HGH - Heartland Group Holdings

[iceman]

I think for now Heartland is a long term hold, slowly increasing its sp with dividends increasing as well over time. I see the share price increasing per annum at the rate of growth in profit. Boring is good for me.

Agree with this. HBL is a long term steady hold with growing dividends but fully priced for now. The interim report is reasonably good with substantial growth in all sectors. But what we need to see in the next few months is them successfully putting the extra capital they got in the rights issue and bonds issue put to work to grow EPS.

[BlackPeter]

Just looked at a chart comparing HBL with one of the big boys (ANZ). Stellar performance from HBL over the last 5 years, if you ask me.

Just in case anybody is wondering - HBL is the blue line, ANZ the orange one (I know, should have picked different colors ;

Attachment 9595

If we look at the forward PE (ANZ 11.1 and HBL 14) and the CAGR (ANZ 2.8 and HBL 11.7) (*), than yes, ANZ is the better earner and HBL is (based on past performance and analyst assumptions) faster growing. Question is just - how big a bonus do they deserve for this growth?

If I put these data into the Grahams formula, than HBL (current SP $1.82) would be worth $4.14 (Graham unmodified) or $2.81 (based on Rogers modified formula), which means they trade at a discount of at least 35% (against Rogers modified formula);
ANZ's (current SP AU$26.86) low growth does not really count for Grahams formula - so lets say the value is based on 12.5 PE is AU$28.20; Discount would be only 5%; Obviously - less risk and all these things ;

Interesting - not sure I expected that when I fist looked at the chart. HBL seems to deserve their SP growth - while ANZ is (justified) basically stagnant.

Still - there is this saying about falling knives ... and the HBL chart might look like an unfinished head and shoulders ...

Not holding a material amount of any of them, but watching the trend with interest ... there might be bargains ahead ;


(*) all raw data off 4-traders ...

[whome]

Great post and analysis BP. The volume section of your chart (presume is HBL) also tells a story - lots of turnover and volatility in ‘14 and ‘15, and low turnover and more stability in the years that follow. I pin my hopes on their good performance with Reverse Mortgages, thinking small is more nimble, but await a more optimistic update. Discl. Holder.

[Beagle]

Got too far ahead of itself at $2.14 in December 2017 on a forward PE of just over 17 when I sold my stake right at the peak.
In the process of correcting and finding itself steadily working its way towards fair value and presently from a TA perspective looks very weak.
Short term risks.
1. Financials are traditionally very vulnerable in a bear market with much heightened risk of delinquent and over due loans turning completely toxic.
2. UDC float sucking the wind (capital) out of this sector. Current PE seems about right on 14 but if UDC floats on the PE of say 12 capital will be re-deployed by some.

Summary. It may be about fair value now but I struggle to see any near term catalyst for a SP re-rating and remain happy to watch from the sidelines for now.

[trader_jackson]

Got too far ahead of itself at $2.14 in December 2017 on a forward PE of just over 17 when I sold my stake right at the peak.
In the process of correcting and finding itself steadily working its way towards fair value and presently from a TA perspective looks very weak.
Short term risks.
1. Financials are traditionally very vulnerable in a bear market with much heightened risk of delinquent and over due loans turning completely toxic.
2. UDC float sucking the wind (capital) out of this sector. Current PE seems about right on 14 but if UDC floats on the PE of say 12 capital will be re-deployed by some.

Summary. It may be about fair value now but I struggle to see any near term catalyst for a SP re-rating and remain happy to watch from the sidelines for now.

Agreed. Any UDC float info (eg PE, outlook etc) would be of particular interesting to watch given how similar UDC is to Heartland.

[percy]

Agreed. Any UDC float info (eg PE, outlook etc) would be of particular interesting to watch given how similar UDC is to Heartland.

The real fun will be seeing the cost of funds UDC will have to pay without ANZ Bank's support.

[Beagle]

The real fun will be seeing the cost of funds UDC will have to pay without ANZ Bank's support.

Hard to see how UDC will garner sufficient funding support even in the medium term so I would expect ANZ will remain as a substantial shareholder and a partial float will be how this pans out. That probably optimizes the float price too which in an ironic twist could be quite good for HBL. ANZ might be able to float say 66% at a forward PE of 13. I think the market would be pretty keen on that multiple with ongoing ANZ deposit support.

[percy]

Hard to see how UDC will garner sufficient funding support even in the medium term so I would expect ANZ will remain as a substantial shareholder and a partial float will be how this pans out. That probably optimizes the float price too which in an ironic twist could be quite good for HBL. ANZ might be able to float say 66% at a forward PE of 13. I think the market would be pretty keen on that multiple with ongoing ANZ deposit support.

So it is not possibly going to be a clean divestment for ANZ.
Trade sales have been the way in the past for ANZ, so we continue to "live in interesting times",particularly with the likes of HBL still showing interest.

[oldtech]

$1.73 currently, 50-day MA crossing the 200-day MA ... I am still holding but keeping a close eye on this.

I don't think the SP has been this low since June.

[Beagle]

Looking very ugly from a technical perspective.
Could test support in the $1.50 - $1.60 range soon.