All numbers based on monthly share price closes and the PEs are the forward looking ones
Between Jan 2013 and Feb 2020 Heartland's PE has ranged between 10.0 and 17.0. Note this excludes post Covid where PE dropped to 7.4.
In the same period Heartland's PE has averaged 12.6 (again excluded post Covid for normality but if included the average would be 12.2)
Always better to use averages than 'midpoints' (which in this case are nowhere near the median)
While Heartland's PE does tend to follow Aussie banks it is generally lower. Why - as Forbar said the other day (and other professional analysts would think the same) this is because of HGH's high risk profile in comparison to international banking peers and HGH's sub scale profile (makes up 1% of banking assets in NZ),
As a matter of interest HGH's PE at $1.81 today is 12.4 and is the same as it was in Feb last year pre Covid ....and not too far away from its average. Maybe current share price is about right on this basis.
Looking forward future shareprice no doubt will be driven by eps growth and in this respect bear in mind that this is less than earnings growth (because of new shares)
Wait until the buyers at large turn the light on with HGH -- PE is bound to increase, Div yield
is likely to come back - with SP repricing up accordingly - as seen with anything else listed
that looks worthwhile (and there are only a select number in that NZX basket) in recent times
The market appears to now be driven by yield to greater degree IMO
India hanging in there at the Gabba ... but quite good cricket watching ...and updating stuff during the quiet patches
Aussie banks have been 're-rated' of late - but who would have believed that HGH has been well and truly re-rated and is now on a P/NTA basis rated higher than all Aussie banks except CBA'
HGH has gone from just average to well above average ... go Heartland - keep the outperformance up.
Here's how P/NTA multiples look now comapred to early November
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Wait until the buyers at large turn the light on with HGH -- PE is bound to increase, Div yield
is likely to come back - with SP repricing up accordingly - as seen with anything else listed
that looks worthwhile (and there are only a select number in that NZX basket) in recent times
The market appears to now be driven by yield to greater degree IMO
I agree with you nztx, the market is yield driven more than on pe’s in this time of low bank interest rate returns. You only have to look at the energy companies yields to see this.
Once the brakes come off the the dividend paying restrictions I think that HGH will surprise. For example with the return of the 11cps dividend @ $2 the yield would be 5.5% net (7.635 gross). Even at $3 on the 11cps dividend the net yield would still be 3.67% net (5.09 gross). Plenty of mileage there in my humble opinion.
Maybe people are using a higher NTA than published because they believe the bad debt provisionings are far too low. Wouldn't less bad debt provisioning feed into a higher NTA? PS writing at the risk of general derision for possibly a very dumb post.
For what its worth I am working my numbers on the official company forecast issued at the time of the FY20 profit announcement. Since then they have confirmed they are trading ahead of that forecast for the 4 months to 31 October $29.9m and have indicated that they have not used any of the previous Covid provisioning. There's also been talk of a revaluation of their Harmoney stake.
Closed at 12.7 times what now appears to be a quite conservative forecast for FY21.
What happens to the share price if there is a profit upgrade to say 15.5 cps and the shares get rerated to the average of the Aussie banks of 16.3 x FY21 earnings, oh my goodness, that's $2.53 ! Couldn't happen, surely not, or could it ?
Last edited by Beagle; 18-01-2021 at 06:20 PM.
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
For what its worth I am working my numbers on the official company forecast issued at the time of the FY20 profit announcement. Since then they have confirmed they are trading ahead of that forecast for the 4 months to 31 October $29.9m and have indicated that they have not used any of the previous Covid provisioning. There's also been talk of a revaluation of their Harmoney stake.
Closed at 12.7 times what now appears to be a quite conservative forecast for FY21.
What happens to the share price if there is a profit upgrade to say 15.5 cps and the shares get rerated to the average of the Aussie banks of 16.3 x FY21 earnings, oh my goodness, that's $2.53 ! Couldn't happen, surely not, or could it ?
From a balance sheet view point it's also realistic. Across 2003 to 2020, ANZ reached a max of 3.0x times net assets (in Sep2007). More recently, 2.20x and 2.23x net assets were seen in Sep2010 and Sep2013 respectively. HGH had net assets of $1.20 at June 2020. A multiple of 2.20 gives you $2.64. A 3.0x multiple gives you a barely believable $3.60x, which would increase past $4 given NTA is expected to increase beyond current levels.
From a balance sheet view point it's also realistic. Across 2003 to 2020, ANZ reached a max of 3.0x times net assets (in Sep2007). More recently, 2.20x and 2.23x net assets were seen in Sep2010 and Sep2013 respectively. HGH had net assets of $1.20 at June 2020. A multiple of 2.20 gives you $2.64. A 3.0x multiple gives you a barely believable $3.60x, which would increase past $4 given NTA is expected to increase beyond current levels.
Interesting that ANZ sold UDC Finance to Shinsei Bank for 1.2x NTA.
Originally Posted by winner69
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