HGH - Heartland Group Holdings

[winner69]

Well done Heartland demonstrating their commitment to reducing greeenhouse gas emmissions

Will make them a better company .... as well as being good for all of us

http://nzx-prod-s7fsd7f98s.s3-websit...068/343485.pdf

How committed Heartland are to this gas emmissioon stuff will show we hear that they reduced lending to 'dirty' industry sectors

[Beagle]

One wonders what might be irking investors ?
The red team dropping the sledgehammer on the real estate market affecting the economy ? Maybe ?
The RBNZ continuing with dividend restrictions at 50% until July 2022 ? Possible ?

I recently posted a comparison of the metrics of HGH v its peer group (see post #14476), and note that HGH's share price has declined a bit since then and therefore their comparative metrics are even more compelling. https://www.marketscreener.com/quote...44/financials/

Looking forward to FY22 (hard to believe we're in the final quarter of FY21 already) analysts are seeing eps of 15 cps so on $1.74 the forward FY22 PE is just 11.6 Its clear they can work around RBNZ dividend restrictions (recently paying a 4 cent interim dividend with full restrictions out of Australian profits) so now we're at 50% on locally sourced profits I foresee an interim dividend of about 5 cps this time next year and a final of about 6 cps for FY22 by which time RBNZ dividend restrictions should be lifted.

11 cps fully imputed = 11/0.72 = 15.28 cps gross and on $1.74 that's a gross forecast yield of 8.8%

I think we're in as least as good a position as the Australian economy with the chances of a recovery as the vaccination program is rolled out and business confidence is restored so i see the significant discount to its peer group as excessive. The metrics highlighted above are right at the most attractive end of the scale of what this company has traded at in many, many years.

The chart is a bit of a worry but this offers such a broad spectrum approach to investing in the economic recovery and has reasonable earnings growth prospects going forward together with trading on what ostensibly is a no growth forward metric that its a very easy stock to like even if holding at the moment feels like an exercise in how stoic one can remain.

Provided Cindy and the red team don't morph into absolute communists we should be all good.

[winner69]

From a Beagle post - Average PE of peer group 15.4 / HGH FY21 PE 12.5 -- conclusion HGH undervalued

Same peer group on a Price/Book Value basis - P/B of peer group 1.29 ? HGH P/B 1.37 - Conclusion HGH more than fairly valued.

Some will say earnings are key determinate of price (ie why PE is main driver) but if you throw ROE and retained %ages into the equations one might see why HGH tends to trade at a lower PE than its peers.

And then big is seen as better (less risky?) than small is often used a reason for multiple relativities - if only all things were equal

[Beagle]

You continue to use NTA which really isn't the best measure in my opinion when HGH makes around double the net interest margin on its loans than its peer group. Capital ratio's are the only other variable. I will always believe its the earnings that really matter...it's my life's work. PE multiples are as you know also a function of expected growth rates going forward and HGH looks good on that score as well, relative to its peer group. Goes without saying HGH is the only bank that will give you full imputation credits with dividends too so has the highest gross yield by quite some margin.

All its peer group's performance's are inextricably tied to the economy and I reckon we're in at least as good shape as Australia provided your mate Cindy doesn't get any more radical for her comrades. I suspect that risk is what's been repriced into HGH shares in the last week and a half. Ouch. Grant and Cindy strike again.

[winner69]

Those relative PE ratios with OZ peers

Nothing seems to have changed over the last 5 years or so ...much to Jeff’s frustration

Must be something that causes it ...obviously not that high NIM margin

From Heartland 2014 ASM preso

[Ferg]

I'm curious if there is a link between HGH SP and the property market. Do investors see a weaker property market giving rise to relatively lower security levels on reverse equity mortgages for HGH? (as in lower headroom) Would that explain a relatively weaker SP in light of the recent Government announcements?

[Jerry]

Nah! It's something to do with shares I buy... kiss of death...

[ziggy415]

Rereading half yearly report " interest from leading agrigators regarding Australian reverse mortgage book " ....and also " growing aussie reverse mortgage organically and inorganiclly " does this mean someone buying the debt and giving heartland money up front and the inorganic growth mean buying other banks reverse mortgage portfolio...several banks that used to offer reverse mortgages but don't now ...with policies still on books and returns getting less and costs per customer climbing..( westpak) spring's to mind....announcement 2nd half of financial year..

[KJMLimited]

The weakness is a bit of everything but I think the potentially slower economy is the most relevant. Just a headwind that the market hadn't thought about a month ago.

[Beagle]

The weakness is a bit of everything but I think the potentially slower economy is the most relevant. Just a headwind that the market hadn't thought about a month ago.

Bingo, I think that's it.