NZ investors cannot access Australian franking credits. So in a general sense the 'gross yield' available to NZ investors holding an Australian share is equivalent to the 'net yield quoted in Australia. Over the last year both ANZ and Westpac have muddied this picture a little. Because they make good profits in New Zealand, they generate NZ imputation credits and at last those credits are being passed on to NZ investors. However the imputation credits are small compared to the Australian franking credits generated on the same profit. So as a 'rule of thumb' it is still more correct to compare the net yield from an Australian newspaper perspective on an Australian company with the gross yield quoted in NZ newspapers for a New Zealand company, from an NZ domiciled investor perspective.
IMO Hunter, in the SST article, should have talked about the Australian net yield verses the NZ gross yield, because as NZ taxpayers, that is what NZ residents should be interested in.
Are you not mixing up a rise in share price with a change in value play CJ?Quote:
Disc: hold and considering buying more. Now it is closer to NTA, the value play has reduced and it is becoming a growth stock with a good dividend.
If you recall PGW, it rose up into the mid 40c range, before crashing back to below 30c. The rise in PGW share price from 30c to 45c had no fundamental backing. It was a pure speculative bubble. The same could easily be happening to HNZ right now. We won't know until all the 30th June financial figures are published. And you may gather from this I am not talking about profit which is almost irrelevant to the ongoing financial viability of banks. If HNZ is in a speculative bubble the value play still exists, but the market may be mis-pricing the share, temporarily hiding the still existing value play from those in the market today.
The fact that HNZ is now trading closer to NTA (I would argue it is now trading above NTA when the as yet undisclosed next round of property write downs happen) means the market has already assumed that there will not be any more serious repercussions from property write downs. This may or may not be the case. The only real indicator will be published with the full accounts, when we can see the risk classification of all HNZ loans. But I do agree CJ that there is no value in assuming that all the loans are OK.
If the value 'on market' has disappeared, the point I agree with you on CJ, I don't think it follows that the company is therefore in growth mode. It could equally well bobble along with a shrinking loan book, as per last year, for many years into the future as the poor loans are exited. Looked at another way, if the loan book grows by 5% via new loans and an equal gross value of bad loans are exited in the same year, net 'growth' in HNZ is zero. With a bad loan book HNZ will have to run extra hard just to achieve minimal growth.
SNOOPY