HGH - Heartland Group Holdings

[percy]

Yes another very solid quarter.
W69 ;UDC result was a prelude .Usually follows when UDC does well, so do HNZ.Seems a growing market for both.And yes UDC is a very well run business too.
And plenty of gas in the tank.
I think the agm presentations will include profit projections,and the usually comprehensive commentary of where HNZ sees their future .
We remain "well positioned."

[Beagle]

At the mid point of their forecast range $53m on 473.6m shares on issue FY16 EPS is 11.19 cps. Leaving aside loan defaults which has been thoroughly discussed, apply whatever PE you feel is right but I note that historically its tended to trade in a range of 11-12 and this is broadly consistent with the current trading range of Aussie banks which suggests fair value is $1.23 - $1.34.

[K1W1G0LD]

i see they've reaffirmed guidance yet again , I wonder how many quarters in a row now they've done that and either met or exceeded or exceeded their target . Steady as she goes.

[percy]

i see they've reaffirmed guidance yet again , I wonder how many quarters in a row now they've done that and either met or exceeded or exceeded their target . Steady as she goes.

Yes "Steady as she goes."
We like it like that.!!!

[winner69]

Heartland says "Key drivers of growth for Heartland are GDP and employment

More good news today on that front


@ANZ_cambagrie: ANZ business outlook survey for NZ shows further improvement. Firms flag better activity, employmt and investmt. +ve signs for growth


FY16 earnings heading $60m - guidance of $51m to $55m rubbish

[Snow Leopard]

At the mid point of their forecast range $53m on 473.6m shares on issue FY16 EPS is 11.19 cps. Leaving aside loan defaults which has been thoroughly discussed, apply whatever PE you feel is right but I note that historically its tended to trade in a range of 11-12 and this is broadly consistent with the current trading range of Aussie banks which suggests fair value is $1.23 - $1.34.

1Q statements lack a lot of the detail of full year and only cover the bank, which is not yet all of HNZ.

But they have a net impairment expense of
$3,306K (with rural being $399K)
as opposed to this time last year when it was
$1,838K (with rural being $10K)

Interestingly 90+ day overdue loans on rural as gone from $17,904K to $11,704 in the last three months, possibly as a result of some/many them being reclassified given that Heartland are supporting dairy in these difficult times.

Whilst I think winner69 and his $60M is just winner69 being winner69 I am going to suggest that the $55M end of guidance is looking very achievable at the moment.

And so hot from the Paper Tiger Institute of Obscure Numbers:

Current value: $1.373
30-Jun-16 value: $1.428
30-Nov-16 value: $1.465

Assuming nothing special whatsoever happens. (i.e. No Tier2, no buybacks, no MTF, No smoking...)

Best Wishes
Paper Tiger

[Beagle]

Not asking you to be silenced mate. I am sure they will simply "manage" their way towards the mid point of their FY16 guidance range by changing some of the underlying assumptions that are supportive of what amounts to nothing more than guesses, (opps sorry, professional estimations) of loan provisioning at year end so I am happy to agree to disagree with you and will stick with my fair value assessment and note that the current price is within my fair value range.

I called it as fairly valued on 1 February 2015 at $1.30...not much has changed, EPS up a little and sector PE down a little bit reflecting underlying risks in a slowing economy and commodity environment.
Those thinking that auditors give a really thorough and impartial scrutiny of the company in terms of the adequacy or otherwise of loan provisioning. Oh dear, that's a pretty sad indictment on professional standards isn't it
http://www.sharechat.co.nz/article/b...fma-reviewhtml

[Snow Leopard]

Not asking you to be silenced mate. I am sure they will simply "manage" their way towards the mid point of their FY16 guidance range by changing some of the underlying assumptions that are supportive of what amounts to nothing more than guesses, (opps sorry, professional estimations) of loan provisioning at year end so I am happy to agree to disagree with you and will stick with my fair value assessment and note that the current price is within my fair value range.

I called it as fairly valued on 1 February 2015 at $1.30...not much has changed, EPS up a little and sector PE down a little bit reflecting underlying risks in a slowing economy and commodity environment.
Those thinking that auditors give a really thorough and impartial scrutiny of the company in terms of the adequacy or otherwise of loan provisioning. Oh dear, that's a pretty sad indictment on professional standards isn't it
http://www.sharechat.co.nz/article/b...fma-reviewhtml

So, never believe an accountants valuation of anything, got that.

Best Wishes
Paper Tiger

[Beagle]

LOL PT auditing standards and valuations are of course two entirely different things. In my view the fundamental problem with auditing is the inherent compromises.

Auditing firms are being paid by the company to audit their financial statements. Its a competitive process so fee pressure is very real and insurance costs extremely high after Enron and any other number of failures you care to recall.

Auditors can be removed by the company so there's pressure on the job to do it at the right price and pressure for the right result. Attracting the right staff with the right experience at a competitive price is also a challenge.

Too often junior and intermediate level staff simply accept what they're told by high priced bankers as being fair and reasonable. You're far better off looking at the macro economic picture and asking if the level of provisioning is really adequate given the severity of sector headwinds. Sooner or later bad debts come out in the wash.

I've spent year's auditing, (no longer) and my gut instinct tells me HNZ's provisioning in the area of dairy loans could only be described as reasonable if there's a really steep recovery in Fonterra's pay-out next season. Whether that happens remains to be seen but all the risk in this area seems to be towards significant increases in future loan provisioning which will of course impact future profit results.

[percy]

As all of us who follow the banking sector know, the most useful comparisons and updates of the sector is provided by KPMG with their reviews.
They are most probably the most respected banking "analysts".
They also happen to be HNZ's auditors.