Not marked to market rawz …take a lot of factors into how you value them but they will be taking a hit
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Aussie banks hammered
https://www.afr.com/companies/financ...0220608-p5arzn
re: HMY - while it has been bid down on minuscule volumes I also struggle to see how HGH will be able to convince their auditor no further impairment is necessary. RAWZ has done the math on what that could look like at PBT impact. However, the theoretical dimiunition in value to HGH is exactly that, at ~$8.6m (or the change in book value form last reporting period to next expected reporting period), not 8.6m multiplied by some multiple. When i look at heartland, I read through the npat impact from the mark to market of non operating assets both on the way up, and on the way down. Better to value the operations of heartland first (by capitalising operating earnings by an appropriate multiple), then adding surplus assets second.
to put it in context: HGH's share in HMY has decreased from the last reporting period to now by ~AU$8.6m. Translated that to NZD, divide that by shares on issue, of 592.9m, that is approx a 1.6c per share impact. that's sweet FA.
re heartlands lending to harmoney, they do have a wholesale lending line. but that is is rapid run off. From what I understand, heartland were a institutional lender to harmoney's peer to peer business (feels weird to say an institution can be a peer to peer lender, but its what happened) but they aren't a warehouse provider. I understand they aren't writing any more loans and are just receiving things as they come in, so the operational impact is quite limited given harmoney have wound down p2p, and are only lending on a warehouse or securitized basis now
HGH getting dragged down by fears of what will happen next year if there is a recession, and sentiment yesterday when the RBA surprised Aussies (but no kiwis) that a 50bps hike was warranted. Personnally, I see more downside coming from a SP/TA perspective. Not selling any shares as a long term holder, but will watch and wait and perhaps buy a bunch more sometime in 2023. My two cents, but I believe banks will get caught up in sentiment around the economy driving the SP down, there will be a few relief rallies as actual reports come in that surprise on the upside and sooth investors as households still have strong balance sheets and banks do tend to earn more interest income from regulatory capital and lending when rates rise, offset later by a capitulation when impairments rise. and for me, personally,that is when I like financial stocks...right at the top of the interest rate cycle, when recession is imminent or just starting to happen, and the outlook is weakest. same with bonds.
My only concern is about Dividend paying capacity ...if they can continue that on present projected track then holding HGH thru this storm is not difficult . SP wont deteriorate too much as will have Yield support ...Mr B said at $ 1.94 it becomes Gross 10% yielder which is massive provided yield not under threat . So for me all analysis should be focused on its dividend paying ability thru this storm as that will cushion the SP fall . I am told that HGH has very efficient risk management systems and they are much better managed then bigger banks by being more efficient and safer
Having a NIM [net interest margin] nearly twice the major banks also helps.
you guys are overlooking the power of 'proactive provisioning'
Jeff master of that
As well as being a share holder I also bank with then, not my main everyday account, mainly for savings / term deposits etc.
Is just me does any others have difficulty navigating around the Heartlands website. I would like to change the the date on two of my 90 Day Notice accounts, but I buggered if I can find where or how to do this. Being a gold card holder for number I years, I find it very frustrating when thing like this should a simple task, not having to ask for assistance on a simple transaction. ( Sent them a message to this effect, still awaiting a response)
Heartland's FY21 Real ROE was 8.6% (Nominal reported 11.9% less inflation 3.3%)
This year assuming a nominal 12.0% ROE and say 7.0% inflation the F22 Real ROE is 5.0%
If one assumes that Real PE ratios are reflective of company performance the Nominal PE (adjusted for inflation) should be lower than the Real PE
This nominal / real stuff flows through to PE ratios as well - which implies the PE of 15 HGH was trading on late last year should now be less than 10 --- meaning a share price of $1.60 is possible
Theoretical stuff so no worries ..... but ask your self why do PE ratios tend to decline in times of high inflation.
1.60 would be a great buy!!!!