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  1. #2371
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    Yes - and market agrees with Snoopy - SP .85

  2. #2372
    ShareTrader Legend Beagle's Avatar
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    Well I take an interest in these things due to the horrors of finance companies during the GFC so couldn't help but notice over $80m of receiveables either more than 90 days overdue or individually impaired. I presume the latter actually recognises a specific chance of impairment ?

    Couldn't see any disclosure of how much of their $1.6 billion of receiveables are overdue by less than 90 days.
    I used to love how Geneva finance thought their receivables overdue by more than 90 days were really worth full value, obviously this is a joke and often they're only worth a fraction of face value.
    At an educated guess i'd say there's still a fair bit of work to do to clean up the balance sheet, more than 5% of receivables seriously impaired is not a satisfactory situation in my view and could dramatically impact on the audited annual results next year.

    I think a PE of 10 as suggested by Snoopy above is actually a bit on the high side for the risks involved and what will earnings really be after proper bad and doubtful debtor provisioning ?

    Wow, I'm glad I opened my eyes properly on this one. Gotta do your own homework, notwithstanding how likeable Uncle Percy is

  3. #2373
    percy
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    Quarterly disclosure notices in accordance to Reserve Bank requirements adds a huge margin of safety to Heartland for depositors and shareholders..
    Growth rate will propel the PE.Excellent sustainable dividend will reward shareholders.
    Adding runs to the board.
    Heartland is well positioned for continued growth,there by delivering long term shareholder value.
    Last edited by percy; 27-11-2013 at 12:02 PM.

  4. #2374
    Speedy Az winner69's Avatar
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    only Q1 and they already made more than all of last year

    That's good

  5. #2375
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    Quote Originally Posted by winner69 View Post
    only Q1 and they already made more than all of last year

    That's good
    I believe that is only because of a big write-off (on last year results)??
    Otherwise it would've been a similar figure correct?

  6. #2376
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    I don't want to take sides in this lively ongoing debate! But possibly the following might be some middle ground?


    1. Level for this type of business?

    Looking at that latest Disclosure statement, we have Note 9 "Financial Receivables" on p15. Here we learn that there is a "provision for impairment" of 41.4m. I assume this to be the write offs on old assets announced in the last full year report. If so, then the remaining assets are those that they considered current after the write down.

    In that case, the impaired and overdue assets listed on p15 are 87m, less 41.4m already provisioned = current potential impairments/overdues of 45.6m. This is 2.3% of total receivables of 1957m.

    Looking at the Westpac report for September, p42 for 2012, they have 605m of 59,442 m, or about 1%. That is one big report, so sorry if I've picked up the wrong figures, don't think I have. http://www.westpac.co.nz/assets/Who-...-DS-Secure.pdf

    But now look at just the "Business loan" figures for Westpac, also p42, and they are 443m of 21,788m or about 2% which is not that different to Heartland?

    I wonder if Heartland is in industry and rural, not in the mortgage business, and that this type of business might always carry a slightly higher level of loans that need management? If so, then perhaps there is not a problem? Westpac seem to be doing just fine with this sort of level on their own business portfolio, and they do not seem to be trying to exit that sector?

    Further, p41 of the Heartland report also shows that the net 45.6m had been 49.0m just 3 months earlier, and also after the write down, or about 2.4%. So progress is being made, over that 3 months at least, which would eliminate the difference with Westpac's business loans within a year if it continued?


    2. In P&L anyway?

    Also, we note in the P&L statement on p8 that Heartland included impairment expenses of 1.7m while still arriving at the profit of 8.7m in line with the year's expectations. This too might be taken as an indication that the business sector Heartland is in may require slightly higher write downs than for just mortgages, and that this has been allowed for in the profit projections and profit model?


    I hadn't seen this approach discussed here before so I mention it. Sorry if it's a repeat. I'm no expert on the banking sector either.

  7. #2377
    Guru Xerof's Avatar
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    Do the banks still carry a 1 or 2% impairment assumption across their books? this used to be common practise, just for conservatism

    others used inventories to do the same thing - its called profit smoothing....not sure if it still goes on

    Percy, I'm getting there - have an online high interest bizo account with them now.
    Last edited by Xerof; 27-11-2013 at 01:36 PM.

  8. #2378
    percy
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    Quote Originally Posted by Paper Tiger View Post
    and would you look at that...

    They have rebuilt their capital adequacy buffer from 1.76% to 2.45% in a single quarter.

    Best Wishes
    Paper Tiger
    Excellent achievement.
    I also note Note 16;Total liquidity is $459,886,000.Very liquid.So with equity ratio of 14.59,growing profits.strong liquidity I see any reasonable acquisition being self funded.ie no need to raise cash from shareholders.
    The business is on track to achieve the goals directors have set.

  9. #2379
    percy
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    Quote Originally Posted by Xerof View Post
    Do the banks still carry a 1 or 2% impairment assumption across their books? this used to be common practise, just for conservatism

    others used inventories to do the same thing - its called profit smoothing....not sure if it still goes on

    Percy, I'm getting there - have an online high interest bizo account with them now.
    Now you have really made my day.
    Should you be able to make it to Trevinos ,22 Riccarton Road at 7pm tomorrow night I will shout you a large drink.
    I do not know the answer to your question.You may have to ring Jeff Greenslade [09] 927 9149 or Simon Owen[09] 927 9195 to get the correct answer,.
    Last edited by percy; 27-11-2013 at 02:00 PM.

  10. #2380
    Reincarnated Panthera Snow Leopard's Avatar
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    Red face I'm so happy I can't stop crying

    Quote Originally Posted by simla View Post
    I don't want to take sides in this lively ongoing debate! But possibly the following might be some middle ground?


    1. Level for this type of business?

    Looking at that latest Disclosure statement, we have Note 9 "Financial Receivables" on p15. Here we learn that there is a "provision for impairment" of 41.4m. I assume this to be the write offs on old assets announced in the last full year report. If so, then the remaining assets are those that they considered current after the write down.

    In that case, the impaired and overdue assets listed on p15 are 87m, less 41.4m already provisioned = current potential impairments/overdues of 45.6m. This is 2.3% of total receivables of 1957m.

    Looking at the Westpac report for September, p42 for 2012, they have 605m of 59,442 m, or about 1%. That is one big report, so sorry if I've picked up the wrong figures, don't think I have. http://www.westpac.co.nz/assets/Who-...-DS-Secure.pdf

    But now look at just the "Business loan" figures for Westpac, also p42, and they are 443m of 21,788m or about 2% which is not that different to Heartland?

    I wonder if Heartland is in industry and rural, not in the mortgage business, and that this type of business might always carry a slightly higher level of loans that need management? If so, then perhaps there is not a problem? Westpac seem to be doing just fine with this sort of level on their own business portfolio, and they do not seem to be trying to exit that sector?

    Further, p41 of the Heartland report also shows that the net 45.6m had been 49.0m just 3 months earlier, and also after the write down, or about 2.4%. So progress is being made, over that 3 months at least, which would eliminate the difference with Westpac's business loans within a year if it continued?


    2. In P&L anyway?

    Also, we note in the P&L statement on p8 that Heartland included impairment expenses of 1.7m while still arriving at the profit of 8.7m in line with the year's expectations. This too might be taken as an indication that the business sector Heartland is in may require slightly higher write downs than for just mortgages, and that this has been allowed for in the profit projections and profit model?


    I hadn't seen this approach discussed here before so I mention it. Sorry if it's a repeat. I'm no expert on the banking sector either.
    I am SO pleased that someone is willing to read the accounts thoroughly, do some proper analysis and make sensible comments based on that.

    Simla you are my hero.

    Now the $41.4m is not actually written-off but is amount of the $2 billiion of finance receivables that they do not expect to ever recover. (Some of this amount is based on percentages of loan categories and some is calculated on the individual assets).
    Writing them off (the accounts) is the final stage when the probability becomes a certainty.

    So the remaining $45.6m they do expect to eventually receive.

    Well done
    Paper Tiger

    Note: The book value of the receivables in the accounts is the $2B less the $41.4m, i.e the value is already discounted. Writing-off a receivable does not involve further accounting losses.
    Last edited by Snow Leopard; 27-11-2013 at 03:04 PM. Reason: PawNote added
    om mani peme hum

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