HGH - Heartland Group Holdings

[alokdhir]

Did not know Forbar had so much influence in markets ...since FB report of underperform out after results ...HGH is not doing well ...Is it the Forbar report or the actual results which market did not like ? Hopefully it will do better ahead .

[Monarch]

HGH was largely tracking along with the NZ50 and ASF (finance smartshares etf) until reports day. When did forbar release their report?

[Muse]

Did not know Forbar had so much influence in markets ...since FB report of underperform out after results ...HGH is not doing well ...Is it the Forbar report or the actual results which market did not like ? Hopefully it will do better ahead .

Forbar's report was from 23 Feb. Highlights
* 1H npat came in $2.3m lower than their forecast, with lower than expected net interest income
* expect a slowdown in receivables from CCFA
* expect additional impairments from rising rates & stimulus roll off
* Forbar grumpy that HGH gone from trading at average discount of 12% to its comps to a 19% premium
* they noted FY22 earnings will be inflated by a removal of a one off amortisation charge
* noted the draft depopsit takers act as a risk
* showed charts showing its FWD PE premium vs peers has been high since mid 2021

[Beagle]

Did not know Forbar had so much influence in markets ...since FB report of underperform out after results ...HGH is not doing well ...Is it the Forbar report or the actual results which market did not like ? Hopefully it will do better ahead .

Just about everything has been hit with the ugly stick. Market making fools of almost all of us. I've previously posted what I think of Forbar analysis.

[alokdhir]

Just about everything has been hit with the ugly stick. Market making fools of almost all of us. I've previously posted what I think of Forbar analysis.

I remember we discussed just after results that around $ 2.40 is fair price at that moment ...market down just 3-5% since then but HGH down 11.5% at todays SP of $ 2.07 ...it was rock solid before ...CCFA worries ? I was not expecting a steady bank to underperform market ...as been told by W69 that banks do well in rising rates environment and they are good hedge in such times ...this has reasonable multiples also and solid yield ...

Maybe soon market will start liking it for above reasons if not for its steady growth ahead .

IMO its current fair value should be $ 2.25 -2.30

[Beagle]

Its been a tough month to be a HGH shareholder, no argument about that and the share price weakness has also really surprised me.
Over the last 3 months the share price movement has matched the NZX50 and over the last year its outperformed the index by just over 20%.

I have two possible theories for the recent weakness.
1. The market is pricing in considerable business failures resulting from the effects of the pandemic and maybe thinks HGH's existing Covid provisioning is not going to be enough to cover that.
2. The market is pricing in the very real chance of a bad recession driven off the back of the above in tandem with other concerns such as high inflation and soaring fuel prices because of the war.

These are very difficult times in the market with extreme volatility and high risk. I have been very transparent on here about the risks and my very high cash position which I built late last year. Everyone needs to think really hard about asset allocation strategies and decide for themselves what risk they're prepared to take in these incredibly uncertain times.

For what its worth I have a 6.7% portfolio allocation to HGH and am not selling it but will probably not add to it either until there is a new uptrend.

[Muse]

Its been a tough month to be a HGH shareholder, no argument about that and the share price weakness has also really surprised me.
Over the last 3 months the share price movement has matched the NZX50 and over the last year its outperformed the index by just over 20%.

I have two possible theories for the recent weakness.
1. The market is pricing in considerable business failures resulting from the effects of the pandemic and maybe thinks HGH's existing Covid provisioning is not going to be enough to cover that.
2. The market is pricing in the very real chance of a bad recession driven off the back of the above in tandem with other concerns such as high inflation and soaring fuel prices because of the war.

These are very difficult times in the market with extreme volatility and high risk. I have been very transparent on here about the risks and my very high cash position which I built late last year. Everyone needs to think really hard about asset allocation strategies and decide for themselves what risk they're prepared to take in these incredibly uncertain times.

For what its worth I have a 6.7% portfolio allocation to HGH and am not selling it but will probably not add to it either until there is a new uptrend.

Yeah I dunno either but got a third potential explanation - the unwinding of December’s big pop.

At close of November HGH sat at about 2.21 - a few broker picks publicised in the herald it jumped to 2.59 or up 17% over 6 weeks or so. I’m always a bit wary of those jumps as they can unwind quickly if they are momentum plays by newer less committed investors. As the peak cycles off disappointed expectations lead to a reversal in expectations and the trend collapses. Throw in a financial result that was just “very solid” and inline with guidance and we got a downtrend with everything else in the world.

I dont think the market is rational enough to have already repriced unemployment and macro uncertainty into HGH already, though its a risk. I just think positive sentiment is incredibly hard to maintain these days with all that is going on and in effect everything is being rerated down.

Unless I’m selling I dont really mind a falling market although I find it interesting and spend time assessing the catalysts and where they are headed as I love buying things and dont want to spend anything than I have to.

HGH is pure bottom drawer material - a solid well run company paying lots of divvies and leading the way in reverse mortgages

[percy]

HGH is part of my dividend portfolio.
Latest divie was better than expected,and HGH capacity to pay increasing future divies looks secure, with HGH's core businesses ;Reverse Equity Loans and Motor Vehicle financing providing above average returns,and in other areas HGH have the agility to move quickly to take advantage of opportunities.
The share price can go up,down, or sideways,however the increasing divies are why I hold, and will continue to hold HGH and my other divie holdings.

[Muse]

I've previously posted what I think of Forbar analysis.

I don't know why Forbar have their nickers in such a twist re Heartland. Sure it's price to book is at a slight premium to most of the Australian banks, but its well known that the single biggest driver of price to book is return on equity, where Heartland shines. It's PE is below its peers and has a superior dividend yield.

See heartland valuation (red dot) vs. its Australian peers below:

Attachment 13621

If anything the analysis suggests Heartland is undervalued relative to its peers (heartland consistently below trendline on a price to book and PE basis). I'd say some discount is warranted given Heartlands smaller size, its evolution from an amalgamation of non bank lenders and eventual registered bank status, and mix of receivables but I certainly don't agree with Forbar that it is overvalued relative to its peers.

[winner69]

Good work FM but Heartland ratios might be a bit light

I reckon Heartland P/B is 1.59 at the moment -- like 210/132

Calanderisation?