HGH - Heartland Group Holdings

[winner69]

Jeff better print a great result to keep the share price up

Media reports Global dairy prices are expected to take another “significant decline” overnight, New Zealand stock exchange analysts say.

If so indicates a lower HGH share price in a few months time

[Simsee]

Jeff better print a great result to keep the share price up

Media reports Global dairy prices are expected to take another “significant decline” overnight, New Zealand stock exchange analysts say.

If so indicates a lower HGH share price in a few months time

Jeff’s got this. Have faith.

[ziggy415]

Jeff’s got this. Have faith.

Malaysia and Indonesia ban all live cattle from Australia because of lumpy skin disease, Malaysia usually buys 20,000 animals per year but only 2300 so far this year, may effect stockco income with loans provided to farmers for this market
Hope Jeff's got this

[Gerald]

Probably due another cap raise to keep the old business model afloat sooner or later eh?

https://bankdashboard.rbnz.govt.nz/summary

The above would seem to say in the last Q HGH has the lowest capital ratio of all NZ banks, has non-performing loans 700% higher then the big banks and for all that risk has a middle of the park return on assets. And to top it off not long back punters were paying 2x tangible book.

Got to have something wrong...Always so much enthusiasm here Will have to go back to the old model and fix up my numbers.

[Muse]

Probably due another cap raise to keep the old business model afloat sooner or later eh?

https://bankdashboard.rbnz.govt.nz/summary

The above would seem to say in the last Q HGH has the lowest capital ratio of all NZ banks, has non-performing loans 700% higher then the big banks and for all that risk has a middle of the park return on assets. And to top it off not long back punters were paying 2x tangible book.

Got to have something wrong...Always so much enthusiasm here Will have to go back to the old model and fix up my numbers.

Nice work looking at the RBNZ dashboard - it always amazes me that punters & investors don't look at it more often...heartland bank's NZ book and NPAT for the 3rd quarter have been publicly available for months now and mums been the word on sharetrader.

Regarding your comments.

Probably due a capital raising if/when/ever HGH is allowed to make it's aussie acquisition. The 31 March 2023 capital adequacy figures for HGH you refer to relative to its peers are 1) well above the stat minimum 2) disproportionately impacted by the payment of a dividend by HGH only 9 days earlier 3) doesn't include the $100m of capital raised in April 2023. Notwithstanding that is core funding ratio of 90.2% is better than the big 4 average of 89.7%. HGH's return on assets much better than the big 4. It's liquidity ratio better than the big 4, as is its credit concentration.

Non performing loans is the one to watch. HGL has long had far higher non performing loans than its peers, hence the NIM. It has only crept up 100bps since December 2022, and circa 280bps above its trailing 5 quarter average. In the 1H conference call, mgmt attributed that to the business and motor portfolios where the exposures have strong security and longer term remediation plans in place. Unsurprisingly individual provisions are up from a year ago, while collective provisions are down while p2p lending via harmoney runs off.

I've reviewed all the broker reports available on HGH and only one provides detail on where the growth in NPAT is due to come from - and nearly all of that that comes from stockco (AU). RBNZ data only shows P&L's for the NZ bank (HBL). Statutory NPAT for March quarter of $17.6m was down $19.3m achieved in March 2022. However, from an underlying point of view, HBL looks to have booked a $2.8m loss on the designation of swaps from the prior period, so net net not much change, and year end will include another designation loss plus whatever the loss on HMY is. So it really does come down to stockco. While w69 likes to get his jollies from the milk price, if you really wanted to know if HGH will meet its guidance, you have to take a view on the australian rural sector, and how that has changed in the 6 months just been versus a year earlier. Not just in a price sense, but in a rebuilding of the herd sense.

Many months ago I said my best case was the business hits the low end of its underlying guidance, and wouldn't be surprised if it came in below it. Since then Jeff has given a few interviews where he talked to the previously issued guidance (albeit if I recall correctly he also signalled in one interview the low end range) so I would think it would be a poor look for him to have said that and only a couple months later come in below that.

Disc. last bought in march 2023 at $1.56.

[Muse]

Hey FM, it will be interesting if HBL can continue this trend in current banking industry climate

Rawz I did this months ago but couldn't be bothered posting till now

the answer it seems is yes - heartland bank even in the peak of the confidence crisis back in march did continue to outperform its peers in raising deposits. Some of that will be getting out early w/ rates, but more to do with the explanations Jeff gave in the excellent podcast JaK posted a few months ago.

*some* seasonality in deposit levels but as a whole banking deposits fell in the March quarter. Big 4 bank deposits fell 1.4%, total banking system fell 1.1%. Heartland's deposits only fell 0.4%. So continued system outperformance in raising deposits.

Attachment 14713

[Muse]

Reporting full yr results now on the 29th, not the 24th. But release signals no change to guidance of underlying npat of $109-114m, so that's good news.
https://www.nzx.com/announcements/416654

[winner69]

Reporting full yr results now on the 29th, not the 24th. But release signals no change to guidance of underlying npat of $109-114m, so that's good news.
https://www.nzx.com/announcements/416654

‘Discussions’ with auditors re fair value adjustments ongoing?

Doesn’t matter what outcome is because they don’t count eh

must have been talking to Fletchers re abnormals / significant items

[Muse]

Be some losses on the de-designation swaps from FY22, M&A expenses on the AU acquisition, and negative revaluation of the HMY shareholding held below operating earnings, I would have thought.
Punters free to decide what ones are valid and what ones aren't.

[percy]

Be some losses on the de-designation swaps from FY22, M&A expenses on the AU acquisition, and negative revaluation of the HMY shareholding held below operating earnings, I would have thought.
Punters free to decide what ones are valid and what ones aren't.

The BIG one for me is whether the divie will be 5.5 cps or 6 cps.
The rest is just noise....lol.