HGH - Heartland Group Holdings

[winner69]

Keeping back the good news / profit upgrade until later in the year

http://nzx-prod-s7fsd7f98s.s3-websit...143/279390.pdf

[trader_jackson]

Keeping back the good news / profit upgrade until later in the year

http://nzx-prod-s7fsd7f98s.s3-websit...143/279390.pdf

Yes saving the $70m+ for a few weeks out from full year result.
No worries as the share price has fallen soo much that Mr Market is no longer really expecting $70m+ anyway

[winner69]

Yes saving the $70m+ for a few weeks out from full year result.
No worries as the share price has fallen soo much that Mr Market is no longer really expecting $70m+ anyway

tj ... I think that $70m+ is now a pipe dream. I need to temper my enthusiasm eh

Getting to $68m means Q4 growth needs to be 20% (YTD is only 8%)

Me becoming bearish could be good for share price though ....look out for $2 again soon.

[winner69]

Did the words say much ...was Jeff full of enthusiasm ...or was it all a bit boring and mundane?

[iceman]

Did the words say much ...was Jeff full of enthusiasm ...or was it all a bit boring and mundane?

Boring and mundane. As it should be. HSF growth pretty impressive though eh. Interesting comments about the reverse mortgage type scheme announced by the Aussie Government in their budget. One has to wonder whether this will be a competition for HSF or draw more people's attention to this option to supplement retirement funds, which could be beneficial to HSF !?

[percy]

Boring and mundane. As it should be. HSF growth pretty impressive though eh. Interesting comments about the reverse mortgage type scheme announced by the Aussie Government in their budget. One has to wonder whether this will be a competition for HSF or draw more people's attention to this option to supplement retirement funds, which could be beneficial to HSF !?

The negative is Australian retirees will be able to get a weekly/fortnightly supplement from their government,at better terms than Heartland can offer.
The positive is it will make people more aware of using reverse equity loans.
The real big positive is that the Australian government will not offer lump sum loans.These lump sum loans are being used to do up houses for sale,home improvements,travel ,new cars etc.
Therefore the positives will far out weigh the negatives.

[Beagle]

tj ... I think that $70m+ is now a pipe dream. I need to temper my enthusiasm eh

Getting to $68m means Q4 growth needs to be 20% (YTD is only 8%)

Me becoming bearish could be good for share price though ....look out for $2 again soon.

At 1.7 times book and trading on a forward PE of 14 I think HBL is still fully priced. I see no reason whatsoever for it to go back to $2 anytime soon.

[Snoopy]

Note that the financial year starts on 1st July of the previous calendar year and ends on 30th June.

Year	Dividends Paid 'per share'	Significant Event During Year'
FY2013	1.5cps(sp) + 2.0cps	17th December 2012: Heartland becomes a bank
FY2014	2.5cps + 2.5cps	1st April 2014: Seniors 'Reverse Mortgage' Business Acquired
FY2015	3.5cps + 3.0cps	10th September 2014: invests in Harmony P2P startup
		28th October 2014: Credit rating upgraded from BBB- to BBB (Fitch Ratings)
FY2016	4.5cps + 3.5cps
FY2017([)	5.0cps + 3.5cps(f)
Average FY2015 to FY2017 inclusive	7.66cps

(f) indicates forecast result.

I have chosen to use the last three years of operation as indicative, as these years include the full contribution of the Reverse Mortgage Portfolio, a critical component of Heartland going forwards.

Year	Dividends Paid 'per share'	Significant Event During Year'
FY2013	1.5cps(sp) + 2.0cps	17th December 2012: Heartland becomes a bank
FY2014	2.5cps + 2.5cps	1st April 2014: Seniors 'Reverse Mortgage' Business Acquired
FY2015	3.5cps + 3.0cps	10th September 2014: invests in Harmony P2P startup
		28th October 2014: Credit rating upgraded from BBB- to BBB (Fitch Ratings)
FY2016	4.5cps + 3.5cps
FY2017	5.0cps + 3.5cps
FY2018	5.5cps + 3.5cps
Average FY2015 to FY2018 inclusive	8.00cps

I have chosen to use the last four years of operation as indicative, as these years include the full contribution of the Reverse Mortgage Portfolio, a critical component of Heartland going forwards.

SNOOPY

[Snoopy]

Plugging in a representative yield, one that represents the ups and downs of the banking cycle of Heartland in its current form, we can now arrive at our 'Capitalised Dividend Model' valuation

(Representative Dividend per Share) / (Acceptable Yield) = Share Price (an algebraic manipulation of: Dividend per Share / Share Price = Yield )

7.66c / 0.72 x 0.075 = $1.42

A reminder here that NTA was:

91cps

at balance date. This means my fair valuation is at a good premium to asset value, a credit to management from the rag tag of assets that they started with.

This $1.42 valuation is measured at the average point in the business cycle. One might argue that we are now riding high in the business cycle and that this $1.42 valuation is consequently too low given today's circumstances. I wouldn't argue with that. But, ever the bargain hound, neither would I look at buying any shares myself until that share price drifts down to that $1.42 level. Don't say that Snoopy didn't warn you!

Plugging in a representative yield, one that represents the ups and downs of the banking cycle of Heartland in its current form, we can now arrive at our 'Capitalised Dividend Model' valuation

(Representative Dividend per Share) / (Acceptable Gross Yield) = Share Price (an algebraic manipulation of: Dividend per Share / Share Price = Yield )

8.0c / 0.72 x 0.075 = $1.48

A reminder here that NTA was

($569.595m - $71.237m) / 516.684m = 96 cps

at balance date. This means my fair valuation is at a good premium to asset value, a credit to management from the rag tag of assets that they started with.

This $1.48 valuation is measured at the average point in the business cycle. One might argue that we are now riding high in the business cycle and that this $1.48 valuation is consequently too low given today's circumstances. I wouldn't argue with that. But, ever the bargain hound, neither would I look at buying any shares myself until that share price drifts down to that $1.48 level.

SNOOPY

[winner69]

Snoops .....I don’t think we will ever see a share price of $1.48 in the foreseeable future