HGH - Heartland Group Holdings

[SCOTTY]

Excellent. Well done Percy

[winner69]

Doesn’t actually mean anything but NTA per share fell from $1.17 in comparable period to $1.09 at December

[Muse]

Doesn’t actually mean anything but NTA per share fell from $1.17 in comparable period to $1.09 at December

book value per share continues to increase: Dec.21 $1.32 > Jun.22 $1.36 > post cap raise LY $1.428 > Dec 22 $1.44.

the noted change in NTA a natural consequence of the multiple above NTA paid for Stockco, more or less transferring some tangible assets (cash) into intangible (goodwill). Hence why I prefer to look at BV in terms of multiples and returns on equity, as if you measured ROE as NPAT over NTA it would look rather impressive as it includes acquired earnings but not the goodwill purchased, whereas NPAT over BV includes goodwill and measures how well (or not) your acquisitions are fairing.

[Rawz]

whats an appropriate book value multiple for a minor like HGH?

1.2x? SP fair value $1.73?

[Muse]

whats an appropriate book value multiple for a minor like HGH?

1.2x? SP fair value $1.73?

best way to consider that is the 'warranted price to book' framework that considers three variables: sustainable ROE, sustainable growth in BV per share, and cost of equity (some old examples of that in the TRA thread)

or can look at a scatter plot bank ROE's and their P/BV multiples (some older graphs of this hanging around from last year) and see where HGH's ROE should place it in the line of best fit

[Rawz]

Thanks FM.

The market has on avg since 2015 given HGH a 1.28x price/book value. assuming the weighing machine is correct maybe fair value is 1.28x $1.44= $1.84 fair value sp vs today at $1.79

This is good enough for dummies like me lol

[iceman]

While it was a bit disappointing to see our NIM dropping while other banks are increasing theirs, particularly in the Q4 2022, our 3.97% still compares favourably, and it needs to. This from the Herald today:

"According to data collected by the Reserve Bank, banks’ net interest margin rose by 6 basis points, to 2.37 per cent, in the final three months of 2022.
The margin last reached this level in December 2014. The last time it was higher was in June 2006, when it hit 2.50 per cent."

[percy]

Looking Forward.page 37 recent presentation.
• The pleasing result in 1H2023 highlights the resilience of Heartland’s product portfolios despite the ongoing current economic challenges in New
Zealand and Australia. Strong growth continued in core portfolios, though softened elsewhere due to suppressed credit demand.
• It is currently anticipated that 2H2023 will deliver a similar result to 1H2023 on an underlying basis. In particular, continued growth is expected in
Motor and Asset Finance. Usual seasonal fluctuations are expected to contribute to a better half for StockCo Australia and Heartland Bank’s Rural
portfolio in New Zealand. Increased demand is expected for Reverse Mortgages in both countries where the product has proven to offer a good
solution for many seniors wanting to live a more comfortable retirement, especially as the cost of living rises.
• Heartland’s NIM is expected to stabilise at its current level as Heartland continues to proactively manage portfolio pricing and margin in
competitive markets.
• Efficiencies through digitalisation and the upgrade of Heartland Bank’s core banking system are critical pathways to a lower CTI ratio. As the
results demonstrate, Heartland continues to grow its revenue line, contributing favourably to its CTI ratio. However, ultimate efficiency requires
that costs are also addressed. This will remain a focus of Heartland’s through 2H2023.
• The remainder of the 2023 calendar year will be significant for Heartland as it progresses towards the completion of the acquisition of Challenger
Bank, therefore becoming an ADI in Australia, and realises the benefits this will provide its existing Australian businesses Heartland Finance and
StockCo Australia – as well as future product opportunities.
Heartland expects NPAT for FY2023 to be in the range of $109 million to $114 million, excluding any impacts
of fair value changes on equity investments held and the impact of the de-designation of derivatives.

[nztx]

Looks like Forbar analyst have read the W69 and Mr B exchange here after new Australian acquisition announcement ...they both agreed to 1 cps addition to bottom line thus giving it 15-20 cents push .

$ 2.60 target now stands at $ 2.75 ....

Now just a $1.79 .. still a bargain or not - approaching 12 months or so on ?

Even the hounds were excited about things then at those loftier levels ..

And some even thought it was winner at even higher levels ..

[winner69]

This paragraph they included is a bit of a rave…. ‘ • It is currently anticipated that 2H2023 will deliver a similar result to 1H2023 on an underlying basis. In particular, continued growth is expected in Motor and Asset Finance. Usual seasonal fluctuations are expected to contribute to a better half for StockCo Australia and Heartland Bank’s Rural portfolio in New Zealand. Increased demand is expected for Reverse Mortgages in both countries where the product has proven to offer a goodsolution for many seniors wanting to live a more comfortable retirement, especially as the cost of living rises.

so H1 was 55m …H2 similar so may 110m full year …lower end of guidance.

if you read it out of context it sort of says all those things will generate growth but 55m is not growth over 55m

Of course stupid me it’s growth over H222 eh and 55m this year is more than 47m last year eh.

hope Jeff keeps on doing what he says he will do …but with.a pretty full bottom drawer that should be a piece of cake.