HGH - Heartland Group Holdings

[winner69]

Will Percy buy more today?

Off course - the price now above the 200MA line - breakout time and best time to buy they say

[percy]

Will Percy buy more today?

No,as I am already "well positioned."
From the chart.
today's share price is well above the;
50 day EMA $1.20
100 day EMA $1.21
200 day EMA $1.21
499 day EMA $1.13.
The MACD and relative strength are also positive.
So yes today would be a good day to add to your holding.

[kizame]

No,as I am already "well positioned."
From the chart.
today's share price is well above the;
50 day EMA $1.20
100 day EMA $1.21
200 day EMA $1.21
499 day EMA $1.13.
The MACD and relative strength are also positive.
So yes today would be a good day to add to your holding.

Unforunately i bought back in today,now I'm going to have to read about being well positioned again and again haha

[percy]

Unforunately i bought back in today,now I'm going to have to read about being well positioned again and again haha

Ha ha..!
Enjoy it.!!!!!!!!!!!!!
The time to be concerned is when I do not say it.!!!!!!!!!
lol.

[percy]

As is often the case, Chris Lee's comments in this week's taking stock are of interest to HBL shareholders.
Go to www.chrislee.co.nz press enter then taking stock.

[beetills]

Chris has always been bullish regarding HBL.

[percy]

Chris has always been bullish regarding HBL.

He has also been "right on the money" with all his HBL posts.

[axe]

As is often the case, Chris Lee's comments in this week's taking stock are of interest to HBL shareholders.
Go to www.chrislee.co.nz press enter then taking stock.

Great read - thanks for sharing. I agree with his points re: kiwibank listing - but I do not think the political will exists (before this election). After is a different story

Although parts are being put into place http://www.nzherald.co.nz/business/n...ectid=11617755

[Snoopy]

Time for our once a year peak into customer ‘asset distribution’ and ‘asset quality’. Our concentration test is that:

Highest single new customer group exposure (as a percentage of shareholder funds) <10%

The greatest regional area of credit risk in dollar terms is Auckland, with $725.318m worth of assets. This represents:

$725.218m/ $2,891.597m = 25% of all loans

However this represents a proportion well short of the 40%+ regional loan share that used to apply to the Canterbury region at HY2013. So I don’t rate that concentration of loans in Auckland as being an issue. Particularly so when ‘Auckland’ is such a varied catch all group.

Now a word on sset loan quality.

Looking at Note 38d, the Grade 6 monitor assets have come down a lot from $198.37m to $115.76m. Great news!

Next, the sum of the grade 7, 8 and 9 assets is now $31.765m, down from $67.313m. This is a very significant improvement.

When these loans appear on the balance sheet, they are netted off against provisions for impaired assets already made. The provision for collectively impaired assets is now $6.999m, down from $15.961m. However, there is a new provision that wasn’t there in FY2013 of $8m, a ‘fair value adjustment for present value of future losses’. What does that new provision mean? The losses are going to be realized sooner than expected perhaps? {Edit: the ‘fair value adjustment for present value of future losses’ is an accounting provision relating to the newly acquired Home Equity Release Loans}

Overall, ‘problem assets’ (grade 6, 7, 8 and 9 combined) total $147.591m. This is down 45% on the $265.683m recorded in FY2013.

I am rather overdue for our once a year peak into customer ‘asset distribution’ and ‘asset quality’. Our concentration test is that:

Highest single new customer group exposure (as a percentage of shareholder funds) <10%

Regional Risk

From AR2015 Note 18b, the greatest regional area of credit risk in dollar terms is Auckland, with $830.027m worth of assets. This represents:

$830.027m/ $3,250.468m = 26% of all loans

This is slightly up on FY2014. But I don’t rate that concentration of loans in Auckland as being an issue. Particularly so when ‘Auckland’ is such a varied catch all group.

Industry Group Risk

From AR2015 Note 18c, the greatest 'business group' risk in dollar terms is Agriculture, with $537.286m worth of assets. This represents:

$537.286m/ $3,250.468m = 17% of all loans

This is slightly up on FY2014, when agriculture was

$469.020m/ $2,906.596 = 16% of all loans

Both these figures are quite high and trending in the wrong direction for FY2015. Given that Heartland is nominally a specialist agricultural lender I wouldn't be too concerned. But if agricultural loans go above 20% of the total (or dairy representing about half the agricultural loans above 10%), then I would sound an alarm bell. This situation will need careful watching when the FY2016 result details are released IMO.

Now a word on Asset Loan Quality.

Looking at Note 19d, the Grade 6 monitor assets have come down from $115.76m to $99.849m. Good news!

Next, the sum of the grade 7, 8 and 9 assets is now $26.533m, down from $31.765m. This is a useful improvement.

When these loans appear on the balance sheet, they are netted off against provisions for impaired assets already made. The provision for collectively impaired assets is now $10.201m, up from $6.999m. So a few more losses have been 'taken on the chin'.

The $8m ‘fair value adjustment for present value of future losses’ in FY2014, has reduced to $6.242m in FY2015. This provision relates to the Home Equity Release Loans acquired in FY2014. I cannot explain why this reduction has occurred

Overall, ‘problem assets’ (grade 6, 7, 8 and 9 combined) total $126.382m. This is down 14% on the $147.591m recorded in FY2014.

SNOOPY

[Snoopy]

So HBL have $64.1mil of "surplus capital" on the books.
I am not surprised,as they said they had "surplus capital."

Percy, if you are a high jumper and always set the bar at a height that will make you look good, then you will always look a champion.

PT was of the opinion that any capital over and above the minimum reserve bank requirements should be regarded as 'surplus capital'. But to have this view, I think you would need to be considering HBL from a snapshot perspective, based on what might happen in average market conditions. The resrve bank is concerned with the stability of the banking system, not teh welfare of Heartland shareholders. In an underestimated downturn, it is existing Heartland shareholders who will be first to suffer any 'capital attack'. The reserve bank will not mind if shareholders take 'a bit of a hit', as long as the banking system remains stable.

From a management perspective, Heartland do care about shareholders. So, quite rightly, you might expect them to set the 'surplus capital' hurdle higher. Heartland are IMO, still in a 'build the company' mode. So it would be natural to think that Heartland would run with a little 'surplus capital' on the books to take advantage of any 'bolt on acquisitions' that might come along. It is with this background and context that my "$64.1mil of "surplus capital" on the books" comment was made.

The constraint going forwards is that the there are two 'big fish' on the horizon as potential acquisitions: UDC and MTF. If either of these were purchased it is possible that the size of Heartland would effectively near double overnight. In either case "$64.1mil of "surplus capital" " would fall way short of what was required for such a takeover. And it is possible that all of the $64.1m of surplus capital could be wiped out in a clear the books rural loans writedown. So it looks to me as though the chance of a deeply discounted cash issue in the next few months is high. If I was in the market for HBL shares I would wait for the cash issue! No point iin overpaying today.

SNOOPY