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  1. #13511
    Dilettante
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    Quote Originally Posted by percy View Post
    Below is part of a letter my brother sent me a few days ago.He is a retired valuer,who valued farms,commercial and residential properties.He lives in Hobart and is currently on holiday in Queensland.OK deals with Australian issues.I see similar issues arising here.


    We will never see the end of this mess. Last Saturday finance reported that mortgage holders , 8% were using the Bank holiday of interest only, 22% were on Jobkeeper ($750/week to firm then employee) ,15% on Jobseeker (the Dole) of $557.85/week which will return to normal of $282.85/week in January. Then 11% have cashed early superannuation. 3.3 million of the 6 million who have a mortgage will need to find a job within six months or they will default. The average mortgage is $467,700 so that is more than $1 trillion. The rescue package allowed company directors to trade while insolvent for six months. After the 25th September, unless there is more Federal money, there will be a ‘tsunami ‘ of insolvencies. Noted many shops vacant on our travels.
    Ended Alexandra Beach and now at Broadbeach till 24th then direct flight Brisbane to Hobart. Having trouble with G2G form re entry to Tasmania and likely will l have to home isolate for 14 days.
    Sobering reading percy. Thanks for sharing.

  2. #13512
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    Read the news...the cases were known around 3pm to 3.30 Pm as the General director said....then u look at the market overall... around 3pm onwards, all shares started to trade lower...so.....insider news eh??

  3. #13513
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    I was wondering what was causing hgh to drop, the announcement didn’t seem to give reason. Equally suspicious here King

  4. #13514
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    If u see broadly nz shares....all started to trade lower after 3pm then big buys at the end...so.....might be the fundies got the news....

  5. #13515
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    Another forum I frequent a member was told from an insider somewhere that a major city had cases and would be going into lock down. That post was a good few hours before the announcement so I have no doubt the news was circulating

  6. #13516
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    Quote Originally Posted by thegreatestben View Post
    Another forum I frequent a member was told from an insider somewhere that a major city had cases and would be going into lock down. That post was a good few hours before the announcement so I have no doubt the news was circulating
    Winston stated he was told earlier in he day there was a "suspected case", so it may have been early speculation .3 PM sounds like it was first confirmed and Ministers informed.

  7. #13517
    On the doghouse
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    Quote Originally Posted by Snoopy View Post
    No one knows exactly how this Covid-19 tail may whip around and strike down HGH profits in the future. But I would argue you don't have to know this to build an investment case. I would argue the solution to investing in these circumstances is to do a 'Scenario Analysis'. That means look at different possible outcomes and then do a probability assessment of how likely each of the possible scenarios will unfold. Such a system is by no means perfect. But it is one better than sitting in your investment armchair utterly bamboozled that you cannot see a clear path ahead. You don't need a clear path to make rational investment decisions if you use 'Scenario Analysis'. I have compiled three forecast scenarios: Scenario 1b, Scenario 2b and Scenario 3. I assess that the likelihood of each of these scenarios occurring in order is 30%, 50% and 20% (observant readers will notice these three relative probabilities add up to 100%).

    So what happens when I combine my forecast from each scenario in those proportions?

    FY2021 eps Probability Factored Earnings Contribution
    Scenario 1b 8.6c 30% 2.58c
    Scenario 2b 10.4c 50% 5.20c
    Scenario 3 14.8c 20% 2.96c
    Total 100% 10.7c

    FY2022 eps Probability Factored Earnings Contribution
    Scenario 1b 7.7c 30% 2.31c
    Scenario 2b 11.3c 50% 5.65c
    Scenario 3 20.1c 20% 4.02c
    Total 100% 12.0c

    Now I believe that a suitable PE ratio for a second tier finance company should be between 10 and 12 in the current business environment. So this would imply the following share price ranges based on the above probability combined projected earnings.

    FY2021: $1.07 to $1.28
    FY2022: $1.20 to $1.44

    With the share trading at $1.33 today, I would argue the share price has got ahead of itself and is now in the mid price range of FY2022 earnings projections. There are too many uncertainties about to justify buying in at this price now. I would like to increase my own stake in HGH further. But I am going to wait for a pull back in the share price before I do so.
    Today I believe marked an investment inflection point for Heartland. A day when New Zealand's greatest ever banker (Jeff) defied the market odds with the support of New Zealand's greatest ever banking sector investor (Heartland share price losses on the market trimmed to 2.5%). With the share price back within my buying range, thanks to the second Covid-19 shock I topped up today at $1.18. That little transaction averaged down my HGH buy in price to $1.37.

    For those who want to reflect on the details of my future scenario modelling for FY2021, you need to look at my posts 13411, 13429 and 13438, But very roughly, my base case, with FY2019 as the base reference year, was motor loans down 10% by revenue, business loans down 15% by revenue and the reverse mortgage business flat. My thoughts now are that maybe the business loan performance will be a little worse, and maybe the reverse mortgage business will fare a little better. Bu those 'gut feel ' changes aren't 'fundamental enough' or 'certain enough' to require a full rework of my modelling.

    The problem with all of these 'historical precedent' valuations is that they are all just that - historical. What investors on this forum want to know about is the future and it is here that the opinion of "New Zealand's greatest ever banking sector investor" becomes invaluable. And that dear fellow investors is what I intend to tell you, just as soon as I can figure out who "New Zealand's greatest ever banking sector investor" is (so I can ask them) ;-P

    SNOOPY
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  8. #13518
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    Snoopy you're obviously far cleverer than me when it comes to this (not hard) I appreciate your posts and I consider your points where I understand the context.
    I go with my gut more than I should, but I'm in HGH at 1.08, if you're buying more at 1.18 I guess I'm doing ok!

  9. #13519
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    Quote Originally Posted by thegreatestben View Post
    Snoopy you're obviously far cleverer than me when it comes to this (not hard) I appreciate your posts and I consider your points where I understand the context.
    I go with my gut more than I should, but I'm in HGH at 1.08, if you're buying more at 1.18 I guess I'm doing ok!
    Great post TGB, I'm with you all the way. I'm in at 1.06 after holding for many years. Hopefully this COVID thing is not going to be to much more damaging.

  10. #13520
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    For my money Snoopy me old doggy mate, there's ten's of thousands of SME's in Auckland who have been hanging on by their fingernails. Another protracted lockdown will see widespread carnage.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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