HGH - Heartland Group Holdings

[winner69]

https://www.nzx.com/announcements/360898

one thing ...the DRP shares are getting cheaper and cheaper

[Grimy]

one thing ...the DRP shares are getting cheaper and cheaper

Much better deal than last time around........

[winner69]

one thing ...the DRP shares are getting cheaper and cheaper

Indeed ...but we’ve lost heaps since last time .....and the time before that ...and the time before that

DRP was about $1.90 once I think

[Beagle]

Got a term deposit maturing with HGH next week. Could roll it over or reinvest on the other side of the ledger. 1.85% per annum for 3 years or own the shares and what's the likely price on a look through covid recovery basis ? Which investment is likely to be more rewarding. Hmmm...not much thinking required there...

I'm starting to like this creative accounting thing of investing in equities and calling it a quasi bond. Seems to be working okay with GNE and HLG...what could possibly go wrong here lol

[clearasmud]

Got a term deposit maturing with HGH next week. Could roll it over or reinvest on the other side of the ledger. 1.85% per annum for 3 years or own the shares and what's the likely price on a look through covid recovery basis ? Which investment is likely to be more rewarding. Hmmm...not much thinking required there...

I'm starting to like this creative accounting thing of investing in equities and calling it a quasi bond. Seems to be working okay with GNE and HLG...what could possibly go wrong here lol

Nothing they're smart.

[Snoopy]

No one knows exactly how this Covid-19 tail may whip around and strike down HGH profits in the future. But I would argue you don't have to know this to build an investment case. I would argue the solution to investing in these circumstances is to do a 'Scenario Analysis'. That means look at different possible outcomes and then do a probability assessment of how likely each of the possible scenarios will unfold. Such a system is by no means perfect. But it is one better than sitting in your investment armchair utterly bamboozled that you cannot see a clear path ahead. You don't need a clear path to make rational investment decisions if you use 'Scenario Analysis'. For those who have been following this thread over the last few days, you will see that I have compiled three forecast scenarios: Scenario 1b, Scenario 2b and Scenario 3. I assess that the likelihood of each of these scenarios occurring in order is 30%, 50% and 20% (observant readers will notice these three relative probabilities add up to 100%).

So what happens when I combine my forecast from each scenario in those proportions?

FY2021	eps	Probability	Factored Earnings Contribution
Scenario 1b	8.6c	30%	2.58c
Scenario 2b	10.4c	50%	5.20c
Scenario 3	14.8c	20%	2.96c
Total		100%	10.7c

FY2022	eps	Probability	Factored Earnings Contribution
Scenario 1b	7.7c	30%	2.31c
Scenario 2b	11.3c	50%	5.65c
Scenario 3	20.1c	20%	4.02c
Total		100%	12.0c

Now I believe that a suitable PE ratio for a second tier finance company should be between 10 and 12 in the current business environment. So this would imply the following share price ranges based on the above probability combined projected earnings.

FY2021: $1.07 to $1.28
FY2022: $1.20 to $1.44

With the share trading at $1.33 today, I would argue the share price has got ahead of itself and is now in the mid price range of FY2022 earnings projections. There are too many uncertainties about to justify buying in at this price now. I would like to increase my own stake in HGH further. But I am going to wait for a pull back in the share price before I do so.

discl: hold HGH with an average holding price of $1.40 (excluding dividends). Of course most of that holding was accumulated pre Covid with different earnings expectations!

Time to update my 'Scenario Analysis' to the revised Scenarios that I have worked through . That means look at different possible outcomes and then do a probability assessment of how likely each of the possible scenarios will unfold. Such a system is by no means perfect. But it is one better than sitting in your investment armchair utterly bamboozled that you cannot see a clear path ahead. You don't need a clear path to make rational investment decisions if you use 'Scenario Analysis'. For those who have been following this thread over the last few days, you will see that I have compiled three forecast scenarios: 'Pessimistic', '"middle of the Road' and 'Optimistic'. I assess that the likelihood of each of these scenarios occurring in order is 20%, 50% and 30% (observant readers will notice these three relative probabilities add up to 100%).
I have tweaked these probabilities a little from 'Iteration 1'.

So what happens when I combine my forecast from each scenario in those proportions?

FY2021	eps	Probability	Factored Earnings Contribution
Scenario 1b	10.5c	20%	2.10c
Scenario 2b	14.3c	50%	7.20c
Scenario 3	16.5c	30%	4.95c
Total		100%	14.3c

FY2022	eps	Probability	Factored Earnings Contribution
Scenario 1b	10.5c	20%	2.10c
Scenario 2b	17.5c	50%	8.75c
Scenario 3	23.6c	30%	7,08c
Total		100%	17.9c

Now I believe that a suitable PE ratio for a second tier finance company should be between 10 and 12 in the current business environment. So this would imply the following share price ranges based on the above probability combined projected earnings.

FY2021: $1.43 to $1.72
FY2022: $1.79 to $2.15

With the share trading at $1.34 today, I would argue the share price is trading at an 8 to 23% discount to fair value on FY2021 earnings. This would suggest we are in a 'top up window' time, despite the recent strong share price rally since the dividend was paid.

SNOOPY

discl: hold HGH with an average holding price of $1.31 (excluding dividends). Haven't done as well as some here with HGH, but nevertheless managed to top up during the Covid wobbles to bring me back into the black.

[King1212]

Nah .... brokers target $1.54

[winner69]

Nah .... brokers target $1.54

Was over 2 bucks once ......and was making less than it is now

Brokers just stay ahead of current price ..they have a abacus that helps them calculate that

[Snow Leopard]

Happy enuf to get a few more shares at $1.24695055 each. Would have preferred it if they had have been another 1/1,000,000 of a cent cheaper.

As for value: we live in interesting times.

[waikare]

Indeed ...but we’ve lost heaps since last time .....and the time before that ...and the time before that

DRP was about $1.90 once I think

DRP Sept 2019 $1.54, and March 2020 $1.59