HGH - Heartland Group Holdings

[davflaws]

I found Roger's post very helpful in general terms, and I think I understand his position as:
There are self interested reasons for HBL managers and assessors to take a rosy view of the current situation.
Many of the properties securing the loans are worth less than they were when the loan was taken out and will be worth an awful lot less when/if the dairy industry gets less profitable. HBL's LVRs are inaccurate and optimistic.
This situation poses real risks to HBL profitability in the medium term and even more immediate risk to the SP as HBL is forced to take a more pessimistic provision for impairment and investors take fright.
Other people have different ideas - but how much difference will it make to the likely future profitability of HBL? Help please!

I have started to think about it but haven't got very far. Just for a first stab - there is $240M out. Some one will know how much HBL have put aside for impairment. Multiply by some number to account for biased assessment, bad LVRs, and the grief caused by a further deterioration in dairy, and then do DFCs or whatever you knowledgeable people do to calculate a shareprice.
What do you get? How can the calculation be improved?

[winner69]

Neither will I.....
Except I always trust people with "the owners' eye",more than the "hired help".
NB.Look at the "hired help" at AIR.You don't see that at Heartland.!!.They value their shares.
Why? Because they are confident in their own abilities.

Monetary rewards are not a substitute for intrinsic motivation.

[winner69]

I'm in paradise Winner.

Word on the street is that good things take time, but are worth waiting for. Buy buy buy apparently. $1.60 by Christmas.

Hope to be on the road to Paradise myself later in the week

I would pleased if the street talk is true and they have actually ycanned all this restructuring stuff - bond issue and return of 'excess' capital

[Jantar]

..... Just for a first stab - there is $240M out. Some one will know how much HBL have put aside for impairment. Multiply by some number to account for biased assessment, bad LVRs, and the grief caused by a further deterioration in dairy, and then do DFCs or whatever you knowledgeable people do to calculate a shareprice.
What do you get? How can the calculation be improved?

I posted the following back in July last year, and still stand by it.

"The dairy industry is not in trouble, just receiving reduced pay outs, and still within a statistical normal range. Loans are not to the industry, but to individual owners, each with their own set of circumstances.

Some dairy farmers converted their farms when pay-outs were well above average, and used this high projected income as a basis for their financial planning. Of these, some have converted farms in areas that are not suitable for dairying (like Central Otago or mid Canterbury) and these are the ones who will really struggle to make the conversion pay. But sharemilker Fred in Southland, who borrowed just to buy his stock, and is on a traditional farm which doesn't need pivot irrigators etc. is probably still keeping his head above water and will manage OK.

It is not as if ALL dairy will crash and default. So the banks could afford to let the less likely ones go under, sell the stock at meat prices, and still support those that are marginal or still successful."

The current dairy payout is almost exactly the average payout prior to the boom that started 7 years ago and ended 2 ywears ago. Everything is now back to normal. Those farmers who converted to dairy using traditional values are doing just fine. It is the ones who thought the rosy times were the new norm who are suffering, and I don't believe that is a large proportion of the industry at all.

[Beagle]

Hope to be on the road to Paradise myself later in the week

I would pleased if the street talk is true and they have actually ycanned all this restructuring stuff - bond issue and return of 'excess' capital

Yeap I have heard through certain channels they have deferred the Tier2 capital notes issue and planned return of capital. Amazing they don't have the courtesy to tell shareholders properly seeing as many have already factored this into the SP, (was worth a potential circa 5 cps) by my calculations. Wonder what else they're not telling shareholders about...

[percy]

Shareholders who read the "Looking forward" section of Heartland Bank's interim report remain fully informed.

[ziggy415]

Yeap I have heard through certain channels they have canned the Tier2 capital notes issue and planned return of capital. Amazing they don't have the courtesy to tell shareholders properly seeing as many have already factored this into the SP, (was worth a potential circa 5 cps) by my calculations. Wonder what else they're not telling shareholders about...

But Roger your not a shareholder.....they rang me last week lol

[Jantar]

Shareholders who read the "Looking forward" section of Heartland Bank's interim report remain fully informed.

"
Looking forward
Underlying asset growth is projected to continue during the second
half of the financial year across all areas, but particularly in consumer
and reverse mortgages.
Heartland believes that current market volatility is expected to give
rise to acquisition opportunities that it may wish to exploit as part
of its growth objective. In considering any acquisition, Heartland’s
criteria remain based on value accretion and access to innovation or a
compelling product or distribution capability.
The Board will continue to monitor its capital position during this
period and continues to support the position that, in the absence of a
more appropriate use, Heartland’s excess capital should be returned
to shareholders.
We continue to expect that NPAT for the year ended 30 June 2016 will
be in the range of $51.0m to $55.0m. This guidance range excludes the
impact of any capital management initiatives.
We are confident that Heartland is well placed to meet this guidance
and deliver on its growth strategy"

The return to shareholders was supposed to be in April. that time frame has been and gone so are we assume that HBL have found a more appropriate use for the tier 2 capital that it hasn't yet raised?

[percy]

"in the absence of a more appropriate use'.
I take it they are looking at appropriate use,ie acquisition/s.
Offcourse, they can not do anything until the MTF sportzone judgement has been made.
We eagerly await that judgement,and look forward to seeing what ANZ Bank do with UDC.
We live in interesting times.

[winner69]

"
[FONT=sans-serif]
The return to shareholders was supposed to be in April. that time frame has been and gone so are we assume that HBL have found a more appropriate use for the tier 2 capital that it hasn't yet raised?

Jantar - maybe, just maybe, they have thought that after a serious review of their dairy loans it would be prudent to shore up their capital base