on this platform over the years, but it is worth reminding that nobody on here foresaw their forays into reverse mortgages or P2P lending the way they have done. This includes becoming one of the largest players in reverse mortgages in Australia. I believe this lending will continue to grow significantly, particularly in any economic crisis where older generations (i.e. Beagle) may help the younger generations (i.e. Beagle's daughters) using such tools.

Unfortunately Heartland can't compete with "The Bank of Dad" which continues to offer interest free,non repayable loans..lol.

[Beagle]

Thank you for this Percy, even though as mfd has pointed out the numbers about Harmoney may be a little higher. The main point is that HBL has consistently achieved higher interest margins than other banks and defaults have consistently been very low. As you pointed out, people tend to continue paying their car finance as they need their car and in the event of them not continuing payments, default amounts are normally quite low.

HBL also continues as recently proved to be well supported for funding from shareholders and do not hold large amounts in the risky home mortgage business, which I "astutely note" will suffer much more in any economic crisis than the niche lending HBL does.
Yes HBL is "fully priced" on historical earnings as has often been discussed on this platform over the years, but it is worth reminding that nobody on here foresaw their forays into reverse mortgages or P2P lending the way they have done. This includes becoming one of the largest players in reverse mortgages in Australia. I believe this lending will continue to grow significantly, particularly in any economic crisis where older generations(i.e. Beagle) may help the younger generations (i.e. Beagle's daughters) using such tools.

A few thoughts mate. If lending to Harmoney was $78m as at 30 June 2017 then I think its safe to say its well on it's way to $100m or possibly more by now, perhaps at least three times Percy's suggestion which is of course factually a lot more not a little.
Default rates have been consistently low because the economy has been consistently good since the GFC. Default rates would change substantially if another GFC eventuated most especially for unsecured lending.
I disagree about your assertion that lending to small and medium business and unsecured would have lower default rates than standard housing lending in another recession and believe the GFC provided ample evidence of that. Bottom line when people are made redundant en-masse they have no chance of their motor vehicle, personal or business lending being bailed out by their benefit or the Government whereas on the other hand people often get assistance through the accommodation supplement paid in addition to their unemployment benefit to pay their housing costs.
I'm not sure how many older folks would borrow on a reverse equity credit facility to help their kids get into debt on a mortgage but I certainly wouldn't.

As mentioned yesterday I think the PE re-rating thing has run its course and on a forward PE of 17 v a sector average of just on 13 this now looks quite stretched. Yes its a good company and there's good organic growth and that's now fully priced in, in my opinion. The undisputed fact is HBL's credit rating is well below the major trading banks so the credit ratings agencies think its more vulnerable in the event of a major economic downturn or major exogenous shock.

For me its all about maximizing returns and minimizing risks. After a ~ 50% gain last year I think the chances of HBL outperforming the index this year are extremely slim. I guess I have turned into someone who's chasing outperformance and am prepared to sell shares after a period of substantial outperformance when I assess the chances of further market outperformance in the ensuing year are very slim. The problem with owning shares that have given you a 50% return in any one year is one tends to want to look for the next big thing that will do that the following year :) Disc Sold HBL in Dec 2017 at $2.14 and used to the proceeds to invest further into HLG at $3.50.

[Joshuatree]

Consensus is the NZ stocks performing ok this year in a Goldilocks kinda way. And black swan events not withstanding the investment climate looks low risk and stable imo. Last few years have been exceptional. Realistically few will outperform this year. Hard to find value on the NZX and expected growth built in already to the s/p of many. Agree ,reverse mortgages a real grower.
I think comparing HBL to the big Aus banks is a waste of time, apples with oranges. Holding but watching all my stocks that have run up ,closely. And where to put the funds if one sells a quality stock like this? Not m/any choices esp in this sector atm.

[percy]

ANZ today informed the market ;
"UDC sale to HNA not proceeding"

[Joshuatree]

Yes heard that on CNBC, tantalising thoughts/dreams on the HBL thread ehh:D

[percy]

We are well positioned to live in interesting times.?...lol.

[Marilyn Munroe]

There is an article on the interest.co.nz website speculating on whether Heartland will make bid for UDC Finance.

The article suggests Heartland will have trouble digesting an outfit the size of UDC if ANZ do not leave some vendor finance in or there is a lack of support by UDC debenture holders.

https://www.interest.co.nz/opinion/91637/david-hargreaves-argues-after-fiasco-failed-sale-hna-anz-may-be-keen-now-quickly

Boop boop de do
Marilyn

[percy]

Funding.Would be a "game" changer for both,and intos would want on board.The sp would head north straight away [over $2.50], and a "huge" rights issue would be well supported.HBL would need to raise about 72 cents per share.ie approx. $400mil.
HBL would most probably need ANZ's support for a year or so, to give them time to get bond depositors onboard.
UDC bond depositors who left because of their worries about HNA, would most probably support HBL as a NZ bank owning UDC.

I posted the above on 22-12-2017.

[whatsup]

If Vodafone is contemplating a float on the N Z market why not UDC as well ?

[percy]

If Vodafone is contemplating a float on the N Z market why not UDC as well ?

ANZ have tended to go with trade sales with their non- core assets.
That said,a UDC a float would be well supported.

[Beagle]

https://www.interest.co.nz/opinion/91637/david-hargreaves-argues-after-fiasco-failed-sale-hna-anz-may-be-keen-now-quickly

Another capital raise for Heartland coming ?

[macduffy]

https://www.interest.co.nz/opinion/91637/david-hargreaves-argues-after-fiasco-failed-sale-hna-anz-may-be-keen-now-quickly

Another capital raise for Heartland coming ?

Well, it would need to be a big one if it's to fund a purchase of UDC. According to David Hargreaves, ANZ has $2b funding UDC - which a new owner would need to find from somewhere.

[percy]

https://www.interest.co.nz/opinion/91637/david-hargreaves-argues-after-fiasco-failed-sale-hna-anz-may-be-keen-now-quickly

Another capital raise for Heartland coming ?

Thanks for again posting the link.
MM post #10328

[percy]

Well, it would need to be a big one if it's to fund a purchase of UDC. According to David Hargreaves, ANZ has $2b funding UDC - which a new owner would need to find from somewhere.

I have already posted my thoughts,posts # 10284 and #10329

[Beagle]

Well, it would need to be a big one if it's to fund a purchase of UDC. According to David Hargreaves, ANZ has $2b funding UDC - which a new owner would need to find from somewhere.

That would appear to be the nub of the issue. They're presently paying well over the odds at 2.75% to attract at call money..one wonders how much of that support disappears overnight at the slightest hint of additional risk / gearing or the hint of a hurdle to replace the ANZ support you've highlighted ? (My money would be out of there the same day any deal was announced that at least didn't maintain the current capital ratio and ensure HBL had a really long period of time to garner support from debenture holders to replace ANZ funding). On the other hand one would imagine there would be considerable synergies between the two finance companies, opps I mean finance company and bank.

[minimoke]

Hmm. Look like I may need to save some cash for the next capital raise sooner than expected

[Beagle]

On the other hand, Chris Lee just posted his first weekly newsletter for the year pontificating that based on ~ $60m in profit ANZ could raise "the thick end of a billion dollars" listing UDC on the market. Why discount this heavily just for the sake of a quick sale to Heartland ?...after all its not like ANZ is a forced seller is it !

[percy]

That would appear to be the nub of the issue. They're presently paying well over the odds at 2.75% to attract at call money..one wonders how much of that support disappears overnight at the slightest hint of additional risk / gearing or the hint of a hurdle to replace the ANZ support you've highlighted ? (My money would be out of there the same day any deal was announced that at least didn't maintain the current capital ratio and ensure HBL had a really long period of time to garner support from debenture holders to replace ANZ funding). On the other hand one would imagine there would be considerable synergies between the two finance companies, opps I mean finance company and bank.

Jeff Greenslade was a director of UDC.
Other senior HBL management staff are ex UDC.
UDC would be a perfect fit.
Instos would rerate HBL immediately up to $2.50.
Raising the equity capital would not be an issue.
The issue would be UDC bond lenders,most of whom would have been attracted to UDC via ANZ,remaining depositors.
That would take a couple of years to settle down.
Always remember HBL have the highest net interest margin of all the listed banks.

[Beagle]

Perhaps Percy but ANZ will want maximum $ and the NZX is desperate for new listings so I think Chris Lee makes a good point.

[minimoke]

Perhaps Percy but ANZ will want maximum $ and the NZX is desperate for new listings so I think Chris Lee makes a good point.How many listed banks / finance companies do we need?

[percy]

Perhaps Percy but ANZ will want maximum $ and the NZX is desperate for new listings so I think Chris Lee makes a good point.

Agreed,but as I pointed out before, ANZ usually sell off what they now consider to be non-core assets, with trade sales.

[Oliver Mander]

Perhaps Percy but ANZ will want maximum $ and the NZX is desperate for new listings so I think Chris Lee makes a good point.

Chris Lee also seems to take a swipe at share forums like this one...he's referring to sharechat.co.nz, although that doesn't seem to have a forum attached to it...is sharetrader run by IRG?
(Anyway, I still value the insight I get on sharetrader, but obviously interesting to see his views).

"It runs one of the dreadful internet chat forums, where anonymous idiots mingle with sharemarket traders, debating matters of the market, with or without knowledge, but certainly without constraint."

[Xerof]

Lee has his very own forum - only problem is there's just one member, who debates matters of the market, with or without knowledge, and certainly without constraint. Powerhouse anyone?

[macduffy]

Jeff Greenslade was a director of UDC.
Other senior HBL management staff are ex UDC.
UDC would be a perfect fit.
Instos would rerate HBL immediately up to $2.50.
Raising the equity capital would not be an issue.
The issue would be UDC bond lenders,most of whom would have been attracted to UDC via ANZ,remaining depositors.
That would take a couple of years to settle down.
Always remember HBL have the highest net interest margin of all the listed banks.

Not just a matter of retaining the bond lenders though, if, as suggested, ANZ has also funded UDC to the tune of $2b. Unless, of course, ANZ could be persuaded/induced to continue. But that would appear to be contrary to their original intention to quit finance companies and other "fringe" activities.

[percy]

Not just a matter of retaining the bond lenders though, if, as suggested, ANZ has also funded UDC to the tune of $2b. Unless, of course, ANZ could be persuaded/induced to continue. But that would appear to be contrary to their original intention to quit finance companies and other "fringe" activities.

Exactly.This is the "catch 22 " ANZ have found themselves in.
Quitting UDC has had the reverse effect.ANZ have had to replace the fleeing bond holders.So more money in.No money out.
I can't see HBL agreeing to buying UDC, without some arrangement over the $2 b plus ANZ have had to support UDC borrowings.
How long that support would be required my take someone of Chris Lee's calibre to tell us..lol.
Then on the other hand we could just guess at two years.

[Beagle]

Current market cap of HBL is $1158m. One of the biggest issues I foresee is attracting debenture holders from a company that has enjoyed the guarantee from the ANZ Bank with a substantially higher credit rating. We have already witnessed what's happened to debenture holder support in regard to the proposed acquisition by HNA, admittedly they had a proposed credit rating lower than HBL but the decimation of support has been quite dramatic to say the least. Is it prudent banking practice to simply assume HBL can attract new debenture funding of $2b just because its now a bigger N.Z. owned company and if so how can one be reasonably assured a two year transitional timeframe is enough ?

[Baa_Baa]

Chris Lee also seems to take a swipe at share forums like this one...he's referring to sharechat.co.nz, although that doesn't seem to have a forum attached to it...is sharetrader run by IRG?
(Anyway, I still value the insight I get on sharetrader, but obviously interesting to see his views).

"It runs one of the dreadful internet chat forums, where anonymous idiots mingle with sharemarket traders, debating matters of the market, with or without knowledge, but certainly without constraint."

Hopefully he's not referring to Sharetrader, where there is value in informed and uninformed debate and discussion. Anonymity, however thin, creates a collaborative environment for sharing views and ideas, asking questions and getting a variety of answers, and synthesising those or not into ones own decisions.

The value of Sharetrader is evident in its longevity and frequent contributors going back many years and for some time running in parallel to the Sharechat discussion forum which was made defunct. It's not perfect, but then neither is the market, or the brokers, or the advisors, or the media. It's a perspective and a useful one at that. IMHO.

I wonder how many customers Chris (or whomever of his team wrote the article) just offended by calling them idiots for the simple sake of them frequenting an internet chat forum. Unintended consequences lurk beneath ill considered opinion. They should stick to their knitting.

BAA

[percy]

Current market cap of HBL is $1158m. One of the biggest issues I foresee is attracting debenture holders from a company that has enjoyed the guarantee from the ANZ Bank with a substantially higher credit rating. We have already witnessed what's happened to debenture holder support in regard to the proposed acquisition by HNA, admittedly they had a proposed credit rating lower than HBL but the decimation of support has been quite dramatic to say the least. Is it prudent banking practice to simply assume HBL can attract new debenture funding of $2b just because its now a bigger N.Z. owned company and if so how can one be reasonably assured a two year transitional timeframe is enough ?

We may have to wait for Chris Lee's transitional timeframe.!..lol.

ps.With his firm's solid support it may only take 6 weeks.!!!

[couta1]

Hopefully he's not referring to Sharetrader, where there is value in informed and uninformed debate and discussion. Anonymity, however thin, creates a collaborative environment for sharing views and ideas, asking questions and getting a variety of answers, and synthesising those or not into ones own decisions.

The value of Sharetrader is evident in its longevity and frequent contributors going back many years and for some time running in parallel to the Sharechat discussion forum which was made defunct. It's not perfect, but then neither is the market, or the brokers, or the advisors, or the media. It's a perspective and a useful one at that. IMHO.

I wonder how many customers Chris (or whomever of his team wrote the article) just offended by calling them idiots for the simple sake of them frequenting an internet chat forum. Unintended consequences lurk beneath ill considered opinion. They should stick to their knitting.

BAA Yes, and let's not forget the mega bucks that a lot of investors lost in 2008 following Chris Lee's finance company ranking system and recommendations.

[winner69]

Yes, and let's not forget the mega bucks that a lot of investors lost in 2008 following Chris Lee's finance company ranking system and recommendations.

Must have had a happy new year

Got stuck into a few besides us sharetraders eh ....Wynard Veritas and Mowbray as disasters and then Kerry McDonald, Rick Christie and Brent King get honourable mentions. Wow

Hope he cheers up as the year goes on

[minimoke]

Yes, and let's not forget the mega bucks that a lot of investors lost in 2008 following Chris Lee's finance company ranking system and recommendations.I havent forgotten - which is why I still wont rate him above snake oil merchant

[Oliver Mander]

Hopefully he's not referring to Sharetrader, where there is value in informed and uninformed debate and discussion. Anonymity, however thin, creates a collaborative environment for sharing views and ideas, asking questions and getting a variety of answers, and synthesising those or not into ones own decisions.

The value of Sharetrader is evident in its longevity and frequent contributors going back many years and for some time running in parallel to the Sharechat discussion forum which was made defunct. It's not perfect, but then neither is the market, or the brokers, or the advisors, or the media. It's a perspective and a useful one at that. IMHO.

I wonder how many customers Chris (or whomever of his team wrote the article) just offended by calling them idiots for the simple sake of them frequenting an internet chat forum. Unintended consequences lurk beneath ill considered opinion. They should stick to their knitting.

BAA


Totally agree Baa Baa.
I'm amazed he'd use perjorative language about individuals who could be his customers and use sharetrader as a vehicle for checking the "pulse" of their investments.
Besides that, I'm not an idiot - I am a very special cat, since I have opposable thumbs.

The collaboration you talk about in your post is important here - I respect what Chris Lee has to say, but there's a myriad more opinions or discussions on this forum that also adds value. What I choose to accept or discard as advice is up to me.

Perhaps that's the rub for Mr Lee - forums like this could be regarded as competition for brokers, the choice between 'DYOR' or pay someone else to do it for you.

Cats do tend to be solitary creatures - but they also respect the other animals (eg, sheep, tigers, beagles) around them. Long may free animal noises reign.

[Onion]

Cats do tend to be solitary creatures - but they also respect the other animals (eg, sheep, tigers, beagles) around them. Long may free animal noises reign.

The vegetables around here are feeling left out :(

[minimoke]

The vegetables around here are feeling left out :(
You need to get used to it. Not a lot of attention to high performance / spec quality motor vehicles either!

Probably because it is well know that on the highway of life if an animal is on the road there is only one winner. (veges are safe in the berm)

[Oliver Mander]

The vegetables around here are feeling left out :(

A good diversity moment :-)!
Good call Onion and minimoke

[beetills]

I havent forgotten - which is why I still wont rate him above snake oil merchant
Do you think he should put his own name in his''''never again list'''' ?

[percy]

Do you think he should put his own name in his''''never again list'''' ?

Classic.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!......... ........lol.

[winner69]

The Australian

ANZ Bank’s UDC Finance operation remains in the crosshairs of suitors, with Heartland Bank and two parties out of Asia in pursuit of the operation, according to sources, after an earlier deal to sell the business to China’s HNA collapsed.

Jeff probably resigned to paying more than he really wants to after being ‘outbid’ last time

In spite of Mr Lee speculates they could get for $600m and change

[percy]

The Australian

ANZ Bank’s UDC Finance operation remains in the crosshairs of suitors, with Heartland Bank and two parties out of Asia in pursuit of the operation, according to sources, after an earlier deal to sell the business to China’s HNA collapsed.

Jeff probably resigned to paying more than he really wants to after being ‘outbid’ last time

Geoff and the rest of the board may not feel the same way,as they have a great deal of their own wealth on the line.?
With Heartland achieving their own very strong organic growth,the board my see any acquisition having to be eps accretive.

[Beagle]

I think they're just better off continuing their pretty strong organic growth. Looks like a competitive process with two possible other suitors plus the option of floating it.

[beetills]

The Australian

ANZ Bank’s UDC Finance operation remains in the crosshairs of suitors, with Heartland Bank and two parties out of Asia in pursuit of the operation, according to sources, after an earlier deal to sell the business to China’s HNA collapsed.

Jeff probably resigned to paying more than he really wants to after being ‘outbid’ last time

In spite of Mr Lee speculates they could get for $600m and change
IMO should Asian interests be the purchasers,investors will continue to abandon the company and i'm also not sure if they will stick with the ship should HBL buy it.Ideal purchaser should have enough to fund its self,maybe an overseas bank not of Asian origin.

[macduffy]

I think they're just better off continuing their pretty strong organic growth. Looks like a competitive process with two possible other suitors plus the option of floating it.

I wonder about the IPO option. Given the amount of funding required - ANZ has $2b advanced, supposedly - and in the absence of a strong "parent", it's difficult to see an IPO'd UDC with a sufficiently high credit rating to attract the funding required. Anyone care to postulate a scenario?

[percy]

I wonder about the IPO option. Given the amount of funding required - ANZ has $2b advanced, supposedly - and in the absence of a strong "parent", it's difficult to see an IPO'd UDC with a sufficiently high credit rating to attract the funding required. Anyone care to postulate a scenario?


A win win situation for Heartland.
Heartland buy UDC for a reasonable price,and the benefits go to NZ shareholders and customers.
Asian interests buy UDC for a high price,UDC customers and depositors go to Heartland,for no cost to Heartland..

[janner]

I think they're just better off continuing their pretty strong organic growth. Looks like a competitive process with two possible other suitors plus the option of floating it.

Agree. $1.49 this time last year $2.08 today. 39% plus divies..

Don't rock the boat..

[Baa_Baa]

After the double top fail on 9/1 and breakdown of the steep rising trend line Oct-Jan, this with indicators pointing down and room to follow through, suggests an imminent test of the 50EMA currently 2.02 and possibly minor supports at 1.98-2.00 and solid technical support at 1.86.

[iceman]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11979332

[minimoke]

Disappointed that Jeff not recognised in the New Years Honours list. He deserved one for services to banking. After all he has taken something on its last legs to be one of the most successful bank in NZ. Another time maybe

Good to see ‘diversity’ to the fore with the top Honours this time round. More new Dames than new Knights. That’s good ...maybe Heartland are on the track with their commitment to diversity.
HBL doing its bit for Diversity. Laura Byrne appointed Head of People and Culture. (would really have ticked all boxes if she was Asian and had one leg) but at least a woman getting a promo is a good step along the way. (Is going from COO to HPC a promotion?)

[winner69]

HBL doing its bit for Diversity. Laura Byrne appointed Head of People and Culture. (would really have ticked all boxes if she was Asian and had one leg) but at least a woman getting a promo is a good step along the way. (Is going from COO to HPC a promotion?)

Laura was already part of the Senior Management Team. I suppose the encumbent HR person Sarah is moving on or something

Having a women in charge of HR doesn't really cpunt as 'diversity'. A large proportion of these leaders are women ....maybe companies feel they need the warm fuzzy empathetic maternal touch to be in charge of people.

Unless the new COO (assuming there will be one) is a woman the balance of diversity of Heartland Senior Manager won't change.

[peat]

(Is going from COO to HPC a promotion?)
Exactly
I tend to think of it as a token position
eg Jackie Johnson (ex IAG NZ CEO) went to that role in IAG (Aus)

[minimoke]

Laura was already part of the Senior Management Team. I suppose the encumbent HR person Sarah is moving on or something.
hmm... that doesn't seem very diverse. Isn't it a Mans turn?

[winner69]

hmm... that doesn't seem very diverse. Isn't it a Mans turn?

No future for a male being a HR professional

Peat - a real good HR person actually involved in the strategic leadership of the busimess can add heaps of value as long as HR is seen as more than just hiring, training and firing

[percy]

HBL doing its bit for Diversity. Laura Byrne appointed Head of People and Culture. (would really have ticked all boxes if she was Asian and had one leg) but at least a woman getting a promo is a good step along the way. (Is going from COO to HPC a promotion?)

Exciting news.
The market reacted quickly, pushing HBL shares up 1 cent.

[minimoke]

Exciting news.
The market reacted quickly, pushing HBL shares up 1 cent. or 0.5%. Pretty well sums up the excitement.

[percy]

or 0.5%. Pretty well sums up the excitement.

Agreed............................................ ..

[winner69]

or 0.5%. Pretty well sums up the excitement.

Didn’t have one of those red flag ‘Price Sensitive’ things .....need one of those when Jeff says profit going to be $70m odd

[percy]

Didn’t have one of those red flag ‘Price Sensitive’ things .....need one of those when Jeff says profit going to be $70m odd

Agreed...................

[dabsman]

I met a one-legged Asian girl once in Cambodia - shall I get her CV?

[percy]

QUOTE=dabsman;700895]I met a one-legged Asian girl once in Cambodia - shall I get her CV?[/QUOTE]

Said her CV to Winner69.
Sure his mate at Co-Op Bank will be excited to employ her.

[Oliver Mander]

A quote from Chris Lee's "Taking Stock" (published Jan 25th).
Link to wider article: https://www.chrislee.co.nz/taking-stock

He obviously does not think much of HBL as a "quality" issuer...

WHEN Fisher & Paykel Finance was sold to an Australian fund manager NZ investors in finance company debentures were left with a realistic menu of one.
The remaining option for those who use tap issues from finance companies was one – UDC Finance.
Then the owner of UDC, the ANZ Bank, announced it had sold UDC to a Chinese conglomerate (HNA), with an airline base.
Then there were none.
However the ANZ/HNA deal was never consummated and UDC now reverts to being at least temporarily available, hopefully until someone, like Heartland Bank, buys the book at a banker’s price, rather than an entrepreneur’s price.
After that there again would be none, if one categorises as ‘’useable’’ only those companies with long histories, strong shareholders and credit ratings (preferably).

[minimoke]

A quote from Chris Lee's "Taking Stock" (published Jan 25th).
Link to wider article: https://www.chrislee.co.nz/taking-stock


Chris who?

Got to the part about Alan Hawkins before nodding off. Great bloke - made me loads out of Equiticorp in the day - got me securely on the housing ladder at the time. With the obvious rider "You've got to know when to hold 'em. Know when to fold 'em"

[percy]

A quote from Chris Lee's "Taking Stock" (published Jan 25th).
Link to wider article: https://www.chrislee.co.nz/taking-stock

He obviously does not think much of HBL as a "quality" issuer...

WHEN Fisher & Paykel Finance was sold to an Australian fund manager NZ investors in finance company debentures were left with a realistic menu of one.
The remaining option for those who use tap issues from finance companies was one – UDC Finance.
Then the owner of UDC, the ANZ Bank, announced it had sold UDC to a Chinese conglomerate (HNA), with an airline base.
Then there were none.
However the ANZ/HNA deal was never consummated and UDC now reverts to being at least temporarily available, hopefully until someone, like Heartland Bank, buys the book at a banker’s price, rather than an entrepreneur’s price.
After that there again would be none, if one categorises as ‘’useable’’ only those companies with long histories, strong shareholders and credit ratings (preferably).

I read it differently.
After UDC is sold there will be no quality "FINANCE" company issuer.
I would also point out that Chris Lee's company have been strong supporters of Heartland Bank.Michael Worrington is a shareholder,and I am sure Chris Lee and Kevin Gloag are also shareholders.Kevin Gloag has followed Heartland very closely.
I seem to remember Chris Lee thought it was a great idea to merge Heartland,UDC and TSB.?

[Oliver Mander]

Ahhh..."Finance" company. That makes more sense, thanks percy. (Note to self: Must. Get. Better. Brain.)
Yes, I had thought that they were supporters of the consolidation that formed HBL in the first place...hence the comment piquing my interest.

[percy]

Would a kind poster please post the link to www.Chrislee.co.nz taking stock.
His view on Heartland remains positive,and has interesting thoughts on HBL/UDC.

[winner69]

Ahhh..."Finance" company. That makes more sense, thanks percy. (Note to self: Must. Get. Better. Brain.)
Yes, I had thought that they were supporters of the consolidation that formed HBL in the first place...hence the comment piquing my interest.

https://www.chrislee.co.nz/taking-stock

[suse]

half year announcement due today... hopefully we are still "well positioned" as percy would say.

[Oliver Mander]

7% NPAT increase...not sure what that means yet, but probably supports the 7% increase in share price...but below the full year expectation of 12% NPAT growth. Would explain why the share pirece has softened below $2 over the last few weeks (starting even before the market decline). My 'quick view' seems to think the share price is fair value right now...maybe a slight softening in the achievability of end-of-year targets...

Disc: hold

[Oliver Mander]

...with negative op cashflow and capital raise continuing to fund a big increase in receivables.

[Filthy]

“Earnings per share for the six months ended 31 December 2017 was 6 cents per share, consistent with the 2017 financial year” – hmm, so no EPS growth? a bit disappointing.

“Heartland expects its NPAT for the year ending 30 June 2018 to be at the upper end of its previously advised range of $65.0m to $68.0m” - upper end of guidance - ok, good

Expansion in Ozzy & reverse mortgages sounding like a sweet spot, but overall I think this will be a little below (high) market expectations.

Be interesting to see the reaction today. Still reasonably happy to hold long term.



filthy

[Oliver Mander]

“Earnings per share for the six months ended 31 December 2017 was 6 cents per share, consistent with the 2017 financial year” – hmm, so no EPS growth? a bit disappointing.

“Heartland expects its NPAT for the year ending 30 June 2018 to be at the upper end of its previously advised range of $65.0m to $68.0m” - upper end of guidance - ok, good

They must be planning on a stonking 2H...having to make up an extra cent in EPS.

[percy]

half year announcement due today... hopefully we are still "well positioned" as percy would say.

Yes we remain "well positioned".
Strong equity ratio.
Growth coming from digital platforms.Good organic growth in all sectors.
Interesting noting the 45% increase "open for business" platform is achieving and the fact they will offer it to the Australians.
Also of interest is HBL's growth strategy in Australia, which is via brokers/Harmoney/Spotcap and their own platforms.
I also note HBL's statement of increasing lower risk/lower margin lending.Yet HBL's net interest margin remains high.
Some costs with new banking system are one offs.These as well as timing seems to have affected eps.
I see no reason for eps not to increase going forward.
3.5cps fully imputed dividend will be paid on 3rd April.Record date 16th March.

[Joshuatree]

Has their banking website improved at all, feedback was it is clunky and slow?

[winner69]

They must be planning on a stonking 2H...having to make up an extra cent in EPS.

Q1 npat up 12% and Q2 npat only up 3% giving 7% for 1st half

2nd half needs to be 19% up on pcp to achieve $68m

As they do what they say they will do yes a stonking 2H coming up.

No increase in eps in H1 .... and not much of an increase for the FY (Percy doesn’t like consistent eps ...he likes eps to be growing)

One thing for sure I don’t think that Jeff will be coming out touting npat of $70m for a while ...I misread him again ...although I take heart when he says impairments in the motor book also increased due to an intentional adjustment to risk settings in previous years which has resulted in a gradual but expected increase in impairment levels. - code word for proactive provisioning ...read into that what you want and the torrential rain in Wellington at the moment might be a hint.

Is hope a strategy?

[percy]

Has their banking website improved at all, feedback was it is clunky and slow?

Increase in business in all sectors would say it has.

[JeremyALD]

It's a good result, but I think the SP more than accounts for a strong year. If you look at this stock it has gone up well above its eps growth in the last couple of years.

[McGinty]

Has their banking website improved at all, feedback was it is clunky and slow?

If your asking about their Online banking platform, I would say no. The digital strategy hasn't made it there to improve the user experience as yet. Maybe later this year?

[Oliver Mander]

Q1 npat up 12% and Q2 npat only up 3% giving 7% for 1st half

2nd half needs to be 19% up on pcp to achieve $68m

As they do what they say they will do yes a stonking 2H coming up.

No increase in eps in H1 .... and not much of an increase for the FY (Percy doesn’t like consistent eps ...he likes eps to be growing)

One thing for sure I don’t think that Jeff will be coming out touting npat of $70m for a while ...I misread him again ...although I take heart when he says impairments in the motor book also increased due to an intentional adjustment to risk settings in previous years which has resulted in a gradual but expected increase in impairment levels. - code word for proactive provisioning ...read into that what you want and the torrential rain in Wellington at the moment might be a hint.

Is hope a strategy?

Totally agree winner69...you've read the quarter results the same way I did. Looking forward to a big 2nd half; needs to be.
i don't mind the "proactive impairments" - I know there was a discussion on this thread before highlighting some concern over how they treated impairment, so its good to see them being proactive. Maybe that's creating some of the wiggle room to deliver a big 2H.

But think jeremy ALD also has it right - growth in share price is fair based on the above result, and so is the tapering off in the last few weeks - the "froth" isn't there to support $2.10, but good solid numbers that support $1.95.

[winner69]

Everything is showing huge growth except EPS and dividends

Taken my rose tinted glasses off and said to myself - BUGGER, should have listened to Beagle when he told me to sell at $2.14. He’s right as usual ...no wonder he’s at the top of the stock picking comp.

Still lumbered with heaps of HBL .....might sell a lot but it hurts when they are down 10% from when I should have sold ....but might do the calcs to see how many I need to sell to make the remaining ones free. That’ll cheer me up

[Beagle]

It's a good result, but I think the SP more than accounts for a strong year. If you look at this stock it has gone up well above its eps growth in the last couple of years.

That's the issue I have with it. EPS growth on an annual basis, (this half is worse), looks to be slowing to be in line with the other 6 Australasian banks I follow but HBL was on a POE of ~ 17 when I sold at $2.14 and the average of its peers is just 13. Three years ago HBL traded at about a 2 PE discount to its peers when EPS growth was significantly higher so SP performance in the last three years has vastly outstripped earnings growth and has substantially been predicated upon PE expansion which frankly I think is extremely unlikely to continue. Far more likely that the PE will fall back into line with its peers, especially now that annual EPS growth has slowed to be more or less in line with same. Those looking for capital gain from here will need to be very patient. I will spare shareholders the pain of making a call on where I see fair value at present, suffice to say I think there are far better opportunities in the market.

[winner69]

If your asking about their Online banking platform, I would say no. The digital strategy hasn't made it there to improve the user experience as yet. Maybe later this year?

Given up on that online banking with them .....ring them now if I want things ....but that’s not very efficient for them.

[percy]

Everything is showing huge growth except EPS and dividends

Taken my rose tinted glasses off and said to myself - BUGGER, should have listened to Beagle when he told me to sell at $2.14. He’s right as usual ...no wonder he’s at the top of the stock picking comp.

Still lumbered with heaps of HBL .....might sell a lot but it hurts when they are down 10% from when I should have sold ....but might do the calcs to see how many I need to sell to make the remaining ones free. That’ll cheer me up

Each to their own.
I remain "well positioned",as all the "everything is showing huge growth" will translate to both eps and dividend growth.
Same as night follows day..

[winner69]

Each to their own.
I remain "well positioned".


Well positioned ...for what?

[iceman]

It's a good result, but I think the SP more than accounts for a strong year. If you look at this stock it has gone up well above its eps growth in the last couple of years.

Not sure I agree it is a good result. It's reasonably solid and little to worry about. As Percy points out, we have growth in nearly all the business, including big growth in expenses !! What I like most is the good growth of reverse mortgages (+22%) and personal lending through Harmoney & Spotcap in Australia, resulting in Australian receivables growing 27% to $615M. Also nice to see them maintain well above industry average NIM at 4.44%. Solid and well positioned.

[percy]

Well positioned ...for what?

Strong lending growth in all sectors, will lead to increasing eps,which will enable HBL to pay increasing dividends,which will lead in turn to share price growth.
That is the true meaning of "well positioned."

[Beagle]

http://www.sharechat.co.nz/article/d1a156fa/heartland-first-half-profit-climbs-7-as-australian-reverse-mortgage-outlook-improves.html?utm_medium=email&utm_campaign=Heartland%20first-half%20profit%20climbs%207%20as%20Australian%20rev erse%20mortgage%20outlook%20improves&utm_content=Heartland%20first-half%20profit%20climbs%207%20as%20Australian%20rev erse%20mortgage%20outlook%20improves+CID_b0f297427 47fdd7398b853a922dac971&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticled1a156faheartl and-first-half-profit-climbs-7-as-australian-reverse-mortgage-outlook-improveshtml

Strongest growth seems to be in impairments, up a whopping 51% ! I have warned before about the risk of finance company type lending on no deposit deals with motor vehicles. Coming back to bite them with more biting to come ? Lending growth is great but if its riskier then the effect on EPS growth is clear to see.
What's the bet a lot of unsecured Harmoney loans have turned out to be anything but harmonious ?
Learned it doesn't pay to be too negative, nobody thanks you so I'll leave it at that.

[McGinty]

Been running my own figures and I can't see where the "strong" growth is.

Sure 12% growth sounds nice on the prior three month period (Q1 2017) but as any of us more experienced investors do, we dig down a little further to identify the only earnings figure that matters to us shareholders.....Earnings per share (EPS). Now this rights issue will be the fourth dilutionary event this calendar year (with the SPP and two DRP's) all of which have given the company addition funding to grow on behalf of the shareholders.

I'll share my figures to illustrate:

1st Qrt 2017, NPAT $14.3m on 485.47m shares, = EPS of 2.95c

1st Qrt 2018, NPAT $16m on 522.65m shares, = EPS of 3.06c

Actual prior calendar period EPS growth rate of 3.7%

As you can see this is a way away from a "strong" growth rate.

Plus this being the second capital raising this year, shareholders should ask themselves if they are now actually funding the company's growth out of their own pockets?

At risk of having a different opinion again as some other respected posters, here's how I see things (updated).

2nd Qrt 2017, NPAT $14.8m on 499.17m shares, = EPS of 2.96c

2nd Qrt 2018, NPAT $15.1m on 522.3m* shares, =EPS of 2.89c (* removes the dulitionary effect of the 34.8m shares issued from the Rights issue in Dec 2017)

So EPS growth this quarter is -2.36% over pcp.

So I stand by my "can't see where the strong growth is" call

[percy]

T
http://www.sharechat.co.nz/article/d1a156fa/heartland-first-half-profit-climbs-7-as-australian-reverse-mortgage-outlook-improves.html?utm_medium=email&utm_campaign=Heartland%20first-half%20profit%20climbs%207%20as%20Australian%20rev erse%20mortgage%20outlook%20improves&utm_content=Heartland%20first-half%20profit%20climbs%207%20as%20Australian%20rev erse%20mortgage%20outlook%20improves+CID_b0f297427 47fdd7398b853a922dac971&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticled1a156faheartl and-first-half-profit-climbs-7-as-australian-reverse-mortgage-outlook-improveshtml

Strongest growth seems to be in impairments, up a whopping 51% ! I have warned before about the risk of finance company type lending on no deposit deals with motor vehicles. Coming back to bite them with more biting to come ? Lending growth is great but if its riskier then the effect on EPS growth is clear to see.
What's the bet a lot of unsecured Harmoney loans have turned out to be anything but harmonious ?
Learned it doesn't pay to be too negative, nobody thanks you so I'll leave it at that.

Really?
Up to a HUGE 1.2% of total receiveables from 1.1%.....???????????????

[couta1]

Looks like business as usual, a classic long term hold kinda stock and one I sold out of far too early.

[iceman]

Winner as you obviously haven't got to slide 17 yet and I know it will excite you, here are the contents:
Diversity & inclusion
• Committed to becoming a more
diverse and inclusive place of work.
• Member of Champions for Change.
• Focused on attracting and retaining
female leaders and improving gender
balance across the business.
• Increase Māori representation.
• Aiming to be an employer of choice
for emerging Māori talent.

[iceman]

At risk of having a different opinion again as some other respected posters, here's how I see things (updated).

2nd Qrt 2017, NPAT $14.8m on 499.17m shares, = EPS of 2.96c

2nd Qrt 2018, NPAT $15.1m on 522.3m* shares, =EPS of 2.89c (* removes the dulitionary effect of the 34.8m shares issued from the Rights issue in Dec 2017)

So EPS growth this quarter is -2.36% over pcp.

So I stand by my "can't see where the strong growth is" call

Reverse mortgages NZ + $24m
Reverse mortgages Oz + $ 58m
Motor finance + $ 62m
Personal loans + $25m
Business loans + $46m

[winner69]

Winner as you obviously haven't got to slide 17 yet and I know it will excite you, here are the contents:
Diversity & inclusion
• Committed to becoming a more
diverse and inclusive place of work.
• Member of Champions for Change.
• Focused on attracting and retaining
female leaders and improving gender
balance across the business.
• Increase Māori representation.
• Aiming to be an employer of choice
for emerging Māori talent.

One of the more illuminating slides of the whole presentation.

[couta1]

One of the more illuminating slides of the whole presentation. Yes and not in a good way, we don't need any more of this PC crap from any listed company.

[minimoke]

One of the more illuminating slides of the whole presentation.
I'm surprised you don't think it should be Slide 1 or 2

Champions For Change are a group of winners. Got Jenny Shipley as Co Chair (well that went without saying) and shes happy to talk about Genesis Energy. How About she shares her contribution to Mainzeal.

And Mike Bush. Hes the Head Cop who reckons Bruce Hutton (the cop that planted the shell case in the Arthur Alan Thomas case - and wasnt bright enough to know the shell was manufactured after the murders) was a man with integrity beyond reproach

[winner69]

The chart on page 6 is a waste of space ...from a presentation point of view at least

[winner69]

Winner as you obviously haven't got to slide 17 yet and I know it will excite you, here are the contents:
Diversity & inclusion
• Committed to becoming a more
diverse and inclusive place of work.
• Member of Champions for Change.
• Focused on attracting and retaining
female leaders and improving gender
balance across the business.
• Increase Māori representation.
• Aiming to be an employer of choice
for emerging Māori talent.

Heartland becoming ‘well positioned’ for when Ngāi Tahu (or another Māori investment co) takes them over and renames them Māori Bank

[percy]

The chart on page 6 is a waste of space ...from a presentation point of view at least

Perhaps they put it in for Beagle.?
Think he missed it.
So yes was a waste of space............................lol.

[Beagle]

Winner as you obviously haven't got to slide 17 yet and I know it will excite you, here are the contents:
Diversity & inclusion
• Committed to becoming a more
diverse and inclusive place of work.
• Member of Champions for Change.
• Focused on attracting and retaining
female leaders and improving gender
balance across the business.
• Increase Māori representation.
• Aiming to be an employer of choice
for emerging Māori talent.

Many thanks indeed for your post. I am even more pleased now not to be a shareholder. People should be hired and promoted based on their talent and that's the ONLY relevant criteria in my opinion.

Percy mate, time is money. All I need to know is their EPS growth rate is slowing and is now in line with their peer group which are trading on much lower PE multiples the rest of this diversification, impairment and support of specific gender groups and race's is just a load of corporate public relations "creative speak", which goes by another name starting with B but probably best I don't use it ;) Next they'll have a target workforce percentage from the "rainbow community" bet you're looking forward to that.

[minimoke]

No hint of UDC that I can see in there.

[Exodia]

Online platform needs a lot of work, limited functionality and poor interface for accessing accounts. I opened a new account a few weeks ago and had to wait to be assigned a password for my new login as their printers were down.. Yes they print the password instead of generating one online.

[percy]

Many thanks indeed for your post. I am even more pleased now not to be a shareholder. People should be hired and promoted based on their talent and that's the ONLY relevant criteria in my opinion.

Percy mate, time is money. All I need to know is their EPS growth rate is slowing and is now in line with their peer group which are trading on much lower PE multiples the rest of this diversification, impairment and support of specific gender groups and race's is just a load of corporate public relations "creative speak", which goes by another name starting with B but probably best I don't use it ;) Next they'll have a target workforce percentage from the "rainbow community" bet you're looking forward to that.
As your wealthiest client will tell you, the figures do not tell the whole picture.
Failure to look beyond eps growth for one period is dangerous.HBL's growth remains intact,and is well ahead of its peer group.Well ahead,because HBL do not carry their heavy baggage..
It was a good result,sound ground work is now producing the results,with plenty of growth opportunities to come,from both NZ and Australia.
.

[percy]

No hint of UDC that I can see in there.

Maybe it is on.? maybe it is not?
If it is, we will know soon enough.!

[winner69]

Page 13 said: ROE reduced due to increase in capital

Means ‘new’ capital not returning as much as the ‘old’ capital was

Need to make it work harder

(And has been calculated on a weighted average)

[percy]

Page 13 said: ROE reduced due to increase in capital

Means ‘new’ capital not returning as much as the ‘old’ capital was

Need to make it work harder

(And has been calculated on a weighted average)
Hard to make new capital produce six months earnings in one month.!

[winner69]

Growth with diminishing returns is an interesting concept, esp in finance world

[McGinty]

Reverse mortgages NZ + $24m
Reverse mortgages Oz + $ 58m
Motor finance + $ 62m
Personal loans + $25m
Business loans + $46m

So business segments are growing without any of the growth hitting the bottom line (EPS).

From my point of view there are two ways you can look at an investment in company (this isn't just about HBL now).

1. Invest in the company because you like the business and it's story

2. Invest in a company because you are looking to grow your investment through EPS and Dividend growth moving forward

Number 2 is how I look at all my investments. If a company isn't going to benefit me in either EPS and Dividends growth and its current price is quoted at a level that the market expects EPS growth. It signals a warning to me.

If I was looking to buy, I won't. As there would most likely be more downside (or sideways movement) in the share price than up
If I was already holding, I would reduce or exit. For the same reason.

"Regardless of one's opinion, the market always has the last word" Mark Minervini

As mentioned in previous posts, I have nothing against HBL, enjoyed being part of their journey and the direction they are going. I'm just looking ahead at the EPS growth and know there are better Investment options out there for my money.

P.S TRA is not one of them.

[winner69]

Hard to make new capital produce six months earnings in one month.!


.....but they assumed / calculated there was really only one months worth of new capital (weighted) ....it only had to produce for 1 month and not the six

But the $40m raised pre June 17 was working for the full six months

[Beagle]

As your wealthiest client will tell you, the figures do not tell the whole picture.
Failure to look beyond eps growth for one period is dangerous.HBL's growth remains intact,and is well ahead of its peer group.Well ahead,because HBL do not carry their heavy baggage..
It was a good result,sound ground work is now producing the results,with plenty of growth opportunities to come,from both NZ and Australia.
.

He doesn't like HBL at the current price either.
BEN growing profit at ~ 10%, growing EPS well and on a PE of just 11.7 https://www.asx.com.au/asxpdf/20180212/pdf/43rhjgpqyb80dx.pdf
HBL Shareholders have had a VERY good run with the substantial PE expansion in recent years.

[beetills]

No hint of UDC that I can see in there.
Still interested according to Interest.co.nz.
Capital raising would be required.
No sale process at the moment.

[percy]

He doesn't like HBL at the current price either.
BEN growing profit at ~ 10%, growing EPS well and on a PE of just 11.7 https://www.asx.com.au/asxpdf/20180212/pdf/43rhjgpqyb80dx.pdf
HBL Shareholders have had a VERY good run with the substantial PE expansion in recent years.

BEN .Take care low mim and large residential loans.
REL lending is safer and has better margins..

[winner69]

MAYBE RERATING BACK TO MORE REALISTIC MULTIPLES UNDER WAY

This cyclone makes me bored and Heartland announcement wasn't that good so as the rain tumbles down (wind to get up to cyclonic proportions later today they say) I updated a few things

Suppose this updated chart is a waste of time and utter nonsense but anyway it suggests that the Heartland Price Book ratio could be reverting to more normal levels associated with banks in Australia.

At a P/B of 1.4 the share price would be about $1.60

Still haven't made my mind up whether to sell yet but finding it hard to find a compelling reason not to. Higher the multiple the lower the future rerurns they say

All prety stupid eh .... but I like it anyway

[winner69]

Quiet an interesting article ...but you need to have an open mind with no prejudices to enjoy

https://aeon.co/ideas/why-hiring-the-best-people-produces-the-least-creative-results

Why hiring the ‘best’ people produces the least creative results

I'm sure Heartland had the 'best' people to build their online platform and in the minds of those people they probably created the 'best' platform ever ....but for ordinary people (customers) like me its not very good and doesn't serve its purpose because I need to use a phone to get something done.

[SCOTTY]

I think that this sharechat articale is far more interesting than the negative comments on this site today: http://www.sharechat.co.nz/article/d1a156fa/heartland-first-half-profit-climbs-7-as-Australian-reverse-mortgage-outlook-improves.html

[winner69]

I think that this sharechat articale is far more interesting than the negative comments on this site today: http://www.sharechat.co.nz/article/d1a156fa/heartland-first-half-profit-climbs-7-as-Australian-reverse-mortgage-outlook-improves.html

Yep ...like the $68m profit bit

Beagle wasn't impressed with this article when he posted the link earlier

[Brain]

Market Cap Westpac 110 billion $
Market Cap HBL. 1.0 billion $

I think that The big banks have sod all chance of growing as fast as HBL

My view is that HBL are really just starting out. Still wearing short pants. They are still young and nimble.

[minimoke]

Market Cap Westpac 110 billion $
Market Cap HBL. 1.0 billion $

I think that The big banks have sod all chance of growing as fast as HBL

My view is that HBL are really just starting out. Still wearing short pants. They are still young and nimble.
I had a look at eh Reverse Mortgage calculator the other day. It looks like they will give you 10 - 15% of property value at 7.8% Which seemed ultra conservative and expensi to me. I'd go 80% at 5.5% - but then I'm not a banker. Must be loads of opportunity for growth just there.

[percy]

Market Cap Westpac 110 billion $
Market Cap HBL. 1.0 billion $

I think that The big banks have sod all chance of growing as fast as HBL

My view is that HBL are really just starting out. Still wearing short pants. They are still young and nimble.

Think I may have to drop "well positioned" for "young and nimble"....lol.

[fish]

I had a look at eh Reverse Mortgage calculator the other day. It looks like they will give you 10 - 15% of property value at 7.8% Which seemed ultra conservative and expensi to me. I'd go 80% at 5.5% - but then I'm not a banker. Must be loads of opportunity for growth just there.

Fully agree.
I dont understand all the negativity.
Bought heaps today at what I regard is a discounted price-take off the divi and it is very cheap imho

[Beagle]

https://www.nbr.co.nz/article/heartland-banks-lending-growth-spurs-7-profit-growth-hampered-rising-bad-debts-jr-212814

[SCOTTY]

Market Cap Westpac 110 billion $
Market Cap HBL. 1.0 billion $

I think that The big banks have sod all chance of growing as fast as HBL

My view is that HBL are really just starting out. Still wearing short pants. They are still young and nimble.

I like your thinking Brain. I think you deserve a name change to “The Brain” :)

[Baa_Baa]

I dont understand all the negativity.
Bought heaps today at what I regard is a discounted price-take off the divi and it is very cheap imho

Buying a couple of clicks above the 200MA support you'd think should be fairly safe, only 11% or so capital loss from its recent high. Market said today Heartland still a bit overpriced or still digesting the numbers, but market could change it's mind tomorrow. I can't see much getting in the way of a plateau forming in the SP around here then steady as she goes until the next numbers are released, unless some external event out of their control clobbers the banking/finance sector.

Edit: should add that it's been awhile since the SP plumbed below 200MA, but when it does it usually has a decent look lower (for a short few weeks). Depending on ones position, if it happens this time, that could present a sell/buyback, add, or get in opportunity.

[SCOTTY]

Buying a couple of clicks above the 200MA support you'd think should be fairly safe, only 11% or so capital loss from its recent high. Market said today Heartland still a bit overpriced or still digesting the numbers, but market could change it's mind tomorrow. I can't see much getting in the way of a plateau forming in the SP around here then steady as she goes until the next numbers are released, unless some external event out of their control clobbers the banking/finance sector.

Edit: should add that it's been awhile since the SP plumbed below 200MA, but when it does it usually has a decent look lower (for a short few weeks). Depending on ones position, if it happens this time, that could present a sell/buyback, add, or get in opportunity.

And nothing wrong with a 6.388% gross dividend yield :). Better to own the bank than lend to it -:)

[winner69]

What a negative story ...it headlined Heartland shares were down. Bloody media.

http://www.sharechat.co.nz/article/44b9ccf7/market-close-nz-shares-fall-as-raft-of-earnings-loom-heartland-fletcher-drop-sky-tv-air-nz-gain.html?utm_medium=email&utm_campaign=MARKET%20CLOSE%20NZ%20shares%20fall%2 0as%20raft%20of%20earnings%20loom%20Heartland%20Fl etcher%20drop%20Sky%20TV%20Air%20NZ%20gain&utm_content=MARKET%20CLOSE%20NZ%20shares%20fall%20 as%20raft%20of%20earnings%20loom%20Heartland%20Fle tcher%20drop%20Sky%20TV%20Air%20NZ%20gain+CID_65f8 17d07bc72444f6b6cc2d255ecf89&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle44b9ccf7market-close-nz-shares-fall-as-raft-of-earnings-loom-heartland-fletcher-drop-sky-tv-air-nz-

[value_investor]

Interesting how quickly market sentiment changes in the mind of investors. Winners become losers, and sure things turn sour overnight. I thought this one was overvalued at $2.10 and it has come down a touch. Although in current conditions I don't see this going all the way down to the other side of the spectrum, it could stay in limbo for a while.

A few things that interested me is this shift in impairment upwards. I'm not sure if HBL have started writing up more loans resulting in a greater % coming back requiring impairment, or diversifying their risk appetite upwards because they are in a better position to do it with their recent capital raise. A bit of both probably.

Another thing is the increase in operating costs due to the new banking systems "teething issues". From experience, these software projects can get out of hand and developers can sniff out and fare to make a handsome sum if you contract out to a 3rd party to help.

I do however like the operating activity growth in the cash flow statement, which some shows that the growth happening is real and not just non cash movements masquerading as real growth. What comes with that of course is greater expenditure.

I'm not too obsessed with price with this one but I wouldn't be jumping in just yet. I believe if this goes down to 1.50 or 1.60 again I'll be accumulating again.

[trader_jackson]

This is the first time in a while I have read through a heartland result and thought: it is average.
Even when excluding the relatively recent capital raise things still just didn't feel and look (and all those other wonderful buzz words) as good as previous result announcements...
Mr Market seems to be thinking along the same lines as the share price is the lowest in over 4 months
Then again, it had a hell of a run and some say it was pretty expensive' already... the "fake media" isn't helping

[winner69]

Share price will resume normal resumption (upwards) tomorrow or Thursday once Forbar and Craig’s send out a note to their clients saying it was a strong result

That’s how the game works

No worries

[winner69]

If your asking about their Online banking platform, I would say no. The digital strategy hasn't made it there to improve the user experience as yet. Maybe later this year?

Persevere ...a new mobile app on the way Jeff says

Designed by the ‘best’ just for you

[percy]

Share price will resume normal resumption (upwards) tomorrow or Thursday once Forbar and Craig’s send out a note to their clients saying it was a strong result

That’s how the game works

No worries
Guess they are like me, expecting a very strong second half,as HBL maintain their strong lending growth.

[winner69]

Jeff has said numerous times Heartlands fortunes are tied to the general state of the economy, ie GDP growth

Westpac economists view of the future are bit dismal (chart)

Probably why Jeff wants to see more profits coming out of Australia

What a load of the old proverbial - Westpac forecast or Jeff’s Statement it just my interpretation of both. Never mind ...little can go wrong with Heartland

[Food4Thought]

Marketing - I can't tell if Heartland are actively looking at promoting themselves to New Zealand as an alternative option to the bigger banks and building societies. Would be great to see some positive marketing material and reaching out to New Zealanders. I am a big fan of New Zealand having their own bank and a strong one, keeping profits and jobs in New Zealand. Year on year this business has been doing a great deal of good for local economies and it is highly commendable. Wonder if they hooked up with some of the retirement villages and got some old money coming in to the bank. I'm sure a lot of the wiser citizens would prefer to keep things nationally when it comes to banking and New Zealand operated businesses.

[Marilyn Munroe]

Another thing is the increase in operating costs due to the new banking systems "teething issues". From experience, these software projects can get out of hand and developers can sniff out and fare to make a handsome sum if you contract out to a 3rd party to help.


if I was using Oracle I would be nervous. What if Larry wanted to buy another Hawaiian Island and started looking around for someone to help pay for it.

Boop boop de do
Marilyn

[winner69]

Quite a few punters reckon that that Slide 17 is code for Tainui / Ngai Tahu come and get us.

Didn’t one of the high flying blue eyed stars of Heartland management leave a few years ago to join Tainui?

[couta1]

Quite a few punters reckon that that Slide 17 is code for Tainui / Ngai Tahu come and get us.

Didn’t one of the high flying blue eyed stars of Heartland management leave a few years ago to join Tainui? The South African ANC party would be proud of that slide, that's definitely not a good thing.

[minimoke]

The South African ANC party would be proud of that slide, that's definitely not a good thing.Whats with having 2 women on that slide. That is 100% of people shown are women. maybe 50% ar LFBTIFNGH, maybe 50% identify as Maori, Maybe 50% are missing a limb. But sure as heck there is 0% male representation and that's not diversity.

[couta1]

Whats with having 2 women on that slide. That is 100% of people shown are women. maybe 50% ar LFBTIFNGH, maybe 50% identify as Maori, Maybe 50% are missing a limb. But sure as heck there is 0% male representation and that's not diversity. Further more, the 100% of woman in that slide are from one race only.

[Beagle]

And nothing wrong with a 6.388% gross dividend yield :). Better to own the bank than lend to it -:)
Not a stellar yield by any stretch of the imagination though.


Interesting how quickly market sentiment changes in the mind of investors. Winners become losers, and sure things turn sour overnight. I thought this one was overvalued at $2.10 and it has come down a touch. Although in current conditions I don't see this going all the way down to the other side of the spectrum, it could stay in limbo for a while.

A few things that interested me is this shift in impairment upwards. I'm not sure if HBL have started writing up more loans resulting in a greater % coming back requiring impairment, or diversifying their risk appetite upwards because they are in a better position to do it with their recent capital raise. A bit of both probably.

Another thing is the increase in operating costs due to the new banking systems "teething issues". From experience, these software projects can get out of hand and developers can sniff out and fare to make a handsome sum if you contract out to a 3rd party to help.

I do however like the operating activity growth in the cash flow statement, which some shows that the growth happening is real and not just non cash movements masquerading as real growth. What comes with that of course is greater expenditure.

I'm not too obsessed with price with this one but I wouldn't be jumping in just yet. I believe if this goes down to 1.50 or 1.60 again I'll be accumulating again.
Good post. That's where I might be interested in it again if I can get my head around their apparent obsession with one particular ethnicity.


The South African ANC party would be proud of that slide, that's definitely not a good thing.

Exactly. To promote one ethnicity above others, is NOT encouraging diversity per se when just by way of example our Asian friends make up a FAR greater percentage of the population. This in my opinion is quite unbecoming of a bank that wants to build credibility. I have never seen any other publicly listed company print part of its annual report in Maori either. Political correctness gone mad ?

[winner69]

The South African ANC party would be proud of that slide, that's definitely not a good thing.

Do you think Chairman Geoffrey and Chief Jeff have lost the plot with this sort of stuff. God knows where it will end up.

Both been around too long maybe and past their best and losing focus on what’s important ...time for them to move on so sanity can prevail?

If they stay just imagine what this slide (and extra ones) will look like at the next presentation.

[percy]

Do you think Chairman Geoffrey and Chief Jeff have lost the plot with this sort of stuff. God knows where it will end up.

Both been around too long maybe and past their best and losing focus on what’s important ...time for them to move on so sanity can prevail?

If they stay just imagine what this slide (and extra ones) will look like at the next presentation.

Geoff and Jeff have taken a vision of a listed NZ Bank and made it a reality.
Customers,Staff,Investors,and Shareholders are enjoying the benefits of their vision.
Heartland Bank has been best described,by our own Brian, as "young and nimble".
The "young and nimble" are being guided by very wise heads.
Having plenty on skin on the line will keep them focussed for future opportunities,here and in Australia,without having to carry the heavy baggage the Australian Banks have landed themselves with.

[Under Surveillance]

Another name change could be the next step? Mano Whenua Bank/Heartland Bank has the same touch to it as Aorangi/Mount Cook or Taranaki/Mount Egmont.

Can't hurt if Maoris get the warm fuzzies for Heartland, or other NZ-owned banks? Same for the Maori-friendly or patriotic such as academics, LGBT, etc.

[macduffy]

Heartland should benefit from it's customers' fee-free access to all those big banks' ATM's. Not that anyone uses cash anymore, or at least that's what we're told!
:cool:

[Raz]

I really though for a while they have been slightly off point..should mix it up with the Board, they have so much potential with this Bank.

[Baa_Baa]

Took a look below the 200DMA today and closed up a bit .. bang on it. Not sure what that means, but punters like the 200DMA, so might be a bottom. Most times don't need to watch closely but when it gets near a turning point (or potential) it pays to be alert. Only for the capital sensitive, the devoted holders won't even know what the closing price was today, they'll be staggering home from the bowling club shortly and not even check ST until the hangover wears off tomorrow.
;)

[Beagle]

Do you think Chairman Geoffrey and Chief Jeff have lost the plot with this sort of stuff. God knows where it will end up.

Both been around too long maybe and past their best and losing focus on what’s important ...time for them to move on so sanity can prevail?

If they stay just imagine what this slide (and extra ones) will look like at the next presentation.

I did caution you when they started printing part of the annual report in Maori that was the thin edge of the wedge but I think there is more to this that what meets the eye.

[winner69]

I did caution you when they started printing part of the annual report in Maori that was the thin edge of the wedge but I think there is more to this that what meets the eye.

Code words for something eh Beagle

[minimoke]

I did caution you when they started printing part of the annual report in Maori that was the thin edge of the wedge but I think there is more to this that what meets the eye.
If there is any of that patronising crap in any report I get I'll be out of there. Just give us the numbers and a language an international audience has a chance of understanding.

[Onion]

Heartland should benefit from it's customers' fee-free access to all those big banks' ATM's. Not that anyone uses cash anymore, or at least that's what we're told!
:cool:

The customers won't be charged a fee but I haven't read anything that says that the banks still won't be charging each other. As the spokesperson from ANZ said - the bank can afford to pay instead of the customer.

So Heartland may end up absorbing fees from their customers using all the other banks' ATMs.

[Beagle]

If there is any of that patronising crap in any report I get I'll be out of there. Just give us the numbers and a language an international audience has a chance of understanding.

They have been printing parts of the annual report in Maori for a while now mini. Absolutely determined they are to show their support for all things Maori, (masquerading as encouraging diversity)...no need to show support for any other ethnicities though which as mentioned yesterday really seems bizarre.

Speaking of support, I see the 200 day MA has been breeched...no worries whatsoever though because the 1,000 day moving average is still intact ;)

[percy]

They have been printing parts of the annual report in Maori for a while now mini. Absolutely determined they are to show their support for all things Maori, (masquerading as encouraging diversity)...no need to show support for any other ethnicities though which as mentioned yesterday really seems bizarre.

Speaking of support, I see the 200 day MA has been breeched...no worries whatsoever though because the 1,000 day moving average is still intact ;)

You are learning.....lol.

[Ggcc]

Some parts of me does believe these boring stocks are heading lower while people are going mad on the A2 buzz. It makes these boring companies look better for me in the long run. Not necessarily only hbl

[winner69]

Rerating continues with a close at 184 ....market deciding that multiples it been trading at too high

Maybe 150/160 is where it settles

[percy]

Rerating continues with a close at 184 ....market deciding that multiples it been trading at too high

Maybe 150/160 is where it settles

Be a wonderful yield at those prices.
Many of us who brought well under $1.00 are loving the yield on our purchase prices,while those who brought under 60 cents. remain on cloud 9..
Keeps improving every year too.
Funny that.!
Great stock for your bowling club mates.Certainly beats the Co-Op's deposit rates they are getting.!..lol.

[Beagle]

Rerating continues with a close at 184 ....market deciding that multiples it been trading at too high

Maybe 150/160 is where it settles

Yeap, very happy indeed with my $2.14 exit call to that effect. Agree that would be a good re-entry point but these things often over correct to the downside.

[Baa_Baa]

Rerating continues with a close at 184 ....market deciding that multiples it been trading at too high

Maybe 150/160 is where it settles

Not before 175 support which seems a certainty now that the 200dma broke down. 15% off the high already, that's some capital loss. Because of what? Who cares eh, it just is. Each to their own strategy. The trusty weekly chart was a sell 16cents ago.

[iceman]

Yeap, very happy indeed with my $2.14 exit call to that effect. Agree that would be a good re-entry point but these things often over correct to the downside.

I'm also pleased to have sold half of my HBL holding at $2.11 so now doing a Percy and holding free shares :-) Been a great ride over the years. I will definitely stay in this one and no doubt accumulate again in the future. I like their steady EPS and dividend growth.

[winner69]

Be a wonderful yield at those prices.
Many of us who brought well under $1.00 are loving the yield on our purchase prices,while those who brought under 60 cents. remain on cloud 9..
Keeps improving every year too.
Funny that.!
Great stock for your bowling club mates.Certainly beats the Co-Op's deposit rates they are getting.!..lol.

Neighbour and his bowling mates took all their cash out of Heartland because of their miserable rates and put itinto ATM a few months ago

That’s ATM the stock and not the hole in the wall thing.

[percy]

Neighbour and his bowling mates took all their cash out of Heartland because of their miserable rates and put itinto ATM a few months ago

That’s ATM the stock and not the hole in the wall thing.

Good on them.!

[Beagle]

Not before 175 support which seems a certainty now that the 200dma broke down. 15% off the high already, that's some capital loss. Because of what? Who cares eh, it just is. Each to their own strategy. The trusty weekly chart was a sell 16cents ago.

And just for you TA people I noted in my review of the chart this afternoon we have the very good makings of a head and shoulders pattern about to be completed if you get your 175 support in due course and a bounce to say mid 180's that should nicely complete the head and shoulders and then that gives them what ? over a 90% from memory ? chance of going down from there. Zero EPS growth and down they go to the average of the other banks, about a PE of 13. $1.50 - $1.60 looks quite possible to me. Just as well Winner's bowling club mates got onto the A2 rocket !

[Baa_Baa]

And just for you TA people I noted in my review of the chart this afternoon we have the very good makings of a head and shoulders pattern about to be completed if you get your 175 support in due course and a bounce to say mid 180's that should nicely complete the head and shoulders and then that gives them what ? over a 90% from memory ? chance of going down from there. Zero EPS growth and down they go to the average of the other banks, about a PE of 13. $1.50 - $1.60 looks quite possible to me. Just as well Winner's bowling club mates got onto the A2 rocket !

The 1.50 - 1.60 level has merit from a TA perspective, but 1.75 support is pretty solid and definitely in the way before that, imo. I'm quite gobsmacked that the HBL darling has posted such poor EPS, those underlying costs etc are chewing away at the near term. I wouldn't want to hold this stock in a global rout, it'll get slammed immediately with the real banks, but who knows whether that's going to happen - probably just being a worry wort.

I guess the long termers don't care too much about capital preservation as long as the dividends keep rolling in. They do crow about making some lovely capital upside and divies, but probably just happy as long as the income keeps coming in irrespective of the head share price. That logic fails me, but I'm not relying on shares for regular income and hate capital losses.

[Beagle]

I think you're dead right to be cautious Baa. Capital preservation must play an important part in one's investment strategy surely ! That was some mighty severe turbulence earlier this month. I've been happy to sell in recent months any high PE stock that doesn't come with explosive growth. Portfolio adjustments in recent months due to the risk reward equation looking too skewed to the former have included sales of, AIR at an average of over $3.40 when RR engine problems were a prominent and unknown risk, HBL at $2.14, PE too high for a bank, PPH at $4.15 and THL, got the timing a bit wrong at an average of about $5.80 but as the old saying goes you can't win them all.
Plenty of cash in the tin helps provide a buffer and dampen down the effects of extreme volatility.

As you suggest the old hands don't care as long as the divvies keep rolling in but I think its clear the market wasn't impressed with zero EPS / dividend growth. Recycled HBL capital into additional ATM in December at around $9 and SUM in the mid 5's so I'm all good :)

[percy]

I used to agree with both Baa Baa and Beagle's point about preserving capital.
However I find my own portfolio suits my now retirement needs.
Those needs are income first to live.This income needs to come from good companies,that have a record of paying fully imputed growing dividends.After any correction these types of shares recover the quickest.So I have HBL and others my portfolio.[HLG,MEL,TRA],
So with income sorted, I have spare capital .This capital is spread between NZ and Australian companies,mainly in sectors I feel have good growth prospects,and yield is secondary,ie,tourism,health,and retirement villages,and mining.
With the growing amount of petty cash,because we live well within our means, I then invest in higher risk fun shares.Over the years I have done extremely well on these.Profits from these are then recycled into my high income producing shares,which means more of the likes of HBL,HLG,MEL,THL, and TRA.Compond investing really works,leaving us all the time "well positioned.".

[silu]

Had a trigger to sell below $1.95 which wasn't renewed because I was incommunicado for a while. There goes about 12c/share which I would have dearly loved. Still like the company but most likely will go sideways for a while and I have more noteworthy investments at the moment.

[Beagle]

If they can make $68m which looks like a tall order given their first half result that's just 12.2 cps on 557m shares, (I don't "buy" all this creative weighted average shares on issue nonsense). I no longer see a valid reason they should trade on a multiple in excess of their peer group, EPS growth is no better than the big banks many of which have a 150+ year history and vastly better credit rating, so I reckon a PE of 13 is fair so I get $1.59 as my target price.

[percy]

DRP is looking more attractive every day..!

[winner69]

Goodness gracious - share price falling faster than what Metro Glass is doing

[janner]

DRP is looking more attractive every day..!


My thoughts also..

[bull....]

i just brought some this morning looks oversold to me , nice div coming up .... see how it pans out

[percy]

Goodness gracious - share price falling faster than what Metro Glass is doing

The steady share is turning out to be MVN.???????????????????/
....lol.

[Exodia]

The steady share is turning out to be MVN.???????????????????/
....lol.

If it falls to $1.50 I'm in, else I think there are better opportunities at the moment

[winner69]

Buffett admits Heartland was just too expensive to buy?

Berkshire Hathaway likes buying companies with durable competitive strengths and a sensible purchase price. In the latest newsletter Buffett said "That last requirement proved a barrier to virtually all deals we reviewed in 2017."

So even though Heartland just what they wanted it must have been really overpriced ..,and too expensive

[percy]

Buffett admits Heartland was just too expensive to buy?

Berkshire Hathaway likes buying companies with durable competitive strengths and a sensible purchase price. In the latest newsletter Buffett said "That last requirement proved a barrier to virtually all deals we reviewed in 2017."

So even though Heartland just what they wanted it must have been really overpriced ..,and too expensive

Bit late to the party.
Us early birds who spotted the durable competitive strengths of Heartland, and brought in years ago,at sensible purchase prices,can only feel sorry Warren missed the opportunity..
You should have told him W69.

[horus1]

HBL have a history of dropping very low when DRP is being assessed. At 1.82 or thereabout its a buy.

[value_investor]

HBL have a history of dropping very low when DRP is being assessed. At 1.82 or thereabout its a buy.

Correct you are. Historically this has fallen, coming towards the DRP, perhaps to do with 2.5% discount. It actually helps people like me who are accumulating. We might see a fall back in price to the 1.50-1.60.

[whatsup]

So when will HBL and TRA amalgamate ?

[iceman]

So when will HBL and TRA amalgamate ?

Never.....

[whatsup]

"never" some times to be turns out to be very soon ! don't bet on it !

[bull....]

im out for a couple cents , couldnt get above 1.84 and still in a downtrend.

[Antipodean]

While the chart is a bit scary at the moment, I intend to hold. In terms of 10+ years investment timeline for me nothing announced has indicated that this short term weakness won't pass. As someone 100% subscribed to DRP the scenario just gets better.

[ziggy415]

While the chart is a bit scary at the moment, I intend to hold. In terms of 10+ years investment timeline for me nothing announced has indicated that this short term weakness won't pass. As someone 100% subscribed to DRP the scenario just gets better.

#me too.......udc finance possible cash raising is adding to the uncertainty....still a good share

[percy]

Craigs research this morning on projected yields, has HBL's gross dividend yield increasing from 7.1% [2018] to 7.9% [2019] an increase of 11.26%.
Great yields for those who spotted the durable competitive strengths of HBL,and brought at sensible purchase prices.

[Beagle]

If they can make $68m which looks like a tall order given their first half result that's just 12.2 cps on 557m shares, (I don't "buy" all this creative weighted average shares on issue nonsense). I no longer see a valid reason they should trade on a multiple in excess of their peer group, EPS growth is no better than the big banks many of which have a 150+ year history and vastly better credit rating, so I reckon a PE of 13 is fair so I get $1.59 as my target price.

Posted recently. Even removing my own confirmation bias regarding methodology of measuring EPS when significant new shares are issued during the year. I note the following 2018 PE's straight off 4 Traders based on Friday's closing price.
NAB 13.35
ANZ 12.16
WBC 12.68
CBA 13.57
BEN 12.13
BOQ 12.72
Average of Australian peer group 12.77
HBL even with the recent SP decline 15.21.
Share price to bring the PE into line with peer group 12.77 / 15.21 x 1.81 = $1.52.
Note: many of HBL's peer group have track records going back more than 150 years and vastly better credit ratings.
2 Years ago HBL traded at about a 2 PE discount to its peer group.
Back-testing of support in the 150-160 range coming in the medium term ? You be the judge.

[Filthy]

didn’t poor ‘old Snoopy bring forward a very compelling PE debate awhile back and end up getting slated by a lot of people on ST for his comparison of HBL to the big ozzy banks?

I really enjoyed all of the contributions at the time, but seem to recall that the outcome (general consensus) was that a slight PE premium for a growing kiwi bank vs the ‘large, mature & clunky' ozzy banks was deemed acceptable?

charts indicate support at around 175. should be fine.

[Balance]

CBL debacle will be having a flow on negative effect on HBL - overseas investors would be wondering whether RBNZ has what it takes to supervise the financial sector.

The big trading banks are effectively supervised by RBA so don't look at the trading banks as guidance of how overseas investors view RBNZ.

https://www.insurancetimes.co.uk/capital-solvency-probably-less-than-zero--regulator-shock-findings-on-cbl-insurance-/1426534.article

"CBLI had significantly under-reserved its French business to such an extend its adjusted capital for solvency purposes (ie excluding inadmissible components) was most likely to be less than zero’, according to the court documents."

[BlackPeter]

CBL debacle will be having a flow on negative effect on HBL - overseas investors would be wondering whether RBNZ has what it takes to supervise the financial sector.

Trading banks are effectively supervised by RBA.

CBL debacle has the potential to have a flow on effect not just on HBL but on all of our (NZX traded) stocks. Overseas market will wonder whether governance in New Zealand is only on a voluntary basis for members of the rich and famous boys club. Not a good place to invest money ....

Just hoping that our market authorities wake up, find their dentures and sort out this mess (including demotivating the next bunch of incompetent yes man to repeat this debacle) - and hoping that whatever they do will be enough and in good time for the fickle international markets to be satisfied. Sitting the issues out and slapping afterwards some of the culprits with wet bus tickets won't do this time.

[winner69]

CBL debacle will be having a flow on negative effect on HBL - overseas investors would be wondering whether RBNZ has what it takes to supervise the financial sector.

The big trading banks are effectively supervised by RBA so don't look at the trading banks as guidance of how overseas investors view RBNZ.

https://www.insurancetimes.co.uk/capital-solvency-probably-less-than-zero--regulator-shock-findings-on-cbl-insurance-/1426534.article

"CBLI had significantly under-reserved its French business to such an extend its adjusted capital for solvency purposes (ie excluding inadmissible components) was most likely to be less than zero’, according to the court documents."

Makes you wonder what really was going on eh Balance ....and how RBNZ seemed to struggle in getting to the bottom of it. That reinsurance bit just seems one big fiddle.

No worries for Heartland ....they have high capital ratios I’m told.

[percy]

Makes you wonder what really was going on eh Balance ....and how RBNZ seemed to struggle in getting to the bottom of it. That reinsurance bit just seems one big fiddle.

No worries for Heartland ....they have high capital ratios I’m told.

You have been told correctly.
Your mate at The Co-Op.?

[percy]

CBL debacle has the potential to have a flow on effect not just on HBL but on all of our (NZX traded) stocks. Overseas market will wonder whether governance in New Zealand is only on a voluntary basis for members of the rich and famous boys club. Not a good place to invest money ....

Just hoping that our market authorities wake up, find their dentures and sort out this mess (including demotivating the next bunch of incompetent yes man to repeat this debacle) - and hoping that whatever they do will be enough and in good time for the fickle international markets to be satisfied. Sitting the issues out and slapping afterwards some of the culprits with wet bus tickets won't do this time.

CBL debacle will only put our market on a par with Aussie,after the fun and games they are having with BIG and GSW.

[Balance]

CBL debacle will only put our market on a par with Aussie,after the fun and games they are having with BIG and GSW.

Maybe true but ASX is a market too big and too important to ignore.

NZX is a pipsqueak market with a board and management who reminds one of headless chooks at the best of times - a market which can be ignored.