HGH - Heartland Group Holdings

[Oliver Mander]

Q1 npat up 12% and Q2 npat only up 3% giving 7% for 1st half

2nd half needs to be 19% up on pcp to achieve $68m

As they do what they say they will do yes a stonking 2H coming up.

No increase in eps in H1 .... and not much of an increase for the FY (Percy doesn’t like consistent eps ...he likes eps to be growing)

One thing for sure I don’t think that Jeff will be coming out touting npat of $70m for a while ...I misread him again ...although I take heart when he says impairments in the motor book also increased due to an intentional adjustment to risk settings in previous years which has resulted in a gradual but expected increase in impairment levels. - code word for proactive provisioning ...read into that what you want and the torrential rain in Wellington at the moment might be a hint.

Is hope a strategy?

Totally agree winner69...you've read the quarter results the same way I did. Looking forward to a big 2nd half; needs to be.
i don't mind the "proactive impairments" - I know there was a discussion on this thread before highlighting some concern over how they treated impairment, so its good to see them being proactive. Maybe that's creating some of the wiggle room to deliver a big 2H.

But think jeremy ALD also has it right - growth in share price is fair based on the above result, and so is the tapering off in the last few weeks - the "froth" isn't there to support $2.10, but good solid numbers that support $1.95.

[winner69]

Everything is showing huge growth except EPS and dividends

Taken my rose tinted glasses off and said to myself - BUGGER, should have listened to Beagle when he told me to sell at $2.14. He’s right as usual ...no wonder he’s at the top of the stock picking comp.

Still lumbered with heaps of HBL .....might sell a lot but it hurts when they are down 10% from when I should have sold ....but might do the calcs to see how many I need to sell to make the remaining ones free. That’ll cheer me up

[Beagle]

It's a good result, but I think the SP more than accounts for a strong year. If you look at this stock it has gone up well above its eps growth in the last couple of years.

That's the issue I have with it. EPS growth on an annual basis, (this half is worse), looks to be slowing to be in line with the other 6 Australasian banks I follow but HBL was on a POE of ~ 17 when I sold at $2.14 and the average of its peers is just 13. Three years ago HBL traded at about a 2 PE discount to its peers when EPS growth was significantly higher so SP performance in the last three years has vastly outstripped earnings growth and has substantially been predicated upon PE expansion which frankly I think is extremely unlikely to continue. Far more likely that the PE will fall back into line with its peers, especially now that annual EPS growth has slowed to be more or less in line with same. Those looking for capital gain from here will need to be very patient. I will spare shareholders the pain of making a call on where I see fair value at present, suffice to say I think there are far better opportunities in the market.

[winner69]

If your asking about their Online banking platform, I would say no. The digital strategy hasn't made it there to improve the user experience as yet. Maybe later this year?

Given up on that online banking with them .....ring them now if I want things ....but that’s not very efficient for them.

[percy]

Everything is showing huge growth except EPS and dividends

Taken my rose tinted glasses off and said to myself - BUGGER, should have listened to Beagle when he told me to sell at $2.14. He’s right as usual ...no wonder he’s at the top of the stock picking comp.

Still lumbered with heaps of HBL .....might sell a lot but it hurts when they are down 10% from when I should have sold ....but might do the calcs to see how many I need to sell to make the remaining ones free. That’ll cheer me up

Each to their own.
I remain "well positioned",as all the "everything is showing huge growth" will translate to both eps and dividend growth.
Same as night follows day..

[winner69]

Each to their own.
I remain "well positioned".

Well positioned ...for what?

[iceman]

It's a good result, but I think the SP more than accounts for a strong year. If you look at this stock it has gone up well above its eps growth in the last couple of years.

Not sure I agree it is a good result. It's reasonably solid and little to worry about. As Percy points out, we have growth in nearly all the business, including big growth in expenses !! What I like most is the good growth of reverse mortgages (+22%) and personal lending through Harmoney & Spotcap in Australia, resulting in Australian receivables growing 27% to $615M. Also nice to see them maintain well above industry average NIM at 4.44%. Solid and well positioned.

[percy]

Well positioned ...for what?

Strong lending growth in all sectors, will lead to increasing eps,which will enable HBL to pay increasing dividends,which will lead in turn to share price growth.
That is the true meaning of "well positioned."

[Beagle]

http://www.sharechat.co.nz/article/d...k-improveshtml

Strongest growth seems to be in impairments, up a whopping 51% ! I have warned before about the risk of finance company type lending on no deposit deals with motor vehicles. Coming back to bite them with more biting to come ? Lending growth is great but if its riskier then the effect on EPS growth is clear to see.
What's the bet a lot of unsecured Harmoney loans have turned out to be anything but harmonious ?
Learned it doesn't pay to be too negative, nobody thanks you so I'll leave it at that.

[McGinty]

Been running my own figures and I can't see where the "strong" growth is.

Sure 12% growth sounds nice on the prior three month period (Q1 2017) but as any of us more experienced investors do, we dig down a little further to identify the only earnings figure that matters to us shareholders.....Earnings per share (EPS). Now this rights issue will be the fourth dilutionary event this calendar year (with the SPP and two DRP's) all of which have given the company addition funding to grow on behalf of the shareholders.

I'll share my figures to illustrate:

1st Qrt 2017, NPAT $14.3m on 485.47m shares, = EPS of 2.95c

1st Qrt 2018, NPAT $16m on 522.65m shares, = EPS of 3.06c

Actual prior calendar period EPS growth rate of 3.7%

As you can see this is a way away from a "strong" growth rate.

Plus this being the second capital raising this year, shareholders should ask themselves if they are now actually funding the company's growth out of their own pockets?

At risk of having a different opinion again as some other respected posters, here's how I see things (updated).

2nd Qrt 2017, NPAT $14.8m on 499.17m shares, = EPS of 2.96c

2nd Qrt 2018, NPAT $15.1m on 522.3m* shares, =EPS of 2.89c (* removes the dulitionary effect of the 34.8m shares issued from the Rights issue in Dec 2017)

So EPS growth this quarter is -2.36% over pcp.

So I stand by my "can't see where the strong growth is" call