Thanks. Herdlicker and many of the AIR exec's should take notes.
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Strong volumes again. Someone is buying.
Year Dividends Paid 'per share' Significant Event During Year' FY2013 1.5cps(sp) + 2.0cps 17th December 2012: Heartland becomes a bank FY2014 2.5cps + 2.5cps 1st April 2014: Seniors 'Reverse Mortgage' Business Acquired FY2015 3.5cps + 3.0cps 10th September 2014: invests in Harmony P2P startup 28th October 2014: Credit rating upgraded from BBB- to BBB (Fitch Ratings) FY2016 4.5cps + 3.5cps FY2017 5.0cps + 3.5cps FY2018 5.5cps + 3.5cps FY2019 5.5cps + 3.5cps 1st November 2018, Heartland Group Holdings restructure set up Average FY2015 to FY2019 inclusive 8.20cps
I have chosen to use the last five years of operation as indicative, as these years include the full contribution of the Reverse Mortgage Portfolio, a critical component of Heartland going forwards.
SNOOPY
Plugging in a representative yield of 7.5%, one that IMO represents an appropriate risk for the ups and downs of the banking cycle of Heartland in its current form, we can now arrive at our 'Capitalised Dividend Model' valuation
(Representative Dividend per Share) / (Acceptable Gross Yield) = Share Price (an algebraic manipulation of: Dividend per Share / Share Price = Yield )
8.2c / (0.72 x 0.075) = $1.52
A reminder here that NTA was
($654.150m - $73.085m) / 565.430m = $1.03 cps
at the half year FY2019 balance date. This means my fair valuation is at a good premium (+48%) to asset value.
This $1.52 valuation is measured at the average point in the business cycle. My rule of thumb is that over the business cycle the actual share price will fluctuate between 80% and 120% of capitalised dividend fair value. This gives a target range of $1.22 to $1.82. $1.41, where the share is trading today, looks a little below fair value. Take off the upcoming 3.5c dividend and we get down to an equivalent $1.375. That is a 10% discount to fair value. I therefore see HGH as worth accumulating at $1.41.
SNOOPY
discl: New shareholder, in at $1.38
Another positive ... I wanted some coin for another punt and since HGH has been boring me something chronic I took the hit and bailed today. It is bound to bounce back now given my track record - you lucky holders you.
Small but positive.
https://www.nzx.com/announcements/331285
Positive close too.