HGH - Heartland Group Holdings

**Beagle** · 10-02-2016, 01:41 PM

I'm on record for months now as calling the SP as being too high and have been absolutely spot on. Notwithstanding that its anyone's guess when and if there might be a dairy recovery the current price around 112/113 feels like fair value to me. That is not to say it won't fall further, (it may well do exactly that with all the momentum with other banks world-wide) so I am a patient buyer provided their provisioning looks reasonable.

Based on a long term average PE of about 11, (this multiple I have chosen has come back a bit in line with other bank stocks region wide) and forward earnings of about 11 cps fair value in my opinion is about $1.21, (less provisioning for bad and doubtful debts that hasn't already been done to mark to their true market value).

To me it seems that Mr Market is saying that based on 473m shares at 112 there's really about .09 x 473m = $42m of irrecoverable loans somewhere on their balance sheet and given the dairy loan exposure of just over $200m this seems consistent with the nightmare scenario that's playing out in ultra slow motion before our very eyes that many dairy farmers will face receivership over the next few years.

So there you have it. I'm now neutral on the stock with a bias towards buying if there's further falls and provisioning looks reasonable. Pleased I sold at $1.31 just under one year ago but looking to be well positioned somewhere around the 52 week low of $1.06.

**percy** · 10-02-2016, 01:45 PM

Originally Posted by winner69

Yes Percy all on track

H1 earnings just under $26m (including the one off costs) and a boomer h2 bringing FY to $54m plus a bit.

It's next year fy17 that could be a problem, although to early for guidance to be given.

I have no reason to doubt the NZ economy will stay in great shape.
The lower NZ$ is helping exporters and the tourism sector.
Lower oil prices will work their way through,lowering prices of not just fuel, but all the huge number of products that are petroleum based.
Low interest rates are also good for the economy.
As long as the NZ economy performs,Heartland Bank will out perform.!

.

**sb9** · 10-02-2016, 02:15 PM

Originally Posted by Roger

So there you have it. I'm now neutral on the stock with a bias towards buying if there's further falls and provisioning looks reasonable. Pleased I sold at $1.31 just under one year ago but looking to be well positioned somewhere around the 52 week low of $1.06.

Agree there with you Roger, sold out at $1.28 last year and although its on my radar not in my price range atm. Too bearish outlook now to take a position, just my 2 cents...

**stoploss** · 10-02-2016, 03:51 PM

Sorry couldn't find the general banking thread , please forgive me .
Still plenty of money in banking .....Dairy not too much of a worry although provisions are up

http://www.stuff.co.nz/business/indu...uld-be-welcome

**Joshuatree** · 11-02-2016, 10:21 AM

[QUOTE=Roger;606722]I'm on record for months now as calling the SP as being too high and have been absolutely spot on.

Spot on for sure. Never mind a global meltdown in mkts happening right now especially banks; ASX big banks down 13% to 19% HBL down too 16%. On record alright , yes for months down ranting.. spot on

**winner69** · 11-02-2016, 11:53 AM

Originally Posted by Joshuatree

Spot on for sure. Never mind a global meltdown in mkts happening right now especially banks; ASX big banks down 13% to 19% HBL down too 16%. On record alright , yes for months down ranting.. spot on

Maybe, just maybe, Roger recognised that all banks were 'over priced' and that many of the issues that has caused this 'global meltdown' had a degree of commonality across all banks,

Heartland being no exception, they are not immune to market sentiment (perceived risk)

Maybe Roger was gloating but it was a good call eh - heartland down 21% since last Feb (or 18% since October after a recovery)