HGH - Heartland Group Holdings

[forest]

5/ The biggest problem I have with the Grade 6 to Grade 9 loans is that when you add them all up for FY2013 I get $265.683m.
SNOOPY[/QUOTE]

Snoopy your are right that Grade 6 to 9 loans add up to $265mil. But HNZ is likely to have more than $200mil of security for those loans so potential loss is only a fraction of the at risk loans.
Also some of the the secured assets might appreciate in todays economic climate therefore I see HNZ as a good investment at todays SP.

[Marilyn Munroe]

All this argyle bargy about impaired loans begs the question;

Would CBS Canterbury shareholders have been better off to remain clear of MARAC and steer their own more prosaic course?

Boop boop de do
Marilyn

[janner]

Glad you have had some financial benefit from my posts on HNZ Master. I just post the facts as I see them on HNZ (not always correctly as other posters have pointed out) and if that overall helps others to decide for themselves whether they want to be in or out of HNZ, well that is fine by me.

Personally I am still positive on HNZ, although not positive enough to own any shares. The problem with most bank shares is that it is all very easy to pick with hindsight. Those who bought in between 50-60c have done very well, albeit with some risk along the way that having 'succeeded' they are now oblivious to.

I guess by the time I decide that HNZ is worth investing in myself, the price may already have bolted. But I don't see any compelling value at 85c, with the credit rating only barely investment grade. Mind you I could say the same about a lot of shares on the NZX.

SNOOPY

" Those who bought in between 50-60c have done very well, albeit with some risk along the way that having 'succeeded' they are now oblivious to. "..

No Snoopy.. Have sold down one third @ 0.87. Watching diligently.. ( No that is not where the monies went to )..

The price will bolt.... Nothing surer.. A few more months to go.. IMHO.

[janner]

All this argyle bargy about impaired loans begs the question;

Would CBS Canterbury shareholders have been better off to remain clear of MARAC and steer their own more prosaic course?

Boop boop de do
Marilyn

Argyle !!!.. Trust a woman to bring Fashion into the subject :-)

But a good question :-)

[percy]

All this argyle bargy about impaired loans begs the question;

Would CBS Canterbury shareholders have been better off to remain clear of MARAC and steer their own more prosaic course?

Boop boop de do
Marilyn

Yes, CBS shareholders should have sold their shares on market and brought Ryman,then sold their Ryman shares earlier last year and invested in Xero,until the day before yesterday,taken their profits and then invested in Heartland.

[kizame]

Yes, CBS shareholders should have sold their shares on market and brought Ryman,then sold their Ryman shares earlier last year and invested in Xero,until the day before yesterday,taken their profits and then invested in Heartland.

So maybe you should have had the same strategy Percy,except sell your HNZ and follow the same procedure,wouldn't you have a bigger smile right now.

[percy]

So maybe you should have had the same strategy Percy,except sell your HNZ and follow the same procedure,wouldn't you have a bigger smile right now.

Not perfect timeing,however I did well buying HNZ.
Sold out of XRO far to early and sold down Ryman too early as well.[enjoyed huge profits]
Never was interested in buying CBS,although I did look at buying them when the merger was announced.
ps.My dividend yield on funds invested in HNZ is now over 10%pa.Lovely people doing good things.!

[kizame]

Good on you Percy.

If HNZ stay on track and aren't bought out,and continue to run as a more or less a conservative bank,mixed with great advertising,I can see them holding a pretty prominent position in years ahead,much like kiwi bank.

[Snoopy]

My main concern with Heartland is if the legacy property assets getting into trouble will disrupt the business plan going forwards. But let's put this issue aside for now and look at the ongoing business as Heartland sees it

Key metrics to look out for will be growth/decline in the loan book,

Heartland have defined their ongoing business focus as 'Rural', 'Business Receivables' and 'Retail & Consumer Receivables' (including domestic mortgages).

On a like for like basis, the three end of year comparative figures (from Note 4: Segment Analysis) for assets in the respective annual reports are as follows:

Sector, FY2011, FY2012, FY2013

Rural, $476.6m, $478.6m, $456.6m
Business, $476.4m, $540.2m, $549.2m
Consumer, $1,035.1m, $989.3m, $987.8m

Total, $1,988.1m, $2,008.1m, $1,993.6m

The growth is coming from the Business sector, but the overall picture is largely static.

maintaining/improving cost of funds relative to lending rate,

Net interest Income, FY2011, FY2012, FY2013

$61.594m, $83.646m, $95.454m

A big improvement is the trend here. I would go so far as to say all of the improved profitability has resulted from reducing borrowing costs relative to lending costs. The underlying levels of business have not changed.

and reduced operating costs.

Operating Expenses, 2011, 2012, 2013

$45.674m(*), $69.547m, $70.347m

The asterisked figure is not strictly comparable, because it excludes the operating expenses of PGGW Finance, not absorbed on FY2011 balance date. The slight increase in operating expenses for FY2013 is probably not significant.

Nevertheless the 'key performance metrics' as selected by 'hanth888' (not me) seem to show that profit growth is entirely attributable to the management of the borrowing/lending margin.

SNOOPY

[percy]

A big improvement is the trend here. I would go so far as to say all of the improved profitability has resulted from reducing borrowing costs relative to lending costs. The underlying levels of business have not changed.





Nevertheless the 'key performance metrics' as selected by 'hanth888' (not me) seem to show that profit growth is entirely attributable to the management of the borrowing/lending margin.

SNOOPY

Lets go back to the formation of HNZ.
Objectives:1] Obtain Bank licence to reduce cost of funds.
2]Concentrate on higher margin lending.
Outcome; Objectives obtained.!
Lower cost of funds with higher margin lending.
Heartland have a record of achieving their stated objectives.