Hmy only HGH cake icing...it is always on HGH book .. even pre covid-19 when sp hit $2.
Now the market values HMY....it will take time
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Hmy only HGH cake icing...it is always on HGH book .. even pre covid-19 when sp hit $2.
Now the market values HMY....it will take time
With all due respect mate I think almost everyone on here knows that any profit will be unrealized and a one-off and are ignoring it in their valuation calculations.
Just a reminder that 16 times the companies own forecast of 14.4 cps = $2.30, (not including any increase from aforementioned one-off Harmoney unrealized gain, the fact that they're trading ahead of current year forecast YTD and not seeing any utilization of previous FY20 Covid provisioning so some of that might come back as a one off restatement of prior year profit).
Going by ANZ's AGM update today, there's every chance that HGH FY 20 Covid provisioning will be restated (upwards) at the interim if not before if it is material.
I suggest you have a read of what Heartland themselves said just 16 days ago here http://nzx-prod-s7fsd7f98s.s3-websit...198/336436.pdf
For the time poor I cut and posted this excerpt :-
Impairments to date have been much lower than anticipated, tracking well below budget.
This reflects releases due to repayments, but also an improving profile and reduction in nonperforming loans.
The economic overlay we took in FY20 of $9.6 million pre-tax has not been utilised.
Ha ha. By 'restatement (upwards)' I actually meant that in a positive sense ie that earnings will be restated upwards. In other words, provisioning will go down. Just my bad. We are in agreement. But thanks for the suggestion which I didn't take up having read the AGM notes already.
I think that in Jeff’s mind the covid cover doesn’t really exist and that’s why he talks about F20 npat being $78.9m ....and because it doesn’t really exists expects it to be reversed and the reversal is included / assumed in the $85m forecast for F20
So reported NPAT improving from $72m to $85m in F21 (not counting HMY)
Pretty astonishing earnings growth then isn't it of 18% !...with clear potential for an upgrade seeing as they did ~ $30m in the first 4 months
Note this bit of the speech, emphasis added :-
Some commentators maintain that the economic ramifications of the pandemic are yet to be
fully felt, and due to this remaining uncertainty, and despite running ahead of the forecast run
rate, we don’t propose currently to change the current NPAT guidance of $83 million to $85
million for FY21.
Not changing it currently is conservative and certainly doesn't mean they won't change it later in the year as more clarity emerges so I therefore see 3 potential sources of an upgrade
1. Reversal of some or all of FY20's Covid provisioning - (one off event I will ignore for my valuation considerations)
2. Upgrade of current year\s forecast as no need for current year Covid provisioning (ongoing implications for enhanced profitability that's definitely relevant to valuation considerations)
3. One off recognition of unrealized value accrual for Harmoney stake - (one off event I will ignore for my valuation considerations).
Without any of the above I see fair value at about $2.30 a year from now.
That will do me master Beagle...$2.30
Brand new car...plus holiday in Thailand...with Singha beer and two thai girl....not a lady boy of course... bloody mr.chow...
With all due respect your 1. and 2. are a bit confusing and to me seem to be the same thing - and it seems you sort of agree with me when I say the whole $6.9m after tax covid overlay in F20 was a cosmetic thing and will be reversed in full in F20 and that reversal is included in Jeff’s $85m forecast
This means F21 result will likely be about $85m ..an increase of 8% over F20 normalised $78.9m ....and whatever might happen between now and year end will be subject to proactive provision to ensure it all ends up at about $85m...no more and no less, Jeff will ensure that happens.
Lets be clear. Firstly they issued the forecast of $83-85m, (mid point $84m for FY21) at the same time as announcing their FY20 result (which was impacted by the Covid overlay). I see this as their core current year earnings unsullied by any one off Covid or Harmoney items.
The fact that subsequently they are talking about not needing earlier Covid provisioning taken in FY20 based on evidence to date suggests a partial of full reversal of this provisioning on top of earlier guidance of $84m, (total could be over $90m inclusive of full reversal of FY20 provisioning plus any upgrade of current year forecast). i.e. $90m for full year, (3 x $29.9m) plus reversal of previous over provisioning for Covid plus possible Harmoney one-off.
Some commentators maintain that the economic ramifications of the pandemic are yet to be
fully felt, and due to this remaining uncertainty, and despite running ahead of the forecast run
rate, we don’t propose currently to change the current NPAT guidance of $83 million to $85
million for FY21.
My interpretation of this is that they are acknowledging that the $29.9m core operating earnings for the 4 months to 31/10/20, (annualized run rate of ~ $90m), is currently ahead of forecast but they are effectively saying that because the effects of the pandemic may not be fully felt yet they are leaving their core earnings at $84m forecast as is for the present time. This certainly does not preclude them from raising it later this financial year.
I share your cynicism about proactive provisioning and suspect core operating earnings for the year will meet forecast and be about 14.4 cps and I think a fair Covid recovery PE going forward is in the range of 15-16 so am sticking with my target of $2.30. I think the dividends will be about 11 cps fully imputed once the RBNZ restrictions come off so that's 11 / 0.72 = 15.28 cps gross and on $1.63 gives a prospective FY22 yield of 9.4% gross. Just a "little" better than their term deposit rates ;)
Hopefully this post clarifies my thinking of how this all fits together.
I think we have to agree to disagree - because I reckon you are double counting the covid overlay. Never mind disagreement is healthy.
For what's worth my 'valuation' of HGH for June 2021 is about $1.97
June 20 Book Value is $1.20 /share. Add F21 earnings of 13.4c ($85m) less divies paid 8 cents plus DRIP 2.2 cents plus HMY revaluation 3.4 cents gives June 21 Book Value of $1.31 / share
Apply the long term P/B of 1.5 and gives you share price of $1.97
Let's say $2.00 and add a 15% hype / exuberance / irrationality factor and one gets $2.30
Same as you at $2.30 ---- Golly gosh we do agree - let's hope the hype etc plays out
$2 will do...master winner.bi will get one tiger rather than two...lol
And then you'll both sell. Maybe not at the same time, but close. You momentum traders (however long it takes) imho are the most impressive investors able to actually 'time the market' which common wisdom says is impossible. Common wisdom though is not all that common.
Impressive sustained performance and enjoyable banter along the journey, we have much to learn about active portfolio management.
Is the DRIP going to be able to add that much to the NTA? I can see the DRP increasing equity by 2%+ quite easily. Its also going to add to the shares on issue so I'm not sure the NTA impact will be as large as 2.2c. Does that mean that Beagle now has a more aggressive forecast than you?