HGH - Heartland Group Holdings

[percy]

Thanks SCOTTY,it is always good to here from a fellow investor who went to the meeting.

[Lizard]

... looking at equity relative to total lending, Kiwibank has $600m net equity and about $11,500m of non-bank lending (which doesn't seem to leave a lot of room for bad debts). Heartland-PWF combination looks to have about $400m of net equity for about $2,100m of lending. So I would take that to seem that HNZ could absorb a substantially greater % of bad debts, and could write off perhaps as much as $300m (about their entire property book) before they'd be down to Kiwibank-type equity as % of funding.

I agree with that point re government funding. However, I haven't seen anyone on this forum proclaiming that Kiwibank is about to need more capital or in any trouble.

Kiwibank could get asset sale cash - Key (Stuff)

Reminder to self once again - "whenever you find yourself making a comparison with another business to justify a valuation, you are usually just proving that the other business is over-valued."

[Lizard]

Interesting profit forecast - slight downgrade at $20-$22m NPAT, but sounds like the $6m deferred tax benefit is included in the forecast? Good to hear impairments are lower than forecast and higher than anticipated level of referrals from PGW.

Price has been plateauing here, so if there is any hint of volume building on the buy side, I would be interested in adding to my initial position. Although, while we all sit around the campfire, waiting to see if we get struck by fall-out from the sovereign debt meteorite or pass through the tail of another banking crisis comet, it seems prudent to watch a little longer...

[percy]

Keep holding yourself at the ready lizard. !!!!!!
I thought the $6 mil would have been on top,so when I saw the announcement I thought it would be a profit upgrade,not a profit downgrade.!!!The impairments being down I take that they are taking few risks.Certainly trying to be a bank rather than a finance company.Maybe too careful,not wanting to miss out on bank licence. Hopefully laying good foundations for the future.Sitting on so much cash and liquidity does not earn profits,so once over Govt guarantee that cash /liquidity should be put to use.Still they are doing everything very carefully,moving forward as to plan,so shareholders will rewarded by having a very run company they can pride of ownership in.

[janner]

Perc.

Was wondering whether to respond to lizards as I feel much the same.. So much happening global.. Have a few shillings ready to spend but feeling very wary..

To increase or not to increase.. That is the question..

Must admit that I think that the company is on the right track..

BUT... with all the shenanigans going on at PGC who have a finger in the HNZ pie..
Are they masters of their own destiny ??

[percy]

I agree with you and Lizard,with so much happening global.Time to be very careful.Take your time deciding.
I am sure the shenanigans at PGC are very much at PGC.All the problem bits are at PGC.
As for PGC and GK influence at HNZ I am sure both Chairman Irvine and MD Greenslade will tell them to "clear off." They will not risk the bank licence.
GK and PGC will know that Irvine and Greenslade will add value to HNZ.HNZ is on the right track.Has not been the best of times to undertake creating a new bank,but they have done the hard yards.

[winner69]

So guys - excluding the deferred tax benefit is the forecast NPAT $14m-$16m as per Lizards question mark or is $26m-$28m as per Percy's thoughts

Downgrade or upgrade or just confusing

But then again if the $6m was included in the original guidance then it is about the satus quo and just a strom in a teacup

[percy]

So guys - excluding the deferred tax benefit is the forecast NPAT $14m-$16m as per Lizards question mark or is $26m-$28m as per Percy's thoughts

Downgrade or upgrade or just confusing

But then again if the $6m was included in the original guidance then it is about the satus quo and just a strom in a teacup

$14m-$16m. I do not think the $6m was included in the original guidance.

[Lizard]

$14m-$16m. I do not think the $6m was included in the original guidance.

No, looks like you are right on that, Percy. From the Annual Report:

We have set a profit target of $20m–$24m for the 2011–2012 financial year. Achieving that forecast will be dependent on our ability to meet our performance milestones and anticipate and quickly adapt to any major market events, needs and opportunities. By virtue of a law change, a one-off deferred tax benefit will be booked as an additional credit to NPAT for the 2011-2012 financial year. The amount of this credit is likely to be in the order of $5m to $6m. This credit will have a positive impact on the forecast.

While yesterday's update certainly reads as though it IS included in the forecast (and to be booked in first half as part of the $9-$10m first half NPAT, thereby making underlying first half only $3-$4m).

The impact on earnings has been offset by the previously announced one-off deferred tax benefit of $6m, and lower than expected operating costs and impairment expense to 31 October.

On the positive side, I think this forecast is inclusive of their current view on likely impairments, which would mean equity should at least be heading upwards rather than eroding....

[SCOTTY]

When the $20 - 24mil projection was made , there were 300m shares on issue. Since then PWF was purchased and another 88.7m shares issued. Now the profit forcast is reduced to $20 - 22m. On a projected earnings per share basis there is a definate drop in earnings!! This is with or without the tax credit which I don't think was included in the original projection.