Sorry, I thought it goes with out saying.!
Other wise no point.!!
Heartland guys are bankers,not some charitable do gooders.!
They do not giveaway our money, or their own.!
The last acquisition not really eps accretive was it Percy. You been watching that video of Jeff too much and been brainwashed.
You mentioned HNZ share price following the Aussie banks down so its really just market sentiment putting pressure on the price, nothing the company is doing eh.
The market is a funny place eh. You never know what might happen next do you. Like who would ever had thought that in a few short months the HNZ share price could fall by 10% ......at the same time that Nuplex's share price goes up 25%.
Never mind .....just shows that HNZ could go up 25% pretty quickly to $1.60 plus ....I love flags
Roger, it is concerning that your confidence in Heartland is being tested, even waning when it is likely or even probable, that your confidence in conjunction with Percy late '14 and into summer this year, may have brought new money to the table. Possibly quite a lot of new money.
I was convinced at the time, made a modest gain, but exited when the weekly price descended below the weekly 14EMA, which it has again and now sits on the 100day EMA. Money flow has declined but is still positive, RSI is declining below 50 and the Slow STO has crossed down, from overbought. (TA talk, in english .. SP is weak and weakening).
It would be helpful I think if you crunched the numbers again and provided your revised assessment of the fundamentals. All the talk of fringe finance lending etc obviously hasn't helped the SP, for that I'm apologetic having participated, but in the overall scheme of things Heartland as you say may have shifted from growth+yield to yield only, and may be exposed to second tier lender variables and risks.
BAA
Yes mate as you suggest its probably time we had a look at the relative PE of HNZ compared to some of the Australian banks and see how they stack up.
Going off the 4 traders website the first thing I notice is there's only 3 analysts covering HNZ and consensus 2015 EPS is now 9.75 cents, previously 10.2 cps last time I looked. One of the brokers downgraded to under-perform in March and we've seen the SP correct materially since then. the other two brokers have HNZ as a Hold. Consensus EPS for 2016 is 10.4 cps.
Seeing as FY2015 is 11 months through its course I believe most astute investors will be looking to base investments on where they see EPS in FY16 and FY17.
In this regard I have zeroed in on FY16 as data is available from brokers for estimates and again off the www.4traders.com website I see based on FY16 consensus estimates and going off closing prices on Friday this week we have the following stocks on comparative multiples based on FY 16 of:-
HNZ 12.35
NAB 12.35, (this is not a typo the multiple is the same for HNZ)
WBC 13.13
ANZ 11.99
BEN 13.32
BOQ 12.94
Dairy in my view is to HNZ what iron ore is to the Australian banks. While I have the greatest respect for our dear friend Percy, there were many many consumer finance companies that collapsed in the GFC, most of which were not in that list I provided a link for recently and I have intimate knowledge of how one of them was behaving, (Geneva finance). HNZ's activities in the www.ifinance.co.nz, harmony and through lending like the aforementioned no wallet no worries campaign plays like a very bad groundhog day movie to me.
I think the current PE considering the risks have changed is about right. My gut feel is extra delinquencies in the riskier consumer finance sector they appear to be targeting as well as problem dairy loans will make net effective earnings growth more challenging. I think the brokers have this about right as a hold with a slight bias towards under-perform. In my view its become a yield story for the foreseeable future and I struggle to see the SP getting much northward traction this year. I guess a good and strong EPS accretive acquisition could change that, (risk to the upside) and likewise extra problems than currently foreseen with consumer and dairy loans could ameliorate consensus broker EPS growth forecast for 2016 and if especially bad could provide some EPS downside risk.
I think on balance its a hold for its good dividend yield and for growth in more favourable times ahead maybe FY2017 will see the dairy sector performing better but who would know, its a lottery really... In my view the SP could potentially track sideways for a considerable period of time and the chart quite obviously is suggesting there may be more downside risk.
This begs the question of how well we are being paid to wait ?
I'm forecasting total fully imputed divvy's this year of 7.5 cents, that's 10.42cps gross which @ $1.28 provides a 8.14% gross return which gives a reasonably supportive argument towards being on the right side of the ledger in terms of having your money as a shareholder with HNZ as opposed to earning ~ 4.5% on deposit Its also an attractive yield especially by virtue of its full imputation credits compared to the Australian banks.
Whether Australian banks have more headwinds than HNZ, who could reasonably say ?, but my gut tells me they face similar challenges, with quite obviously the Aussie banks under pressure to increase their capital ratio, which possibly gives those banks that haven't done so already, some specific downside risk ?
In terms of relative PE its perhaps worth noting the types of business the various banks do and the superior credit rating of the larger Aussie banks as well as their vastly longer track records.
On this basis you'd have to say the FY16 HNZ PE looks very fulsome as a ratio on a relative basis.
Hold an appropriate moderate allocation in anticipation of better economic times in the long run. FWIW that's what I'm doing at present. I mainly see it as a good yield story for the foreseeable future.
Hi Roger ,
While I can see the dairy sector being depressed for a while , I disagree with your comparison to finance companies .
From my understanding they loaned ( a lot of it inter company /related ) on undeveloped land . Brooklyn rise Wellington in one case , that massive hole North of Queenstown , bare sections at Jacks Point to name a few .
In most cases there was no interest being paid monthly on these loans as the developers had no cash flow . So the interest was capitalised ( not sure if that's the right word but I know you will understand what I'm saying ).
That was the undoing ....I mean how could you lose $ 500 Mio !!! Hanover .......
As for Dairy farmers you will know that the farming sector is / has been the backbone of the country . Most farmers are salt of the earth, hard working people . They are used to drought/ flood etc so good years bad years . So the dairy payout going South
will hurt them but they have cashflow and loans will get paid . Sure some might be stretched but with relatively low interest rates and an accommodative bank looking at helping farmers for the long term , I can't see this being a finance company debacle .
Where Heartland will go wrong is if they stray too far from their bread and butter/ traditional business. I know you have eluded to this re Harmony . I still scratch my head re SCF ( I always thought they had lent on SC farms/ stock ) After the Americas Cup
it was astounding to see all those bars on the waterfront go under and SCF as an interested party .
A banker talking about being 'socially responsible' while screwing the oldies, he my man. Probably convinced himself that Heartland are doing this is a public service as well. Gives me the warm fuzzies
Yes mate as you suggest its probably time we had a look at the relative PE of HNZ compared to some of the Australian banks and see how they stack up.
Going off the 4 traders website the first thing I notice is there's only 3 analysts covering HNZ and consensus 2015 EPS is now 9.75 cents, previously 10.2 cps last time I looked. One of the brokers downgraded to under-perform in March and we've seen the SP correct materially since then. the other two brokers have HNZ as a Hold. Consensus EPS for 2016 is 10.4 cps.
Seeing as FY2015 is 11 months through its course I believe most astute investors will be looking to base investments on where they see EPS in FY16 and FY17.
In this regard I have zeroed in on FY16 as data is available from brokers for estimates and again off the www.4traders.com website I see based on FY16 consensus estimates and going off closing prices on Friday this week we have the following stocks on comparative multiples based on FY 16 of:-
HNZ 12.35
NAB 12.35, (this is not a typo the multiple is the same for HNZ)
WBC 13.13
ANZ 11.99
BEN 13.32
BOQ 12.94
Dairy in my view is to HNZ what iron ore is to the Australian banks. While I have the greatest respect for our dear friend Percy, there were many many consumer finance companies that collapsed in the GFC, most of which were not in that list I provided a link for recently and I have intimate knowledge of how one of them was behaving, (Geneva finance). HNZ's activities in the www.ifinance.co.nz, harmony and through lending like the aforementioned no wallet no worries campaign plays like a very bad groundhog day movie to me.
I think the current PE considering the risks have changed is about right. My gut feel is extra delinquencies in the riskier consumer finance sector they appear to be targeting as well as problem dairy loans will make net effective earnings growth more challenging. I think the brokers have this about right as a hold with a slight bias towards under-perform. In my view its become a yield story for the foreseeable future and I struggle to see the SP getting much northward traction this year. I guess a good and strong EPS accretive acquisition could change that, (risk to the upside) and likewise extra problems than currently foreseen with consumer and dairy loans could ameliorate consensus broker EPS growth forecast for 2016 and if especially bad could provide some EPS downside risk.
I think on balance its a hold for its good dividend yield and for growth in more favourable times ahead maybe FY2017 will see the dairy sector performing better but who would know, its a lottery really... In my view the SP could potentially track sideways for a considerable period of time and the chart quite obviously is suggesting there may be more downside risk.
This begs the question of how well we are being paid to wait ?
I'm forecasting total fully imputed divvy's this year of 7.5 cents, that's 10.42cps gross which @ $1.28 provides a 8.14% gross return which gives a reasonably supportive argument towards being on the right side of the ledger in terms of having your money as a shareholder with HNZ as opposed to earning ~ 4.5% on deposit Its also an attractive yield especially by virtue of its full imputation credits compared to the Australian banks.
Whether Australian banks have more headwinds than HNZ, who could reasonably say ?, but my gut tells me they face similar challenges, with quite obviously the Aussie banks under pressure to increase their capital ratio, which possibly gives those banks that haven't done so already, some specific downside risk ?
In terms of relative PE its perhaps worth noting the types of business the various banks do and the superior credit rating of the larger Aussie banks as well as their vastly longer track records.
On this basis you'd have to say the FY16 HNZ PE looks very fulsome as a ratio on a relative basis.
Hold an appropriate moderate allocation in anticipation of better economic times in the long run. FWIW that's what I'm doing at present. I mainly see it as a good yield story for the foreseeable future.
Thanks for sharing your thoughts Roger, appreciated.
I can't delete it now LOL. No intention to delete the truth as I see it, no matter how much of hard reality it contains. Maybe I should change my user name to "Reality Check" or a "Balanced Perspective". Most of my mates think I'm crazy getting less bullish on HNZ. Maybe I need to see a shrink to get over my hang-up's from the dozens of finance debacles of the GFC...who's right and who's wrong, only time will tell Market as a whole looks like tracking sideways and HNZ with it.
This might brighten up some folks' day. E&OE, and the flag could last a while. I still think there's a chance that gap will be filled at $1.18 level. But despite my flag-waving, think of this move as a healthy retracement after a strong run. Entirely natural market reaction, which can be seen on lots of stocks, bonds, FX, all day every day across the globe, on all timeframes. It depends how hard you look
Gentlemen and Ladies (maybe).
Lets not forget this stock had a 40% move a while back,I think the only reason it hasn't continued (yet) is that there hasn't been a new aquisition.
But if you are really concerned about where the shareprice is going,have a look at the weekly charts going back past 2012,you will see HNZ still in an upwards channel,just popping below the line of linear regression.
INMOP the weekly charts are more important than the daily,it gives great perspective as to what is happening and probably why.
PEG whichever way I look at it,even going down to a 15% growth rate,still looks very attractive.
Originally Posted by percy
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Its also an attractive yield especially by virtue of its full imputation credits compared to the Australian banks.
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