good points percy im in agreement the reverse mtge has the opp to be biggest in aus/nz
Printable View
Market always forward looking so here's my take on forward guidance.
Mid point of $76m on 560.1m shares gives forecast earnings of 13.57 cps, call it 13.5 cps because some shares will be issued in lieu of dividend during the year.
Now what's the right PE given their growth rate and compared to their peers ? Time for a peer review and detailed analysis of comparative forecast growth rates...will look at that when I have time and post my thoughts.
In the meantime, I wish I could say I was surprised by the rising impairments but I'm not. As I have warned before...start making low deposit loans and they come back and bite you.
Overall a pretty reasonable result I feel. Highlight for me is growth in reverse equity loans especially in Australia, the low point the level of impairments.
Gut feel this is a hold. I feel a PE of about 13.5 is right and on 13.5 cps this gives me a target price of $1.82 by early 2019. At $1.74 less the pending 5.5 cps final dividend due shortly, (net price $1.685) and assuming 9.5 cps in divvies in FY19 holders are looking at a gross yield inclusive of imputation credits of (9.5 / 168.5) / 0.72 = 7.8%. I think that's pretty good and makes the shares a good hold.
The trouble I see with Reverse Mortgages is that there is nothing very special in them. Sure HBL have some first mover advantage. But lets face it. Low loan to asset ratio RE loan, high interest - no reason at all to prevent other banks entering the fray. And then they can do much larger loan /asset ratio loans and start squeezing margins.
All the Australian banks are heavily capital constrained and these loans need capital. The major's in Australia have shown a lack of interest in this type of lending for a VERY VERY long time. I think this ultra low risk Australian lending is the jewel in the crown of the company whereas no deposit unsecured Harmoney lending will continue to be the thorn in their side. Thankfully the former is many times larger than the latter and growing at a vastly quicker pace.
Love the way they present numbers
Tout the EPS going up from 12 cents to 13 cents ......pretty good really
Put a couple of decimal points in the sums
EPS increased from 12.33 cents in F17 to 12.53 cents in F18 - a miserly 1.6%
That’s probably why divie not up ...new capital not working that well (yet)
This is a good achievement
Significant developments and key initiatives around employee diversity, including partnership with Global Women and Champions for Change, and introduction of flexible working policy
I regret selling out of HBL even more now (This one is a cracker - https://www.globalwomen.org.nz/our-p...483/jan-thomas)
Capital ratio.ROE,ROC.
Without having to have satisfactory NZ Reserve Bank capital ratio to support RELs it means Heartland Group will be able to grow RELs ,and use make better use of their capital to grow their Australian operations.
Heartland Bank will off course still need to comply with NZ Reverse Bank banking ratios.
This ones a cracker ...hopefully not just been by swayed by fellow directors to be a champion and doing it because he truly believes
https://www.globalwomen.org.nz/our-p...eff-greenslade
But I guess the best of the latest results is another free Maori language course! My two new words for today are:
whakaro - a state of mind
tautoko - champion
Hey - this must be worth more than just the measly increase of the EPS by only 1.6%! BTW - what is measly in Maori? They probably never will teach us that particular word :);
actually i was in a rush think my sentencing was wrong it should be hbl would get taken over by a bigger fish if the reverse mtges become big business.
Yes it seems trite to have a presentation to analysts and round the EPS to the nearest whole number. I smelled a rat straight away.
Off note 8 http://nzx-prod-s7fsd7f98s.s3-websit...214/284523.pdf in the financials and based on diluted shares on issue last year I get EPS rising from 12.24 cps to 12.535 cps a gain of just 2.4%. The reason is the growth in impairments. But wait there is more....
We have a new accounting standard that requires them to model impairments over the expected life of the loan
http://nzx-prod-s7fsd7f98s.s3-websit...214/284490.pdf - see more at page 14.
Two things occur to me.
1. This is proof of what I have been saying all along that their methodology of measuring impairments in the past has been to understate them.
2. Its does seem awfully convenient that they are taking this charge of $14-18m net directly as a charge against equity, i.e. an extraordinary item below the normal profit line...after all we can't have such mundane things impacting management's performance bonus next year can we !
Holding.... but less enthusiastic than I was.
But wait there's even more...its all okay because based on this year's forecast EPS will grow from 12.535 cps to 13.5 cps, growth of 8% !
Once the guru analysts work out that EPS is going to grow at 8% this year the share price will really take off !
I think it is a good result . Have bought more and have a lot. Think women are very important especially for reverse mortgages.