-
02-06-2016, 10:32 AM
#7621
An excellent presentation..
A must read for any one who owns or is thinking of buying HBL shares.
Last edited by percy; 02-06-2016 at 10:34 AM.
-
02-06-2016, 11:08 AM
#7622
Originally Posted by winner69
Doesn't rave about how the pretty chart looks from just over a year ago --- oops but somebody had to say that
this bit in outlook re dairy loans - In this event, Heartland’s profitability would reduce. However, Heartland would remain profitable, and we don’t expect that there would be any impact on Heartland’s capital
That is code for yes we are going to incur some decent losses but have no idea how much (and hoping like hell)
Finally owning up to the very real possibility that they're going to get a decent haircut from this sector.
I for one was well aware they're calling it at 59% LVR last balance date but when you consider the dairy farm index is down 24% in the last year that makes it 59 / 0.76 = LVR 77.63% and that assumes (which isn't the case) that all those valuations they're working their 59% on were current as of a year ago. I think earlier analysis using 80% LVR is about where its really at, probably worse than that seeing as some of the loans are over stock which is down further and plant and machinery which has even less value in a forced sale situation..
Last edited by Beagle; 02-06-2016 at 11:23 AM.
-
02-06-2016, 04:29 PM
#7623
Rural Haircut Taken?
Originally Posted by Roger
Finally owning up to the very real possibility that they're going to get a decent haircut from this sector.
I for one was well aware they're calling it at 59% LVR last balance date but when you consider the dairy farm index is down 24% in the last year that makes it 59 / 0.76 = LVR 77.63% and that assumes (which isn't the case) that all those valuations they're working their 59% on were current as of a year ago. I think earlier analysis using 80% LVR is about where its really at, probably worse than that seeing as some of the loans are over stock which is down further and plant and machinery which has even less value in a forced sale situation..
Slide 16 in today's presentation announces a Rural Portfolio total value of of $505m. If you look back at the interim report at 31st December 2015, the rural loan book was $571m. $65m is a very large drop in just five months. It could be:
1/ Just a seasonal effect (EOFY2015 30-06-2015 had a rural loan balance of $537m for comparison) OR
2/ Maybe Heartland have wound up some of their 'good' rural loans to keep the total rural portfolio size under control.
Nothing wrong with doing eoither 1 or 2. But neither will make bad rural loans go away.
The other possibility is
3/ Up to $65m worth of rural lending has been written off in the last five months.
The truth is probably a combination of 1/, 2/ and 3/. But to know for sure we will have to wait for the fine detail of the full year accounts.
SNOOPY
Last edited by Snoopy; 24-04-2017 at 08:57 AM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
-
02-06-2016, 04:59 PM
#7624
-
02-06-2016, 05:02 PM
#7625
Hey Snoops and W69. Latest REINZ dairy stat's down 24% for the year to April 2016 but didn't it fall by a significant amount in the previous year as well ? Can you remember ?
HBL says dairy sales values peak to trough could fall by 40% but maybe taking into account that some of their lending is on stock plant and machinery and the fall in dairy values in the previous year if one were to mark to market their security values as at 30 June 2016 they're down 40% already ? That would make a bit of a nonsense of their historical claim of 59% LVR wouldn't it ! Sometimes management only acknowledge they're going to get a haircut when the hear the shearer's combs start buzzing and I think this is one of those occasions.
Last edited by Beagle; 02-06-2016 at 05:04 PM.
-
02-06-2016, 05:03 PM
#7626
Member
Originally Posted by winner69
Down 5% from 1.32 on 1 Jan.
-
02-06-2016, 05:25 PM
#7627
Originally Posted by Snoopy
Slide 16 in today's presentation announces a Rural Portfolio total value of of $505m. If you look back at the interim report at 31st December 2015, the rural loan book was $571m. $65m is a very large drop in just five months. It could be:
1/ Just a seasonal effect (EOFY2015 30-06-2015 had a rural loan balance of $537m for compariosn) OR
2/ Maybe Heartland have wound up some of their 'good' rural loans to keep the total rural portfolio size under control.
Nothing wrong with doing eoither 1 or 2. But neither will make bad rural loans go away.
The other possibility is
3/ Up to $65m worth of rural lending has been written off in the last five months.
The truth is probably a combination of 1/, 2/ and 3/. But to know for sure we will have to wait for the fine detail of the full year accounts.
SNOOPY
For the record;
"due to the repayment of some large loans".
Source,Share broker's research 18th May 2016.
-
02-06-2016, 07:15 PM
#7628
Dairy Cow Prices
Originally Posted by Snoopy
The main point I was trying to make was that the dairy downturn could have an effect , the order of one year's profit. Thinking about it further, I am more inclined towrads Rogers view that the total effect will be spread out over many years. Thus it will be an ongoing crimp on profits rather than one devastating blow.
Specifically, I was thinking 'cows' rather than 'land' when I made my comments.
Putting some numbers on this from a stuff article, dated 15-03-2016:
http://www.stuff.co.nz/business/farm...-one-is-buying
"Dairy cow prices have gone from highs of $2200 when there was a record payout to half that value and it is eating into sharemilker equity."
<snip>
"Worthington said cow prices depended on demand and supply and there were too many cows and heifers for sale."
" "There is no demand for stock at the moment. The price might go up in two years, and there will be a shortage of cows then." "
"Farm adviser Gary Massicks, from Feilding, said some cows were listed for sale at $1600."
" "But you talk to stock agents, and they are not selling. The reality is cows are worth their slaughter price plus $100, often $1100 or $1200." "
That is a 45% decline in value from the peak. Ouch!
SNOOPY
Last edited by Snoopy; 02-06-2016 at 07:16 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
-
02-06-2016, 07:25 PM
#7629
If that Rachel Stewart gets her way and number ofvdairybcows are reduced by 80% thy might not get much for the cows anyway
Maybe the Heartland CFO knows a lot more than letting on when he said 'we can always shoot the cows ' (recent quote fron Sharetrader poster subway)
Last edited by winner69; 02-06-2016 at 07:27 PM.
”When investors are euphoric, they are incapable of recognising euphoria itself “
-
02-06-2016, 07:36 PM
#7630
Originally Posted by winner69
Hey snoops
I couldn't find your $571m in the interim report ut this probably explains why you think a big number.
Note 12(c) IRHY2016, "Concentration of credit risk by industry sector"
Agriculture: $570.735m
Have a look at Note 1 of the last disclosure statement - rural is $505m
They have 2 ways of categorising segments - one by sales channel / other the other more aligned as to the use of loan (category risk they call it)
Just a trap for young players - lesson being nothing is obvious
I am no more successful than you Winner. Can't find your Note 1, although not sure of document you are referencing. At this stage I am going with Percy's explanation: "some big loans repaid."
If Heartland can keep their overall Agricultural portfolio contained I am satisfied. If calling in some big loans means a longer rope can be given to some of our more indebted farmers then I am all for that. Good blokes and blokesses our farmers. If Heartland can see some farmers through this downturn that other banks would put to the auctioneers hammer, then I say good on them. Give 'em a chance and those farmers will pay their dues in the end!
SNOOPY
Last edited by Snoopy; 02-06-2016 at 07:38 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
Tags for this Thread
Posting Permissions
- You may not post new threads
- You may not post replies
- You may not post attachments
- You may not edit your posts
-
Forum Rules
|
|
Bookmarks