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  1. #16
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    quote:Originally posted by stormrose

    Indicators don't look so great for the NBFIs. They need capital to ride out a downturn - and many are too highly geared to do this.
    Even though SCF may have the size a general downturn in the FinServ sector will cause capital flight to something else.
    Wait for the crash, buy when the survivors are recovering.
    Agree with that and if there are defaults in the industry then it will probably hurt SCF as far as inflows go. Longer term however it will ensure that the sector is better regulated which will only help a company like SCF. Because of its capital base it could well be in a good position to pick up the pieces from other finance companies which are higher geared.

  2. #17
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    Snapper What is so good about South Canterbury Finance last time I read their prospectous which is about $ years ago. I would not look at their secured
    debentures. Please tell me what has changed since then.

  3. #18
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    Longstanding finance company - been around for ever
    Been through all parts of the business cycle
    Well capitalised
    Stable management
    Good reputation
    Well supported by advisor groups.

    No denying, however, that it doesn't offer the same security as the major banks but it would have to be one of the strongest in the non-bank sector.

  4. #19
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    If you are after good interest rates put your share of money that u want to put into fixed interest in to a reputed overseas bank. This way you get good interest on the money as you dont pay tax on interest.

  5. #20
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    Snapper Whats New that was what was said four years ago but prospectous detailed some of the things it was lending on and this raised alarm bells with me so what exactly is new. Your statement would cover over 90% of finance companies. Can you come up with any concrete changes or other reasons why this is a finance company to invest in or with.

  6. #21
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    quote:Originally posted by pimpit

    If you are after good interest rates put your share of money that u want to put into fixed interest in to a reputed overseas bank. This way you get good interest on the money as you dont pay tax on interest.
    if you're a NZ tax resident you must pay tax on your worldwide income. Not declaring would be evasion. Are you referring to the attraction of cashflow timing?

  7. #22
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    Support for your view Enigma

    "Capitalist and others banks and fund managers have a vested interest in keeping you out of finance company debentures. They want you to invest in managed funds thet gross you less than 2% and if they did not have competition from finance companies what would the banks offer you in interest maybe 0.2% to make their managed funds look good. And they would probally increase mortgage and loan rates by at least 2% due to lack of anywhere else to obtain loan money."


    ASB remarks just sour grapes, say finance companies

    08.09.05
    By Georgina Bond


    Finance companies have come out fighting after one of the country's largest fund managers warned their debentures were "seductive" and posed unnecessary risk to small investors.

    Yesterday, many labelled the comments by ASB Group Investments "sour grapes".

    Elders Finance and Hanover Group executive chairman Mark Hotchin said the comments "smacked of desperation" as fund managers were losing money and market share to finance companies.

    "And so they should be because the returns are better and they are safer."


    He was angry finance company debentures had been called "seductive".

    "It's seductive because it's real. You're the first cab off the rank so you get paid first."

    Finance companies committed to paying a certain rate of return, whereas investors did not have that commitment from fund managers.

    On Tuesday, ASB Group Investments head Rob de Luca said investors put their money with finance companies seduced by the phrase "first ranking secured deposits" but, in many cases, their money was anything but safe.

    After analysing the financial reports of its competitor finance companies - guardians of more than $8 billion of hard-earned cash - ASB said many were earning weighted average interest margins of between 15 to 40 per cent, but were paying investors well below that at between 9 to 10 per cent.

    De Luca said a lot of that money was lent out to highly geared property developers and those returns were not appropriate returns for that risk.

    Although finance companies have had a dream run in recent years on the back of a rising property market, De Luca expected returns on the property market and investment in general to be more subdued going forward. This meant investors were not getting the security they would expect. Many finance companies felt ASB was painting the industry with too broad a brush.

    St Laurence Group managing director Kevin Podmore agreed investors were not getting appropriate returns for their risk in some instances.

    "But not everyone is charging 40 per cent interest rates."

    He suggested an independent rating process was needed to help investors gauge the level or return against the risk.

    Western Bay Finance chairman Jim Smylie said banks created a great opportunity for finance companies 10 years ago when they "wouldn't help the average man in the street".

    "Now they've realised what they have missed out on and are fighting for market share and trying to get back into the market we're in."

    While it was valid to urge investors to be cautious about where they put their money, it was up to the market to decide whether the returns on their risk was appropriate.

    Smylie did not think there was cause for alarm about an industry meltdown if the property cycle took a turn for the worse.

    "I think there's going to be a correction and I think some finance companies will find it difficult but they will just be absorbed by bigger players like ourselves."

    North South Finance managing director Darryl Eastgate was surprised at ASB's criticism.

    "North South has an $8 million overdraft from ASB, so the bank's security ranks pari passu with our investors."

    ASB Group Investments is New Zealand's third-largest fund manager with more than $5.3 billion under management.

    Asked if the statement by its investment arm was as strong as the bank anticipated, ASB head of corporate affairs Linley Wood said the aim was to urge caution and to remind investors of the me
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  8. #23
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    Elders Finance reports profit jump

    08.09.05 6.40am


    Commercial finance company Elders Finance has reported a 61 per cent leap in its annual net profit to $35.4 million, compared with $22 million last year.

    Mark Hotchin, executive chairman of its parent company, Hanover Group, said the"stellar performance" reflected strong operating revenue growth and tight control of operating expenses.

    Operating revenue passed the $100 million mark for the first time at $109 million, up from $80.9 million last year.


    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  9. #24
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    We have strayed a little from the topic, which is [u]not</u> whether to place money on secured (or any other) debenture through a finance company, [u]but</u> whether or not to buy shares in SCF should it list !!

  10. #25
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    Skelessi then give us some reason why we should invest in this companies shares.I for one, unless you can convince me something has dramatically changed in last 4years, would not touch this with a barge pole. Please Give me some pertinent facts. The rating companies seem in my opinion have a very biased view of finance companies. Some they rate highly on my reading of their prospectouses would be some of the most dangerous to invest in and vice versa.

  11. #26
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    Enigmna, sorry I didn't get back to you earlier, but I have been out of town. To answer your question, I think the attributes of SCF as a potential investment are very sucinctly summed up by Chris Lee who is a pre-eminent and well researched sharebroker on the Kapiti Coast. I trust he will not mind me quoting him. He says:

    “The best of the finance companies in New Zealand, without much argument from any analysts or commentators, are UDC Finance and South Canterbury Finance.

    They share a genuinely long heritage, they have substantial capital, they lend at rates comparable with the trading banks, they are profitable, and they have knowledgeable management and directors.
    The best of the finance companies in New Zealand, without much argument from any analysts or commentators, are UDC Finance and South Canterbury Finance.

    They share a genuinely long heritage, they have substantial capital, they lend at rates comparable with the trading banks, they are profitable, and they have knowledgeable management and directors.
    SCF lends across all the sectors, its bad debt level is low, its margins fair, and thus from its billion dollar of assets, it produces a tax-paid profit of around $25 million, a 2.5% margin. By comparison, Provincial Finance last year produced the same sort of profit from a $250 million book, suggesting an effective tax-paid margin of 10.0%.

    SCF's best known figure is Allan Hubbard, a legend in the town, driving a very old, olive green VW Beetle, spurning toys like cell phones, reaching his office each day before dawn, and reading all the mail, the better to stay informed.

    He still signs every debenture certificate and there are 700 issued each week.

    But SCF also has competent staff, headed by CEO, Lachie McLeod, once a Super 12 referee and once Westpac's South Island head of rural lending, and it has other very experienced, down-to-earth directors and management.

    McLeod is a quiet, fit young man (40s, I guess) who heads a structure that has several wholly-owned companies in cities like Palmerston North, Dunedin, Auckland and Hamilton, each named by their geographic base.

    The company's funding manager is Kevin Gloag, probably the most experienced and respected funding manager in the industry, himself once a Highlanders rugby coach.

    South Canterbury Finance prides itself as having no frills, just a successful business, built on competent, normal people, confidently performing their duties knowing that if the company ever needed more capital, either Allan Hubbard would write a cheque, or any number of institutions would take up a share opportunity.

    As its owner is 77, there must be a fair chance that some of the company will be floated, perhaps this year.

    If that occurs, the queue for shares will stretch way past Ashburton and Oamaru, and I will be part of it. “

    Chris Lee has done extensive research into the finance company sector and his weekly articles (not always complimentary) may be read on his website at &lt;www.chrislee.co.nz&gt; They are usually most informative and interesting.

  12. #27
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    Long Strangle,

    What do you think of South Canterbury Finance?
    \"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>

    The information you have is not the information you want.
    The information you want is not the information you need.
    The information you need is not the information you can obtain.
    The informaton you can obtain costs more than you want to pay.

  13. #28
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    Skelessi Thanks for efforts so far.But have you read their prospetous not their investment statement. Who do they lend to is it a broad spectrum or a very narrow focus,and what are the percentage limits to any one sector. The last time I bothered to look at one of their prospectuses the very narrow focus they concentrated on (I am not saying they are not successful) for lending made it a very high risk company in my opinion if there was a down turn in that sector. Very like a certain finance company (with no connection to South Canturbury Finance just used as an example)that has a huge exposure to VTL and it's clients.

  14. #29
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    There is no prospectus yet. The discussion arose out of an article in the New Zealand Herald (see posting by rmbrave on 07/09/2005 for verbatim copy) suggesting that the company might list before the end of the year. I can only suggest that with it's position in the market and track record a float would be overwhelmingly successful. If you do not like finance companies (which appears evident from your comments) then, if it should list, stay away. I won't.

  15. #30
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    Skelessi I have money invested in five finance companies in their first ranking debentures and the odd capital note. To the tune of about $60000.00 Their prospectous for borrowings should be available by making a phone call asking about lending them money they usually have an add in NZ Herald. Tell them you want the prospectous not the investment statement which is what they send most people. But you have a full legal right to ask for the full prospectous. This might give you a better insight into the company. As I said about four years ago it made me run a mile. And it is not easy to obtain a current one from Australia.

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