Originally Posted by
Snoopy
I agree Cyclical that a correction is well overdue. So lets take some time to try and figure out what Heartland might look like coming out the other side. I will start.
From a 'market perspective', I think any hope of HGH trading at a 'premium' to other finance sector shares is gone.
From an operational perspective, I expect the reverse mortgage business to grow because it is one of the few ways for older NZers and OZers to access capital. They may even do it to help bail out their son's and daughter's businesses as the only source of wider family finance!
I expect the new car market will be hit hard and that will affect Heartland's motor industry finance going forwards. I don't expect existing customers to stop paying their loans as their car may be their only escape (and way to get to a job interview) from lock down for the unemployed, OR the safest way to get to work for those still employed. No-one will be keen to repossess cars, because who are they going to sell them on to? Better to work out an arrangement with your existing customers, even if Heartland has to take their share of a hit while doing it. For customers on lease arrangements, that end of lease residual value of the vehicle could be an issue for Heartland.
Providing seasonal rural financing looks to remain a strong pillar of the business. The competitive advantage that competitors 'Allied Farmers' and 'PGG Wrightson' had is now gone with the physical sale yards being closed own. From being a weak third player, Heartland, without any restriction about buying and selling through the same agent like their competitors, looks to have moved to market position of relative advantage in 'paddock to paddock' livestock sales.
I agree with Beagle that some of those Harmony unsecured P to P loans might be in trouble. But what proportion of Heartland's loan book will this effect?
Some thoughts off the top of my head. Not all of them bad. Interested to hear where other Heartland shareholders think HGH is going.
SNOOPY