Dairy prices flat of late (GDT results) - just like the Heartland share price
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Dairy prices flat of late (GDT results) - just like the Heartland share price
Price breaking through some resistances. Those dairy futures must be moving up are they winner?
this might not be good for heartland
Treasurer Josh Frydenberg to review Pensions Loan Scheme interest rate after 'gouging' allegations
Treasurer Josh Frydenberg will review the Government's reverse mortgage scheme to reflect Reserve Bank interest rates in the face of "gouging" claims from retirees.
https://www.abc.net.au/news/2019-10-...ction=business
if the govt scheme drops rates due to political pressure hgh probably be forced to match or they run the risk of losing business
https://www.heartland.co.nz/savings-...interest-rates
Gross yield on shares 9% at $1.62 assuming 10.5 cps fully imputed dividends for FY20. Important to invest on the right side of the ledger.
Strong spread of lending and funding.
Fast growing Reverse Equity Lending helps reduce risks, as does better quality motor vehicle lending,together with generally shorter lending terms.ie seasonal and livestock rural lending rather than rural mortgages.
Equity ratio is very close to The Reserve Bank of NZ's new proposed level.
Had a quick look at the comparative group I follow in Australia.
BEN, BOQ, NAB, ANZ, WBC and ANZ. Many of these banks have issues arising from the Australian banking enquiry and are inadequately capitalised for the pending RBNZ capital requirements.
HGH are much better capitalised, do not face any issues arising from said review, are growing faster and yet has a lower forward 2020 PE at 11.9 than any of them and is significantly cheaper than some. Forward PE of 11.9 is right toward the bottom end of its range in recent years of 11.0 - 17.0 and yet we have the lowest interest rates in 100 years which implies another 1 or 2 PE above the medium should apply.
My sense is HGH has been languishing below fair value pending clarification of the RBNZ's capital requirements which if I recall correctly are due to be announced some time next month ? Maybe there is some worry some of the Australian banks will list their NZ subsidiaries here ?
I don't think banks do well in a recession. The slightest sniff of trouble and the share price plummets, at least that's what happened last time. I guess no two recessions are the same and the last crisis was all about banks and liquidy. Still, I'm guessing that when a recession comes, banks will do a lot worse than other assets like dividend paying utilities for example.
I still hold HGH and some Australian banks directly for a grand total of 4% of my total financial assets. For me that's enough just at this stage.
HGH has been close to dead money over the last 12 months.
I very much enjoyed this presentation by David Rosenberg about how to be positioned during a recession and what gets hit and what does ok. You can cut straight to the 21 minute mark for the punchline but its worth watching the whole thing.
https://www.youtube.com/watch?v=afgvcwp__DY
Just for balance, I should also add that this excellent presentation, from Josh Brown, who you sometimes see on CNBC, which notes that more money is lost in trying to prepare for a recession than is actually lost in a recession. So that's why I still hold banks and some big cap miners directly and even drip feed into the Smartshares S&P US Growth Fund every week. It feels dirty and uncomfortable but this circus could still last for years so who knows. For the most part however, I'm going the David Rosenberg way.
https://www.youtube.com/watch?v=IQqw1S2U1yM
It has underperformed the NZX50 index by about 10% over the last year. Lot of value in the company at the current price and the gross yield is 8.5% - 9.0% depending upon one's assumptions of either 10 cps in annual fully imputed dividends or 10.5 cps. Interesting for medium term holders to note that the average analyst view is for 11 cps in fully imputed dividends in FY21 which put them on a gross prospective forward yield of 11 / 0.72 = 15.28 / 162 = 9.4%.
We might find out how safe and sustainable the utility yields are if Rio pulls the pin. Nothing is risk free and I believe Rio's announcement this week effectively blindsided the market and the gentailiers are in the process of being repriced after enjoying an exceptional run. My view is people have been busy preparing for a pending recession for most of 2019 and many REIT's and utility companies are priced like one is highly likely in 2020.
What if it doesn't happen, the US and China agree to some form of trade deal and its risk on and growth again ? Perhaps an overlooked and cheap stock like HGH enjoys a very good run in 2020 ? $1.90 - $2.00 a year from now not out of the question and would represent a PE of about 13.5 - 14.0 times FY21's forecast eps which is the middle of the PE range over the last 5 years or so.
Once HGH breaks through 170 it’ll be over 200 before we realise what’s happened
Then the smart ones can think about selling again
Did get overcooked on a forward PE of about 17.5 a few years back at the peak when it was $2.14.
17.5 times FY21's prospective earnings would see it at $2.45. Don't think its going that high anytime soon.
I don't think $2.00 is going to be overcooked this time round.
A 10.5 cent divie on earnings of 12.8 seems OK
At 2 bucks that’s still a awesome 7.3% gross yield ....better owning the bank than putting money in the bank eh, esp when interest rates are at 100 year lows
My sense is after a poor 2019, 2020 could be a "jack-a-box" 30-50% total shareholder return year for HGH.
Don't think anyone would have picked MEL to be up over 60% in the last year inclusive of dividends, (about 80% TSR if you take a reference point from a week ago before Rio went feral). Its been a wonderful performer but that's history now and all the risk appears to be to the downside. Got to find what's next, that's going to do a MEL. :)