The increasing fully imputated dividend should also be taken into account espically when comparing HNZ with Aussie banks.
Say 7 cents pa ? Nett yield at 95cents 7.36% Tasty.!!!
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Yes Percy, thanks for reminding us about the value of the N.Z. imputation credits v our inability to claim franking credits from Australian banks a point that shouldn't be overlooked by any astute investor.
Attachment 6173
Roger, As much as I would like to see 20% gain this year, I don't think it is going to happen unless we get some corporate action such as a buyback or an acquisition. For the last 18 months, the ceiling on the share price has been the broker targets (see image). I'd expect this to stay the same and I wouldn't expect broker targets to change much as a result of this result.
Very satisfying to make big gains out of George Kerr.
All so predictable?
http://www.sharetrader.co.nz/showthr...8HNZ%29/page35
:D :D :D
Well done Balance, your balanced and objective approach has served you well :)
Hope heartland advertising increases advertising in this sector
http://www.nzherald.co.nz/personal-f...ectid=11313859
http://s3.documentcloud.org/document...semortgage.pdf
Jeff on the radio. Talking about aquisitions
http://podcast.radionz.co.nz/busines...y_rise-048.mp3
"cautious, disciplined and in no hurry" . That's what I like to hear. I hope they find a niche in the household or rural sectors where they can put our money to good use rather than a share buyback.
Very pleased with the result. I think we are now starting to really see the benefit of lower cost of funds after bank registration reflected in increasing NOI.
Non core property reduction continues to be reduced slightly ahead of schedule and a reduction in rural loans where they are in direct competition with the big banks. HNZ will instead continue to look for higher yielding niche lending in this and other sectors.
Motor vehicle loan book has a steady and healthy growth.
They have also managed to reverse the HER loan book decline in NZ and started growing it in June and July. The development of this part of the business will be very interesting to watch both in NZ and Australia in the next year or two.
Well done HNZ, steady as she goes !
Would you guys be in for HNZ Bonds?
A Bond issue before the next acquisition announced?
Accounts for the group as a whole and the banking group look OK to me.
Should survive another year in reasonable circumstances. :)
Quite a dramatic shift with the reduction in the non-core property and the Sentinel acquisitions.
No plans to buy any more or sell any at the moment except for the dividend recycling.
Best Wishes
Paper Tiger
Hi Percy
I agree with you regarding the net yield. Looking at a gross yield it looks even tastier; ie. the final divi of 3.5c carries imputation credit of 1.361c which totals a gross divi of 4.861c. Should the interim be the same, then the annual gross divi would be 9.722c and @ a share price of $1.00 this would be a gross yield of 9.722%. At the current share price of 95c the gross yield would be 10.23368%. It certainly beats bank deposit rates which are always quoted @ a gross return rate. :)
Cheers
The underlying debt of the company (borrowings removed) according to the full year statement of financial position is: $39.375m + $0.431m = $39.806m
To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the problem 'Investment Properties' and the unspecified 'Investments' from that total:
$3,016.888m - ($2,607.393m +$24.888m + $238.859m) = $145.748m
We are then asked to remove the intangible assets from the equation as well:
$145.798m - $47.421m = $98.327m
Now we have the information needed to calculate the underlying company debt net of all their lending activities:
$39.806m/$98.327m= 40.5% < 90%
Result: PASS TEST
SNOOPY
Updating for the full year result FY2014:
The EBIT figure is not in the financial statements. So I will use 'interest income' as an indicator for EBIT, once I have taken out the selling and administration costs
EBIT (high estimate) = $210.297m - $64.739m= $145.558m
Interest expense is listed as $101.221m.
So (EBIT)/(Interest Expense)= ($145.558)/($101.221)= 1.44 > 1.20
Result: PASS TEST, a significant improvement from the FY2013 position, which confirms the improvement reported during HY2014.
SNOOPY
Updating this number for the full year FY2014
Equity Ratio = (Total Equity)/(Total Assets)
Using numbers from the Heartland FY2014
= $452.622m/ $3016.888m = 15.0%
As at EOFY2014, there is a significant jump in the capital base of Heartland compared to last year. $20m of the increase has come from a capital raising on 18th February 2014 (note 30). New Zealand and Australian Home Equity Release mortgage businesses were purchased from Seniors Money International Limited ("SMI"). This acquisition was part paid for by issuing $37.8m worth of Heartland shares on 1st April 2014. That means total new capital put into Heartland during FY2014 was a hefty $57.8m.
Take the $57.8m worth of new capital away from the end of year equity position and I get $394.82m of residual historical equity. This means that of the new equity in Heartland during the year only
$394.82 - $370.543 = $24.290m
or 30% has come from re-organizing the FY2013 model Heartland business.
The customer loan base has increased in proportion, meaning the whole business has upsized.
SNOOPY
Once again there is no mention of Tier 1 or Tier 2 in the Heartland FY2014 report.
The 'best case' scenario is that all loans are Tier 1. $2,564.266m of loans are outstanding. 20% of that figure is:
0.2 x $2,564.266m = $512.9m
Heartland has total equity of $452.6m which is still below the 20% of loan target no matter what the tier classification of the loans.
Result: FAIL TEST
PS Other posters have protested at my 20% of equity to back up the loan measuring stick in the past. 20% is not too far away from the 17% which by implication is judged acceptable by management under the watchful eye of Reserve Bank chairman Graeme Wheeler. The Reserve Bank further qualifies their views that a company of Heartlands credit rating still has a 1 in 30 chance of going broke in any year. I prefer to think in business cycles and 30 years will contain around five of those. So you could restate the Reserve Bank's view as saying that HNZ has a one in five chance of going broke at the bottom of the business cycle.
For me that investment risk is too high. So I am sticking to my 20% equity requirement, even if the Reserve Bank will settle for less.
SNOOPY