HGH - Heartland Group Holdings

[Beagle]

I chose not to answer it because I won't lock myself into a predetermined course of action on here but for what its worth if you are interested the general investment principle I follow is that if any share is ~ 110 - 115% or more of my own fair value assessment I will consider allocating capital elsewhere depending upon what other opportunities exist at the time.
Analyst average fair value assessment is $1.86 http://www.4-traders.com/HEARTLAND-B...518/consensus/
I see it at about $1.90.
2018 PE's of comparative banks I follow, (assuming 12.5 cps earnings for HBL this year due to dilution effects of new capital raise)
HBL 15.6 at $1.95
BOQ 13.2
ANZ 12.7
NAB 14
WBC 13.4
CBA 13.8
All figure off 4 traders to eliminate any of my inherent confirmation bias, (with the exception of EPS for HBL which I have adjusted down slightly (12.9 cps to 12.5 cps) to account for increased number of shares on issue).

Another, (very important in my opinion) issue to consider is that HBL is the only investment in this sector which will give you full imputation credits. You also need to consider the relative EPS growth rates of the various banks. As I suggested yesterday, due to the strong appetite of HBL for new capital I have reservations now that their EPS growth will be much if any greater than their peers.
Much will depend upon their use of the extra capital to drive extra growth. Those that love this share and have a very long association with it will tell you that there's an acquisition around the corner, (but we've heard Jeff cry wolf so many times you can put me in the sceptic camp on that one) and how they drive their organic growth, (I am a believer and believe their reverse equity mortgage book is going to grow very, very strongly in the years ahead). Is their organic growth sufficient to justify the PE premium to their peers...that as they say... is the $64,000 question !

[janner]

I chose not to answer it because I won't lock myself into a predetermined course of action on here but for what its worth if you are interested the general investment principle I follow is that if any share is ~ 110 - 115% or more of my own fair value assessment I will consider allocating capital elsewhere depending upon what other opportunities exist at the time.
Analyst average fair value assessment is $1.86 http://www.4-traders.com/HEARTLAND-B...518/consensus/
I see it at about $1.90.
2018 PE's of comparative banks I follow, (assuming 12.5 cps earnings for HBL this year due to dilution effects of new capital raise)
HBL 15.6 at $1.95
BOQ 13.2
ANZ 12.7
NAB 14
WBC 13.4
CBA 13.8
All figure off 4 traders to eliminate any of my inherent confirmation bias, (with the exception of EPS for HBL which I have adjusted down slightly (12.9 cps to 12.5 cps) to account for increased number of shares on issue).

Another, (very important in my opinion) issue to consider is that HBL is the only investment in this sector which will give you full imputation credits. You also need to consider the relative EPS growth rates of the various banks. As I suggested yesterday, due to the strong appetite of HBL for new capital I have reservations now that their EPS growth will be much if any greater than their peers.
Much will depend upon their use of the extra capital to drive extra growth. Those that love this share and have a very long association with it will tell you that there's an acquisition around the corner, (but we've heard Jeff cry wolf so many times you can put me in the sceptic camp on that one) and how they drive their organic growth, (I am a believer and believe their reverse equity mortgage book is going to grow very, very strongly in the years ahead). Is their organic growth sufficient to justify the PE premium to their peers...that as they say... is the $64,000 question !

Thank you Beagle .
A good reply.. Will admit that I am biased towards HBL as it has been good to me .. ( mostly free shares ).

[percy]

From www.4-traders.com
.....................2015....2016....2017....2018. ...2019.....2020.
divie................7.5......8.5........9.......9 .53......10.1......10.6
eps.................10........11........12.......1 2.9.....13.9.......14.5
Not only are we seeing an increasing dividend and eps growth, we are also seeing ROE and ROA increasing yearly, on the larger capital.

Confirming what counts as real growth.
Revenue growth.......Yes.
EPS growth..............Yes.
Dividend growth.......Yes
ROE,increasing.........Yes
ROA,increasing.........Yes.

[winner69]

Confirming what counts as real growth.
Revenue growth.......Yes.
EPS growth..............Yes.
Dividend growth.......Yes
ROE,increasing.........Yes
ROA,increasing.........Yes.

Not everything is increasing

Cost of doing business is DECREASING

Didn’t look at NIM

[Beagle]

Thank you Beagle .
A good reply.. Will admit that I am biased towards HBL as it has been good to me .. ( mostly free shares ).

Your welcome. I forgot to include Bendigo bank in my comparative PE analysis which is here http://www.4-traders.com/BENDIGO-AND...apide&mots=BEN and their 2018 PE is just 12.2. The average of the six Aussie banks peer group that I follow is thus 13.2 v HBL at 15.6.
HBL thus trades at a PE premium of 2.4 compared to its peers whereas a few years ago it traded at a PE discount of a similar amount.
Has this got the legs (EPS growth) to expand its PE premium to the Aussie banks further or is a reversion tighter into its peer group to be expected ?

[percy]

Not everything is increasing

Cost of doing business is DECREASING

Didn’t look at NIM

Yes cost of business is decreasing.
NIM.Was down,so hopefully will recover, and continue to increase.One to watch.Has been steadily improving, so maybe just a one off last result.

[McGinty]

I chose not to answer it because I won't lock myself into a predetermined course of action on here but for what its worth if you are interested the general investment principle I follow is that if any share is ~ 110 - 115% or more of my own fair value assessment I will consider allocating capital elsewhere depending upon what other opportunities exist at the time.
Analyst average fair value assessment is $1.86 http://www.4-traders.com/HEARTLAND-B...518/consensus/
I see it at about $1.90.
2018 PE's of comparative banks I follow, (assuming 12.5 cps earnings for HBL this year due to dilution effects of new capital raise)
HBL 15.6 at $1.95
BOQ 13.2
ANZ 12.7
NAB 14
WBC 13.4
CBA 13.8
All figure off 4 traders to eliminate any of my inherent confirmation bias, (with the exception of EPS for HBL which I have adjusted down slightly (12.9 cps to 12.5 cps) to account for increased number of shares on issue).

Another, (very important in my opinion) issue to consider is that HBL is the only investment in this sector which will give you full imputation credits. You also need to consider the relative EPS growth rates of the various banks. As I suggested yesterday, due to the strong appetite of HBL for new capital I have reservations now that their EPS growth will be much if any greater than their peers.
Much will depend upon their use of the extra capital to drive extra growth. Those that love this share and have a very long association with it will tell you that there's an acquisition around the corner, (but we've heard Jeff cry wolf so many times you can put me in the sceptic camp on that one) and how they drive their organic growth, (I am a believer and believe their reverse equity mortgage book is going to grow very, very strongly in the years ahead). Is their organic growth sufficient to justify the PE premium to their peers...that as they say... is the $64,000 question !

Yes a good unbiased post Beagle.

HBL is a good well run company that has delivered for it's shareholders, but there are times that the investment case in a company at any price should be questioned (mainly for investors entering or adding).

At the moment my opinion is that the current sentiment (and resulting momentum) has got in front of the fundamentals, and this not a bad or negative thing. It's just part of the wonderful mechanism we call the stock market.

[Beagle]

Yes a good unbiased post Beagle.

HBL is a good well run company that has delivered for it's shareholders, but there are times that the investment case in a company at any price should be questioned (mainly for investors entering or adding).

At the moment my opinion is that the current sentiment (and resulting momentum) has got in front of the fundamentals, and this not a bad or negative thing. It's just part of the wonderful mechanism we call the stock market.

Yes I couldn't agree more and it makes a pleasant and very refreshing change from the negative sentiment and momentum affecting SUM other companies.

[winner69]

Heartland continues to get rerated upwards by the market

A price book multiple of over 1.8 is unprecedented for Heartland ...and pretty high for banks / financial instos

Over 2 bucks next week.

[Jantar]

Like others, I feel that HBL is slightly overvalued at the moment, but not by enough to start selling. It is currently my third largest holding and I'm very happy with how it is doing.