HGH - Heartland Group Holdings

[Jantar]

That $2 wall got smashed finally

Just sold 10% of my holding at $2.02. The rest are a hold

[pierre]

Just sold 10% of my holding at $2.02. The rest are a hold

Im holding all mine. They owe me an average of $1.21 each and I'm happy to enjoy the divvies and the ride waiting for Beagle's prediction of $2.50 to arrive.

[Beagle]

Pleased its finally cracked $2 again as its been a long time between drinks. Will go higher but $2.50 is upper quartile of my expectations in the next 12 months. Excellent yield and good prospects for a reasonable capital gain makes this a very sound hold.

[winner69]

Beagle ...way OZ banks are going at least $2.50 after full year announcement...yes?

[Beagle]

I know you use other ways to assess fair value relative to Aussie banks and that's fine mate but I will stick with earnings. As I said last week I see fair value at about $2.30 but you could be right and that $2.30 might be now, not in 12 months time.
The answer to your question is that will be very much determined by their profit forecast for FY22, which hopefully we will be blessed to know when they announce their FY21 result in August.
Just double checking off market screener now

The market is always forward looking as we know mate so is starting to think about FY22 earnings and leaving aside the outlier CBA (which is on a forward FY22 PE of 20.2) based on Friday's closing prices the peer group I follow is currently trading in a fairly tight range based on 13.1 x - 14.7 (average 14.14) x FY22 forecast earnings.

If we apply the same PE to HGH based on average analyst expectations for FY22 of 89.7m earnings we get fair value now of $2.16
If HGh can issue an FY22 forecast of about the $94m earnings level we've been recently talking about then that suggests eps of just over 16 cps for FY22 and fair value in late August 2021 of 14.14 x 16.04 cps = $2.27 nand if the PE stays the same and this time next year we're talking about FY23's forecast of $100m earnings than eps would rise about 6% from there and the share price with it to circa $2.40 by mid 2022.

$2.50 is right at the top end of my expectations as a target price in the year ahead and that's based on a forward PE of 14.5 x 17 cps ($100m) earnings expectations for FY23.

When it got to $2.14 years ago and was overpriced it was on a forward PE of 18 times earnings so we're nowhere near overpriced this time (with all the years compounded earnings growth since then).

[winner69]

Beagle - as you know my preferred measure of value is Price/Book Value

Oz bank peer group exc CBA currently P/B is about 1,2 - HGH is 1.6

HGH out on its own - relatively speaking most expensive of peer group by a long way

Must be flawed --- won't use that method any more --- (even though done me good in past)

[Beagle]

Market seems to be saying that earnings based price relativity to Aussie banks is the correct approach.

[winner69]

beagle ....but that implies all are 'equal' and we know that they aren't eh

[JohnnyTheHorse]

Beagle - as you know my preferred measure of value is Price/Book Value

Oz bank peer group exc CBA currently P/B is about 1,2 - HGH is 1.6

HGH out on its own - relatively speaking most expensive of peer group by a long way

Must be flawed --- won't use that method any more --- (even though done me good in past)

Is Heartland Fintech with all that online stuff they talk about? Market loves fintech... maybe that explains it.

[winner69]

I have a feeling they are about to announce the demerger of the motor finance arm