HGH - Heartland Group Holdings

[Snow Leopard]

EPS growth (period on period) less than 11%

On current profit guidance of up to $60M - FY EPS growth would be less than 5%. We need an upgrade ($63M please) .

So going to do a small A$15M Tier 2 thing with the Aussie's then!

Dividend of 3.5c and a plea to take the DRiP.

Bank obviously struggling what with the constant need to find real money .

Best Wishes
Paper Tiger

[percy]

I am surprised they have not done a decent Tier 2 in NZ. Say $60 to $80 mil.
Yes the growth has to be real eps growth.I don't see why it can't be.
Strong Digital loan origination should tranlate into solid eps growth.

[forest]

Let me answer that rhetorical question with another, why do you think they have the dividend reinvestment scheme ?

Roger I understand that the DRP is to retain earnings and this goes partly towards increasing profits on retained earnings.
I also understand that the purpose of share investing is dividend collecting.
What I like to see however if a company expect to be able to make good returns on retained earnings it should retain those earnings.
If not pay a (large) dividend and use up the imputation credits.

But what is happening now does not seem to be fair to all share holders or cost efficient to HBL.

Not fair because some larger share holders get a first dip at a discounted price and the very small share holders are getting a disproportional increase in their holding.
Not cost efficient because the cost of contracting the transfer agent to pay out the dividend and organising the share purchase plan can both be eliminated / reduced.

[forest]

I am surprised they have not done a decent Tier 2 in NZ. Say $60 to $80 mil.
Yes the growth has to be real eps growth.I don't see why it can't be.
Strong Digital loan origination should tranlate into solid eps growth.

Me too, one would think there would be plenty of support for this.

[Beagle]

Roger I understand that the DRP is to retain earnings and this goes partly towards increasing profits on retained earnings.
I also understand that the purpose of share investing is dividend collecting.
What I like to see however if a company expect to be able to make good returns on retained earnings it should retain those earnings.
If not pay a (large) dividend and use up the imputation credits.

But what is happening now does not seem to be fair to all share holders or cost efficient to HBL.

Not fair because some larger share holders get a first dip at a discounted price and the very small share holders are getting a disproportional increase in their holding.
Not cost efficient because the cost of contracting the transfer agent to pay out the dividend and organising the share purchase plan can both be eliminated / reduced.

Its not about what you or I want forest, in my opinion its about respecting individual shareholders rights to chose whether they want dividends or shares in lieu of dividend.
I am sure you would have noticed the sea of grey hair at many companies annual shareholders meetings. In my opinion many small shareholders are relying of dividend income to support their retirement lifestyle.
I think keeping the dividend at 3.5 cps, (rather than increasing it in line with the 14% earnings growth to 4.0 cps) strikes a good balance this year considering the company is experiencing such strong organic lending growth across all divisions. Regarding the share purchase plan in my opinion a renounceable rights issue would have been fairer to all parties but it would appear on the face of it this option may be more expensive. I guess its only natural that holders of (for example), a six figure number of shares feel a bit miffed that someone holding as few as say 1000 shares enjoy the same rights under the share purchase plan. It is what it is, life isn't fair all the time but I think the terms of the SPP for smaller shareholders are very fair considering institutions paid $1.46 back in December when the share price was quite a bit less.

[forest]

Its not about what you or I want forest, in my opinion its about respecting individual shareholders rights to chose whether they want dividends or shares in lieu of dividend.
I am sure you would have noticed the sea of grey hair at many companies annual shareholders meetings. In my opinion many small shareholders are relying of dividend income to support their retirement lifestyle.
I think keeping the dividend at 3.5 cps, (rather than increasing it in line with the 14% earnings growth to 4.0 cps) strikes a good balance this year considering the company is experiencing such strong organic lending growth across all divisions. Regarding the share purchase plan in my opinion a renounceable rights issue would have been fairer to all parties but it would appear on the face of it this option may be more expensive. I guess its only natural that holders of (for example), a six figure number of shares feel a bit miffed that someone holding as few as say 1000 shares enjoy the same rights under the share purchase plan. It is what it is, life isn't fair all the time but I think the terms of the SPP for smaller shareholders are very fair considering institutions paid $1.46 back in December when the share price was quite a bit less.

I agree with you, as far that the way capital raising is carried out and dividend is paid could well be the most pragmatic way of doing it.

But as far as that every share holder is treated the same as it should, this is definitely not the case.
And this not being the case were are the boundaries?

[BlackPeter]

I agree with you, as far that the way capital raising is carried out and dividend is paid could well be the most pragmatic way of doing it.

But as far as that every share holder is treated the same as it should, this is definitely not the case.
And this not being the case were are the boundaries?

You are right ... a renounceable rights issue would have been much fairer. I think it as well appropriate to communicate this to the board. Feel free to send them a friendly message - or tell them next AGM. I am trying to get the NZSA interested to raise this with HBL ... and definitely intend to raise it at the next AGM (which is however still 9 months away ..).

[Snoopy]

I agree with you, as far that the way capital raising is carried out and dividend is paid could well be the most pragmatic way of doing it.

But as far as that every share holder is treated the same as it should, this is definitely not the case.
And this not being the case were are the boundaries?

I think all of this dates back a few years when the law was changed to allow fast track capital raising. The Restaurant Brands capital raising last year was also fast track. However in that instance the non tradable rights were issued pro-rata. While it was not possible to trade the rights, any rights not taken up were bundled up and sold by tender to the institutions. Any premium above the strike price was then passed back to the shareholders who had not taken up their rights, in proportion to their pre-rights shareholding. This seems to be a much fairer way to do things, and it was still fast track.

While the way Heartland did their capital raising was good for small shareholders, I reckon those of you with a medium size parcel that will see your shareholding diluted as a result of the coming capital raising have a genuine grievance with Heartland management.

SNOOPY

[forest]

I think all of this dates back a few years when the law was changed to allow fast track capital raising. The Restaurant Brands capital raising last year was also fast track. However in that instance the non tradable rights were issued pro-rata. While it was not possible to trade the rights, any rights not taken up were bundled up and sold by tender to the institutions. Any premium above the strike price was then passed back to the shareholders who had not taken up their rights, in proportion to their pre-rights shareholding. This seems to be a much fairer way to do things, and it was still fast track.

While the way Heartland did their capital raising was good for small shareholders, I reckon those of you with a medium size parcel that will see your shareholding diluted as a result of the coming capital raising have a genuine grievance with Heartland management.

SNOOPY

I have discussed HBL type of capital raising with directors of different companies in the past, and they would acknowledge the unfairness of a raise like HBL. There reosoning was usually as you said 'but it saves time'. I would have thought that in this case HBL and indeed most companies if they are organised have sufficient time to carry out a capital raising fair to all share holders.

[weasel]

Has anyone else got an email from HBL offering the SPP - I noticed it said documentation has been sent electronically but I haven't received anything. Want to make sure I don't miss out!

I realise I can't participate because my address is overseas.