Roger your mailbox is full .
Im holding till annual accounts too.
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Roger your mailbox is full .
Im holding till annual accounts too.
copied from today market update:
"Heartland advises its preliminary forecast range for NPAT for the financial year ending 30 June 2016 is $51m - $55m. This includes an allowance for estimated impairments."
HNZ board must already have possible maximum impairments FY16 in their mind?
Just venting some frustration mate. It is nice to get a very warm welcome back from so many people and to see their kind thoughts expressed. Thank you folks. This helps restore my faith in human nature and nice to see that many people appreciate my honest and open communication style even if sometimes even I would acknowledge it is done in a confronting manner. Tact was never one of my strong suits and probably never will be lol.
Thanks for your support mate. A good friend in times of heavy weather is a real friend indeed. Years ago I read that 6% of passengers simply don't turn up for their flight, for some strange reason this doesn't seem to worry the airlines...I wonder why :)
Just adding a tiny titbit to yesterday's post. I am sure many of us have watched with morbid fascination on the business news and in particular CNBC the super slow motion track wreck that is the Greek fiasco.
Many of the expert international economists have lamented that really Greece has little to no chance of ever repaying the $320 billion owned to European banks and indeed cannot meet its interest and repayment schedules.
Further, the problem is really sheeting home to the European banks because if they don't offer further support they crystallise a substantial capital loss on the $320b currently advanced.
Over time this "toxic" or "zombie debt" as some commentators are referring too it as, simply balloons out to an even larger sum, perhaps as much as half a trillion dollars and the European banks simply hope the Greek economic reforms turn that pup of an economy into something capable of performing an herculean task of actually repaying some of it.
Surely I am not the only one who can see the parallel between this most unfortunate Greek situation and the one HNZ are in with their dairy loans ?
Sure is, my biggest holding now.
Thanks mate. Sometimes I think if someone has an XXXXXL position in a stock there is potential for them to misinterpret robust debate as something of an attack and I suspect that's what's happened here with our mutual friend.
Noodles mate, you're quite right that we won't know the outcome for a couple of years but you can bet your last dollar Fitch will be watching closely, recall their recent comments on the dairy sector with thinly disguised hints about possible pending downgrades if this situation become dire and protracted. All the risks with HNZ's "very forward looking" forecast appear to be too the downside.
I remain perplexed with how the Directors think they can reliably estimate loan defaults so far ahead especially seeing as nobody has any real idea how protracted or how serious this dairy problem becomes.
I will leave you folks to consider for yourselves whether accurate estimations of default rates a year out are possible / plausible in this environment ? Maybe the pending Trans Pacific Partnership deal comes to the rescue and everyone gets a dairy miracle, let's hope so. Gotta feel for the dairy farmers, nobody thought it would get anywhere near this bad and its good that HNZ are arranging counselling and referring farmers to support groups and lending them even more money to get through. BNZ are running survivability workshops around the country and another bank are effectively pulling the financial support pin on unviable business operations...which bank is taking the prudent approach with their shareholders best interests at heart ?...that is the sixty four "million" dollar question that only time will answer.
Very commendable that Heartland (and other banks) are working with their dairy clients to help them over the tough times. That at least is an admission there is a problem.
Whatever interest will still be accruing. I for one will be closing reconciling the cash flow statements with the P&L.
The old capitalising interest trick eh Roger. Even handover was reporting solid profits until the end.
Although there may appear to many similarities, there are far more differences.
The entire Greek economy is in trouble, and the vast majority of the loans are to the Greek government, not to the Greek people.
The dairy industry is not in trouble, just receiving reduced pay outs, and still within a statistical normal range. Loans are not to the industry, but to individual owners, each with their own set of circumstances.
Some dairy farmers converted their farms when pay-outs were well above average, and used this high projected income as a basis for their financial planning. Of these, some have converted farms in areas that are not suitable for dairying (like Central Otago or mid Canterbury) and these are the ones who will really struggle to make the conversion pay. But sharemilker Fred in Southland, who borrowed just to buy his stock, and is on a traditional farm which doesn't need pivot irrigators etc. is probably still keeping his head above water and will manage OK.
It is not as if ALL dairy will crash and default. So the banks could afford to let the less likely ones go under, sell the stock at meat prices, and still support those that are marginal or still successful.
Sorry Mate Roger, didn't realise you were banned, welcome back. Missed you here, your honest and reliable analysis. I have loaded on Scales for last two days.
Winner - Handover - Love it...I have an interesting story to tell about how much pressure they put on people to reinvest towards the end...remind me to tell you sometime over a beer.
Jantar - I am not suggesting all of their loans to dairy farmers are in trouble, (note my cryptic reference to this being a $64 million dollar question). I was going to put $64,000 question but that hardly seemed appropriate in the circumstances. Within the normal statistical range, really ? When was the last time GDT auction prices were under $2,000 a tonne ? Some economists are whispering about a $3 pay-out level...how do you think dairy farmers with an average of 61% debt will cope with that nightmare ?
Thanks gv1. SCL now my biggest position. Superb, conservatively managed company with excellent growth prospects.
I may have missed this somewhere in the conversation, but dairy farmers now have an average 61% debt level?
HNZ only say their loans to the specific security value is 61% don't they?
http://www.nzherald.co.nz/business/n...ectid=11489246
I make no apology for posting this article in here as its clear that the level of possible future default on these circa $230m, (and increasing), loans will be a major determining factor in HNZ's future profitability.