HGH - Heartland Group Holdings

[winner69]

Snoops

I think you will find that Heartland’s equity in Harmoney is treated as an Investment in Equities and that equity as such is ‘valued’ each year with any change in that value going through Income Statement.

Heartland don’t pick up their ‘share of Harmoney’s profit’ in their accounts. They do not equity account Harmoney’s earnings.

The lending done through Harmoney is done in Heartland’s name (just like others using the platform) and it is those loans that Heartland shows in their books. Harmoney is just a shopfront Heartland use.

I admit I haven’t delved too deeply into Heartland’s account to say that’s how it’s done but it appears so but willing to stand corrected if this is a load of the proverbial.

A2 investment in Synlait is a lot clearer to understand - have a quick look at their accounts to see.

[Beagle]

Reoccurring theme Beagle ?

Not a theme, although real estate prices have also really surprised. There's no question that the economy has been hit very hard with the Covid sledgehammer, (sharpest GDP decline since the great depression in the 1930's), and one has to be super careful with stock selection.

HGH seems to be weathering the storm pretty well so far...only time will tell if their bad and doubtful debt provisioning is adequate.

[winner69]

Not a theme, although real estate prices have also really surprised. There's no question that the economy has been hit very hard with the Covid sledgehammer, (sharpest GDP decline since the great depression in the 1930's), and one has to be super careful with stock selection.

HGH seems to be weathering the storm pretty well so far...only time will tell if their bad and doubtful debt provisioning is adequate.

That’s old new news

I read in the paper that THE RECESSIONS OVER

[Beagle]

That’s old new news

I read in the paper that THE RECESSIONS OVER

LOL wouldn't it be wonderful if that was the truth.

[Norwest]

Lot's of positives in this thread, I want to put another angle into the discussion

Four reasons why I'm not currently invested into HGH:

1. It's a BBB grade bank.

An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial commitments on the obligation.

I don't think that anyone could successfully argue that we are not meeting the two underlined situations right now.

source: https://www.standardandpoors.com/en_...ourceId/504352

2. OBR is in effect

Open Bank Resolution (OBR) is a long-standing Reserve Bank policy aimed at allowing a distressed bank to be kept open for business, while placing the cost of a bank failure primarily on the bank’s shareholders and creditors, rather than the taxpayer.

source: https://www.rbnz.govt.nz/regulation-...ank-resolution

3. I wouldn't put my term deposits into Heartland Bank, even though their rates are some of the best on the market, given the current economic situation, and points #1 and #2 above, I would prefer less return on my cash with a much safer institution.

4. I know several businesses, who the big four banks would not lend to because of a multitude of factors, whilst heartland were quite happy to lend to them prior to 2020. Several of these businesses are now on deferred payment's with Heartland.

[fish]

[QUOTE=Norwest;845041]Lot's of positives in this thread, I want to put another angle into the discussion

Four reasons why I'm not currently invested into HGH:

1. It's a BBB grade bank.

I am a little confused-is HGH a bank ?

Personally I do not put deposits in banks-no return above inflation
I hate the idea of Banks of making yet more money out of me .

HGH lend money at high interest rates-some of it has good security(reverse mortgages ) and some with lower security but higher interest rates.
This mitigates the risk but increases the return
Hence I have no deposits with HGH but do invest in the stock .
When the risk appears too much I sell-eg this February .
When there is less risk I buy-eg just before and after the results annoucement.
Works for me

[King1212]

High risk high gain...

HGH is well managed finance company which own heartland bank.

Hobson wealth broker ....slap $1.88 target sp

[Beagle]

Thank you for your comments Norwest.
I believe the big four Aussie banks have plenty of their own problems and the recent credit rating downgrade has started to reflect some of them.
Credit rating is one thing, momentum in where the credit rating is headed is another thing as is the capital ratio and HGH has to the best of my knowledge a better capital ratio than any of the big Aussie 4.

Its one thing to, for example, invest on term deposit with say the BNZ and get 2.9% and I am grateful for small mercies that I still have a term deposit with them at that rate until February 2021 but their current rates here https://www.bnz.co.nz/personal-banki...rates-and-fees are a completely different story with a maximum rate regardless of term or amount of just 1.15% before tax and inflation. This as you quite rightly observe is before one takes account of the risks imposed by the Reserve Bank's open banking resolution.

It is beyond any doubt whatsoever that the current (negative real after tax rates and inflation) returns compensate in any way for the OBR risk or any other risk of default...so that begs the question of alternatives. I think HGH shares are a fair alternative and although there are clear risks one shouldn't also overlook the possibility of the recovery story being better than expected over the medium term seeing as both N.Z. and Australia (lowest Covid cases in Melbourne today since the new outbreak went rampant) are weathering the Covid risk much better than most other countries.

One shouldn't overlook the optimistic case for earnings of 14.5 cps in FY21 (mid point of HGH's forecast) and a vaccine for Covid sometime in late 2021 seeing HGH rerated to around the mid point of its historic PE range of 11-17, mid point 14, as the economy starts to recover. 14.5 cps at the mid point PE of 14 suggests a possible recovery price of something in the order of $2 perhaps as early as late 2021 or more likely sometime in 2022.

Risks and rewards appear to suggest to me that on balance HGH is quite probably a good recovery stock to take a modest position in so that's what I've done.
Sure there's some downside risk, no-one thinking objectively would not acknowledge that, but there's quite solid upside potential too.

If you want minimum possible risk the Reserve Bank has Kiwibonds, current rates are here and don't forget these rates are before tax and inflation https://debtmanagement.treasury.govt...e111-13jul.pdf

[nevchev]

Thank you for your comments Norwest.
I believe the big four Aussie banks have plenty of their own problems and the recent credit rating downgrade has started to reflect some of them.
Credit rating is one thing, momentum in where the credit rating is headed is another thing as is the capital ratio and HGH has to the best of my knowledge a better capital ratio than any of the big Aussie 4.

Its one thing to, for example, invest on term deposit with say the BNZ and get 2.9% and I am grateful for small mercies that I still have a term deposit with them at that rate until February 2021 but their current rates here https://www.bnz.co.nz/personal-banki...rates-and-fees are a completely different story with a maximum rate regardless of term or amount of just 1.15% before tax and inflation. This as you quite rightly observe is before one takes account of the risks imposed by the Reserve Bank's open banking resolution.

It is beyond any doubt whatsoever that the current (negative real after tax rates and inflation) returns compensate in any way for the OBR risk or any other risk of default...so that begs the question of alternatives. I think HGH shares are a fair alternative and although there are clear risks one shouldn't also overlook the possibility of the recovery story being better than expected over the medium term seeing as both N.Z. and Australia (lowest Covid cases in Melbourne today since the new outbreak went rampant) are weathering the Covid risk much better than most other countries.

One shouldn't overlook the optimistic case for earnings of 14.5 cps in FY21 (mid point of HGH's forecast) and a vaccine for Covid sometime in late 2021 seeing HGH rerated to around the mid point of its historic PE range of 11-17, mid point 14, as the economy starts to recover. 14.5 cps at the mid point PE of 14 suggests a possible recovery price of something in the order of $2 perhaps as early as late 2021 or more likely sometime in 2022.

Risks and rewards appear to suggest to me that on balance HGH is quite probably a good recovery stock to take a modest position in so that's what I've done.
Sure there's some downside risk, no-one thinking objectively would not acknowledge that, but there's quite solid upside potential too.

If you want minimum possible risk the Reserve Bank has Kiwibonds, current rates are here and don't forget these rates are before tax and inflation https://debtmanagement.treasury.govt...e111-13jul.pdf

Yes,pretty uninspiring rates alright.Even with decreased dividends i feel HGH is a good place to park my hard earned as i cant see the SP going south of here for a while and 8% is ok by comparisons(bloody good really)

[percy]

"Greenslade said Heartland did not have material exposure to the industries most profoundly affected by Covid-19 (tourism, hospitality, retail business) or the demographic most impacted by rising unemployment (15- to 24-year-olds)."

Well I would be asking which banks do have material exposure to the tourism,hospitaity and retail sectors,because they "appear to have a problem or two." Then we will see how good some credit rating companies are,knowing full well that history has shown they do not have a good reputation for being right.[GFC]