HGH - Heartland Group Holdings

[percy]

Tainted by Australian Banks.
ANZ Bank's $3 billion capital raise has correctly spooked the market.The $3 billion is partly to meet regulatory requirements.
ALL Australian banks have to hold more capital to mitigate the risk of losses on home loans.!
ANZ's has further increased provisions by 13% mainly mining and agriculture.
So what has this to do with HNZ?
Capital.HNZ have excess capital.More than meets The Reserve Bank of NZ requirements,and possibility of share buy back.Capital return?
Australian home loans.HNZ's only exposure is via Australian REL loans.Not sure regulatory requirements.
Australian mining.HNZ have no exposure to this sector.
Dairying in NZ.From Craig's research 28/7/2015.HNZ's exposure to the slowing dairy sector IS NOT significant 7.6% of its total loan book.Craigs estimate other banks exposure is up to 15%.
HNZ announcement 30th July 2015.....2016 Estimated NPAT of $51mil to $55 mil.This includes allowance for estimated impairments.

Share prices follow earnings.....buy earnings growth.[steve fleming]. HNZ has earnings growth.
Share prices are driven by increasing dividends... HNZ are increasing dividends.
Banks have great capacity to pay increasing dividends.HNZ are a bank.


"In the land of the blind,the one-eyed man is king".


Back to ANZ and the other Australian Banks.......They have been very rewarding for investors,and will continue to be for the long term investor..

I am very pleased today's result confirmed what I have been saying.
Will repeat;
"Share prices follow earnings....buy earnings growth...[Steve Fleming].
Share prices are driven by increasing dividends.

[Beagle]

Roger please warn me by pm if your thinking of buying back into Sum, the shock would be just too much for one to take otherwise

No chance of that mate. Wonder if my other mates will start talking to me again or whether my conduct is still considered unbecoming of a gentleman.
Just called it as I saw it and anyone that followed me exited at $1.32 and is back in at $1.12/3...not too shabby seeing as there were no dividends in the intervening months...but apparently I'm the biggest (expletive deleted) out there according to some, go figure ? Still.... I'd rather have one real friend for 10 fair weather ones...opps, sorry, I digress.

[trader_jackson]

Seems to be very heavy selling (and buying) today, about 0.81% of the company has changed hands... this can be the only logical reason for keeping the price depressed... but who would want to sell after such great results?

[janner]

Just called it as I saw it

Only way to go really.

[Cricketfan]

I wasn't surprised by the substantial increase in loan provisioning, almost doubling, (reflecting my previously articulated concerns about no and low deposit lending and unsecured lending), but to be fair after such a dramatic increase in provisioning the profit result was solid, reflecting stronger margins on those sort of loans.

What did very pleasantly surprise me was the loans to sharemilkers only comprise 6.6% of their dairy loan book meaning the vast majority of their dairy loans are secured over land and buildings. This should give shareholders some comfort going forward.

After a 20 cent correction and the passage of several months of time since I sold out at calling it fair value at $1.32 and having thought the SP was over-valued for some time and been correct, I am now happy to call this as fairly valued trading cum a fully imputed 4.5 cent divvy. Long term investment trading through the trough of the present cycle these are probably not a bad buy as part of a well diversified portfolio, at these sort of depressed level's.
Disc - Bought back in a modest stake this afternoon.

Wow, what happened to the doom and gloom from the last month or so? The tone of your posts made it seem like the sky was falling and even a decent FY result wouldn't matter because it's the following year that will be horrendous.

[Hoop]

I am very pleased today's result confirmed what I have been saying.
Will repeat;
"Share prices follow earnings....buy earnings growth...[Steve Fleming].
Share prices are driven by increasing dividends.

My opinion is probably worth diddly-squat ..
As I see things Earnings follow the share price .....The FY announcement is historic. Accumulating earnings over a period from July 1 2014 to June 30 2015..the share price is the "now" and "forwarding looking"..In other words if a company suddenly gets into the poop the share price will drop earning result will follow. Yes Mr Market can and does react by correcting if the earnings announcement is different to that forecasted or perceived.

I agree mostly with the second statement...It theoretical based though, but I think my interpretation would include a balanced" both eyes open" perception, such as, if the divvy increases and earnings decrease below the divvy the share price would be driven down due to capital erosion..increased divvy and increased earnings share price driven up....No divvy but big increase in earnings (e.g to fund an acquisition)..shareprice??? and so on.

It seems Mr Market perceived HNZ FY result to what was announced...looking forward could be what is keeping the share price suppressed ...eh

[belted galloway]

After having a quick look through the financials I have a few points.

Deposits have increased from 1,736,750,000 to 2,097,458,000, with the company expecting a similar level of growth in FY16.

Experiencing good growth in the reverse mortgage book, which is not at the expense of margin.

Past due but not impaired receivables have increased from 75,595,000 to 87,572,000

It was very kind of directors to reward themselves with a 4% increase in director’s fees to now over $900,000.

I cannot really understand how the 12% interest in Ora HQ Limited is related to the core business activities. The only constellation I can find is they are using it to funnel business lending: http://heartland.connect.orahq.com/


Now to the rural segment that has been of concern recently.
Heartland provide some nice grading of their portfolio.
"The Judgement portfolio consists mainly of Business and Rural lending. Judgement loans relate to loans where an on-going and detailed working relationship with the customer has been developed.
Judgement loans are individually risk graded based on loan status, financial information, security and debt servicing ability. Exposures in the Judgement portfolio are credit risk graded by an internal risk grading mechanism.
The Group typically finances new loans in risk grades 2 to 5 of the Judgement portfolio."

Rural judgement portfolio
Grade 1 – Very Strong $533,000
Grade 2 - Strong $8,019,000
Grade 3 - Sound $17,363,000
Grade 4 - Adequate $101,029,000
Grade 5 - Acceptable $343,645,000
Grade 6 - Monitor $49,276,000
Grade 7 - Substandard $3,484,000
Grade 8 - Doubtful $761,000
Grade 9 - At risk of loss - 0

Dairy exposure is $218m, of which only $13.5m is sharemilkers. This is very reassuring, as these are the ones facing the greatest risk of default.


Overall a good result. One of those companies that just does what they say they’ll do. With strong leadership and governance they are consistently growing ROE, NP and dividends year on year, which is outstanding.
Definitely a good addition to the portfolio. The depressed share price has been a great buying opportunity to add to my holding.

[stoploss]

I wasn't surprised by the substantial increase in loan provisioning, almost doubling, (reflecting my previously articulated concerns about no and low deposit lending and unsecured lending), but to be fair after such a dramatic increase in provisioning the profit result was solid, reflecting stronger margins on those sort of loans.

What did very pleasantly surprise me was the loans to sharemilkers only comprise 6.6% of their dairy loan book meaning the vast majority of their dairy loans are secured over land and buildings. This should give shareholders some comfort going forward.

After a 20 cent correction and the passage of several months of time since I sold out at calling it fair value at $1.32 and having thought the SP was over-valued for some time and been correct, I am now happy to call this as fairly valued trading cum a fully imputed 4.5 cent divvy. Long term investment trading through the trough of the present cycle these are probably not a bad buy as part of a well diversified portfolio, at these sort of depressed level's.
Disc - Bought back in a modest stake this afternoon.

Roger biggest backflip since the greens on the RWC opening hours , what about the rating agencies lol .....but congrats for declaring this ...
Have to update your "trading Song" from
https://www.youtube.com/watch?v=L5HTwlY_O64

to
https://www.youtube.com/watch?v=kFiSI-X4IcA

Cheers S/L
enjoy

[Cricketfan]

Overall a good result. One of those companies that just does what they say they’ll do. With strong leadership and governance they are consistently growing ROE, NP and dividends year on year, which is outstanding.
Definitely a good addition to the portfolio. The depressed share price has been a great buying opportunity to add to my holding.

Isn't it funny how much panic (at least on this forum) there's been in the last month or so, despite HNZ giving an update about their low exposure to dairy? Yet it's just business as usual, maybe a slightly higher risk because of dairy, but not exactly worth the fuss that some people have been making here.

[Joshuatree]

Roger biggest backflip since the greens on the RWC opening hours , what about the rating agencies lol .....but congrats for declaring this ...
Have to update your "trading Song" from
https://www.youtube.com/watch?v=L5HTwlY_O64

to
https://www.youtube.com/watch?v=kFiSI-X4IcA

Cheers S/L
enjoy

That ridley bent song is pretty good stop loss. Lively and upbeat.Appropriate
Thanks to percy for keeping the faith with good reasoning and sensible logic, hats off.