HGH - Heartland Group Holdings

[tim23]

Interesting - sounds like you are not interested too much on the dividend side of things then?

[couta1]

Interesting - sounds like you are not interested too much on the dividend side of things then?

Got the last divvy and currently the sale money is in Spark shares so still divvy bearing, basically I didn't want to see all my profit eaten up by a downtrend as has happened so many times before so just being proactive for once. PS- If I wrote a book of my share market journey over the last few years you would understand where I'm coming from.

[Zaphod]

Got the last divvy and currently the sale money is in Spark shares so still divvy bearing, basically I didn't want to see all my profit eaten up by a downtrend as has happened so many times before so just being proactive for once. PS- If I wrote a book of my share market journey over the last few years you would understand where I'm coming from.

Hopefully we won't find it in the horror section at the book store!

[Beagle]

I'm watching this closely before a re-entry, I was thinking breaking $1.25 would be a positive sign thoughts Baa_Baa? Roger your obviously not too keen on this stock going forward? Maybe a year or so before any imprudent lending affects the bottom line but maybe the market is pricing that in now?

Based on how I've seen finance companies manage their problem debts I'd suggest we won't see any meaningful effect on their profit for FY16. In a nutshell, most banks and finance companies bend over backwards to try and help customers weather a storm so if dairy stay's subdued expect them to be working with their clients to reschedule payments, interest only, restructure, maybe downsize the herd or sell part of the farm, payment holidays all that sort of thing. With so much new dairy production in other countries coming on stream there's a very real possibility as mentioned before that it becomes the Kiwi version of the Australian banks iron ore problem, although well worth noting that all the Australian banks have a massive exposure to dairy in N.Z. too. If it stays at current level's FY17 and beyond is where the rubber is going to meet the road and reality bites on whether simply supporting customers through a tunnel without any light at the end thereof, continues to be appropriate.

This new (I will call it Holden lending), where they lend with deferred payment terms starting in early 2016 can't go bad in FY16 because even if customers default early in the loan they'll be trying to work with them that year so they might be okay for some modest EPS growth in FY16...(I think the brokers consensus is about 10.4 cps from memory) but its the "quality" of this new no deposit and unsecured lending which has me spooked and feels like groundhog day pre-GFC finance company activity all over again.

I am sure they will tout their loan growth at the next ASM and in their annual report in due course. In my view the market is right to have significantly marked down the banks on both sides of the Tasman. Clearly Fitch see real risks and other do too and the PE's of the banks have come back a bit reflecting their increasing risk. I think the stock was better value at $1.32 on 1 February when I commented it was basically fully priced back then. There's been a lot of water under the bridge since then and unfortunately its all been going in the wrong direction.
HNZ looks fully priced now at $1.20 with all the headwinds that have built in the economy in recent months. Really a dividend yield story for now in my opinion.

[winner69]

Roger, you could be right about HNZ being valued 'about right' by the market at the moment

I have given up this flag pole charting stuff. To work properly the price needs to go straight up to $1.60 and that aint going to happen

So belief in Heartland in delivering is necessary.I reckon 27% return over the next 12 months (from $1.20). OKish maybe. Based on these assumptions -

1 - I should never have asked whose halo is going to lose its lustre first (from our current list of esteemed and most loved leaders who are benefiting from the Halo Effect). It is not going to be Jeff's

2 - Heartlands earnings growth is going to slow but still be a respectable 17% in FY16 (see top half of table below, it all makes sense)

3 - Jeff 'hinted' at the ASM that the market needs to rerate HNZ. Whereas currently priced at 1.2 times Book Value a step up to 1.4 times is a good start to get anywhere near its peers.

4 - Not allowing for capital initiatives in all this.

So this time next year a share price of $1.44 and a 27% return for the year methinks. Sep in the table should be June

[SCOTTY]

Based on how I've seen finance companies manage their problem debts I'd suggest we won't see any meaningful effect on their profit for FY16. In a nutshell, most banks and finance companies bend over backwards to try and help customers weather a storm so if dairy stay's subdued expect them to be working with their clients to reschedule payments, interest only, restructure, maybe downsize the herd or sell part of the farm, payment holidays all that sort of thing. With so much new dairy production in other countries coming on stream there's a very real possibility as mentioned before that it becomes the Kiwi version of the Australian banks iron ore problem, although well worth noting that all the Australian banks have a massive exposure to dairy in N.Z. too. If it stays at current level's FY17 and beyond is where the rubber is going to meet the road and reality bites on whether simply supporting customers through a tunnel without any light at the end thereof, continues to be appropriate.

This new (I will call it Holden lending), where they lend with deferred payment terms starting in early 2016 can't go bad in FY16 because even if customers default early in the loan they'll be trying to work with them that year so they might be okay for some modest EPS growth in FY16...(I think the brokers consensus is about 10.4 cps from memory) but its the "quality" of this new no deposit and unsecured lending which has me spooked and feels like groundhog day pre-GFC finance company activity all over again.

I am sure they will tout their loan growth at the next ASM and in their annual report in due course. In my view the market is right to have significantly marked down the banks on both sides of the Tasman. Clearly Fitch see real risks and other do too and the PE's of the banks have come back a bit reflecting their increasing risk. I think the stock was better value at $1.32 on 1 February when I commented it was basically fully priced back then. There's been a lot of water under the bridge since then and unfortunately its all been going in the wrong direction.
HNZ looks fully priced now at $1.20 with all the headwinds that have built in the economy in recent months. Really a dividend yield story for now in my opinion.

Hi Roger

Do you know what if any exposure HNZ has to dairy/share milker leading? Where and how much is it? Other than your posts, I am unable to find any data for this.

Cheers

[tim23]

Wonder if the market underestimating value of Harmoney share and reverse equity loans which have been getting an okay rap recently.

[couta1]

Hopefully we won't find it in the horror section at the book store!

Would make the cut, probably on a par with the Texas chainsaw massacre

[Baa_Baa]

I'm watching this closely before a re-entry, I was thinking breaking $1.25 would be a positive sign thoughts Baa_Baa? Roger your obviously not too keen on this stock going forward? Maybe a year or so before any imprudent lending affects the bottom line but maybe the market is pricing that in now?

The Weekly chart suggests that a long term rising price channel/trendlines is still in place, this week the SP breached the rising support trendily briefly but recovered to the support, now resistance, previously mentioned. There is no suggestion that a new uptrend in in place, daily, weekly or otherwise. As said, the recovery from $1.16 looks speculative, it could go either way imho.

[Beagle]

Roger, you could be right about HNZ being valued 'about right' by the market at the moment

I have given up this flag pole charting stuff. To work properly the price needs to go straight up to $1.60 and that aint going to happen

So belief in Heartland in delivering is necessary.I reckon 27% return over the next 12 months (from $1.20). OKish maybe. Based on these assumptions -

1 - I should never have asked whose halo is going to lose its lustre first (from our current list of esteemed and most loved leaders who are benefiting from the Halo Effect). It is not going to be Jeff's

2 - Heartlands earnings growth is going to slow but still be a respectable 17% in FY16 (see top half of table below, it all makes sense)

3 - Jeff 'hinted' at the ASM that the market needs to rerate HNZ. Whereas currently priced at 1.2 times Book Value a step up to 1.4 times is a good start to get anywhere near its peers.

4 - Not allowing for capital initiatives in all this.

So this time next year a share price of $1.44 and a 27% return for the year methinks. Sep in the table should be June

I think a LOT depends on where the price of dairy goes over the next year. If it drops further or stays the same we'll see brokers pulling back their EPS estimates for FY16 and FY17.

Hi Roger

Do you know what if any exposure HNZ has to dairy/share milker leading? Where and how much is it? Other than your posts, I am unable to find any data for this.

Cheers

According to Craigs at the end of 1H 15 rural lending was $455m up from $416m in the previous corresponding period.
More of a worry is that HNZ are on record in their 1H FY15 report as saying they're targeting rural lending including dairy and sharemilkers for growth. (in my view that's banking code speak for they're the customers that keep coming back to us for more money). Am a perhaps being cynical with my view here or just being realistic ?... you be the judge.