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  1. #12801
    percy
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    Quote Originally Posted by Baa_Baa View Post
    Something along the lines of relentless promotion no doubt. You forgot to mention when it was $2.14 … been a loooong recovery, sigh that still seems a long way away. That was a summer of great expectations dashed by sobering reality. Few posted their successful exit and long wait for re-entry, and while others fell silent, one lone voice carried the mantel waiting for redemption, still waiting.
    The relentless increase in fully imputated dividends has been something I have learnt to live with.
    Like a great number of Sharetraders who brought HGH at well under $1.00, I have never had cause to complain.

  2. #12802
    Hunting for more dog food Beagle's Avatar
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    Quote Originally Posted by percy View Post
    I knew you would love that post.
    Don't know what I am going to be saying when it does.?...lol.
    Somehow I don't think "I told you so" will cut the mustard lol
    No butts, hold no mutts, (unless they're the furry variety).

  3. #12803
    Advanced Member King1212's Avatar
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    What I like about HGH is the dividend never disappointing me. Always increases...n DRP is fabulous...just like term deposit with compounding interest...but better...

  4. #12804
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    Quote Originally Posted by percy View Post
    I can not remember you ever getting anything right with Heartland.
    Just pages of drivel,and "Fail" tests.
    In hindsight totally lacking any foresight.
    Heartland have a history of doing what they said they would do,as far back as saying they would receive a banking licence.
    We live in a very perilous world which includes finance.
    Passing judgements with the benefit of hindsight can hurt the wrong people .
    I suspect Snoopy is too resilient to be hurt but I can understand if he was feeling frustrated.
    Banking,borrowing and lending can be very risky and I appreciate all thoughts.
    The diligence and time snoopy has put in is much appreciated by many.
    Snoopy has skin in the game and we should all listen and see value in what he has to say.
    An optimist will never agree with a reasoned pessimist but we should listen to both before making investment decisions

    I have a brother who was a senior manager at National Westminister Bank-doing really well-then they were taken over by Royal Bank Scotland .You may Know the story but he saw what was happening and his only way out was to sell his shares and negotiate good leaving package at the age of 55.With that secured he continued to do contract work in his specialised field(unrelated to RBS misdeeds) until things went to custard.Another brother also working for Nat West did not sell-and for many years we heard his regrets .

  5. #12805
    percy
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    Quote Originally Posted by Snoopy View Post
    Not a holder Winner69, but I am becoming very uneasy about Heartland. What do you think of this observation?

    I am presently visiting the Kapiti Coast and have read today's edition of the Dominion and the local rag the Kapiti Observer, both dated Wednesday 20th July.

    On page B7 of the Dominion is an ad for PGG Wrightson Finance, an organization which seems inevitably destined to become part of Heartland. They are advertising a 12 month secured term deposit offering 7.5% per annum. This is despite the small print in the ad that notes any such investment will become a deposit with Heartland that will consequently be unsecured in a couple of months time (no mention of that last clause in the ad of course).

    Then on p13 of the Kapiti Observer, a real 'heartland' publication (sic), Heartland are offering a 12 month term deposit rate of 6.25% per annum. This seems to be quite a big gap for what is ostensibly the same investment, even allowing for the fact the 'small print' shows that the PGG Wrightson Finance 7.5% rate is for investments of $100,000 plus.

    The headline on the Heartland ad states 'We invest in Wellington'. Immediately I am thinking, no you don't! You are primarily the old Southern Cross and CBS Canterbury Building Societies, investing in the heart of the South Island. Oh and you are also Marac investing in the manufacturing heart of Wellington (yeah right, let me know if you can't count any manufacturer's left in Wellington on one hand!)

    I can't help the impression that Heartland is really old rope painted and tarted up as a new frilly bow knot. The marketing budget is being spent to allow the paying of lower interest rates to depositors than a BBB- credit rated organization might otherwise offer. Pull the wrong string and the whole lot might unravel. I really, really hope that I am wrong.

    I would like to see Heartland succeed. I think NZ inc. needs it! But is a 'Salt of the Earth' name and a hyped marketing budget really the key to the path of success?

    SNOOPY

    discl: Hold PGW, who are in the process of divesting PGG Wrightson Finance.
    The drivel started on 20-07-2011.

  6. #12806
    Senior Member pierre's Avatar
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    Quote Originally Posted by percy View Post
    The drivel started on 20-07-2011.
    Percy - why don't you just say what you really think? Lol.

  7. #12807
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    Quote Originally Posted by percy View Post
    The drivel started on 20-07-2011
    .
    Thanks for that 'blast from the past' Percy. A pretty good post from me in 2011 and It holds lessons for us today. The 'old rope tied up with a frilly bow knot' has held together. It has even managed to 'wrap up' Seniors Finance along the way. All good. Even the credit rating has gone up, by one half notch anyway.

    But I think the veneer coating that was painted on Heartland creating a bank is getting a little thin. A bank that has outsourced its personal banking functions is hardly a bank for people in my books. But by qualifying as a 'bank' in technical terms, even though they have given up their banking licence to Westpac, Heartland are able to get away with offering call investments at 1.6%. I doubt if many investors would invest with 'Marac' or the 'Canterbury Building Societies' directly on those terms. Call yourself a bank and many people don't read beyond the 'b'. But Heartland have three B's in a row, and think they can align themselves in the public mind with banks that start with 'AA'. Which obviously they do as people keep investing with Heartland at what I consider inadequate interest rates. It is a repeat of what happened nine years ago with Heartland offering significantly lower interest rates than the then PGW owned PGW Finance for the same risk,

    So what to do? What is bad for depositors is good for shareholders, so buy HGH shares! That is one point that I think Percy and I can agree on, even if we have different views on what price point to pay. For the record I see fair value for HGH at $1,63, as derived in my post 12556 for those you want to look it up.

    SNOOPY
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  8. #12808
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    It is always good to read and consider alternative viewpoints. Thanks for your posts Snoopy. Greatly appreciated.

  9. #12809
    Hunting for more dog food Beagle's Avatar
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    Quote Originally Posted by Beagle View Post
    Overdue for a peer group comparison. I think we all know the Australian banks are grappling with issues and don't need to regurgitate all of them.
    FY20 forwards PE's
    BEN 13.9 Comment a no growth bank with eps in FY17 and FY18 higher than either the forecast for FY20 or FY21 !
    BOQ 12.7 - Comment - same as above
    ANZ 12.2 Comment - Crikey do they have issues on both sides of the Tasman or what !...which probably explains their low PE
    NAB 13.4
    WBC 13.1
    CBA 16.2
    Australian sector average 13.6

    How does HGH compare. Has been growing eps steadily but somewhat frustratingly more slowly in recent years. Mid point of FY20 forecast is 78.5m which gives forcast eps of 13.59 cos and a forward FY20 PE of just 12.2.

    I think their generally better track record of eps growth, better capital ratio and better earnings prospects should accord them a PE at least the same as the sector average in Australia, 13.6 which could see a rerating to 13.6 x 13.59 = $1.85 in early 2020.

    Gross yield assuming 10.5 cos in fully imputed annual dividends for FY20 is 10.5 / 0.72 = 14.583 / 166 = 8.8%.

    I think eps growth in FY21 will be stronger than FY20. Disc 5.3% portfolio allocation.
    Posted on 12 November 2019 when the SP was $1.67. (Emphasis added).
    Now sits at 7.3% of my portfolio allocation after share price increase and buying some more at $1.85, (actions speak louder than words), this week.
    Last edited by Beagle; 04-01-2020 at 08:07 AM.
    No butts, hold no mutts, (unless they're the furry variety).

  10. #12810
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    Quote Originally Posted by fish View Post
    We live in a very perilous world which includes finance.
    Passing judgements with the benefit of hindsight can hurt the wrong people .
    I suspect Snoopy is too resilient to be hurt but I can understand if he was feeling frustrated.
    Banking,borrowing and lending can be very risky and I appreciate all thoughts.
    The diligence and time snoopy has put in is much appreciated by many.
    Snoopy has skin in the game and we should all listen and see value in what he has to say.
    An optimist will never agree with a reasoned pessimist but we should listen to both before making investment decisions

    I have a brother who was a senior manager at National Westminister Bank-doing really well-then they were taken over by Royal Bank Scotland .You may Know the story but he saw what was happening and his only way out was to sell his shares and negotiate good leaving package at the age of 55.With that secured he continued to do contract work in his specialised field(unrelated to RBS misdeeds) until things went to custard.Another brother also working for Nat West did not sell-and for many years we heard his regrets .
    For the record, I totally agree with this. I respect all the great work that Snoopy puts in on this site. He never shies from a debate and that's how it should be. We just do not see eye to eye on HGH and that's fine with me.

  11. #12811
    percy
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    Quote Originally Posted by Snoopy View Post
    . But by qualifying as a 'bank' in technical terms, even though they have given up their banking licence to Westpac,.

    SNOOPY
    Factually incorrect.[as per usual]
    Heartland Bank Ltd is a NZ registered bank,owned by Heartland Group Holdings,which is listed on both the NZX and ASX .
    Last edited by percy; 04-01-2020 at 08:14 AM.

  12. #12812
    One Fearsome Feline winner69's Avatar
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    Quote Originally Posted by Beagle View Post
    Posted on 12 November 2019 when the SP was $1.67. (Emphasis added).
    Now sits at 7.3% of my portfolio allocation after share price increase and buying some more at $1.85, (actions speak louder than words), this week.
    No doubt about it, you are a guru ....but maybe just a lucky guess?

    Seeing the consensus is that Heartland is really only a Bank in name / disguise and really is just a finance company a ‘peer review’ against Aussie banks is a bit nonsensical.....isn’t it?

    You never know you might find Heartland at $1.87 appears to be even cheaper if compared against a ‘peer group’ of finance companies.
    Last edited by winner69; 04-01-2020 at 08:19 AM.
    “What the wise man does in the beginning, the fool does in the end”

  13. #12813
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    Quote Originally Posted by percy View Post
    Factually incorrect.[as per usual]
    Heartland Bank Ltd is a NZ registered bank,owned by Heartland Group Holdings,which is listed on both the NZX and ASX .
    Only became a ‘bank’ as a marketing ploy to give them some credibility - so said their finance man at the time with a big smile.

    Mind you it does impose some added disciplines ..that’s good
    “What the wise man does in the beginning, the fool does in the end”

  14. #12814
    Hunting for more dog food Beagle's Avatar
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    I've made quite a few "lucky guesses" with this one mate, as you know
    I'm no fan of their unsecured lending through Harmoney but it seems to be working. Bit harsh calling them a finance company and as you say, they have the extra disciplines required by the Reserve Bank of New Zealand.

    I think the current risk environment for HGH is quite benign and's there's scope for reasonable earnings growth and possibly a modest PE expansion such that we should see a (well earned this time) $2.14 sometime next year
    No butts, hold no mutts, (unless they're the furry variety).

  15. #12815
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    Quote Originally Posted by Beagle View Post
    There's always a degree of issues with banks Snoopy, that's why they trade at such a big discount to the market median forward multiple of about 19 and always have.
    Last time I looked at this, which wasn't long ago, HGH has forecast eps growth considerably more than its peers which I concluded warranted a PE premium of about 2 to its peer group. The lack of issues compared to its peers also warrants a PE premium of at least 1, possibly 2.
    Heartland may not have the issues of the big Aussie banks. But it has other issues. It is still the bank with the most rural exposure as a percentage of their loan portfolio. Cashflow is much worse than other banks. As we get near the end of the business cycle some of the marginal loans at Heartland are more likely to become distressed than those made by the big banks. So in my mind no premium PE is warranted.

    I expect all banks to continue to trade at below market PEs and IMO, with the increased capital requirements and scrutiny, they deserve to. This is not a reason to take your capital out of other shares and put it into banks.

    Further, any consideration of an appropriate forward PE is best referenced off its own PE range I mentioned the other day, 11 - 17.5. Its not expensive especially when viewed in the context of 10 year Govt stock at ~ 1.6% which itself warrants a PE premium of 2 compared to more normal times when the risk free rate is closer to 4%.
    I don't believe you should buy a share and justify your position by how well the return compares with today's government stock rate, I think you have to consider what the medium to long term outlook for interest rates is. Clearly interest rates are likely to be lower over the next ten years, on average, than they were over the last ten years. But does lower mean stuck at today's all time low levels? I think not. By justifying your share purchases by using today's interest rates, the only certainty you are locking in is that you are paying too much for your shares in the medium term.

    I think eps growth in FY21 is going to be very strong and I actually think the shares are a bit cheap and let's be honest at 7.5% gross yield we're being paid pretty handsomely to enjoy the fruits of future growth.
    Perhaps, but the slow down has to come. If growth goes according to plan you can kiss good-bye to fully imputed dividends because most of that growth will come from Australia. Not that I see this as a problem. It is a natural consequence of Heartland's growth ambitions in Australia. A higher PE is more appropriate at the bottom of the business cycle, not at the top.

    Close to record dairy payout forecast this year means there's little to concern yourself with there.
    Did you miss the auction price plunge of over 6% in both whole and skim milk prices in December?

    You worry too much mate. Looking at the glass as half full is usually far more rewarding than looking at it as half empty and looking for problems.
    Perhaps so. But I don't mind giving away growth opportunities if the downside risk of losing capital is too high. I am a buyer of Heartland shares at $1.40, not $1.80.

    SNOOPY
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  16. #12816
    One Fearsome Feline winner69's Avatar
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    Quote Originally Posted by Snoopy View Post
    Heartland may not have the issues of the big Aussie banks. But it has other issues. It is still the bank with the most rural exposure as a percentage of their loan portfolio. Cashflow is much worse than other banks. As we get near the end of the business cycle some of the marginal loans at Heartland are more likely to become distressed than those made by the big banks. So in my mind no premium PE is warranted.

    I expect all banks to continue to trade at below market PEs and IMO, with the increased capital requirements and scrutiny, they deserve to. This is not a reason to take your capital out of other shares and put it into banks.



    I don't believe you should buy a share and justify your position by how well the return compares with today's government stock rate, I think you have to consider what the medium to long term outlook for interest rates is. Clearly interest rates are likely to be lower over the next ten years, on average, than they were over the last ten years. But does lower mean stuck at today's all time low levels? I think not. By justifying your share purchases by using today's interest rates, the only certainty you are locking in is that you are paying too much for your shares in the medium term.



    Perhaps, but the slow down has to come. If growth goes according to plan you can kiss good-bye to fully imputed dividends because most of that growth will come from Australia. Not that I see this as a problem. It is a natural consequence of Heartland's growth ambitions in Australia. A higher PE is more appropriate at the bottom of the business cycle, not at the top.



    Did you miss the auction price plunge of over 6% in both whole and skim milk prices in December?



    Perhaps so. But I don't mind giving away growth opportunities if the downside risk of losing capital is too high. I am a buyer of Heartland shares at $1.40, not $1.80.

    SNOOPY
    Some good points there Snoops - not just relevant to Heartland but to the whole market per se.
    “What the wise man does in the beginning, the fool does in the end”

  17. #12817
    Hunting for more dog food Beagle's Avatar
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    Quote Originally Posted by Snoopy View Post
    Heartland may not have the issues of the big Aussie banks. But it has other issues. It is still the bank with the most rural exposure as a percentage of their loan portfolio. Cashflow is much worse than other banks. As we get near the end of the business cycle some of the marginal loans at Heartland are more likely to become distressed than those made by the big banks. So in my mind no premium PE is warranted.

    I expect all banks to continue to trade at below market PEs and IMO, with the increased capital requirements and scrutiny, they deserve to. This is not a reason to take your capital out of other shares and put it into banks.



    I don't believe you should buy a share and justify your position by how well the return compares with today's government stock rate, I think you have to consider what the medium to long term outlook for interest rates is. Clearly interest rates are likely to be lower over the next ten years, on average, than they were over the last ten years. But does lower mean stuck at today's all time low levels? I think not. By justifying your share purchases by using today's interest rates, the only certainty you are locking in is that you are paying too much for your shares in the medium term.



    Perhaps, but the slow down has to come. If growth goes according to plan you can kiss good-bye to fully imputed dividends because most of that growth will come from Australia. Not that I see this as a problem. It is a natural consequence of Heartland's growth ambitions in Australia. A higher PE is more appropriate at the bottom of the business cycle, not at the top.



    Did you miss the auction price plunge of over 6% in both whole and skim milk prices in December?



    Perhaps so. But I don't mind giving away growth opportunities if the downside risk of losing capital is too high. I am a buyer of Heartland shares at $1.40, not $1.80.

    SNOOPY
    The same Aussie banks that lend billions for decades long LNG projects with no idea whether with commodity cycles whether it will be profitable or not ?
    The same Aussie banks that launder money for terrorist organisations and charge dead people fees and manipulate investors into a "diversified" portfolio made up entirely of their own financial products ?
    The same Aussie banks that are dangerously under capitalized according to the Reserve Bank of New Zealand ?
    ANZ has massive exposure to dairy as does Rabobank.
    HGH's dairy exposure is reducing. I try not to overreact to any one change in the dairy auction price these days, I learn from past mistakes unlike SUM dogs.

    Growth in Australia will be very strong but the bulk of their business is still in N.Z. so your claim of no imputation credits is baseless.

    I am comfortable with my own assessment of valuation for HGH. You've been worried about this stock ever since it was 85 cents when I first bought in.

    All banks have a mismatch in funding. They lend long and borrow short, its simply how it works and the vast majority of people roll their short term deposits over and over and when required various banks make their short term deposits more attractive than normal to get the funds required. This mismatch in funding you regularly go on about...I am sorry but it is needless worry.

    You don't understand the retirement sector at all...oh dear is all I will say.

    Thankfully this Beagle has his own nose to follow and my nose works.

    A forward PE of 13.5 for HGH is fair and reasonable in my opinion as is a gross yield of 7.5%. The average Aussie bank I follow is currently on a forward FY20 PE of 13 and I think a small PE premium is fully warranted for HGH. If you can't see the value at this level maybe you should sell ?
    I have just bought some more at $1.85 this week which tells you exactly what I think.
    Last edited by Beagle; 04-01-2020 at 10:37 AM.
    No butts, hold no mutts, (unless they're the furry variety).

  18. #12818
    always learning ... BlackPeter's Avatar
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    Quote Originally Posted by percy View Post
    The drivel started on 20-07-2011.
    Any chance we could go back to kicking the ball instead of trying to hit the player? This sort of language is adding nothing of value. A disgrace to the poster using these words.
    ----
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  19. #12819
    percy
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    Quote Originally Posted by BlackPeter View Post
    Any chance we could go back to kicking the ball instead of trying to hit the player? This sort of language is adding nothing of value. A disgrace to the poster using these words.
    Was referring to the poster's posts on this thread,not the poster,who I went to the trouble of introducing to "our Jeff" at the last agm..
    Last edited by percy; 04-01-2020 at 11:54 AM.

  20. #12820
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    Quote Originally Posted by Beagle View Post
    The same Aussie banks that lend billions for decades long LNG projects with no idea whether with commodity cycles whether it will be profitable or not ?
    The same Aussie banks that launder money for terrorist organisations and charge dead people fees and manipulate investors into a "diversified" portfolio made up entirely of their own financial products ?
    Yes, you and I both know these Aussie banks have issues (although LNG is widely regarded as a suitable transition fuel on the way to to lower carbon economy, and all mineral prospecting has risk). Now that these issues are out in the open the Aussie banks can do something about them. I expect the behaviour of these Aussie banks to improve. I am not denying that the Aussie banks have issues.

    Quote Originally Posted by Beagle View Post
    The same Aussie banks that are dangerously under capitalized according to the Reserve Bank of New Zealand ?
    You are talking about the likes of ANZ,NZ. You cannot buy shares in ANZ.NZ. You have to buy shares in the whole group. The capitalization of the whole group is being dealt with by the Australian Reserve Bank.

    Quote Originally Posted by Beagle View Post
    ANZ has massive exposure to dairy as does Rabobank.
    HGH's dairy exposure is reducing. I try not to overreact to any one change in the dairy auction price these days, I learn from past mistakes unlike SUM dogs.
    Agricultural Loan Portfolio {A} Total Loan Portfolio {B} Percentage of Agricultural Loans {A}/{B]
    Heartland Group Holdings EOFY2019 $741.947m $4,787.079m 15.5%
    ANZ Bank EOFY2019 $38,562m $618,295m 6.2%

    What the above table doesn't show is that the ANZ 'agricultural' figure also includes mining. Take that out and you can see that it is likely that the rural exposure of HGH is very likely triple that of the parent ANZ, in relative terms.

    Quote Originally Posted by Beagle View Post
    Growth in Australia will be very strong but the bulk of their business is still in N.Z. so your claim of no imputation credits is baseless.
    I didn't say that. I said future dividends would likely not be fully imputed if the Australian expansion goes to plan. I am quite comfortable with this, if the growth strategy pans out.

    Quote Originally Posted by Beagle View Post
    All banks have a mismatch in funding. They lend long and borrow short, its simply how it works and the vast majority of people roll their short term deposits over and over and when required various banks make their short term deposits more attractive than normal to get the funds required. This mismatch in funding you regularly go on about...I am sorry but it is needless worry.
    I am not talking about Heartland Bank. I am talking about Heartland Australia the non-banking group with a BBB- credit rating (below the BBB of Heartland Bank). Heartland Australia has no access to depositors and is set up to run on wholesale funding entirely. You may not be worried about any funding mismatch but Jeff is. Furthermore Jeff is doing something to fix it. Perhaps you had better e-mail Jeff and tell him to cease and desist and stop wasting time?

    Quote Originally Posted by Beagle View Post
    A forward PE of 13.5 for HGH is fair and reasonable in my opinion as is a gross yield of 7.5%. The average Aussie bank I follow is currently on a forward FY20 PE of 13 and I think a small PE premium is fully warranted for HGH. If you can't see the value at this level maybe you should sell ?
    I thought about that. $1.85 is some 13% above my fair valuation. Many shares on the NZX are overvalued by that amount or more. When it gets to 20% above my fair valuation I will think again,

    SNOOPY
    Last edited by Snoopy; 04-01-2020 at 12:16 PM.
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

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