HGH - Heartland Group Holdings

[Ggcc]

Investors and customers were invited to this event in havelock north. It was more a meet and great with a few words from the director and ceo. They were very positive about things. Yes the rural sector has some concerns, but the business is strong and sound is what the ceo mentioned..... Don't quote me word for word, but I walked away happy. I mentioned to one of the directors about the share price and he believed institutions had somewhat undervalued them. I mentioned them being high risk and he politely denied they were high risk. Again don't quote me word for word, as this is how I recalled the discussion. Always DYOR please.

[trader_jackson]

Investors and customers were invited to this event in havelock north. It was more a meet and great with a few words from the director and ceo. They were very positive about things. Yes the rural sector has some concerns, but the business is strong and sound is what the ceo mentioned..... Don't quote me word for word, but I walked away happy. I mentioned to one of the directors about the share price and he believed institutions had somewhat undervalued them. I mentioned them being high risk and he politely denied they were high risk. Again don't quote me word for word, as this is how I recalled the discussion. Always DYOR please.

I do like to hear things like this, thanks for the update.

SP had a nice rally today... Winner69 it appears they might beat ARV to the $1.30 mark, but I hope it is a close 2nd place for ARV

(disclosure: topping up at $1.19 is turning out to have been a good idea... so far)

[SCOTTY]

Investors and customers were invited to this event in havelock north. It was more a meet and great with a few words from the director and ceo. They were very positive about things. Yes the rural sector has some concerns, but the business is strong and sound is what the ceo mentioned..... Don't quote me word for word, but I walked away happy. I mentioned to one of the directors about the share price and he believed institutions had somewhat undervalued them. I mentioned them being high risk and he politely denied they were high risk. Again don't quote me word for word, as this is how I recalled the discussion. Always DYOR please.

Thanks very much for sharing that Ggcc. Excellent reporting ��
Cheers

[pierre]

Investors and customers were invited to this event in havelock north. It was more a meet and great with a few words from the director and ceo. They were very positive about things. Yes the rural sector has some concerns, but the business is strong and sound is what the ceo mentioned..... Don't quote me word for word, but I walked away happy. I mentioned to one of the directors about the share price and he believed institutions had somewhat undervalued them. I mentioned them being high risk and he politely denied they were high risk. Again don't quote me word for word, as this is how I recalled the discussion. Always DYOR please.

I attended this event too. HBL holds its Board meetings in various locations around the country and this time it was Hawke's Bay's turn. HBL invited local shareholders, investors and customers to cocktails and canapes following their meeting today. We had brief addresses from chairman Geoff Ricketts and CEO Jeff Greenslade. They both spoke positively about the business and their forecast of $51-$55m NP for the current FY.

Jeff said HBL is positioning itself in quite different spaces from the major banks, is not held back by expensive legacy IT systems and is able to be nimble and use technology to offer customers "what they want, when they want it".

I talked to Jeff after his address and asked him about HBL's exposure to dairy. He said they were focused on helping their clients through the current situation but felt that HBL would be able to weather the storm if the dairy situation did not improve over the next couple of years.
He said that should a dairy farm have to revert to sheep and beef the value of the operation would be around 60% of its dairy value and that with their LVR's HBL would not be too badly impacted. He is comfortable with their current level of provisioning.

I was a little nervous when he said that only profitability would be impacted if the dairy situation gets worse - but the balance sheet would hold up. Jeff said all the major banks were far more exposed than HBL and all were generally focused on supporting their dairy customers.

I noted a few local motor vehicle dealers at the event and one of them told me that while UDC was his main financier he was placing increasing amounts of vehicle finance with HBL.

I guess that the chairman and CEO have to be very careful about what they say at such an event and that they would be unlikely to be spreading negativity. Equally they wouldn't be able to over-estimate the state of affairs so on balance I would say the picture generally looks Ok.

At today's closing price of $1.29 a fully imputed dividend yield of 6.2% means its definitely better to own the bank than to deposit funds with it. If I could use a well-worn phrase - I think we are "well positioned" with HBL.

[Ggcc]

I think you put their words better than mine Pierre. Thanks

[percy]

I think you put their words better than mine Pierre. Thanks

A big thank you to both of you.

[Raz]

I attended this event too. HBL holds its Board meetings in various locations around the country and this time it was Hawke's Bay's turn. HBL invited local shareholders, investors and customers to cocktails and canapes following their meeting today. We had brief addresses from chairman Geoff Ricketts and CEO Jeff Greenslade. They both spoke positively about the business and their forecast of $51-$55m NP for the current FY.

Jeff said HBL is positioning itself in quite different spaces from the major banks, is not held back by expensive legacy IT systems and is able to be nimble and use technology to offer customers "what they want, when they want it".

I talked to Jeff after his address and asked him about HBL's exposure to dairy. He said they were focused on helping their clients through the current situation but felt that HBL would be able to weather the storm if the dairy situation did not improve over the next couple of years.
He said that should a dairy farm have to revert to sheep and beef the value of the operation would be around 60% of its dairy value and that with their LVR's HBL would not be too badly impacted. He is comfortable with their current level of provisioning.

I was a little nervous when he said that only profitability would be impacted if the dairy situation gets worse - but the balance sheet would hold up. Jeff said all the major banks were far more exposed than HBL and all were generally focused on supporting their dairy customers.

I noted a few local motor vehicle dealers at the event and one of them told me that while UDC was his main financier he was placing increasing amounts of vehicle finance with HBL.

I guess that the chairman and CEO have to be very careful about what they say at such an event and that they would be unlikely to be spreading negativity. Equally they wouldn't be able to over-estimate the state of affairs so on balance I would say the picture generally looks Ok.

At today's closing price of $1.29 a fully imputed dividend yield of 6.2% means its definitely better to own the bank than to deposit funds with it. If I could use a well-worn phrase - I think we are "well positioned" with HBL.

I have also been to one of these meetings, near identical by the sound of it...a good summary. I have noticed in the past six weeks all the banks have backed off their agr./dairy sector clients, no one wants to pull the trigger. No idea how long that may continue however makes it harder to assess value when so few sales are going through for farms as well....

[Ggcc]

They did mention where they see the future growth in the company. Which is the now generation. Those who want finance quick and easy will have their way, with the help of technology. I don't know whether he meant harmony, or something within the bank itself. In roughly two minutes we could lend you $50,000.... It was that quick. I love the needing it now generation!! It took me two years of active searching to upgrade my television haha

[Raz]

They did mention where they see the future growth in the company. Which is the now generation. Those who want finance quick and easy will have their way, with the help of technology. I don't know whether he meant harmony, or something within the bank itself. In roughly two minutes we could lend you $50,000.... It was that quick. I love the needing it now generation!! It took me two years of active searching to upgrade my television haha

Yes however doesn't result in low risk lending...need to see the return for that level of risk....

[Snoopy]

I talked to Jeff after his address and asked him about HBL's exposure to dairy. He said they were focused on helping their clients through the current situation....

The above I would suggest is code for 'capitalising interest payments'.

....but felt that HBL would be able to weather the storm if the dairy situation did not improve over the next couple of years.

The above is code for. "We have assumed the dairy situation will improve, when rating our dairy loans".

He said that should a dairy farm have to revert to sheep and beef the value of the operation would be around 60% of its dairy value and that with their LVR's HBL would not be too badly impacted. He is comfortable with their current level of provisioning.

I was a little nervous when he said that only profitability would be impacted if the dairy situation gets worse - but the balance sheet would hold up.

$260m in dairy loans on the books.

20% write off
= $52m
= no profit for FY2016
= no dividend going forwards?

Such a write off would not pose a threat to the ongoing operation of Heartland. But it would get rid of what Heartland call their 'excess capital' from the balance sheet!

Jeff said all the major banks were far more exposed than HBL and all were generally focused on supporting their dairy customers.

What Jeff says above may be true. But from an investor perspective, you cannot buy shares in ANZ (NZ), Westpac (NZ), BNZ or ASB directly. You can buy shares in all of those indirectly by purchasing the Australian parents. But the rural loan risk of buying the Australian parents is far less than buying HNZ, Because the respective NZ operations represent only a small amount of the Australian parent companies' business. From an investor perspective, it is Heartland that has the most rural exposure.

SNOOPY