Trading underway ….share price up
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Trading underway ….share price up
stopped trading
Well dividend still there.
The NZX should have put a halt on until 10 minutes after announcement.
Heartland announces 1H2024 financial results
27/2/2024, 10:04 am HALFYR
Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) has announced its financial results for the six-month period ended 31 December 2023 (1H2024).
- Net profit after tax (NPAT) of $37.6 million. Underlying NPAT of $52.7 million. NPAT decreased by $11.1 million (22.7%) and, on an underlying basis, decreased by $2.0 million (3.6%) compared with the six-month period ended 31 December 2022 (1H2023).
- One-off or non-cash technical items had a $15.1 million net impact on NPAT.
- Gross finance receivables (Receivables) up 4.2% .
- Continued strong growth in New Zealand Reverse Mortgages (up 18.7%)5 and Australian Reverse Mortgages (up 20.0%)5.
- Solid growth in Asset Finance (up 8.9%)5 and Motor Finance (up 6.4%)5.
- Underlying impairment expense ratio decreased by 6 basis points (bps) to 0.23% compared with 1H2023.
- Significant progress towards Heartland’s ambitions to become a bank in Australia through the acquisition of Challenger Bank Limited (Challenger Bank).
- Completion of Heartland Bank Limited’s (Heartland Bank) core banking system upgrade in 1H2024 enabling accelerated digitalisation and automation.
In December 2023, Heartland announced revised NPAT guidance for the financial year ending 30 June 2024 (FY2024) due to:
- the expected A$3.5 million one-off FY2024 impact on underlying NPAT arising from the anticipated acquisition of Challenger Bank, positioning Heartland for its next stage of growth
- short-term operational performance challenges - a slower than expected start to FY2024 for Motor Finance and Australian Livestock Finance, and higher cost of funds
- Heartland Bank’s response to issues affecting a subset of legacy lending.
In what has been a mixed environment in which to operate, Heartland’s 1H2024 result saw continued growth in most of its core lending portfolios , with good pipelines for further growth and to expand market share.
The acquisition of Challenger Bank is nearing completion with the regulatory approval process now in the final stages. When FY2024 guidance was provided, it excluded any costs related to the acquisition of Challenger Bank. As the acquisition nears completion, it was appropriate that guidance was updated to reflect the impact of Challenger Bank becoming part of Heartland. The impact to underlying NPAT for FY2024 is expected to be a net loss of A$3.5 million, reflecting underlying NPAT of Challenger Bank. This is expected to transition quickly to a profit-making position as material deposit raising occurs.
In preparation for completion, Challenger Bank is actively raising deposits. Recent success achieved by Challenger Bank in the Australian deposit market has exceeded Heartland’s expectations. This will enable Heartland to optimise the advantage of a lower cost of funds post-acquisition completion. Heartland is confident of acquisition completion in the second half of FY2024 (2H2024).
The arrears experienced in a subset of longer dated Motor Finance loans are a result of operational issues in Heartland Bank’s Collections & Recoveries area and do not reflect any underlying issues with the credit quality of the book. This is primarily a resourcing issue caused by illness, employee turnover due to overseas travel, and a focus on Heartland Bank’s core banking system upgrade (which is now complete). This is being addressed through a specialised recruitment strategy and automation. Underlying impairments are otherwise performing as expected given the challenging economic conditions. Heartland’s asset quality continues to shift towards loans with lower risk exposures.
Overall performance continues to demonstrate the resilience of Heartland’s core lending portfolios and ‘best or only’ strategy. In particular, Australian Reverse Mortgages’ market share increased to 41% as at 30 September 2023 and Motor Finance experienced growth of 6.4%5 in a market where total new and used car sales in New Zealand were down by 12.2% . In the long-term Heartland expects to continue its growth story. Organic growth is expected to improve in line with reduced inflation. Similarly, cost of funds and net interest margin (NIM) are expected to improve as interest rates ease.
One of Heartland’s focuses in 1H2024 has been on continuing to position for future growth. Heartland has growth ambitions that will facilitate cost efficiency and return on equity (ROE) expansion. Specifically, Heartland’s ambition is to achieve an underlying NPAT of $200 million and an underlying cost-to-income (CTI) ratio of less than 35% by the financial year ending 30 June 2028 (FY2028).
Heartland has various strategic initiatives underway to support the realisation of its FY2028 ambitions, including:
- expansion in Australia facilitated by the acquisition of Challenger Bank providing access to depositor funding and larger addressable markets
- increased digitalisation and automation to achieve frictionless service at a low cost
- continued growth across core lending portfolios.
For the full announcement, see the attachments to this release:
‒ Heartland 1H2024 Results Announcement
‒ Heartland 1H2024 Investor Presentation
‒ Heartland NZX Results Announcement Template
‒ Heartland Distribution Notice
‒ Heartland Interim Financial Statements
‒ Heartland Bank Disclosure Statement
– ENDS –
The persons who authorised this announcement:
Jeff Greenslade, Chief Executive Officer
Andrew Dixson, Chief Financial Officer
For further information and media enquiries, please contact:
Nicola Foley, Group Head of Communications
+64 27 345 6809
nicola.foley@heartland.co.nz
No raise then?
nim's crushed as expected , see they are being removed from index small cap on 15 march
Bit of an anti-climax
Damn, guess I'll remove my bids at 60c
As far as I can see the report is not as bad as I had thought. Above $1.30 by the end of the week I feel
Result all good. FY28 numbers looks good. Long term holders can sit back and relax
results will take a while to unpick. But I've got a bug so going back to bed.
that was bizarre
Heartland is increasingly a volatile stock. Well it always has been - over reacting to both the good and the bad but that theme seems more pronounced. I reckon its moving annual beta has increased - though that isn't exactly high on the list of things to look at
What's the div?
I see they have finally ripped the bandage off the HMY value. Booked at 49 cents per share.
Ironically now HMY will probably be a tailwind for HGH with big revaluation gain over the coming years
I remember posting here that the heartland extend product was not good. It extended loans on depreciating assets potentially over the assets useful life.
In my mind it was kicking the can down the road and now i guess its time to address these 'longer dated loans'
Been a holder since cbs days and topped up when i think it was Kerr selling out.
Still a happy holder.
I particularly like the HGH ambition of $200m NPAT for 2028 :)
Today is the day that yesterday we worried about,and all is well...lol.
I am impressed that they are progressing well with their sound growth strategy.
Pleased to see Challenger Bank has already started accepting retail deposits.
Ok result, solid outlook
- "Recent success of Challenger Bank in the AU deposit market has exceeded Heartland’s expectations"
- "NIM compression expected to be temporary"
- CTI "expected to gradually improve"
Disc - small recent entrant holder
Need Big money to make Big money like that
In just 4 years too .. where will the economy & interest rates go in that time ?
Where's it coming from in high interest volatile times - withholding dividends or robbing another bank ? ;)
Or hand outstretched for further Cap Raises on the back of outgoing dividends having the lid put on them ?
We all know what a trail of Cap Raises regularly flung out does to the SP -- HGH in past have demonstrated
that very very well .. Did someone say but for all the frequent Cap Raises the SP should be north of $5 ? ;)
A challenge for Muse here rawz
Plot rolling 12 months Reported and Underlying NPAT and it looks like below ……with Underlying $20m odd more than Reported. Wonder what is Muse?
The Reported line looking a bit sad eh Rawz …. Methinks the market thinks the Underlying stuff is rubbish and they should be concentrating /valuing on the real NPAT….spooky that H1 NPAT was down 22% on pcp which is about what share price fallen over the last few months
Why even give guidance for 2028? Who does that. It’s so far away. What’s it look like in the 3 years before that.
Also, what does EPS look like in 2028. How many shares to be issued to get Aussie humming. And how many shares to be issued to meet the capital requirements? I recall seeing a slide that said capital required needed to increase 400bp from todays level
To me it seems like HGH is worth a bet now ...most likely we have bottomed already ...if not then soon .
If they can pull this off then SP can double from here by 2028 ...they looking for time to do the job ...thats why talking about 2028 eps ....by when all efforts would start adding to eps .
Do you see a $200m generating $5 plus SP bohemith in 4 or 5 years .. in this one ?
Let's face it .. what sort of Capital or Borrowing inflow would be needed to generate that sort of NPAT ?
Likely in the current high Interest times ? or maybe not ? ;)
And to be worth $5 apiece, then it needs to behave like a $5 stock and generate returns or value usually attributable of a $5 stock .. that doesn't seem to be something similar to a share where the 5.5c Div has been slashed down to 4.0c and the recent share price trajectory resembles a nearby skislope heading down into the valley .. strangely enough the transition upwards between the two is not something that can be easily talked up and comes about through results and performance ;)
What is a Cap Raise going to do to SP ? .. perhaps more of the past pattern which has it now at circa $1.20 ?
With a drop out of the index - what will excitement levels for taking up a fresh avalanche of HGH shares @ $1.00 or $1.10 look like ? :) Many takers .. or will they be mostly watching for signs of rapid elevation towards the $200m with no tricky downgrades first ? :)
Perhaps it might take '85c to clear the shelves' to get all the newly minted scrip into new homes ;)
I mean heck if $200m NPAT was that easily attainable like a walk in a Christchurch Park, then why stop there ? Perhaps HGH should have a play at taking over one of the big Aussie major banks .. and stop stuffing around with smaller Aussie challenges ;)
The target Aussie bank might even come to the party with a multi-billion high interest loan to help get the job of taking it out over & done with in a hurry too :)
The new shares to be issued for such an adventurous play may well have to be cleared out at 50c, but then 5 years down the track just may be worth who knows .. perhaps 25 ragged depreciated inflation torn Kiwi pesos apiece ;)
https://www.nzx.com/announcements/426935
Quote:
Net profit after tax (NPAT) of $37.6 million. Underlying NPAT of $52.7 million.
NPAT decreased by $11.1 million (22.7%) and, on an underlying basis, decreased by $2.0 million (3.6%) compared with the six-month period ended 31 December 2022 (1H2023).
- One-off or non-cash technical items had a $15.1 million net impact on NPAT.
So if we eliminate the $15.1m One-offs, write-offs/downs etc - then would probably see $4.0 mil ahead
In times of rapidly increasing interest rates possibly would have expected considerably better as shown by the big Aussie banks. Like any bank, HGH probably know well how sting fairly hard at market interest rates on lending. Deposits coming in will all be eyed on the lending margins they can generate.
I wouldn't have expected to have seen this published in an NZX Announcement:
Quote:
The arrears experienced in a subset of longer dated Motor Finance loans are a result of operational issues in Heartland Bank’s Collections & Recoveries area and do not reflect any underlying issues with the credit quality of the book. This is primarily a resourcing issue caused by illness, employee turnover due to overseas travel, and a focus on Heartland Bank’s core banking system upgrade (which is now complete). This is being addressed through a specialised recruitment strategy and automation. Underlying impairments are otherwise performing as expected given the challenging economic conditions. Heartland’s asset quality continues to shift towards loans with lower risk exposures.
NPAT circa $50m now - 4 years out $200m on the ambitious wishlist
What Borrowing & Capital base will it take to multiply what is HGH now, by a mere 4 times to see $200m in 2028 ?
Or just wishful ambitious dreaming ? ;)
Is there a large trove of gold hidden in Oz under the vault of Challenger Bank no-one else was aware of ? ;)
good on them for having aspirations of 200m , but it be hard going.
hard slog at the moment for second tier finance institutions to get deposits same in aus so if challenger getting them they are doing something well ... what ?
if they do another cap raise dilution would mean even less dividends in the future without a increase in profits
days of being a dividend grower over ? for the immediate future one must wonder
The operating cash flow before changes in operating assets and liabilities at -70.6m is concerning.
Okay correct
What is going to take in Capital Structuring & Borrowings to double this outfit's wishful outlook by 2028 to get to $200m ?
Is the final dividend going to be trimmed as well ?
what will that do to the SP ?
That sort of thing going forwards doesn't bide for happy campers wanting to throw more in the pot
or for that matter structuring & borrowings within certain ratios to meet ambitious wishes ..
After all the times are tighting, cost of capital is up there, it might come back a bit, but
the economy seems to be recessing. Aussie may or may not be the same too.
And everyone has seen where the SP has gone already .. a crimped dividend & wishful thinking aren't likely to assist.
Outfits like HGH need lots and lots of available Capital whether sourced from stakeholders, Retained earnings or Borrowed and more so when in expansion mode. The high cost of borrowing currently will restrain things IMO
Hi all. In my latest column published on my Substack, Just the Business, takes a look at Heartland's likely fortunes in Australia once it receives its Australian banking licence. The headline is: Can Heartland succeed in Oz where so many NZ companies have failed?
And you can find it here:
https://justthebusinessjennyruth.sub...ed-in-oz-where
Yep. That's one of the things the column looks at. Also their StockCo acquisition in Australia
Brokers recent research.
Craigs.Overweight...Target Price [12mths].$1.76
Forbar.Neutral......Target Price..........$1.37
Jarden.Overweight...Target Price [12mths].$1.92
Current share price $1.22
wow hgh down 16% in aus ... insider info ?
should be up considerably more for an outfit with a grand wishlist of improving their bottomline fortunes between now & 2028 by double .. or is the jury still out pondering how many Cap Raises to get there and if the Divs will be wrung out to achieve a respectable balance of bells & whistles in volatile turbulent times ? ;)
No announcement yet re the conclusion of the regulatory approval process re Challenger Bank. Surely must be imminent now?
Not sure if the answer will be positive or negative for the share price but the current limbo circumstance is distracting for everyone and sucking up resources.
Beagle called $1.17 cum dividend the low. He always had a good nose for HGH feeds. Nose looks to be right so far
That Beagle good at sniffing bottoms alright atpit, how he deciphers that language ive no idea but I'm not a doggie lover.Thanks for sharing Beagle.(thumbs up).
Close today at $1.31 indicates some legs here again?
And still no news re Challenger.
These guys set up a place to get independent advice re reverse mortgages
https://www.equityrelease.co.nz/
I've just brought in today. Great to be part of the HGH ride. And some familiar faces here...
rebalance day - HGH will exit the FTSE small cap index today at mkt close
20 M shares in the sell 10 mins out from close
I understand what u trying to say ...but I wud have not bought Shares at 11 pm ...Cud I ? ...but still thanks for your faith in your dog ....u r a true believer ...lol
PS : Also for your benefit I will like to remind u that Mr B was a whole hearted participant in last CR around $ 1.80 and was encouraging followers like u to do the same in his various posts about merits of HGH while I was posting totally opposite to that and even sold out all my big position as I knew better SP will come ....surely was not in sync at that time mate !!!
O my - The big boys have come out to play!
And look at the volume for CEN, MCY, ARG, SPK and others!
Heartland partners with TSLA , not as good as 1% that most of the banks do on an EV.
https://www.informedinvestor.co.nz/h...=6589072110861
hammer time . $1 soon :t_up:
Glad I don't take the DRP
Dairy prices down again … 3 auctions in a row. Whole Milk Powder down 4% overnight
new lows soon
probably on this i guess from there annual report
We expect economic conditions to remain challenging throughout FY2024, with ongoing pressure on margins and impairments
$1.14 wow. That increase to $1.30 was just a big fat dead cat bounce.
Surely wont go under $1.10. surely not?
non bank lenders under extreme margin pressure by big banks.
Buying at $1 or $1.10 or $1.20 no biggie when the SP be over $2 in a couple of years and you collect a decent divvy along the way.
Who can pick the bottom? Buying HGH in a downtrend is different to buying OCA or KMD (as an example) in a downtrend imo.
Where do you get your margin under extreme pressure by big banks stuff from? Do you mean like now or just in the past? I reckon right now what they are writing will be back to normal nim and this will flush through in the coming years with nim increasing nicely
well im saying margin isnt under pressure now.. yes in the past but not going forward.
you saying its getting crushed by big banks? where do you get this from? just making it up or what? im honestly interested to see the data
as the swaps drift lower nim will increase.
I can’t see that.
This is from H1
In the long-term Heartland expects to continue its growth story. Organic growth is expected to improve in line with reduced inflation. Similarly, cost of funds and net interest margin (NIM) are expected to improve as interest rates ease.
JP Morgan is up 95 per cent over the last 5 years where as HGH is down 24 per cent. Weird - I would have thought that all banks would move in lockstep. Well, looks like they don't.
The good news is that most NZers would own more of JPM than HGH - JPM is 1.26 per cent of the S&P500, which would form the core of most KiwiSaver and high growth funds. HGH is now a tiny part of the NZX50 and of course the NZX50 will be a much smaller proportion of the basic growth KiwiSaver fund (one hopes). I just checked Kernel's High Growth fund - JPM is 0.91 per cent. I couldn't see HGH - I stopped looking after I got to 0.20 percent of the fund. Might be there somewhere.
So we can all relax. The underperformance of a single company is not going to have a significant impact on a diversified vanilla retirement fund.
Somehow it is better to spend your hard earned money rather than put in the share market.
2019..NPAT $74m....SP was around $1.50-1.60
Now NPAT was almost $96m
...n SP is now $1.13....
What a sheet market to be honest!!!
Anyone can elaborate...why so many ruthless selling???
You have to remember that there are more shares on issue today too.
One year term deposit rate was about 3.3% in 2019. Five years later it is 6.1%.
HGH paid 10cpa/share dividend 5 years ago; today it is the same I think. We are lucky perhaps that the SP has not fallen by more…
So as interest rates fall, SP back up?
I am not selling right now, I still own some, but sold most of mine around $1.70 . I am looking at where my Task cash will be redistributed, but some part of me feels that longterm there is no growth in this share and I am not 100% sure if this is the right fit for my portfolio. It is a great dividend stock, but no growth in SP
Big hgh div fan. Holding nothing now. Took part in the last raise and got full allocation but changed my mind shortly after. Post this last dividend I had remorse for not getting a few back. I don't think its 4 years away its just another hgh confidence hurdle. Been there before today haven't we. Can go either way. Im waiting for bull to call it a buy. To many like myself have enjoyed hgh in the past and may have rose tinted specks.
I'm well under water here, and got another 673 via the DRP this week to add to the problem.
Regulator very slow in dealing with the Challenger proposal and that needs to be out of the way with all the consequences transparent, and preferably done and dusted, before this stock is going anywhere. Not much buy interest now at all.