NZ Finance - Building an Empire

[rmbbrave]

Me too.

I bought some at 41 and 45 though.

[rmbbrave]

quote:Originally posted by rmbbrave

There are now buyers wanting 120,000 shares at between 41 and 50 cents and there is one person trying to sell 1000 shares at 65 cents. The list price was 30 cents back in October.

The trouble with this situation is that you can't get a proper value for NZF. Sooner or later (sooner is far more likely) one of the buyers is going to break ranks and buy at 60 cents and when they do I will change the name of this thread to NZ Finance - Money doubled in 5 months!

[rmbbrave]

"The consideration is to be satisfied by the issue of 2,666,667 ordinary shares in NZF at an issue price of 45 cents (based on the last 20 business days closing price)."

To whom will these shares be issued?

To the current owners of Approved Mortgage Brokers?

Will there be a rights issue?

[rmbbrave]

Here I am talking to myself again.

I have found the answers to the questions I put forward in my last post.

NZF has a plan so cunning you could pin a tail on it and call it a weasel, NZF is buying AMB with shares in NZF.

I believe Bob Jones in the 1980's was a master of this. He bought buildings with shares in Bob Jones Investments. Bob got the buildings, the previous owners got shares.

The lastest news on the share price is:

There is now a willing buyer at 51 cents (16000) and a seller at 65 (1000). Good luck to that buyer he'll need it. Buyers outnumber sellers 76:1

Jenny Ruth once asked "Why did they bother? (to list). And now she knows...


NZ Finance to buy Approved
New Zealand Finance Holdings will buy Approved Mortgage Brokers for $1.2 million from April 1.
Monday, 14 February 2005

By Jenny Ruth


For Approved's existing four owners, managing director Dave Shatford who bought out co-founder Karl Baker in April last year, the other co-founder Lawrence Diack, and directors Michael Beal and Nick McCorkindale, the deal is essentially a share swap as NZFH will pay them by issuing nearly 2.7 million new shares at a nominal 45 cents each.

They are already ahead on the deal. NZFH offered 5.5 million shares in an IPO last October at 30c and those shares are now trading at 50c.

"We were keen to give them some cash (but) they were very keen to take scrip," says NZFH managing director John Callaghan.

Approved will continue to operate as a stand-alone business quite separate from NZFH's own mortgage broking operations.

"Our mortgage broking operation has generally specialised in the sub-prime market. We do a lot of non-conforming lending through Liberty and Bluestone," Callaghan says.

NZFH had been looking for a way of getting into the premium end of the market and that was what attracted it to Approved, he says.

He wants to keep the two brands separate to protect their respective places in the market. "You don't go to Mercedes to buy a Toyota and you don't go to Toyota to buy your Mercedes."

Approved has 11 franchisees and a total of 17 staff. Buying approved means NZFH's combined mortgage broking operations are approaching writing $1 billion a year in home loans.

Shatford says the big advantage of being part of a larger group will be that Approved will be able to take bigger risks as it seeks to expand. " We're looking at growth beyond Auckland and Wellington. That's a big cost," Shatford says.

It also means that Approved can stick to its own knitting rather than exploring other niches such as the sub-prime market. He says Approved's shareholders and NZFH have been talking about the deal, which is still subject to NZFH completing due diligence, since September

[PennyPicker]

Thanks for the posts rmbbrave, don't get despondent, I and others I'm sure are following them with great interest.

My feelings during the leadup to NZF listing were that there wasn't alot of good news, it was either quiet or negative points were being bantered about with respect to the time/industry. Maybe just some brusied egos following MPM?

I suspected at the time that it was possibly a ploy by many to reduce interest, (even if only on this board) in the IPO so they could be assured the largest holding possible. (cynical I know .

Presumably if there's a buyer at 51 that means there are absolutely no spare shares available?

Disc: Hold since IPO (and topping up when I can).

[PennyPicker]

quote:Originally posted by rmbbrave

The trouble with this situation is that you can't get a proper value for NZF. Sooner or later (sooner is far more likely) one of the buyers is going to break ranks and buy at 60 cents and when they do I will change the name of this thread to NZ Finance - Money doubled in 5 months!

Up 10% now to 55.

PP.

[rmbbrave]

Now up to 57. 14% today!

Buyers outnumber sellers 10 to 1

[rmbbrave]

Could you please tell me what their respective P/E's are. On the chart I look at NZF's P/E is N/A.

[PennyPicker]

A high PE in comparison to other companies in the sector is acceptable if there is high growth expected, isn't it?

I've tried calculating the PE and EPS based on the information available in this news artical...

quote:17/12/04

FORECAST: New Zealand Finance Holdings forecasts $2.5 million profit


Following a review of current performance, New Zealand Finance Holdings Limited (NZFH) directors are forecasting a net profit after tax to exceed $2.5m for the year ended 31 March 2005.

But end up with some way out figures.

What's the PE you found/calculated?

PP

[rmbbrave]

According to http://www.investopedia.com/university/peratio/

The P/E is Share Price divided by EPS
And the EPS is (Net Income minus dividends) divided by Number of shares

Total revenue for NZF for the six months to 30 September 2004 was $5,667,824 so for one year I assume it is $12m. The number of shares is 69m

The EPS is 12m/69m = 0.17
The P/E is therefore 0.57/0.17 = 3.35.

I have provided my working and assumptions so please feel free to correct any mistakes.