HGH - Heartland Group Holdings

[winner69]

I'm not nervous, unlike NZ Oil and Gas, management of HNZ know what they are doing. People are just taking a 'breather', once another set great results come out, we'll see the ladder to the $1.40's come out again.

A 10% correction when NZX50 is up slightly is some breather t_j - and it's even down from 52 weeks ago according to the NZX website.

Maybe PT observation that the share price has taken a sharp turn southwards since they put the word BANK in their name has some credence. Sentiment works in funny ways.

You grumpy with NZO or something bringing them up randomly on this thread?

[percy]

This was going to be a simple post along the lines that the share price has taken a sharp turn southwards since they changed their name to have the word Bank in it and thus, obviously, this was a bad thing to have done.

But then I noticed this...



So I have read all of Snoopy's original post and checked his figures and have no complaints there (though if anybody does want a good discussion of what are applicable inclusions and exclusions - do not phone me)...

But...

If UDC have a 1.43% impairment provision and Heartland have a 1.09% impairment provision then I do not see how the emphasised conclusion can be drawn from the data.

Best Wishes
Paper Tiger

Neither do I...lol.

[winner69]

Global dairy prices down again. Milk powder down 10% and below 2000, Fonterra say its needed to get back to 3000 to meet their old forecast of $4.60. Not looking too good for next year (2017) as well

Heartland $300m plus dairy loans more 'risky' today than last week. No way in the world can Jeff tell me that it's all honky dory. The loan restructure team out in full force I reckon turning problem loans into 'current' loans.

NZ dairy prices drop sharply at GlobalDairyTrade auction
http://www.stuff.co.nz/business/farm...ytrade-auction

[Yeshiva]

Global dairy prices down again. Milk powder down 10% and below 2000, Fonterra say its needed to get back to 3000 to meet their old forecast of $4.60. Not looking too good for next year (2017) as well

Heartland $300m plus dairy loans more 'risky' today than last week. No way in the world can Jeff tell me that it's all honky dory. The loan restructure team out in full force I reckon turning problem loans into 'current' loans.

NZ dairy prices drop sharply at GlobalDairyTrade auction
http://www.stuff.co.nz/business/farm...ytrade-auction

What $300m plus of dairy loans? Page 10 of Heartland's latest annual report says they have "exposure to dairy" of $218m, with a LVR of 61%. This comprises 7.6% of their total book. Could you kindly let me know where the $300m plus figure comes from?

Also, HBL have more than enough capital to plan a purchase of Motor Trade Finance, or failing that, a share buyback. So there's heaps of cash in the till even if they need to increase provisioning for bad dairy loans.

Interestingly, a quick google search for "Heartland Bank NZ dairy" brings up this recent article on Reuters, where Heartland note that weak dairy prices will potentially last until 2017, but they will continue to do business with farmers.

http://www.reuters.com/article/newze...-idUSL3N15B24I

Is there any evidence at all for your phrase "The loan restructure team out in full force I reckon turning problem loans into 'current' loans"?. As the philosophers retort goes - "that which can be asserted without evidence can be dismissed without evidence".

[NZSilver]

She's going to get cheap!

[winner69]

What $300m plus of dairy loans? Page 10 of Heartland's latest annual report says they have "exposure to dairy" of $218m, with a LVR of 61%. This comprises 7.6% of their total book. Could you kindly let me know where the $300m plus figure comes from?

Also, HBL have more than enough capital to plan a purchase of Motor Trade Finance, or failing that, a share buyback. So there's heaps of cash in the till even if they need to increase provisioning for bad dairy loans.

Interestingly, a quick google search for "Heartland Bank NZ dairy" brings up this recent article on Reuters, where Heartland note that weak dairy prices will potentially last until 2017, but they will continue to do business with farmers.

http://www.reuters.com/article/newze...-idUSL3N15B24I

Is there any evidence at all for your phrase "The loan restructure team out in full force I reckon turning problem loans into 'current' loans"?. As the philosophers retort goes - "that which can be asserted without evidence can be dismissed without evidence".

Yes yeshiva, $217m net 6 at June. My mistake - very remiss of me. Wonder what it is now?

Not implying they go broke but saying some time it is possibie that dairy loans going bad will be a drag on profitability. Even $5m extra is significant. No impact in F16 I guess but F17 could bea different story.

Loan restructuring (ie support) turns old loans into new loans - that's what happens in the finance world. Only conjecture that Heartland are actualy doing this but ....

Good philosophical stuff at the end. There's also the saying that the art of good listening is hearing what isn't being said

[stoploss]

Global dairy prices down again. Milk powder down 10% and below 2000, Fonterra say its needed to get back to 3000 to meet their old forecast of $4.60. Not looking too good for next year (2017) as well

Heartland $300m plus dairy loans more 'risky' today than last week. No way in the world can Jeff tell me that it's all honky dory. The loan restructure team out in full force I reckon turning problem loans into 'current' loans.

NZ dairy prices drop sharply at GlobalDairyTrade auction
http://www.stuff.co.nz/business/farm...ytrade-auction

They will only be getting out of control when you see Dairy farmers/ loans appearing on Harmony.

DISC:Hold

[Yeshiva]

Yes yeshiva, $217m net 6 at June. My mistake - very remiss of me. Wonder what it is now?

Not implying they go broke but saying some time it is possibie that dairy loans going bad will be a drag on profitability. Even $5m extra is significant. No impact in F16 I guess but F17 could bea different story.

Loan restructuring (ie support) turns old loans into new loans - that's what happens in the finance world. Only conjecture that Heartland are actualy doing this but ....

Good philosophical stuff at the end. There's also the saying that the art of good listening is hearing what isn't being said

A wise Rabbi once said to lie on your stomach at night to avoid temptation. Equally, one should think before speaking so as to avoid foolishness, unless it your purpose to be deliberately foolish.

Since conjecture is welcome on this thread in the absence of discussing facts about Heartland's business, it is my conjecture that the percentage of HBL's dairy related loans compared to its total book may hold steady or decrease. That is, the $217m figure does one of three things:
- It grows at the same rate as HBL's overall book
- It grows at a lesser rate compared to HBL's overall book, thus slowly shrinking as a percentage
- The dollar figure stays the same or drops in real terms, which will show a faster drop in percentage relating to the overall book.

For the figure to increase, it means that not only would HBL be signing up lots of new dairy related business, but it would need to be doing so at an even faster rate than the rest of its book growth, which strikes me as unlikely. Possible, but unlikely.

I only mention this because there appears to be a lot of fixation on HBL's dairy exposure. To me, this looks a lot like Chicken Little behaviour. I would be looking more closely at the areas that HBL signalled as strong growth, being reverse mortgages and SME working capital, plus also automotive lending. I would also ensure I did not conflate dairy lending with all agricultural lending, because it seems stone fruit and pip fruit exporters are doing well at the moment.

[winner69]

A wise Rabbi once said to lie on your stomach at night to avoid temptation. Equally, one should think before speaking so as to avoid foolishness, unless it your purpose to be deliberately foolish.

Since conjecture is welcome on this thread in the absence of discussing facts about Heartland's business, it is my conjecture that the percentage of HBL's dairy related loans compared to its total book may hold steady or decrease. That is, the $217m figure does one of three things:
- It grows at the same rate as HBL's overall book
- It grows at a lesser rate compared to HBL's overall book, thus slowly shrinking as a percentage
- The dollar figure stays the same or drops in real terms, which will show a faster drop in percentage relating to the overall book.

For the figure to increase, it means that not only would HBL be signing up lots of new dairy related business, but it would need to be doing so at an even faster rate than the rest of its book growth, which strikes me as unlikely. Possible, but unlikely.

I only mention this because there appears to be a lot of fixation on HBL's dairy exposure. To me, this looks a lot like Chicken Little behaviour. I would be looking more closely at the areas that HBL signalled as strong growth, being reverse mortgages and SME working capital, plus also automotive lending. I would also ensure I did not conflate dairy lending with all agricultural lending, because it seems stone fruit and pip fruit exporters are doing well at the moment.

Nothing to argue about there yeshiva

But isn't the point that exposure to ~$200m (or whatever the number is) of dairy loans during hard times for many dairy farmers raises the possibility of increased levels of bad debts - which would be a drag on future Heartland earnings.

That is all I am pointing out, nothing else. A risk I assess as a shareholder and its future impact on its share price,

[Yeshiva]

hot off the press - record new car sales. One might raise conjecture this is better rather than worse news for Heartland.

http://www.scoop.co.nz/stories/BU160...ial-demand.htm