HGH - Heartland Group Holdings

[trader_jackson]

Solid result (EPS up 4% - I don't think it was meant to grow this year at all actually due to increase in shares issued), and fairly solid outlook (EPS likely going up about 5%)... especially given these turbulent times (slowing economy and depressed dairy prices?) and interest rates decreasing...
New structure must be working, as other 'banks' have failed to deliver... Although NTA flat and Price to NTA still a bit elevated...
Although $1.60-70ish is probably about fair value, I'll probably try snatch a bit more up at $1.60 or below, simply because of the high yield, that (importantly) looks fairly sustainable (in these every decreasing yield times)

[iceman]

EPS up from 12.4 cps to 12.9 cps, up 4%. I'd call that a very average result. I'm holding but will not be confusing sentiment with the real facts.

I look at it differently Beagle. As we know, we have recently had a big capital raise and issuing of lots of new shares. Maintaining (slightly increasing) EPS and ROE this quickly tells us the new capital has been put to good work very swiftly, growing most parts of the business and increasing NPAT and dividend.
I don't like the increase in dividend as I believe they should keep that cash, but man I like the 24% growth in the Aussie REL business.
I think this is much better than a "very average result" !

[Beagle]

I am going off memory here but if I recall correctly last year's eps growth was just 2.5%. 4% this year...I suppose if we normalise this as they have in the presentation for one-off restructuring costs it looks a lot more impressive, see page 31 of their presentation http://nzx-prod-s7fsd7f98s.s3-websit...193/305399.pdf, they get to 13.7 cps which is a very solid 10.5% eps growth excluding restricting costs so what you suggest Iceman is fair comment on a normalised eps basis.

The problem with doing that though is if we look at the mid point of the forecast $78.5m and I have now modelled an extra approx. 11m shares to be issued in FY20 under the DRIP we have 78.5 / 580m shares = 13.5 cps for FY20, this is less than FY19 earnings adjusted for one-off restricting costs !. Even if you start buying into the whole weighted average shares on issue thing, eps growth in FY20 will be nothing compared to adjusted eps for FY19.

Suppose its good that if we look at the 2 year average from FY18 of 12.2 cps by FY20 we've moved up to approx. 13.5 cps so no matter how you slice and dice the restructuring costs they're forecast to grow earnings by 10.6% over two years or just over 5% per year on average. Probably better than most of the Australian owned banks and HGH better positioned regarding capital adequacy than them too. So that's all good.

Is a forward PE this early in FY20 of 11.7 really cheap though for where we are in the economic cycle with a possible recession looming (with implied extra loan provisioning and write-off's) ? Looks about fair value to me.

[winner69]

Just as well Heartland don’t do the Oceania thing and highlight Comprehensive Income

Comprehensive Income down from $71m last year to $66m this year ....foreign exchange impacted NZD value of Aussie assets and such things.

[Baa_Baa]

I look at it differently Beagle. As we know, we have recently had a big capital raise and issuing of lots of new shares. Maintaining (slightly increasing) EPS and ROE this quickly tells us the new capital has been put to good work very swiftly, growing most parts of the business and increasing NPAT and dividend.
I don't like the increase in dividend as I believe they should keep that cash, but man I like the 24% growth in the Aussie REL business.
I think this is much better than a "very average result" !

The investment in Aus REL business delivering an impressive contribution to top line receivables, now 3x the NZ REL business, and both growing. The departure of Aus banks from the REL market gifted HGH an opportunity that they appear to be making the most of.

[Beagle]

Is a FY20 forward PE of 11.7 good value ? I really don't know the answer and a lot depends upon whether we go into a recession or not.
Make your own assessment of the merits of other banks but for what its worth off Market Screener the forward FY20 of the Aussie banks I follow is :-
BEN 14.3
BOQ 12.0
ANZ 11.5
NAB 12.3
WBC 12.4
CBA 13.8
Average 12.7.
HGHchart.jpg
TA isn't helpful in giving any clear guidance either. Probably just a hold for divvy income of 8.6% gross.

[percy]

I found the result presentation an excellent read.
A year of a lot of changes means HGH are "well positioned" to take advantage of the opportunities in the market place,ie Reverse Equity Loans,Livestock lending and Open 4 products.[And they look to be going for them.]
Capital is been recycled from low margin lending including rural and business,ie very large loans to a greater number of smaller loans.Improves their risk profile too.
As REL and better quality lending has been increasing rapidly, it is not surprising NIM has reduced slighty,although it remains nearly double the major banks.
Pleasing that HGH keep doing what they say they will do.
The increase divie shows directors/managements confidence they will continue to grow the business, and increase rewards for shareholders.

[Beagle]

Market must be looking through the one-off restructuring costs and seeing real eps of 13.7 cps or maybe the 14.4 cps they said they'd earned in the second half of FY19....or is it simply dividend hounds chasing the bigger feed.

[RTM]

I
I don't like the increase in dividend as I believe they should keep that cash, but man I like the 24% growth in the Aussie REL business.
I think this is much better than a "very average result" !

Just back from catching my dinner and must say I am very happy with the overall result and the increased dividend. I'm retired and try not to eat to much of our capital as we try to live off our dividends. I guess your perspective depends on what one has the shares for and perhaps where you are with your life.

[Snow Leopard]

This is a good result.

Slightly baffled that they raised the dividend an entire cent, but just means more shares in the DRiP compounding away to financial freedom.

But the important question of the day is:
Why do hotels always change your towels every day even when you follow the notice and hang them up to reuse them?