HGH - Heartland Group Holdings

[Beagle]

I've been more than happy to hold for 18 months now for such a good dividend.

Yep, putting our happy hats on again. Since their stated objective is to improve return on equity what are they going to do with the increased EPS most especially given they have a DRP still in place. Pay it out as fully imputed divvy's !!

[Beagle]

Further thoughts....I think $48m is a reasonable target that should be achieveable, (without new acqusitions) and on 466.946m shares that gives us EPS of 10.28 cps this year for a 14% growth in EPS based on weighted average shares on issue last year and EPS of 9.0.

10.28 cents eps and a PE of 12 gives us $1.23. Call it $1.20 to be a bit conservative. Upside from there if there's an EPS accretive acquisition(s).

I reckon divvy's this year of 7 cps fully imputed up from 6 cps last year and in line with EPS growth gives (7/0.72) so gross divvy's of 9.72 cents so on $1.06 this morning that gives a gross divvy yeild for 2015 of 9.17%.

[Cricketfan]

One trading on a PE of over 30 with EPS contraction and the other on a forward PE of about 11 and showing strong growth. Yeah great analogy.

Yes but what happened to SUM after April when you wrote this post and things were all looking good? I guess what Ginger_steps_ was asking or pointing out was whether the same could happen here?

[Billy Boy]

Good discussion going here... Making me re-think my thinking.
Bought heaps @ 86c, mainly on Birdmans advice.( think it's Birdman.. man with the cat pic.)
I not worrying too much about the fundies at this stage coz it's a BANK (with a difference sure),
but it's what and how they are involved.
Dairy will not drop off to much as NZ farmers are more efficient than northern hem farmers.
And not all have to sell to Fonteria (SML will play a bigger part looking ahead).
By 2015 meat exports to China will be duty free under the FTG. Chinese eat and like mutton.
All food for thought
BB

[Ginger_steps_]

Yes but what happened to SUM after April when you wrote this post and things were all looking good? I guess what Ginger_steps_ was asking or pointing out was whether the same could happen here?

More or less. I like heartland but had to sell recently for a house deposit. Happy to lock in some decent gains. I was just merely pointing out how similar the comments are here making heartland out to be a sure thing.....

[Beagle]

More or less. I like heartland but had to sell recently for a house deposit. Happy to lock in some decent gains. I was just merely pointing out how similar the comments are here making heartland out to be a sure thing.....

Nothing is a sure thing and what we have seen with SUM is that when a stock is priced for perfection on a PE of 30+ and doesn't deliver it, its gets belted and belted pretty hard at that. Doesn't help that directors shot their own credibility to bits by wild west insider trading governance policies that happened AFTER I made that post. (See subsequent posts in SUM thread where I make it clear Norah Barlow and her fellow directors made fools of themselves).
On the other hand here we have a stock in a completely different sector trading on less than 12 times historical EPS at present, hardly priced for perfection and trading on lower PE's that regional comparative banks in Australia and has more predicable earnings so hardly a relevant comparison. Besides that there's always the prospect of a decent fully imputed dividend yield with HNZ whereas the unimputed divvy's SUM pay are so low as to be almost inconsequential. All I'm suggesting is barring a huge exogenous shock to the market of some sort or other its highly likely we'll see a reasonable level of SP appreciation to go with our circa 9% divvy yield this year.

[BlackPeter]

Agreed, HNZ is a well run company. However - its not the only show in town, and I am not quite sure, whether it is (looking at risk vs reward) still a better proposition than any of the bigger banks. Just comparing:

ANZ: (really) big international bank with proven capability to survive major market crash's
HNZ: still a quite minor and only national player, focussing on lots of previous finance company business (and we know, how that went during the recent GFC); certainly higher risk stuff than ANZ.

forward P/E: HNZ 11.9 (tendency rising), ANZ 12.5 (and currently in a downtrend - i.e. further falling) - forward PE based on Reuter or FT predictions;

analysts 12 month target: HNZ 96 ... 101, with a 97 cts median (i.e. even the most optimistic analysts predict a SP drop over the next 12 months), ANZ 3315 ... 4260, median 3855 (i.e. majority of analysts predict a rise over the next 12 months). Predictions lifted off FT and for ANZ translated from AUD into NZD.

So - if the next 12 months run really smooth (rockstar economy?), than maybe HNZ might come out as equal or even winning. However if we have just minor hiccups like e.g. the HER business not taking off as hoped for, or if the rural sector developing a flu, or if something else negative happens, than I am not sure, whether people on this thread are in a year still as upbeat as they are today.

Discl: Used to hold ANZ as well as HNZ (at some stage), currently holding none of them. DYOR;

[Beagle]

Based on the mid point of HNZ's own forecast range we get $43.5m on 466m shares or 9.33 cps so at $1.05 they're on a forward PE of 11.25. I think with all due respect BP the data you've used is clearly flawed and further, those that know the company well know the official forecast is very conservative. Also as I am sure you are aware dividends from ANZ carry no N.Z. imputation credits whereas HNZ ones carry full credits which makes a substantial difference to one's net returns over time. The other issue you discuss regarding potential vulnerability in the possible event of a major exogenous shock like a GFC Mk2 ignores the fact that the various building society's and finance company's that now are comprised within the HNZ parent company successfully traded right through the GFC we've just had. Finally from a parochial perspective I have a very strong preference towards backing a home grown Kiwi bank than supporting an Australian one more especially so when I reflect upon all the fees and interest the so called Bank Of New Zealand have gouged out of me over the years. Happy holder

[Beagle]

http://www.sharechat.co.nz/article/4...-rbnz-sayshtml

N.Z. Banks well placed to weather a potential downturn according to Reserve Bank analysis.

[percy]

Australian banks face a few challenges Heartland don't;
Slow down in mining sector.
Slow down in manufacturing sector.
Slow down in the retail sector.
Slow down in real estate housing market.
Possible a tightening of European wholesale funding.
Possible Australian Reserve Bank requiring Australian banks to have a much greater capital base.