HGH - Heartland Group Holdings

[Beagle]

Remember your 15% limit.

Right on it now and slightly over it with HLG now I'm expecting a decent profit upgrade when HGH announce their half year result later this month and I have a high conviction these are exceptionally good value relative to its peer group. See HLG thread for my thoughts on that one.

[Beagle]

Global Dairy Trade prices up again overnight

Been going up since Oct/Nov last year -- just like the HGH share price (which tends to follow)

HGH share price 2 bucks soon ...no worries

Worth all of that in my opinion and some.

[Beagle]

Peer group update - FY21 PE's off market screener today.
ANZ 14.2
NAB 16.7
WBC 15.2
CBA 18.8
BEN 16.5
BOQ 17.0
Average 16.4

Based on HGH mid point of company official guidance (possibly to be upgraded this month ?) at $1.83 they are on a forward PE of 12.7

If they were on the same average FY21 PE (without any upgrade) they would presently be priced at 16.4 times 14.4 cps = $2.36.

I think the chance of an upgrade is very real based on :-
1. ASM guidance that they had traded ahead of forecast for the 4 months to 31/10/20
2. Previous comments from the company that they are considering revaluing their stake in Harmoney
3. Previous comments from the company that they have not used any of their previous provisioning for Covid
4. Plenty of press reports and anecdotal evidence that lending volumes have been very strong.

Disc: I am right on the limit of my self imposed 15% maximum portfolio allocation after a small top-up this morning.

[winner69]

Peer group update - FY21 PE's off market screener today.
ANZ 14.2
NAB 16.7
WBC 15.2
CBA 18.8
BEN 16.5
BOQ 17.0
Average 16.4

Based on HGH mid point of company official guidance (possibly to be upgraded this month ?) at $1.83 they are on a forward PE of 12.7

If they were on the same average FY21 PE (without any upgrade) they would presently be priced at 16.4 times 14.4 cps = $2.36.

I think the chance of an upgrade is very real based on :-
1. ASM guidance that they had traded ahead of forecast for the 4 months to 31/10/20
2. Previous comments from the company that they are considering revaluing their stake in Harmoney
3. Previous comments from the company that they have not used any of their previous provisioning for Covid
4. Plenty of press reports and anecdotal evidence that lending volumes have been very strong.

Disc: I am right on the limit of my self imposed 15% maximum portfolio allocation after a small top-up this morning.

If shareprice rockets up in next week or two you'll have to sell some to keep with self imposed limits

[Beagle]

If shareprice rockets up in next week or two you'll have to sell some to keep with self imposed limits

Kingfish seem happy enough to let things run up to 20% for any one share based on accumulated profits and they're pretty smart guys. Maybe I should follow suit...

[winner69]

Peer Group update

Oz banks average Price/Book ratio 1,26

HGH Price Book currently 1.53

HGH rated much higher than Oz banks

Maybe Heartland is now seen as a Fintech stock after all

[Beagle]

I wonder how Jarden are getting on with their strategic review ? Maybe more to come out in regard to that with the half year announcement later this month ?

[Beagle]

https://tmmonline.nz/article/9765181...+February+2021

Huge growth to come.

[Greekwatchdog]

That HY will be very interesting given their guidance and how economy has performed. Positive seem to be everywhere. Whats the chance of $2.14 again soon? I sense Lip licking here...

[Beagle]

That HY will be very interesting given their guidance and how economy has performed. Positive seem to be everywhere. Whats the chance of $2.14 again soon? I sense Lip licking here...

I'm not tempted at all to sell at $2.14 this time. The fundamental's and outlook warrant something a fair bit north of that in my opinion. I can foresee up to 16 cps for FY22 in a strongly recovering economy with years of growth ahead and a PE of at least 15 gives me a fair target price 12 months hence of $2.40. Applying the same average PE as is currently accorded the peer group I follow which is 16.3 a fair value case can easily be made up to 16 x 16.3 = $2.61

I'm very comfortable taking a dogged approach with this one. Goes without saying that this is the only bank that will give you full imputation credits with its dividends which is a definite incentive to hold this instead of Australian banks.

I'm not sure what the dividends will be for FY21 but I am hopeful for 11 cps fully imputed (15.28 cps gross / 185 = 8.25% FY22 forecast gross yield) for FY22 when dividend restrictions are hopefully fully eased. Possibly worth noting that 8.25% is more than 8 times their best term deposit rate which really shines the spotlight on the importance of investing on the owners side of the ledger At call has very recently been reduced to just 0.5% which is pretty miserable for my call funds but good for the net interest margin of the bank and therefore good for my shares so I am somewhat conflicted and not sure whether I like the reduced call rate or not lol.

P.S. Just on 2 weeks until they report their half year on 22 February and I'm really looking forward to that.