HGH - Heartland Group Holdings

[winner69]

.......think that rocket might have been a dud winner??

we already got the up and another up .... away this afternoon and the rest of the week .... be patient

[Balance]

we already got the up and another up .... away this afternoon and the rest of the week .... be patient

Agreed.

Hope Snoopy keeps the sp down in the meantime.

[percy]

I think it is highly unlikely that the HNZ Board would initiate a cash issue capital raising with the share price at it's current level without more runs on the board, and a more elevated share price to sustain the move.
A capital raising is inevitable at some stage, but going by the measured approach of the current Board, unlikely in the short term. Therefore I see more short to medium term upside in the share price.
Interesting to see they obviously don't want the non-core assets having to be accounted for year after year and the review may well involve a one off hit to clear the decks. If the economy/ property market continues to improve, and they do it right, that hit may not be too traumatic, and would IMO eventually enhance the perception and hence share price of the company considerably.

Yes pleasing to see non-core assets being dealt with.
A very good result with nett profit before tax increasing from $5.6mil to $14.9mil.Getting traction.Core loan book stronger.The reduction in mortgage loan book means they are not chasing this market,but would rather put the money to more profitable loans,which makes sense to me.Great that they are already achieving lower funding costs.NTA at 90cents.EPS at 3cents is improving as we expected.2 cents dividend was a big surprise.I take it they passed on the "opportunities"that they were offered.Maybe they are paying the higher dividend as they are confident in their future earnings. Well done HNZ,New Zealand's only listed bank is on course to deliver all we hoped for.

[Snoopy]

Updating for the full year 2012 result

EBIT (high estimate) = $205.148m-$65.547m= $139.601m

Interest expense is listed as $121.502m.

So (EBIT)/(Interest Expense)= ($139.602)/($121.502)= 1.15 < 1.20

Result: FAIL TEST but an improvement from the HY2012 position.

Updating for the half year 2013 result. EBIT is not recorded in the released pdf. So we need to do some 'deconstructive analysis' on the released results to estimate what it might be. We start using the "interest income" from the income statement, and subtract from that "selling and administration expenses."

EBIT (high estimate) = $103.280m-$31.943m= $71.337m

Interest expense is listed as $56.250m.

So (EBIT)/(Interest Expense)= ($71.337)/($56.250)= 1.27 > 1.20

Result: PASS TEST (a first for HNZ)

SNOOPY

[Snoopy]

Updating this number for the full year FY2012

Equity Ratio = (Total Equity)/(Total Assets)

Using numbers from the Heartland FY2012.

= $374.8m/$2348.1m = 16.0%

This is a slight improvement on the half year position, achieved by both shrinking the loan book and not paying out any dividend from profits.

Updating this number for the half year HY2013 release.

Equity Ratio = (Total Equity)/(Total Assets)

Using numbers from the Heartland FY2012

= $381.091m/$2350.101m = 16.2%

This is a slight improvement on the full year position, achieved by continuing to modestly shrink the loan book and build some equity. This half year marked the payment a maiden first half special dividend. It is encouraging that the equity ratio has continued to improve despite this.

SNOOPY

[Snoopy]

Customer concentration is of course an indirect measure of potential risk. Of more interest perhaps is 'real risk'.

Interesting reading from Note 32C in the Full Year 2012 accounts.

There is a large jump in Grade 6 categorized loans. Grade 6 is the 'monitor' category up from $16.3m to $62.9m. Grade 6 is the jargon used by Heartland when a loan is on the cusp of going bad. Obviously these loans have not gone bad at this point, and that should be emphasized. Nevertheless if even half of those loans did go bad it would wipe out a whole years profits. This is something that should make Heartland shareholders cautious. A call for new capital from shareholders is now officially an 'on the horizon possibility', even though Heartland have only said so indirectly in this obtuse way.

The half year report last year did not provide the same level of disclosure as the full year report. This has proved to be the case again in HY2013.

Under note 12 and as of 31st December 2012, the percentage of deposits from the Canterbury region has reduced from 42% six months previously down to 36%. Overall I see this as a good thing, even if some market share in Canterbury must continue to be sacrificed to improve the overall term deposit risk profile.

Note 17c re-emphasises that the credit provision as reached with RECL (the real estate credit limit mangement agreement) has been fully utilised. This in turn means any further writedowns will directly hit the HNZ balance sheet.

I get the impression that rebalancing the account risk is still a work in progress.

SNOOPY

[winner69]

Let us assume the 2c dividend is sustainable from here-on in. Perhaps it is also possible to assume that the dividend will be matched by another 2c dividend in the second half of the year, which should be more profitable for a variety of reasons.

4c per share, fully imputed, means a yield of 7.8% on today's current price of 73c. That's not bad at all. If that's what Heartland can keep up with in 2H2013.

As Percy says better owning the bank than putting money in the bank

[winner69]

Hmmmm, seller at 74 changed their bid to clean sweep the SP down to 71 cents. Ouch, those disenfranchised sellers are still present and trying to get their profits quick fast!

Maybe not the disenfranchised but those awful nasty traders who bought a month or so ago and now taking their profits ....good on them

Or maybe some who think result wasn't that good and decided to move on to something better as prospects might be better elsewhere

Maybe these disenfranchised are just a myth anyway!!!!

[GR8DAY]

I'm expecting a big buyer at the end of today or tomorrow with 100,000 shares +. Can't help but think there was a few on the sidelines waiting for that report...

huh??........are you trying to say Moose you've got a 100,000 shares you and your dad have to off load??(LOL).........looks like a softening SP to me, hope you dont get stuck with them mate!

[percy]

Maybe not the disenfranchised but those awful nasty traders who bought a month or so ago and now taking their profits ....good on them

Or maybe some who think result wasn't that good and decided to move on to something better as prospects might be better elsewhere

Maybe these disenfranchised are just a myth anyway!!!!

Well I did my best to help out the sellers today by buying more at 74cents.