HGH - Heartland Group Holdings

[Snoopy]

Nothing further to add as what I wrote is correct.

AA the credit rating of ANZ in New Zealand means "Very strong ability to repay principal and interest." according to Standard and Poors and Fitch.

BBB the credit rating of Heartland means "Adequate ability to repay principal and interest. More vulnerable to adverse changes." according to Standard and Poors and Fitch.

From this we can conclude that Percy does not work for Standard & Poors nor Fitch!

SNOOPY

[percy]

AA the credit rating of ANZ in New Zealand means "Very strong ability to repay principal and interest." according to Standard and Poors and Fitch.

BBB the credit rating of Heartland means "Adequate ability to repay principal and interest. More vulnerable to adverse changes." according to Standard and Poors and Fitch.

From this we can conclude that Percy does not work for Standard & Poors nor Fitch!

SNOOPY

I have always either worked for myself or reputable firms.

[K1W1G0LD]

I have always either worked for myself or reputable firms.

Percy, where Snoopys concerned you have the patience of a saint. I really think snoopy has missed his calling. He would be better off spreading his message at the local retirement village, I'm sure he would go down a treat , the confused spreading the investing message to the befuddled . lol.
cheers kiwigold

[percy]

Percy, where Snoopys concerned you have the patience of a saint. I really think snoopy has missed his calling. He would be better off spreading his message at the local retirement village, I'm sure he would go down a treat , the confused spreading the investing message to the befuddled . lol.
cheers kiwigold

Thank you KIWIGOLD.Yes, he has worn me out.I used to try to help him .Now I just can't be bothered.

[percy]

You're not reputable ?

Correct.Tried,but failed.lol.

[percy]

In support of Snoopy's analysis ... He's doing no more than compare two financial organisations using historical information. Those out there with crystals balls would do well to take a look backwards as well as forwards.

Agree,however should you drive with you eye solely on the rear vision mirror you are a fool.Same with investing.

[born2invest]

Perhaps Snoopy thought rationally and realises a bank in a saturated market like NZ with no offshore growth and a lower ROA than the big banks should not be trading on a valuation of 40+ times earnings?

[percy]

Perhaps Snoopy thought rationally and realises a bank in a saturated market like NZ with no offshore growth and a lower ROA than the big banks should not be trading on a valuation of 40+ times earnings?

I do not think he is that silly.[I could be wrong!!! lol]
He is,or should be, fully aware the projected PE is under 10 and ROE is improving very quickly.
Astute investors are looking at future earnings.You could say they are keeping a careful eye on the road ahead.!

[SCOTTY]

Perhaps Snoopy thought rationally and realises a bank in a saturated market like NZ with no offshore growth and a lower ROA than the big banks should not be trading on a valuation of 40+ times earnings?

Like Percy, I prefer to look ahead.

The valuation of 40+ which you are useing was after property write-downs last year of some $18m. Normalised earning were from memory $24m. Currently HNZ is on track to earn after tax profits between $34 to $37m which at today's price of 85c = 9 to 9.8 times earnings.

[Snoopy]

Perhaps Snoopy thought rationally and realises a bank in a saturated market like NZ with no offshore growth and a lower ROA than the big banks should not be trading on a valuation of 40+ times earnings?

See my post 2968 0n this thread. I see others have corrected you on the forward PE. That 40+ PE figure was because of (hopefully) one off property write-downs. Despite what some may think, I am not here to beat up people for investing in HNZ. I believe that HNZ has a good future in NZ like others here. Where I do differ is what the suitable entry price for a new investor might be.

My main problem is determining where the competitive advantage of Heartland is. As a measure of how widespread the measure of opinion is on this, you see HNZ as "one player in a saturated market". Go back to post 2895 and hanth888 sees HNZ as

"a near monopoly position on the type of products it provides (i.e. high-margin livestock/personal/business lending - they're not battling it out with the big 4 to see who can write more residential mortgages)"

So which is it? Like any issue with a wide range of opinions, the truth probably lies somewhere in between. And that leads me back to trying to figure out what the competitive advantage of Heartland really is.

'No offshore growth' is not really an issue because compared to the big 5 banks, Heartland is a minnow. If Heartland can find their niche, they wouldn't have to take much business off the big 5 to greatly increase the size of the Heartland loan portfolio.

ROA is not a good comparative measure for banks, because the loan book base is theoretically proportional to total Tier 1 capital available. And net assets are just one component of this.

A very brief summary of my quest for a competitive advantage is as follows:

1/ Heartland do not seek to compete in the mortgage market by going head to head with the big banks. They are still advertising for mortgage business. But they aren't pushing hard where the big 5 banks do it better.

2/ Heartland do not earn as much margin as Dorchester Finance and Turners Auctions Finance when it comes to financing motor vehicle.

My best assessment of Heartland going forwards will be as a plodding minnow, outflanked on both sides. Nothing wrong with just being Mr Average Piggy in the Middle bank of course. But I want to invest in a Bank/Finance company that is on top of the game. So far I can't see the path for Heartland getting there.

SNOOPY