HGH - Heartland Group Holdings

[Beagle]

unforetunately it looks like the dairy industry in on the verge between difficult times and a disaster.
Would I be right to assume if the negatives continue in the dairy sector that HNZ will probably recieve an investment downgrade shortly.
IMHO The current interest rates on offer from HNZ do not reflect thier current exposure to the dairy sector so I am with drawing my cash deposits.

Just one persons opinion and not meant as financial advice.

Fitch came out a while back and gave a strong hint that they are watching this space very closely and expressly hinted at the possibility of credit downgrade(s) in the banking sector. There's been a fair bit of water under the bridge since they said that and unfortunately its all gone in the wrong direction.

[percy]

unforetunately it looks like the dairy industry in on the verge between difficult times and a disaster.
Would I be right to assume if the negatives continue in the dairy sector that HNZ will probably recieve an investment downgrade shortly.
IMHO The current interest rates on offer from HNZ do not reflect thier current exposure to the dairy sector so I am with drawing my cash deposits.

Just one persons opinion and not meant as financial advice.

I think you will find Heartland have a very small dairy sector loan book,however the Aussie Banks could face challenges with mortgages on dairy conversions.

[percy]

I hope you are right Percy but I was told they have a fair bit of exposure to loans on dairy herds the value of which is decreasing rapidly.

I have heard they have only modest exposure to dairying,of which dairy herds would make up a good part of their dairying exposure.
Now you are most probably more up to date than me,but I was told on Saturday prices of cows had not dropped. We must also remember, a cow is a milk producing machine, that provides solid cash flow.No cow,no cash flow.An investment of $1,700 to $1,800 will provide you with a mini milk factory providing approx. $1,300 of milk solids. You may wish to correct my figures as I can't find where I wrote them down.

[Xerof]

Funny how the problems of the dairy industry seem to want to be discussed on a Bank thread, and a Bank which has limited exposure to farmland asset funding.

Funding cows is an entirely different kettle of, well, cows - exposure would never be above 60%, a cow is a cash cow as percy says, and if you bothered to look at the meat company schedules, prices are at elevated levels historically, so farmers can always just trade the cash cows in. Marcus Kight will tell you all about it - excellent business through all business cycles

The real exposure as percy again said, is from the recent conversions - highly unlikely to be the realm of HNZ, more likely to be ANZ(NBNZ)

where's your money going snap - under the mattress?

[percy]

Funny how the problems of the dairy industry seem to want to be discussed on a Bank thread, and a Bank which has limited exposure to farmland asset funding.

Funding cows is an entirely different kettle of, well, cows - exposure would never be above 60%, a cow is a cash cow as percy says, and if you bothered to look at the meat company schedules, prices are at elevated levels historically, so farmers can always just trade the cash cows in. Marcus Kight will tell you all about it - excellent business through all business cycles

The real exposure as percy again said, is from the recent conversions - highly unlikely to be the realm of HNZ, more likely to be ANZ(NBNZ)

where's your money going snap - under the mattress?

What a breath of fresh air you are.
Thank you for a well thought out post.

[Beagle]

I think you should do more home work on the cull value of a dairy cow.
so over the last 2 years a good producing dairy cow was worth about $2200....this year that same cow is worth on ave $1750 a decline of about 20%.
Your so called savoir in the beef cull price is just ridiculous as current meat schedule for a cull cow ave about $4.35 and given diary cows genetics are made to produce milk and not meat your ave dairy cow is not that heavy once dressed out and on the hook....... so would weigh about 180kg on the hook.
So last years milking cow that was valued at $2200 on the books would be worth about $780 on the hook..............
I run over 100 head of cattle so are well aware of the schedules.
here's a link to this weeks north island meat schedules....prices are lower in the south island.
The relevant section for cows is listed under COW
http://www.taylorpreston.co.nz/schedules/
probably buy more NZR shares with the money.
might even buy some more beefies as I am a little under stocked at the moment.

Client told me an AWFUL lot of dairy cows in calf are going to the works at present.
2015 National Average market values http://www.ird.govt.nz/technical-tax...lues-2015.html
2014 National average market values http://www.ird.govt.nz/technical-tax...lues-2014.html

Pretty simple really, if HNZ were lending 60% on a sharemilkers herd at $2,200 a head, loan value per head $1,320 last year and the sharemilker is now staring down the barrel of a gun at 50% of $4.40 a kilogram of milk solids last year and this year and so on, said sharemilker is right in the **** right up to his eyeballs and sending stock to the works won't recover what HNZ lent them so HNZ have no real option but to "support them through this" but seeing as there's no light at the end of the tunnel I fail to understand why some can't see HNZ are simply digging a bigger hole for themselves by continuing to support this negative cash flow business operation ?

[percy]

Right dairy team I have started a new thread for you on Off Market Discussions;Cows in calf and other dairy issues.
Enjoy it, you have earnt it.!!!

[Beagle]

Sits and waits for Winner to say I see nothing...nuthing at all. Speaking of ostrich farming let's all stick our heads in the sand and pretend Fitch are too..I guess that would be called finding you're happy place Sorry Percy, mate, I simply couldn't resist I leave you in peace for the evening now.

[winner69]

Seeing not allowed to talk about cows I'll change the subject - I hope that Seadragon liability isn't going to be a problem. Seems heartland the bank of last resort

Reading that threat is a worry

[ziggy415]

Right dairy team I have started a new thread for you on Off Market Discussions;Cows in calf and other dairy issues.
Enjoy it, you have earnt it.!!!

are these cows A2