HGH - Heartland Group Holdings

[percy]

Maybe Xerof's post No. 2345 contains the answer.
If not phone Craig Stephen on [09] 9279310 and save yourselves [and us] a lot of time.

[winner69]

Snoopy - maybe depositors money not needed because business not borrowing much more than last year.

From an NBR article (sorry guys for typing it out)


The latest update of credit data from the central bank shows borrowing for business, agriculture and non-mortgage consumer activity is falling.

While running nowhere near the unsustainable annual increases in debt in the middle of the last decade, most sectors have returned to credit growth broadly in line with, or slightly below, the annual rise in nominal GDP.

But that is now falling away. For the year to July, business lending rose only 0.4% - well below the nominal GDP increase of more than 4%, and, on the face of it, inconsistent with business investment intentions.

At the start of the year annual business credit growth was 2.3%: modest by historical standards but prudent under the circumstances.

With overseas trade data showing imports of capital goods such as machinery and plant are still running comparatively highly, this suggests – and it is only a suggestion at this stage – businesses may be funding more capital investment out of their cashflow rather than out of increased debt.

The only sector not dropping its borrowing is housing.

[percy]

Well it looks as though the "sale price" shares have all gone.Buyers at 87cents.
To whoever brought at 84cents.Well done.My last purchase was at 87cents.

[Snoopy]

Snoopy - maybe depositors money not needed because business not borrowing much more than last year.

From an NBR article (sorry guys for typing it out)


The latest update of credit data from the central bank shows borrowing for business, agriculture and non-mortgage consumer activity is falling.

<snip>

The only sector not dropping its borrowing is housing.

I can't get this persistent ghost of those bad property assets out of my head

From page 20 of the Heartland presentation.

Non core property loans are classified in three buckets:

a/ Performing / Hold: (loans or assets that are performing and will continue to be held)
b/ Accelerated Exit: (loans and assets to be exited within a 12-18 month time)
c/ Extend: (loans that will be converted over time to real estate, improved or positioned better for sale, and exited over a five year period.)

But I have to ask what has HNZ actually done to recover these property loans? Sure they have taken a substantial write down, and reclassified them into different 'buckets'. But doesn't that just mean they will accept a lower price when ultimately these assets are disposed of? It doesn't mean that they have actually sold any.

This could explain why the 'Monitor +' asset total has not really decreased. Some of the worst assets have come back into the monitor (watching brief) category, because of a change in book price. But the problem of ultimately getting them off the books has hardly been addressed, above admitting they will have to go for a lower price than the former 'book value'.

I have been and visited some of these subdivisions around Frankton. Are they unrealistically still being held on the books as 'development opportunities' when really they will probably end up as paddocks being grazed by goats. How many more millions will have to come off the HNZ books should that scenario eventuate?

SNOOPY

[percy]

Snoopy - I agree this company is not right for you.

May not be right for some one who has ghosts in his head,however it is perfect for the lovely clear headed people who have just purchased 105928 shares at 88cents.Will prove to be a lucky number for them.

[winner69]

Snoopy - the guy who did this study is a bit of a guru, even if he does work for the OECD.

Quite interesting study about the things to look for to see if banks are likely to default. He uses a term 'distance to default' and looks at indicators that affect this.

Interesting the Basel Tier 1 ratio found no support as a predictor of default risk but other leverage rationun-weighted leverage ratios did. Also house prices are a predictor of default.

A bit of a heavy read and pretty academic but quite interesting. You can see where our Mr Wheeler might be coming from as well.

Doesn't help analyse HNZ specifically but could point you in the direction of where to really look.

http://www.oecd.org/daf/fin/BanksBusinessModels.pdf

[Snoopy]

Back to note 38.

Next job is to look at the difference in the contracted 'finance receivables' and the expected 'finance receivables' over the next twelve months. That should give a measure of the new (or re-signed up) business that Heartland is expecting over the next twelve months.

Contracted: 0 + $562.696m + $283.289m = $845.985m

Expected: 0 + $520.198m + $421.900m = $942.098m

So Heartland is planning to sign up some $100m of new short term loans over the year. Interesting.

It occurred to me after writing this that Heartland has indirectly told us what the dividend will be in FY2014. So time to work it out.

From Note 38 again:

Contracted forward receivables are as follows at balance date 30-06-2013: $2,205.929m.

Estimated forward receivable maturity profile is: $1,986.615m

So overall the loan book is expected to shrink during the year by around 10% because some receivables will be repaid before the contracted period ends. This in turn means the bank will be able to hold less capital as the loan book shrinks. Thus all of the earnings will be available as dividends. Have I got that right?

HNZ may be the incredible shrinking bank. But maybe most of that shrinkage will find its way to shareholders in the form of dividend cheques?

SNOOPY

[swillisam]

Interesting, director changing his shareholding by 540,838 shares

https://www.nzx.com/companies/HNZ/announcements/240608

[CJ]

Interesting, director changing his shareholding by 540,838 shares

https://www.nzx.com/companies/HNZ/announcements/240608

He obviously hasn't been reading Snoopys posts.

It occurred to me after writing this

that no one is listening to you?

Sorry shouldn't be cruel to animals.

[CJ]

If a director is buying near on $500k of HNZ on market then I would say holders are.... Well positioned!

But what about the Basel Teir 1 ratio?