HGH - Heartland Group Holdings

[percy]

And in same period HNZ only down 11% ....so not really contaminated by association with Aussie banks (who are down a lot more)

Just a general rerating downwards for Heartland reflecting greater risk aversion that punters have

I still see it as a correlation with the Australian Banks,because of lower valuation multiples being applied to the banking sector at present.
"Punters" may have "greater risk aversion " but Heartland Bank's sound financials ,means " investors" can take advantage of "punters" folly.!!! lol.

[Snoopy]

Fed Farmers say 11%of dairy farmers were under scrutiny by their banks, compared with 7%in November and 6% in August.

Banks call this Strategic Debt Management - better outcomes in helping farmer out of the industry and hopefully recover more than just foreclosing / receivership

We should be grateful to Heartland management they have essentially avoided this impending fiasco

Huh? I don't think so. From a shareholder perspective, Heartland is a lot more exposed to agriculture & mining than the Aussie headquarted big banks.

See table below.

Loan Category	ANZ Loan Book FY2015 (gross)	ANZ Loan Book FY2015 (%ge)	WBC Loan Book FY2015 (gross)	WBC Loan Book FY2015 (%ge)	HBL Loan Book FY2015 (gross)	HBL Loan Book FY2015 (%ge)
Agriculture, Forestry, Fishing and Mining	$39,610m	4.7%	$22,671m	2.9%	$576m	17.8%
Business and Property Services	$51,000m	6.1%	$74,793m	9.7%	$396m	12.2%
Construction	$7,609m	0.9%	$7,682m	1.0%
Entertainment, Leisure and Tourism	$11,797m	1.4%	$8,416m	1.1%
Finance and insurance	$230,710m	27.5%	$95,694m	12.4%	$377m	11.6%
Government and Local Authority	$52,524	6.2%	$75,936m	9.9%
Manufacturing	$34,432m	4.1%	$18,501m	2.4%	$94m	2.9%
Personal lending	$330,925m	39.5%	$419,764m	54.5%	$1,397m	43.1%
Electricity, Gas and Water Supplies	$9,795m	1.2%	$7,445m	1.0%
Retail & Wholesale trade	$38,528m	4.6%	$22,774m	3.0%	$276m	8.5%
Transport and storage	$14,783m	1.8%	$13,895m	1.8%	$20m	0.6%
Other	$16,455m	2.0%	$2,358m	0.3%	$102m	3.2%
Total	$838,248m	100%	$769,929m	100%	$3,240m	100%

SNOOPY

[percy]

I still see it as a correlation with the Australian Banks,because of lower valuation multiples being applied to the banking sector at present.
"Punters" may have "greater risk aversion " but Heartland Bank's sound financials ,means " investors" can take advantage of "punters" folly.!!! lol.

Offcourse there is an upside with lower valuation multiples....................
Means any acquisition Heartland Bank makes will be at these lower valuation multiples.....

[winner69]

Just had a look on ANZ securities charts and yes indeed HBL has been a real out-performer against the backdrop of a severe general correction in banking stocks. Only down 15% from $1.33 to $1.13 over the last 12 months, mitigated further by good fully imputed dividends. Good result considering how poorly many of the other Australian and international banks have shocked their shareholders. No mining exposure has been a real blessing for HBL shareholders. That said until fears of a global recession ease and until there's a genuine bounce in commodity prices that ease asset quality concerns, I expect the banking sector to remain under pressure, (HBL probably continue to outperform on a relative basis). Its been a very tough start to 2016 for many stocks with many tigers, cats and dogs very busy licking their wounds.

Yes, good to see Heartland outperformance against its peers

Long may it continue

[Beagle]

Yes, good to see Heartland outperformance against its peers

Long may it continue

Be even better if they actually do an acquisition rather than just talk about it regularly for the last 18 months. I guess you could argue they're better positioned now that sector PE's have compressed but OTOH one could argue they've compressed for a reason and with slower economic times an acquisition of say MTF while potentially less expensive is also potentially riskier. (e.g. I'd imagine some of the 430 Dick Smith employees could face serious challenges ahead meeting their loan payments).

Ouch Snoopy...your beagle nose has detected something interesting there. I guess HBL have only just over $200m dairy loans so about 7% of loan book but still much higher on a relative basis than ANZ !
Also as you noted recently, HBL have been less forthcoming with appropriate doubtful debt provisioning than UDC. Must be the was it 21% ? of ANZ assets in Asia that has spooked the market then ?

[percy]

Heartland Bank have already done a number of very successful acquisitions.
I am reminded of Rank Group in the late 1980s.Had plenty of cash but just kept delaying buying anything.The market just kept on and on about them talking about acquisitions,but not doing any.Yet Graeme Hart took his time.The rest is history.
Bit like Ebos,always three acquisitions in the pipeline at any one time.But very few ever get done.But the ones they do are great.
Heartland Bank's directors and management have significant share holdings,so any acquisition/acquisitions will be well thought out.
In the event of no further acquisition they still have court approved share buy back.
Either way shareholders will enjoy increasing ROE,EPS and higher dividends.

[Snoopy]

Snoops - your table would be clearer if you didn't have HBL numbers to 3 decimal points (assuming anz etc numbers are actual millions)

Yes you are right Winner. At your suggestion I have removed the 'three decimal places' on the statistics relating to Heartland.

The reason I put the decimal places in there was because Heartland did in their annual report. I thought that if I left them there it would be easier for those who wanted to check up on my work to find where I pulled the figures from. However, for comparison purposes, it looks like I may have made some transcription mistake with the decimal point. I didn't. ANZ and WBC really are over 200 times bigger than Heartland in loan book terms. That fact does ram home how very big those 'big' Aussie banks really are!

SNOOPY

[winner69]

Yes you are right Winner. At your suggestion I have removed the 'three decimal places' on the statistics relating to Heartland.

The reason I put the decimal places in there was because Heartland did in their annual report. I thought that if I left them there it would be easier for those who wanted to check up on my work to find where I pulled the figures from. However, for comparison purposes, it looks like I may have made some transcription mistake with the decimal point. I didn't. ANZ and WBC really are over 200 times bigger than Heartland in loan book terms. That fact does ram home how very big those 'big' Aussie banks really are!

SNOOPY

Well done Snoops

Your signature - in a weird sort of way it could have relevance to Heartland

[winner69]

Heartland announcement said this -

Given continued market interest in the dairy sector in New Zealand, Heartland advises that its direct exposure to dairy farmers is 8% of its total lending book as at 31 December 2015. The average loan to value ratio (LVR) for Heartland’s dairy is 57%

Good to see them still lending in an industry that has a bright future. As Heartland says ' cautious approach to new lending, but remain open to new customers and supportive'

Dairy exposure pretty low at 8% of receivables - say $234m

But it's LVR at 57% that's the real good news. Previous number they quoted was 61% so 57% is pretty amazing seeing farm prices are down.

Just shows that even though total loans are up the quality of those loans appear to be much stronger. Incredible really. This is reflected in a pretty minimal increase in impairments as well.

Seems all honky dory down on the farms that Heartland have an exposure to .....and Heartland prospering from it

[kiora]

Heartland announcement said this -

Given continued market interest in the dairy sector in New Zealand, Heartland advises that its direct exposure to dairy farmers is 8% of its total lending book as at 31 December 2015. The average loan to value ratio (LVR) for Heartland’s dairy is 57%

Good to see them still lending in an industry that has a bright future. As Heartland says ' cautious approach to new lending, but remain open to new customers and supportive'

Dairy exposure pretty low at 8% of receivables - say $234m

But it's LVR at 57% that's the real good news. Previous number they quoted was 61% so 57% is pretty amazing seeing farm prices are down.

Just shows that even though total loans are up the quality of those loans appear to be much stronger. Incredible really. This is reflected in a pretty minimal increase in impairments as well.

Seems all honky dory down on the farms that Heartland have an exposure to .....and Heartland prospering from it

You are assuming the loans are secured against land,sometimes they are on livestock and plant.
What has happened to stock and plant prices?How have they valued them?
How have they assessed land values?