Forsyth this morning saying HGH overvalued - 12 month price target of $1.35...
Printable View
Forsyth this morning saying HGH overvalued - 12 month price target of $1.35...
Come on TJ Frosyth broker is a crook .....can not be trusted...and everyone knows...
I've seen the report and couldn't disagree with it more. The company itself is forecasting $84m at the mid point of their forecast range which translates to earnings of 14.3 cps and yet Forbar are only estimating 10.5 cps, claiming we are in the heart of the storm. The average analyst view of market screener is here and shows earnings for FY21 or 13 cps rising to 14 and 15 cps in the following years. https://www.marketscreener.com/quote...44/financials/
Rather than me make aspersions on their analysts work I would rather simply highlight that its at a really substantial variation to the company's own forecast and the rest of the investment analyst community.
All that's left for me to add in this instance is that Forbar run a subsidiary company called Leveraged Equities that gives their clients the ability to short stocks. Maybe they are looking for more business with their subsidiary ?
My own view is that HGH is very cheap relative to the six Australian banks I follow all of which are trading in ostensibly the same environment as HGH.
After a sobering and expensive experience with brokers and their analysts in the early 90’s, I cut my own path, learnt basic FA and binged on TA. Owning a business for a while helped.
It’s worked pretty well so far. The only analysts you need imho are the generous collective members of ST. And the fortitude to make up your own mind and back your own research in your investing and trading. It’s also a lot more rewarding in many ways.
Disc own HGH and quietly accumulating these depressed prices.
Gltah.
Not sure jimdog31...I am not following ATM or Synlait closely at this stage.
Top rated US analyst who had won some professional award was on CNBC this morning saying the financials' are heavily undervalued as a sector. Being priced for Armageddon, worse than GFC and is not warranted. He also made the astute observation that financials' have the highest covid beta so on any good news regarding a vaccine we could see a substantial rerating of this sector.
On another topic, I was a client of Forbar for more than a decade and left them about 15 years ago. I found their research to be of inconsistent quality. Some of their analysts had good insights and others...not so good. I have cut a very similar path to you Baa Baa and agree 100% with your viewpoint expressed above.
I have also been accumulating HGH shares and I now have more than ever held previously. There's not much point having funds on term deposit is there so the benefits of investing on the right side of the ledger so too speak, have never been more clearly defined !
Thanks Beagle. I'm pretty sure they are - even with the latest ATM news they held very close to that target. They are also the crowd that are pushing a price target of $13 for PPH, so the spread of their targets are wildly inconsistent , too high and too low.
I think their Excel may be in need of an update. They are probably using the same guys that built the spreadsheet for COVID tracking in the UK.
Anyway I agree with you, most of HGH market segments are spread to diversify the risk IMO.
I remain disappointed but agree that the financial sector has been oversold and am currently in ANZ WBC and HGH
For this one, I'd really like to see some serious support kick in at 1.33 or thereabouts. Confluence of some useful moving averages around there on both the daily and the hourly.
Attachment 12031
Attachment 12032
https://www.nzx.com/announcements/361862
Heartland long-term rating affirmed, outlook remains stable
22 October 2020
Fitch Rating (Fitch) has affirmed the Long-Term Issuer Default Ratings (IDR) of Heartland Group Holdings Limited (NZX/ASX: HGH) (Heartland Group) and Heartland Bank Limited (NZX: HBL)
(Heartland Bank) at 'BBB' and the Long-Term IDR of Heartland Australia Group Pty Ltd (Heartland Australia) at 'BBB-'. The Outlooks remain Stable.
Heartland Bank remains one of just two Australasian banks to have no reduction or adverse change to its ratings or outlook despite the economic impacts of COVID-19 since January 2020.
Bloody good news!!
You gotta be very brave person to short this stock at current price level with strong earning guidance and other positive news that keeps flowing through...
Long time reader first time writer, have been a long time share holder and been a client with Heartland Group back before amalgamation of Ashburton Loan and Building Society and Ashburton Permanant Banks .
Believe this is quite an achievement going through one of the biggest global crisis they say more than 100 years. Intend to buy more.
How long is that Beau - I mean for those of us who dont know HGH history time line?
And congrats on popping your post cherry.
Just to be the naysayer here, some would say we havent got through it yet. Especially banks. We dont know for sure but I still expect some tough times , its unlikely to be all beer and skittles and all the banks have made some large provisions, it just whether those impairments are large enough or too large is the crux of the issue.
I did state going through not gone through , not all beer and skittles but occasional beer
Loan and Building Society Days 1997 got a mortgage for motel complex found them extremely good to deal with .
I have recently been alerted to this threat to the Heartland 'golden goose' of REL mortgages in Australia.
https://householdcapital.com.au/corporate/our-story/
The article below is from April 2020.
https://householdcapital.com.au/medi...ket-expertise/
"Earlier this year, Legal & General, one of the largest providers of equity release products in the UK, took an (20%) equity stake in Household Capital Pty Ltd., citing Australia as a market with lots of potential."
From
https://www.moneymanagement.com.au/n...sehold-capital
"This latest round of fundraising brought the total amount raised by Household Capital since 2017 to $25 million."
If I read this correctly, there is only $25m of Household Capital shareholder equity backing the entire reverse mortgage loan book.
So it doesn't sound like Legal & General had to outlay much cash to grab that 20% shareholding.
20% x $25m = $5m (only)
Nevertheless, in addition to the equity stake, Legal & General are providing funding capital to Household Capital Ltd. This builds on the $100m debt facility established with (also equity holder) ME bank (An Aussie bank 100% owned by 26 industry super funds) in 2019 (referenced below).
https://www.adviservoice.com.au/2019...ding-facility/
From
https://www.finder.com.au/household-...verse-mortgage
The current variable interest rate for a 'Household capital' loan is 5.15%, with a minimum loan amount of $50,000 and a maximum of $1,000,000. There is a 1.5% loan capital application fee on top of this which is added to the balance of your loan.
Sample calculation: Borrow $100,000 for four years.
Interest Due Year 1 $5,227.25 Interest Due Year 2 $5,496.45 Interest Due Year 3 $5,779.52 Interest Due Year 4 $6,077.17 Capital Charge $1,150.00 Total All Charges $23,730.39
From
https://www.finder.com.au/home-loans...eniors-finance
The equivalent borrowing rate at Heartland Seniors Australia is 5.8%, but Heartland have no application fee.
Sample calculation: Borrow $100,000 for four years.
Interest Due Year 1 $5,800.00 Interest Due Year 2 $6,136.40 Interest Due Year 3 $6,492.31 Interest Due Year 4 $6,868.87 Total All Charges $25,297.58
The underlying capital backing the Heartland Seniors reverse mortgage portfolio at EOFY2020 was:
$699.980m - $597.037m = $102.943m (c.f. $25m figure above)
This shows that with the share capital on the books currently allocated to Heartland Australia, our Heartland is fundamentally four times larger than this new 'Household Capital' challenger brand. But being a 'new brand on the block', it is not a surprise that a reverse mortgage taken out with 'Household Capital' will be somewhat less costly than the equivalent Heartland product (over four years at least).
(Note for comparison that Heartland's Reverse Mortgage variable interest rate in New Zealand is currently 6.2%)
Household Capital Pty Ltd. was established in 2016, and launched in 2017 as a specialist retirement funding provider.
Given all this, I don't see a significant cannibalisation threat from Household Capital Pty Ltd to Heartland's Seniors Australian business. These two are the only two active players of any size in the Australian REL market today. I see room for both brands to grow.
SNOOPY
It is good news, particularly the stable outlook. For those not invested, a ratings company maintaining existing ratings is not going to change your view that a bank/finance company warrants a cheaper price in a recession. A lot of big investors were stung by high rated lending backed investment products not being genuinely worth their ratings during the GFC. I'm guessing that these potential investors aren't going to be convinced by rating companies, hence no wave of new buyers pushing up the price.
It probably means there's just a longer acquisition window as lead indicators like this don't move the price which waits for reconfirmation of the value through released results.
The possibility of a third outbreak may have contributed to a bit of caution.
Just in case any depositors are worried about negative returns from their Heartland term deposits, I should point out that my table above does not show the full picture and was a 'tongue in cheek' reply.
Typically 'high risk banks' are required to back any loans they write. But that requires holding typically only 15% of their loaned out capital. So if term deposit rates did drop to -2% (not impossible but probably unlikely), or maybe 0% (more realistic - a NIM of 2% on deposited funds), then this would shrink Heartland's NIM down from 3.99% to 1.99% (apparently, or would it?). So on that basis it would be impossible to make any money if you were loaning out the money at the same rate you were borrowing it at. But that deposit NIM would only apply to 15% of the loan. The remaining 85% of the loan would not have to be funded by depositors.
That means from a 'profit perspective' Heartland's overall net interest margin that was 4% would decrease to:
(0.15 x 1.99) + (0.85 x 3.99) = 3.5% (actual effective NIM from a reduction in Heartland deposit rates by 2%)
At least, I think that is right. I am trying to show a non-proportional effect that reducing interest rates has on bank loan profits (and how Heartland can still make a profit with loan mortgage rates at 1.99%). This is made possible by retaining the existing 3.99% margin on the non bank backed part of the loan that is facilitated by the Reserve Bank of NZ being supportive of such lending. But no doubt I will be corrected if I have this wrong!
SNOOPY
discl: Not a banker
I have fond memories of MARAC finance too - when i started my first shop 12 years ago (Nov 2008 GFC!) - the banks wouldn't touch me, not even an OD - Marac loaned me $33k to get going ..... Then 2 years later they offered me a distressed store that they had security over - we did a deal - the other parties got to walk away without ugly bankruptcy process. Banks still wouldnt touch me four years in.
13 years later we are thriving. Thanks MARAC/HGH
Basically I think HGH does banking differently. Which is awesome in this environment....