$ 1.85 ....underperform ...
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Forbar have been negative on Heartland all the way from $1.30 in Nov 2020 and been wrong all that time.
Consensus target price is $2.23 https://www.marketscreener.com/quote...144/consensus/
Broker targets are complete bs and mainly based on companies they want to do raises for etc.
Banks did not sell off today after OCR statement and they are usually linked to the AUS market anyway.
HGH probably not so linked.
Any price targets are complete bs (if they are taken as a forecast) - brokers are in that regard neither better nor worse than anybody else defining a price target. Has something to do with Ben Grahams statement that NOBODY is able to predict future stock prices. This does include brokers.
"Higher rates higher NIM usually"
one wonders why FOO BAR is not in favour of this stock.
NIM up, one hopes so.
But WBC, ANZ are AUS price driven.
HGH with good long term borrowing at low rates should be in a very nice position right now especially for their reverse mortgage book :)
banks invariably get caught up in the negative sentiment when the economy looks like it will deteriorate. it's just one of those things...some investors start to fret 'what happens to the bank' if a recession (or the always on the horizon depression) occurs. I wouldn't be surprised at all if that continues to happen.
recession might happen and we start to get some increased incurred credit losses and increased provisions...but between now and then at least we have all that lazy regulatory capital (that has just been chilling out earning nothing) start to earn some actual interest income as rates rise. that'll be good, and probably be a few relief rallies after earnings announcements, before the drift sets back in again.
Happy holder - but not accumulating, yet.
HGH making people nervous ....Latest is Josh's latest video on YouTube ...in which he is saying negative things about HGH ...mainly for Harmoney hit of $ 7.5 mil as per him and HGH's direct correlation with economy ...Reverse mortgage is also a worry for him ...as house prices dropping and rates going up ..so he says negative for HGH ...He switched to bigger Aussy bank !!
Is HGH in trouble ?
https://www.youtube.com/watch?v=JEi-OGW10R4
Jeff still got his covid overlay to release ….that’ll offset the temporary decline in Harmoney share price wh h no doubt will have to be adjusted in Heartlands accounts.
Yes Jeff says Heartlands fortunes tied to economic growth but also to employment levels and that’s still OK
And many say higher interest rates equals higher NIM and apparently that’s good.
No restrictions on bank dividends now ….. that should help a bit
I like Josh’s videos but he has been wrong a bit lately haha. Gonna stick with HGH and OCA.
With interest rates charged increasing markedly in months ahead, the range shortens between
what some companies are paying out (excluding tax credits)
At some point with higher mortgage interest rates, the equation has moved sufficiently where
the best move is to give any mortgages & borrowings the shove first .. ahead of investing
Possibly an angle some haven't considered, but grossing up Interest costs to what pre-tax
income level is needed to cover these could be a wake up call V looking at some higher Div Yielders
coming ever the more closer if not been overtaken with RBNZ's recent / upcoming OCR footwork
Happy holder also.Have been a shareholder since first listed when my CBS shares were converted over.Picked up a few more when Kerr sold down and have a 50% participation in the DRP.
Along with my other mainstay share in CDI things seem to be going well .
The above are my NO 1 &2 STOCK with the 3 thru to 10 not so good.
Maybe us Heartlanders should feel proud that its taken something as the mighty Macquarie to seduce Jason to prefer them over Heartland .... think I'll stick to Heartland
From Direct Broking current ratios
Macquarie PE 14.47 / Div Yield 3.38% / 2.9 time NTA
Heartland PE 13.21 / Div Yield 6.2% / 1.7 time NTA
Maybe time for Beagle to update his peer group comparisons
HGH seems to have entered bear territory - 20% down from recent high
Did the same in 2018 and when markets went stupid with onset of Covid in 2020
Falling Global Dairy Trade prices since March don't seemed to have helped the Heartland share price ..... bit spooky GDT prices fell during 208 as well.
Jeff says Heartland fortunes dependent on GDP ..... many say we are heading into a recession .... is HGH share price a leading indicator .... or is more bad to come
Thanks Fiordland Moose! :t_up: Tried to post earlier but the website has been down...
Exited my recent small position in green on reading your post and watching Josh's video..
HGH seems to be in a bit of a bear hug now ... $2.05.. will wait for it to fall more...
Global milk price up 1.5% in latest auction. First rise for 3 months winner.
HGH is really looking weak these days ...Need some help from financial engineering in upcoming results and optimistic future outlook ...
So far Forbar winning over our as well as Jarden analysts ....
Yeah mate rip into it:t_up:
Guess HGH will have to do a huge write down on HMY. Then report 'normalised earnings'. Fair enough
Jeff says $93m to $96m which means it'll be about $95.4m
The calculation involving escrow, spreads, volatility, trading patterns etc etc will no doubt mean HMY stake will be written down a bit ..... but he has the covid overlay and a few other things in the bottom drawer so things will be OK
Anyway whatever HMY is written down buy will only mean huge gains in F23 and F24 eh
HGH hold 8518864 shares in HMY. Was valued at A$1.91 (by memory) so au$16.2m at last reported date.
HMY now au$0.895 x 8518864 shares = au$7.6m current value.
au$8.6m drop in valuation.
The covid overlay is $6.9m?
Wonder is Jeff wanted to keep some of that covid overlay for actual covid related loans in arrears. But now HMY is buggering that up
How big is the bottom draw? :ohmy:
I really think the issue with HMY is liquidity. It is far to easy to lower the price with the use of a little cash and it could be a very clever way to get some cheaper HGH.
Aussie banks hammered
https://www.afr.com/companies/financ...0220608-p5arzn
re: HMY - while it has been bid down on minuscule volumes I also struggle to see how HGH will be able to convince their auditor no further impairment is necessary. RAWZ has done the math on what that could look like at PBT impact. However, the theoretical dimiunition in value to HGH is exactly that, at ~$8.6m (or the change in book value form last reporting period to next expected reporting period), not 8.6m multiplied by some multiple. When i look at heartland, I read through the npat impact from the mark to market of non operating assets both on the way up, and on the way down. Better to value the operations of heartland first (by capitalising operating earnings by an appropriate multiple), then adding surplus assets second.
to put it in context: HGH's share in HMY has decreased from the last reporting period to now by ~AU$8.6m. Translated that to NZD, divide that by shares on issue, of 592.9m, that is approx a 1.6c per share impact. that's sweet FA.
re heartlands lending to harmoney, they do have a wholesale lending line. but that is is rapid run off. From what I understand, heartland were a institutional lender to harmoney's peer to peer business (feels weird to say an institution can be a peer to peer lender, but its what happened) but they aren't a warehouse provider. I understand they aren't writing any more loans and are just receiving things as they come in, so the operational impact is quite limited given harmoney have wound down p2p, and are only lending on a warehouse or securitized basis now
HGH getting dragged down by fears of what will happen next year if there is a recession, and sentiment yesterday when the RBA surprised Aussies (but no kiwis) that a 50bps hike was warranted. Personnally, I see more downside coming from a SP/TA perspective. Not selling any shares as a long term holder, but will watch and wait and perhaps buy a bunch more sometime in 2023. My two cents, but I believe banks will get caught up in sentiment around the economy driving the SP down, there will be a few relief rallies as actual reports come in that surprise on the upside and sooth investors as households still have strong balance sheets and banks do tend to earn more interest income from regulatory capital and lending when rates rise, offset later by a capitulation when impairments rise. and for me, personally,that is when I like financial stocks...right at the top of the interest rate cycle, when recession is imminent or just starting to happen, and the outlook is weakest. same with bonds.
My only concern is about Dividend paying capacity ...if they can continue that on present projected track then holding HGH thru this storm is not difficult . SP wont deteriorate too much as will have Yield support ...Mr B said at $ 1.94 it becomes Gross 10% yielder which is massive provided yield not under threat . So for me all analysis should be focused on its dividend paying ability thru this storm as that will cushion the SP fall . I am told that HGH has very efficient risk management systems and they are much better managed then bigger banks by being more efficient and safer
Having a NIM [net interest margin] nearly twice the major banks also helps.
you guys are overlooking the power of 'proactive provisioning'
Jeff master of that
As well as being a share holder I also bank with then, not my main everyday account, mainly for savings / term deposits etc.
Is just me does any others have difficulty navigating around the Heartlands website. I would like to change the the date on two of my 90 Day Notice accounts, but I buggered if I can find where or how to do this. Being a gold card holder for number I years, I find it very frustrating when thing like this should a simple task, not having to ask for assistance on a simple transaction. ( Sent them a message to this effect, still awaiting a response)
Heartland's FY21 Real ROE was 8.6% (Nominal reported 11.9% less inflation 3.3%)
This year assuming a nominal 12.0% ROE and say 7.0% inflation the F22 Real ROE is 5.0%
If one assumes that Real PE ratios are reflective of company performance the Nominal PE (adjusted for inflation) should be lower than the Real PE
This nominal / real stuff flows through to PE ratios as well - which implies the PE of 15 HGH was trading on late last year should now be less than 10 --- meaning a share price of $1.60 is possible
Theoretical stuff so no worries ..... but ask your self why do PE ratios tend to decline in times of high inflation.
1.60 would be a great buy!!!!
The phone app isn't bad, but the internet banking through their web site is clunky and not user friendly/intuitive.
I haven't heard of adjusting PEs for inflation either.
1/I have heard of adjusting PEs downward because rising interest rates reduce customer spending power.
2/ Rising interest rates also tend to elevate our currency, and that has a negative effect on our exporters that in turn might flow through to a lower PER.
3/ Rising wage demands with an uncertainty as to whether those extra costs can be recovered can have a negative effect on profits and PEs as well.
You could argue that 1,2 and 3 above are all caused by inflation. But I don't think that reducing PERs specifically because of inflation is the right thing to do. You need to look at the downstream effects of inflation to make a call on that. You might argue that from a bank point of view, for instance, that rising inflation leads to rising net interest margins. So PERs for banks should be raised.
SNOOPY
Quote Snoopy - You might argue that from a bank point of view, for instance, that rising inflation leads to rising net interest margins.
Inflation should lead to rising interest income .... but rising net interest margins?
inflation > higher OCR/swap rates > rising bank interest income & should leave to higher net interest margin dollars (IE a banks GP before credit losses). Perhaps not higher net interest margin as a % of book (coin toss on if those improve or compress, probably depends on individual banks strategy around marketshare and how elastic their deposit costs are
sorry snoop i didnt see your post as I was typing mine, beat me to it.
in addition to what you said, banks regulatory capital starts to earn some decent dollars to as rates rise. thats a lot of dough that was earning bugger all in 2020 & 2021 that starts to earn something now, bit of a silver lining
ha, top shelf theoretical stuff there winner. made my heard hurt as i tried to contemplate it
i resisted sharing this earlier in the year, but reading this and thinking through the 'doom loop' is another good way to give you a sore head
https://www.bloomberg.com/opinion/ar...tyle-doom-loop
mark to market of bonds in a rising environment errodes capital and puts divies at risk, so the theory goes.
at some point you just cant see the wood from the trees if you think too much about these things. Banks a pretty good proxy for the wider economy. On my investment horizon, I know the economy will be substantially larger in 10 and 20 years than now, and so will earnings and the SP, and stop worrying about it. Plus, HGH a pretty nifty bank, excellent NIM as percy points out, and ROE. Even better.
I am really just parroting stuff my broker told me a few months back Winner. Using actual figures and reality to shoot down my theory? What sort of a debating tactic is that?
The key to being a top class economist is being able to spin a good yarn. And the great thing about being an economist is that a few months down the track, no-one member of the public can remember what you said. So you just spin another good yarn, to remove any temptation for your client to look back at what you actually said 'back then''. Brokers often use the same tactic. The only problem there being that, if you listened to your brokers advice at the time and acted on that advice, then you do remember what your broker said 'at the time'! Poor brokers!
Fortunately I had already built up my HGH holding at a price level significantly below what the HGH price was when it came onto my brokers 'buy' list. So these HGH price fluctuations in recent months are not of much concern to me. To be fair I am not too worried about net interest margins either. If there is any pressure on interest margins Jeff will just record it as an 'extraordinary one off' and we will all be happy shareholders again. FY23 is many broker and economist forecasts away.
SNOOPY
[QUOTE=winner69;961209]It all depends on how despondent punters are alokdhir ..... mood is such that maybe 190 is on cards next week
When Jeff gives them a comforting cuddle and hugs (ie a +ve report) they might feel a bit happier[/QUOTE
So if one is looking at a income stock for long term hold then its attractively priced now ...forget how much cheaper it can become ...then one should start accumulation ...as almost 9.5% Gross yield is golden in the long term ....unless people anticipate 10% or higher term rates ahead !!!
Sigh - one of the top broker picks for 2022 is struggling to find a floor.
All due to its shareholding & lending to Harmoney or expectations that loan losses are going to be really bad with the economy going backwards?
Another bad day for HGH ...
Calling experts to say something comforting for holders please ...:D
Is buying now is trying to catch ...Falling Knife :p
good article in AFR about bank wipeout in aussie yesterday
https://www.afr.com/chanticleer/why-...0220609-p5asm2
Jarden analyst yesterday said HGH is getting dragged down because of Aussy banks poor outlook ...where as HGH's outlook is not necessarily equally " BAD "
That gives solace that it will come back and this maybe opportunity to add some at very good yield prices
Its just over 9% Gross ...even better then GNE at SP of $ 1.92
Share price tied to how aussie banks are going ... doesn't really matter how HGH are performing .... even the might jeff can't move the HGH share price against these odds
Wait until the dust settles with those I reckon best bet
Maybe even get HGH for about 150 (or less)
The reverse mortgage angle was a major factor when I initially invested in HGH, rising house prices/locked in equity/low interest rates. But the falling house prices and rising interest rates make the reverse mortgage business less attractive, time to sit on the sidelines for a while.
Some of the reasons people take out a reverse mortgage remain.
Pay for a medical procedure.
Home improvements.
World trip.
Help out members of the family.
Buy a new car [electric].
For some perspective, the house price index was:
2615 !/5/2022
2366 1/5/2021
1913 1/5/2020
1771 1/5/2019
Heartland expanded its reverse mortgage business in September 2020, so I guess the house price index could go down to about 1965 (a drop of about 20% from today) and there could still be good business to be had.
https://www.qv.co.nz/price-index/
I agree. Not too many problems I see for HGH REL in the longterm. I am already over invested at an average price of around $1.30. I find at this price a great longterm entry point for some. DYOR and not business advice.
It might drop some more next week but I will calmly hold as I am a longterm investor in this share. Great management with skin in the game.
Agreed. I don’t think a bit of pullback in house prices will negatively affect the REL market. The customers are elderly with huge equity and as percy points out above, seek RELs for various valid reasons. The increasing cost of living could well provide one more reason customers may want to draw down a bit of debt to help themselves, children or grandchildren. HGH’s REL business is strong and I have no concerns about it.
We need to also remember it is only one of many segments HGH is in.
A very happy holder and just added a few more
I am torn between HGH and GNE ...both have excellent yields at the moment ...GNE yield seems more secure to me and less dependent on economy ...which surely will be collateral damage in big Inflation fight needed .
My purpose is mainly long term income with moderate capital appreciation as bonus ...will be switching from IFT ...
HGH may have more growth prospects but my highest priority at the moment is security of yield and its long term dependability ....
Any thoughts will be most welcome and appreciated
I see both HGH and GNE as great companies and have large positions in both. Currently feel that HGH will go lower as inflation and recession fears loom. GNE getting close to bottom (my opinion) with potential large upside and reasonably secure dividend stream for several years.
Go GNE 18 months then HGH 4 years. Check back after that
I am in favour of stacking up one investment against another when making an investment decision. It prevents tunnel vision investment that can lead to investment disaster. However, because no-one can predict the future with all its twists and turns, it does make sense to have a diversified portfolio across different industries that are not reliant on one theme. For this reason, and knowing you have done your due diligence on both HGH and GNE, if you are happy with both, then I would invest in both. There is no need to try and pick 'the winner' here.
SNOOPY
A bit on Aussie banks and this weeks panic selling…..which HGH share price followed down
https://www.morningstar.com.au/stock...rs-note/224116
Here’s Zaia again on why puncturing an overly optimistic outlook is no issue for long term investors:
“We never assumed there would be a rosy picture forever anyway. The market is taking in that adjustment or change but is probably getting carried away by focusing on those downside risks.”
Thanks mates for your very well thought out options ...Yes I agree with Snoopy that equal mix of both GNE and HGH will cover larger spectrum ...GNE surely looking better at the moment as mentioned by ShareGuy ...but longer term both will even out ...which is my goal ...long term sustainable income .
Newbie ...I am trying to switch from IFT as looking to prefer income over growth ...otherwise nothing wrong with IFT ...I agree with u
Rawz ...best solution ...GNE for 18 months to ride out this down phase with high yield then get all eggs in HGH basket to enjoy the economy boom time
Banks don't do well in a recession. US bank index down more than 20% so far this year https://www.cnbc.com/quotes/.DJUSBK which puts HGH's decline pretty much in line with the average US bank, some of whom its worth noting are already on high single digit metrics.
GNE my #1 market position, and the most defensive high yield stock I know of on the NZX.
I recently switched out some of HGH for GNE and all of my OCA for GNE and ARG.
Based on many, many years of observations HGH trade in a PE range of 9 to 18. 9 is usually a very good time to back the truck and trailer up and 18 a very good time to sell.
https://www.marketscreener.com/quote...44/financials/
Average analyst has it on a FY23 PE of 11.2 @ $1.92. 20% fall from here is a real chance in a very serious recession.
PE of 9 would put it in the low $1.50's. If it gets that low that's maybe time to back the truck up...unless we're heading into a global depression ? :scared:
Q/ When do you call a finance company in drag a bank?
A/ When its name is Heartland.
I don't buy these 'peer group' arguments. We should all be grateful that Heartland is a bank in marketing spiel only. We all know Heartland bank accounts are actually Westpac bank accounts with a Heartland marketing sticker on the top of the page. Even that is pushing things. The parent company we can invest in, is called 'Heartland Group Holdings'. But that company doesn't have a banking licence. Only its subsidiary does, and that is for 'marketing reasons'.
SNOOPY
I think most think of Heartland being a finance company .... and not a bank
Even Jeff calls it a fintech
But its uncanny how the rises and the falls in the HGH share price seems to follow aussie banks .... and how they are valued much in line with those banks and not in line with finance / fintech companies
Crickey - I see HGH closed 20% down at A$1.54 on Friday
Thats about $1.70 odd in NZD
Carnage tomorrow morning?
Not sure what you're looking at winner:
$1.715
ASX https://www2.asx.com.au/markets/company/hgh $1.715 -$0.224 (-11.597%)
Australia......................................... ...............................................New Zealand
Last price traded 860 shares at $1.54............................................. .....50,031 at $1.92
VWAP $1.6974........................................... .......................................$1.9342
Total volume traded for the day 2872 shares for total value $4,875..........Volume 652,642 ..Value $1,262,312
No point in getting too excited about the small volume or price in Aussie.
Snoopy me ol Beagle mate have you had a good sniff through their financials' lately and looked at the size of their reverse home loan lending book and the speed its growing ? The only part of their book that really worries me is their exposure to "Harmoney" which is lending based on nothing more than one's credit rating and is quite possibly going to be anything but harmonious in a deep recession. That said, yeah, this is a real chance of going down to the bottom of its metrics trading range of 9-18 and a resulting share price of about $1.50-$1.60 in a deep recession just like most other banks have considerable possible downside risk. I don't think Josh looking to hide in Macquarie's will do him any good, (bright young likeable guy though).
You got worked up when you thought HGH had an over large exposure to dairying..................................All was well.
Also when they offered no deposit loans on new Holden cars.............................................. ...................All was well.
Snoopy got all worked up on legacy property loans............................................. ..................................All was well.
Percy does not get worked up................................................ .................................................. ...........All is well.
History proves they badly underperformed the market during the dairy crisis in a very serious way.
Financials' have a long and bad track record of underperforming the market in a recession.
sentiment driven by fear & down ramping impacted hgh far more than heartlands underlying financial performance during the dairy crisis. heartland performed admirably through the dairy price downturn, with its lending concentration far smaller & secured than what was portrayed.
agree that sentiment gets impacted, it is what it is, and that will matter far more to momentum traders, than to investors.
re harmoney, not sure if you noticed but heartlands exposure to them is shrinking massively. HGH provided lines to harmoney's off balance sheet p2p business, which is being wound down, and heartland's lending to them is in run off, shrinking rapidly. if recent rates of run off continue, possible hgh's receiveables could be at or close to nil within 12-18 months, and at 31 december 2021 represented a very small fraction of hgh's book.
You can't be serious that comments on here materially affected the share price. The market was very well aware HGH had a very serious level of exposure to the embattled dairy sector at the time and was reacting rationally to a very real risk of huge financial losses. Heartland took the risk to carry farmers through the crisis and in my view they were lucky to get away with it. My analysis shows Heartland badly underperformed the NZX50 during the dairy crisis...I suppose a lot depends upon what start and end dates you use to define this ill defined crisis. Fortunately these days the percentage of exposure to this sector is much lower relative to their expanding balance sheet.
Agree with your other points and I am very pleased to see their level of exposure to unsecured lending being dialed right back.
For the purposes of my own analysis I have already written off the value of their stake in Harmoney.