HGH - Heartland Group Holdings

[BlackPeter]

From discussions I have had with HBL directors/management, they speak highly of their close working relationship with The Reserve Bank of NZ.
Started well before the granting of HBL's banking licence, and continues today, with their current corporate restructure.

I am sure the CBL board would have spoken as well highly about their working relationship with the RBNZ .... maybe they did?

Probably a discussion for some other thread. The point for this thread is: It is not the role of the RBNZ to protect shareholder interests. Whatever the RBNZ oversight might be good for - share holders would be mistaken if they rely on it in any shape or form. If there are problems with HBL (hypothetical - I don't assume there are ...) than the RBNZ will be the last authority to inform shareholders or protect their interest. They even might be instrumental in keeping any problems under cover as they did in the case of CBL.

[bull....]

can watch the annual meeting via webcast , cool i wont need to leave the house.

https://www.nzx.com/announcements/323858

if you have a question let them know by the 18th

[winner69]

can watch the annual meeting via webcast , cool i wont need to leave the house.

https://www.nzx.com/announcements/323858

Cool

Hope somebody calls Ricketts a fuddy duddy again ....need a bit of light entertainment after the boring serious stuff.

Hope they cover off diversity initiatives

[BlackPeter]

Cool

Hope somebody calls Ricketts a fuddy duddy again ....need a bit of light entertainment after the boring serious stuff.

Hope they cover off diversity initiatives

Why not running the AGM in Te Reo? I guess the least they could do is alternating every other year ...

[minimoke]

Hope they cover off diversity initiatives

Thats an excellent idea. Especially at the time when someone asks how the share price has moved from approx $1.90 a year ago and is now $1.67 off a high of $2.14

[bull....]

Thats an excellent idea. Especially at the time when someone asks how the share price has moved from approx $1.90 a year ago and is now $1.67 off a high of $2.14

good question for them to explain there poor stock price performance and how they are planning to rectify being one of the worst places to park your money in the last year

[percy]

Thats an excellent idea. Especially at the time when someone asks how the share price has moved from approx $1.90 a year ago and is now $1.67 off a high of $2.14

Great idea,with directors and management having so much "skin on the line",their answers would be interesting.

[Beagle]

My thoughts.
Market was disappointed with just 2% EPS growth this year.
Market was disappointed with no dividend growth this year
Market has some trepidation about the whole restructuring thing.
Current PE is 13.2. FY19 PE is 12.7, FY20 PE is 11.8 and FY21 PE is 11.2 (based on average analyst forecasts as recorded on market screener) so there is decent growth in EPS forecast in future years with EPS of 14.8 cps forecast in FY21 which suggests 18% total growth in earnings over the next 3 years or just on 5.7% compound average EPS growth.

Unlike Ben Graham's model which priced shares based on historical EPS and applied a multiple of 8.5 for a no growth company and 2 x g (where g is estimated long term growth for the next 7-10 years) I apply a multiple of 1 to ensure I am buying value but use current year earnings.

This suggests to me a fair PE is 8.5 + 5.7 (yes I think with HBL's unique business model they can grow earnings sustainably at that rate with their very high NIM and very strong growth in reverse equity loans) = 14.2. Current year earnings are forecast at 13.1 cps so to me the shares have an intrinsic value of 14.2 x 13.1 = $1.86 and are underpriced.

I looked this morning at the average PE of the six major Australian banks I follow, NAB, ANZ, BEN, CBA, WBC and BOQ. Their current average FY18 PE is 12.37 compared to HBL of 13.2 however forecasted PE based on earnings growth in the FY20 year sees the Australian peer group average decline to just a PE of 12 (showing quite moderate average EPS growth in the next 2 years), whereas HBL declines to a PE of 11.8 in FY20 and just 11.2 in FY21.

We can see that HBL's forecasted EPS growth is materially higher than its peer group in the years ahead which I think warrants the PE mentioned above.
My Conclusion. The current SP of HBL is being affected by factors mentioned at the beginning of this post and is not fairly representative of the future earnings potential and earnings growth of the company.
I think its underpriced by about 20 cps at present and I expect relative outperformance in the year ahead from the current level of $1.66.

I correctly called this a SELL at $2.14 in December 2017 when it got well ahead of itself. I now rank it as a BUY and have been doing exactly that. Presently my #1 investment position even ahead of SUM !

[Blue Skies]

My thoughts.
Market was disappointed with just 2% EPS growth this year.
Market was disappointed with no dividend growth this year
Market has some trepidation about the whole restructuring thing.
Current PE is 13.2. FY19 PE is 12.7, FY20 PE is 11.8 and FY21 PE is 11.2 (based on average analyst forecasts as recorded on market screener) so there is decent growth in EPS forecast in future years with EPS of 14.8 cps forecast in FY21 which suggests 18% total growth in earnings over the next 3 years or just on 5.7% compound average EPS growth.

Unlike Ben Graham's model which priced shares based on historical EPS and applied a multiple of 8.5 for a no growth company and 2 x g (where g is estimated long term growth for the next 7-10 years) I apply a multiple of 1 to ensure I am buying value but use current year earnings.

This suggests to me a fair PE is 8.5 + 5.7 (yes I think with HBL's unique business model they can grow earnings sustainably at that rate with their very high NIM and very strong growth in reverse equity loans) = 14.2. Current year earnings are forecast at 13.1 cps so to me the shares have an intrinsic value of 14.2 x 13.1 = $1.86 and are underpriced.

I looked this morning at the average PE of the six major Australian banks I follow, NAB, ANZ, BEN, CBA, WBC and BOQ. Their current average FY18 PE is 12.37 compared to HBL of 13.2 however forecasted PE based on earnings growth in the FY20 year sees the Australian peer group average decline to just a PE of 12 (showing quite moderate average EPS growth in the next 2 years), whereas HBL declines to a PE of 11.8 in FY20 and just 11.2 in FY21.

We can see that HBL's forecasted EPS growth is materially higher than its peer group in the years ahead which I think warrants the PE mentioned above.
My Conclusion. The current SP of HBL is being affected by factors mentioned at the beginning of this post and is not fairly representative of the future earnings potential and earnings growth of the company.
I think its underpriced by about 20 cps at present and I expect relative outperformance in the year ahead from the current level of $1.66.

I correctly called this a SELL at $2.14 in December 2017 when it got well ahead of itself. I now rank it as a BUY and have been doing exactly that. Presently my #1 investment position even ahead of SUM !

Thanks Beagle for sharing this clear insightful analysis, much appreciated.

[Sinvester]

My thoughts.
Market was disappointed with just 2% EPS growth this year.
Market was disappointed with no dividend growth this year
Market has some trepidation about the whole restructuring thing.
Current PE is 13.2. FY19 PE is 12.7, FY20 PE is 11.8 and FY21 PE is 11.2 (based on average analyst forecasts as recorded on market screener) so there is decent growth in EPS forecast in future years with EPS of 14.8 cps forecast in FY21 which suggests 18% total growth in earnings over the next 3 years or just on 5.7% compound average EPS growth.

Unlike Ben Graham's model which priced shares based on historical EPS and applied a multiple of 8.5 for a no growth company and 2 x g (where g is estimated long term growth for the next 7-10 years) I apply a multiple of 1 to ensure I am buying value but use current year earnings.

This suggests to me a fair PE is 8.5 + 5.7 (yes I think with HBL's unique business model they can grow earnings sustainably at that rate with their very high NIM and very strong growth in reverse equity loans) = 14.2. Current year earnings are forecast at 13.1 cps so to me the shares have an intrinsic value of 14.2 x 13.1 = $1.86 and are underpriced.

I looked this morning at the average PE of the six major Australian banks I follow, NAB, ANZ, BEN, CBA, WBC and BOQ. Their current average FY18 PE is 12.37 compared to HBL of 13.2 however forecasted PE based on earnings growth in the FY20 year sees the Australian peer group average decline to just a PE of 12 (showing quite moderate average EPS growth in the next 2 years), whereas HBL declines to a PE of 11.8 in FY20 and just 11.2 in FY21.

We can see that HBL's forecasted EPS growth is materially higher than its peer group in the years ahead which I think warrants the PE mentioned above.
My Conclusion. The current SP of HBL is being affected by factors mentioned at the beginning of this post and is not fairly representative of the future earnings potential and earnings growth of the company.
I think its underpriced by about 20 cps at present and I expect relative outperformance in the year ahead from the current level of $1.66.

I correctly called this a SELL at $2.14 in December 2017 when it got well ahead of itself. I now rank it as a BUY and have been doing exactly that. Presently my #1 investment position even ahead of SUM !

Thanks Mr Beagle very informative.