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  1. #5801
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    "It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong.
    ~ George Soros"


    Whether Roger is right or wrong won't be known for a couple of years. But I am can now rest a lot easier knowing that Craigs and HNZ management agree the dairy impact is small.

    Welcome back to the forum Roger.
    Last edited by noodles; 30-07-2015 at 06:47 PM.
    No advice here. Just banter. DYOR

  2. #5802
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    Neil Roberts Founder and majority owner of Harmoney has stepped down from the Board but remains largest shareholder and CEO ! I wonder if he is finding it difficult to work within a structured Board or does this indicate some disagreements at Board level !

  3. #5803
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    The Dairy Farm 61% LVR figure. Is that the percentage when the loan was granted? Or the % on present day values? Does anyone know? Plus I appreciate the $700 to $1,000 price by Roger for dairy cows at the works. It is a much higher residual value than I would have thought for loans that were under water. Other ideas please?

  4. #5804
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    Quote Originally Posted by Master98 View Post
    welcome you back Roger, do like read depth analysis on both side, do like listen different voice on this forum.
    Agree entirely ..

    Quite entertaining as well as educational at times ..

  5. #5805
    Speedy Az winner69's Avatar
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    In that Heartland announcement They said that 6% of loans are dairy related.

    but i am puzzled as to why they added these sentences, especially the 2nd one - "The average loan to value ratio (LVR) for Heartland’s dairy exposures is 61%. However, it is important to note that LVRs are only one of the indicators of loan quality"

    Do we interpret that as Heartland themselves think the 61% is a high/risky number but its all OK because other things are alright. If so why even mention all this as everybody was excited at being told the exposure was low.

    One thing I have learned over many years announcements have to be read carefully to really try to understand what is being said.

    Just adding to Rogers note - even if 5% of these dairy loans go bad that's a decent chunk of the $50m profit gone.

    Not too much point debating dairy anymore. Those who believe are happy as so no problems. Those who have concerns manage the risk best they can. Whatever happens you can either praise or blame yourself, what you do is up to you.

    I still hold until the annual accounts. I believe there is more risk with heartland than a while ago and will manage accordingly.

    If anybody is interested have a look at sector analysis in recent accounts and track impairment expense under rural for the last 3 to 4 quarters.

    Cricket about to start ....could be exciting
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  6. #5806
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    Roger your mailbox is full .

    Im holding till annual accounts too.
    Last edited by Joshuatree; 30-07-2015 at 08:36 PM.

  7. #5807
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    Quote Originally Posted by winner69 View Post
    Just adding to Rogers note - even if 5% of these dairy loans go bad that's a decent chunk of the $50m profit gone.
    copied from today market update:
    "Heartland advises its preliminary forecast range for NPAT for the financial year ending 30 June 2016 is $51m - $55m. This includes an allowance for estimated impairments."
    HNZ board must already have possible
    maximum impairments FY16 in their mind?
    Last edited by Master98; 31-07-2015 at 06:52 AM.

  8. #5808
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by greater fool View Post
    Hmmm Why do I think this is a 'goodbye' note from Roger? Do hope that thought is wrong.
    Cheers Roger, your posts have been welcome and useful.

    da' fool
    Just venting some frustration mate. It is nice to get a very warm welcome back from so many people and to see their kind thoughts expressed. Thank you folks. This helps restore my faith in human nature and nice to see that many people appreciate my honest and open communication style even if sometimes even I would acknowledge it is done in a confronting manner. Tact was never one of my strong suits and probably never will be lol.

    Quote Originally Posted by winner69 View Post
    In that Heartland announcement They said that 6% of loans are dairy related.

    but i am puzzled as to why they added these sentences, especially the 2nd one - "The average loan to value ratio (LVR) for Heartland’s dairy exposures is 61%. However, it is important to note that LVRs are only one of the indicators of loan quality"

    Do we interpret that as Heartland themselves think the 61% is a high/risky number but its all OK because other things are alright. If so why even mention all this as everybody was excited at being told the exposure was low.

    One thing I have learned over many years announcements have to be read carefully to really try to understand what is being said.

    Just adding to Rogers note - even if 5% of these dairy loans go bad that's a decent chunk of the $50m profit gone.

    Not too much point debating dairy anymore. Those who believe are happy as so no problems. Those who have concerns manage the risk best they can. Whatever happens you can either praise or blame yourself, what you do is up to you.

    I still hold until the annual accounts. I believe there is more risk with heartland than a while ago and will manage accordingly.

    If anybody is interested have a look at sector analysis in recent accounts and track impairment expense under rural for the last 3 to 4 quarters.

    Cricket about to start ....could be exciting
    Quote Originally Posted by winner69 View Post
    Fantastic in depth post Roger.

    I was thinking much the same but have been making scones all day, might make comment later
    Thanks for your support mate. A good friend in times of heavy weather is a real friend indeed. Years ago I read that 6% of passengers simply don't turn up for their flight, for some strange reason this doesn't seem to worry the airlines...I wonder why

    Just adding a tiny titbit to yesterday's post. I am sure many of us have watched with morbid fascination on the business news and in particular CNBC the super slow motion track wreck that is the Greek fiasco.
    Many of the expert international economists have lamented that really Greece has little to no chance of ever repaying the $320 billion owned to European banks and indeed cannot meet its interest and repayment schedules.
    Further, the problem is really sheeting home to the European banks because if they don't offer further support they crystallise a substantial capital loss on the $320b currently advanced.

    Over time this "toxic" or "zombie debt" as some commentators are referring too it as, simply balloons out to an even larger sum, perhaps as much as half a trillion dollars and the European banks simply hope the Greek economic reforms turn that pup of an economy into something capable of performing an herculean task of actually repaying some of it.

    Surely I am not the only one who can see the parallel between this most unfortunate Greek situation and the one HNZ are in with their dairy loans ?

    Quote Originally Posted by winner69 View Post
    Might try making apple turnovers tomorrow, seeing Scales is the flavour of the week
    Sure is, my biggest holding now.

    Quote Originally Posted by iceman View Post
    I am pleased you are back Roger. Your contribution, knowledge and amount of time you obviously can and do spend on research and share with us is very much valued. A robust debate of contrary views is healthy for all of us. But in my view we have seen in recent months too much personal bickering on many threads, that does not add much value to the debate. I hope all posters can refrain from that and stick to the issues of real interest and importance.
    Thanks mate. Sometimes I think if someone has an XXXXXL position in a stock there is potential for them to misinterpret robust debate as something of an attack and I suspect that's what's happened here with our mutual friend.

    Noodles mate, you're quite right that we won't know the outcome for a couple of years but you can bet your last dollar Fitch will be watching closely, recall their recent comments on the dairy sector with thinly disguised hints about possible pending downgrades if this situation become dire and protracted. All the risks with HNZ's "very forward looking" forecast appear to be too the downside.
    I remain perplexed with how the Directors think they can reliably estimate loan defaults so far ahead especially seeing as nobody has any real idea how protracted or how serious this dairy problem becomes.
    I will leave you folks to consider for yourselves whether accurate estimations of default rates a year out are possible / plausible in this environment ? Maybe the pending Trans Pacific Partnership deal comes to the rescue and everyone gets a dairy miracle, let's hope so. Gotta feel for the dairy farmers, nobody thought it would get anywhere near this bad and its good that HNZ are arranging counselling and referring farmers to support groups and lending them even more money to get through. BNZ are running survivability workshops around the country and another bank are effectively pulling the financial support pin on unviable business operations...which bank is taking the prudent approach with their shareholders best interests at heart ?...that is the sixty four "million" dollar question that only time will answer.
    Last edited by Beagle; 31-07-2015 at 08:55 AM.

  9. #5809
    Speedy Az winner69's Avatar
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    Very commendable that Heartland (and other banks) are working with their dairy clients to help them over the tough times. That at least is an admission there is a problem.

    Whatever interest will still be accruing. I for one will be closing reconciling the cash flow statements with the P&L.

    The old capitalising interest trick eh Roger. Even handover was reporting solid profits until the end.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  10. #5810
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    Quote Originally Posted by Roger View Post
    ........
    Surely I am not the only one who can see the parallel between this most unfortunate Greek situation and the one HNZ are in with their dairy loans ?.......
    Although there may appear to many similarities, there are far more differences.
    The entire Greek economy is in trouble, and the vast majority of the loans are to the Greek government, not to the Greek people.

    The dairy industry is not in trouble, just receiving reduced pay outs, and still within a statistical normal range. Loans are not to the industry, but to individual owners, each with their own set of circumstances.

    Some dairy farmers converted their farms when pay-outs were well above average, and used this high projected income as a basis for their financial planning. Of these, some have converted farms in areas that are not suitable for dairying (like Central Otago or mid Canterbury) and these are the ones who will really struggle to make the conversion pay. But sharemilker Fred in Southland, who borrowed just to buy his stock, and is on a traditional farm which doesn't need pivot irrigators etc. is probably still keeping his head above water and will manage OK.

    It is not as if ALL dairy will crash and default. So the banks could afford to let the less likely ones go under, sell the stock at meat prices, and still support those that are marginal or still successful.

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