Frustrated? Like I was when DIL hit 13 cents?
You still need to learn to read properly - especially company announcements.
Printable View
You are starting to be like master911 - cannot read.
Win a few, lose a few - did the sums for you before of how you need to pick 5 to 10 baggers so will not insult others by repeating the exercise.
Happy to do it just for you though - just send me your email address, ok? I am very good like that.
five to ten baggers ????
They have to be in the penny dreadful section..
They have way more duds than winners..
Senior management and directors in most if not all NZX listed company's, have a period of restricted trade. So whilst management think, believe and want to buy cheap shares as a sign of confidence, they can't during this period, otherwise it would be borderline inside trading. I dare say this is the case with HNZ, given their results were announced not too long ago.
WTF ... shareorice close to having a 4 in front of it .. whats up as whatsup kept asking
Soemthign not right eh
Last week a friend went to a Heartland depositers' briefing.They are to conduct a number of these around the country.My friend was most impressed with the presentation.Thought Greenslade was on top of the game.Had a lot of senior management there.A very positive meeting.
Greenslade comes across as a confident operator but HNZ is going to be a hard slog changing public perception of Finance Companies in NZ .
On a slightly different tack I wonder if article reporting PGC may be ditching HNZ holdings in Stuff over weekend has anything to do with PGC losing 3 cents today.
Interesting they put these cucumber sandwich meetings on for depositors - what about the poor suffering shareholders?Quote:
Heartland depositers' briefing
only a 'review' at this stage, but you are right - not a good look - shareholders will be feeling completely abandoned by now.....having lobbed the finance company off by way of an uncontested in-specie, and had the underwrite backfire badly on us, lets bail ........Quote:
PGC may be ditching HNZ holdings
May be worth a flutter at $0.20
The alarm bells started ringing when the CFO made the comment that intending to become a bank was 'a great marketing tool' .... he left the impression that this was the main reason ... and until it happened (or not) they could still sort of use the the word bank quite a lot
As long as the depositors get the cucumber sandwiches and everybody thinks Greenslade is an OK switched on bloke all will be OK methinks.
I am not terribly expert in analysing financial stocks and have made more than my share of investing mistakes. I also have a heap of respect for Xerof, Winner and Snoopy, who are all ringing the alarm bell on HNZ. So, since I recently acquired a few HNZ, am hoping someone can further outline the concerns in relation to the accounts.
My prior concerns were regarding liquidity, particularly in regard to the expiry of the govt guarantee. However, the accounts suggest that they have managed that quite well and the expiry in itself is unlikely to pose a threat at this point. Nor is there any sign of Marac raising rates to attract funds (although to some extent, they will have benefited from widening spread over bank deposits through a fall in bank rates).
The market is still looking more cautious though, with the MAR010 trading at 8.0% - considerably higher than the Heartland/Marac term deposit rate for similar maturities - but the yield on MAR010's is falling. This seems to suggest an "alert but not anxious" type approach from the market and is in line with the sort of rates being seen in GPG, IFT and NPX fixed interest securities.
So presumably, amongst the ST experts, credit risk is the main concern? How would you go about judging that versus, say, Kiwibank?
For instance, looking at equity relative to total lending, Kiwibank has $600m net equity and about $11,500m of non-bank lending (which doesn't seem to leave a lot of room for bad debts). Heartland-PWF combination looks to have about $400m of net equity for about $2,100m of lending. So I would take that to seem that HNZ could absorb a substantially greater % of bad debts, and could write off perhaps as much as $300m (about their entire property book) before they'd be down to Kiwibank-type equity as % of funding.
In impairments, Kiwibank had allowance for about $87m of individual and collective impairment at FY2011, while HNZ+PWF had about $50m. Kiwibank had a further $200m of overdue and impaired for which an impairment had not been provisioned. HNZ+PWF had about $212m, of which $74m came from PWF - and a good $53m was impaired but for which impairment had not been provisioned. i.e. overall, HNZ+PWF looks a little worse, but comes close to Kiwibank in terms of % of equity.
Not intending to defend HNZ, but am more just interested in specific comments as to where the risk in HNZ is coming from beyond the systemic risk affecting all lenders in the current environment?
(Also, I note re PGC potential sale of HNZ that the stuff article did not suggest PGC was in a hurry to quit HNZ, but more that their holding in it was not part of a long term strategy, and more to do with continuing to support HNZ transition to a stable business)Quote:
Mogridge said PGC was in no rush and HNZ's share price had some way to rise.
After sleeping on it, just should point out that the equity of PWF+HNZ in my earlier post is not accurate - possibly equity is closer to $300m post-transaction. If I find the correct figure, I will post it. However, also note that $90m of impaired/restructured PWF loans were not acquired and $30m have a 3 year full-recourse agreement, so total of overdues in HNZ more like $140m (from HNZ side), with at least $50m of recourse to PGC (via RECL) and PGW (mostly against other loans).
Note: Just found pro-forma in the capital raising update at end of August and NTA was $324m for HNZ+PWF. Have also just re-read and adjusted the overdue but not impaired amounts for both. HNZ now looks to have overdue but not impaired assets equal to around 43% of equity, while Kiwibank is about 33%. This does not take account of HNZ's recourse agreements with PGW and RECL
I agree with a lot of what you comment on Lizard.....admittedly I don't proclaim to know the exact ins and outs, in terms of equity/lending etc....and I am a shareholder of HNZ,but when you take a snapshot of HNZ it seems to me, that the entity is far better placed than the previous PGC which held MARAC. It seems that although there maybe still some bad loans like is possible with any bank or finance company these are minimal in the big scheme. Furthermore, Jeff Greenslade has delivered on everything to date, which imo represents good leadership. The management of HNZ have shown their confidence by accepting the $15k SPP and HNZ seems to have positioned itself where the big banks don't want to go and further you could could argue that farmers and the rural sector are more confident now than they have been for sometime. Also, whether pple perceive it as a finance company or a bank - the bad finance companies have been whittled down to a small few, which should benefit HNZ.
With regards to PGC i also agree that I fail to see why PGC would want rid of HNZ when they've only just acquired them, PGW which they hold on the otherhand yes I could see why they may wish to address this ownership !!
Liz, I have an indirect shareholding in HNZ as a PGW shareholder through the $10m that PGG Wrightson (PGW) supplied towards the just completed Heartland New Zealand (HNZ) recapitalization. I do not consider myself an expert in analyzing banks either. Albeit that is a hole in my analysis armour I hope to fill at some stage. I had hoped that my holding PGW through PGG Wrightson Finance (PGF) would be my window into future analysis of the banking world. But as you know, PGF has just been sold to HNZ.
Having just said I don’t really know what I am doing regards banking, I would nevertheless be a little worried about HNZ regarding their current capitalization relative to their lending book as you paint it.
If I look at the PGF financial accounts at the death (30th June 2011) I see total equity of $100.919m against loans and receivables of $381.778m, after the annual provision for doubtful debts.
$90.9m of those “still OK” loans (according to PGW management) have now been transferred to a special purpose vehicle that still sits with the seller PGW. The final sale price for PGF was confirmed at $99.5m. So my best guess of what Heartland acquired when they bought PGF is $99.5m of net tangible capital to support $381.7-$90.9= $290.8m of loan debt. That is a loan to equity ratio of 3:1
Using your figures for the combined HNZ Lizard, $324m of net equity for about $2,100m of loans equates to a loan to equity ratio of 6.5:1. What would the combined loan book have looked like at HNZ without the acquisition of PGF! Actually I can answer that:
($2,100m-$290.8m)/($324m-$99.5m)= 8:1. A crisis averted by HNZ in buying PGF?
Well according to you Liz (on the other side of the transaction fence) it was actually PGF that was the ‘bad boy’ in this cauldron of doubtful loans.
Lizard wrote
“HNZ+PWF had about $212m (of overdue and impaired loans), of which $74m came from PWF - and a good $53m was impaired but for which impairment had not been provisioned. i.e. overall, HNZ+PWF looks a little worse,”
This I don’t understand. We PGW shareholders were told that all the overdue loans where interest is being capitalized, were rolled up into the ‘special investment vehicle’ that PGW retained. How does Heartland justify classifying $53m of their just acquired PGF loans as impaired, when we PGW shareholders were lead to believe that all the loans on sold to Heartland were good?
SNOOPY
In the latest PGW interim report, authorized of 7th February 2011, this is what PGW management said about PGF:
“PGG Wrightson Finance had continued to benefit from its good fundamentals with strong reinvestment rates and initiatives to extend the book beyond the non-bank deposit taker Crown guarantee scheme.”
Yet a matter of weeks later PGF was portrayed to PGW shareholders as an effective “basket case” that could only be sold at net asset value. We shafted PGW shareholders were lucky to get even that, according to the PGW board. Somehow that fact PGF wasn’t even sold for asset value, because the unsaleable loans were retained by PGW by way of a special purpose investment vehicle, was overlooked. This suddeness in the fall of grace of PGF shocked and rocked me. Using the PGW board’s metric for measuring ‘finance unit trouble’, where does that now leave HNZ?
Your comparisons with Kiwibank were interesting Lizard. However the big difference is that ultimately if Kiwibank needs more money the government is there to supply it. And my hunch is the quality of Kiwibank loans is superior to Heartland too.
SNOOPY
Of practical concern for old owner PGW was the ongoing depositor and lender cashflows in PGF from here on in. Net negative cashflows would ultimately stress the now HNZ balance sheet, should that be required to be called upon as a result of depositors not reinvesting enough money. This was certainly the case with PGF as it existed within PGW. And this reasoning was put forward by the board of PGW as the real reason for the PGF fire sale.
I would be interested if you expanded a bit more on your opinion here Lizard as it relates to HNZ:
“My prior concerns were regarding liquidity, particularly in regard to the expiry of the govt guarantee. However, the accounts suggest that they have managed that quite well and the expiry in itself is unlikely to pose a threat at this point.”
In the case of PGF, it seemed that getting some balance with the depositor reinvestment rate and deposit rollover time period verses the underlying farmer loans was going to become an issue. Under note 23 of the PGF FY2011 accounts, we see that $185.924m of secured debentures are redeemable within a year (mostly this October, the one coming up in a few days) when the government guarantee scheme runs out. Could PGF as a stand-alone entity attract the required new and/or reinvested depositor capital in time? This is the capital required to match the $333.911m (see PGF FY2011 Note 14) of customer loans also due to expire over the June 2011 to June 2012 twelve month period.
Far from saving PGF, it looks like the government guarantee has contributed to the firm’s stand alone downfall by concentrating all the term deposit maturities around one date. Thus a ‘wall of reinvestment’ is created that cannot be easily hurdled.
How will putting on a new brand of running shoes allow the renamed Heartland (rural division) to clear this jump? Keeping back $90.9m of loans:
$333.911m- $90.9m= $243.0m
does help, yes. But it doesn’t fix the now HNZ problem from where I sit.
SNOOPY
[QUOTE=Xerof;357190]Interesting they put these cucumber sandwich meetings on for depositors - what about the poor suffering shareholders?
At present it is most important to have depositors on side.HNZ are carry a lot of cash at present to help them get through the end of Govt guarantee.
You can not stay in lending business ,unless you have money to lend.It surprised me to learn that there are a lot of people with over half a mil just sitting in a cheque a/c earning no interest.It is very important for big lenders to meet the people at HNZ. If they like them they will lend them big money.I love going to these meetings.First, I look at people's shoes, then their trousers.Lovely shoes,and clothes made out of good clothe.Then it is fun watching who the local brokers are talking to.Real money draws them. Only takes a few minutes to work out who is worth big bucks.Old saying everyone laughs at a rich man's jokes is very true. So if your depositors like cucumber sandwichs,then make sure they get enough,and laugh with them.!!!!
]
Hi Snoopy, This could take me hours to answer and will probably send everyone to sleep, so I'll try and limit it to a few main points.
Liquidity risk is covered on pages 32 & 33 of the HNZ FY11 report and in pages 16 and 17 of the PWF FY11 report. Note that leaving behind the impaired loans with PGW doesn't change the deposits due, and actually removes some receivables from the contractual maturity, so could be perceived as a negative in regards to cashflow from HNZ perspective (reality is, not much would have been likely to be received though).
There are two parts to the liquidity risk tables - those based on contractual maturity and those based on expected maturity. Contractual maturity pretty much presumes a wind-down scenario - no new deposits, no reinvestments. Under that scenario, most financial institutions will have a funding gap - banks can look pretty extreme with all those on-demand deposits versus long-term mortgages. Expected maturity is more relevant - and obviously the assumptions that go to making that up. HNZ appear to have presumed a 72% re-investment rate (no new deposits), and expected maturities show redemptions could easily be handled from maturing loans, without even resorting to the $267m of cash on hand or $280m of undrawn bank facilities.
The 72% re-investment rate has been beaten by rates of 74-75% in July/August (although I would expect that there remains a significant chunk of deposits that will be redeemed in November/December and would be surprised if this rate is maintained). Furthermore, HNZ has had a steady stream of new deposits - at June, the rate was running at around $30m per month and the rate has since been said to be stable. Almost all of the new deposits and 80% of the re-investments have been choosing the non-guaranteed option. In reality, retail deposits fell by only $80m between the 5 Jan accounts and 30 June - a 5% reduction in overall deposits. This seems to suggest that their depositor base isn't about to head off into the sunset with the expiry of the guarantee.
The PWF side provides less information - there is a narrower asset-liability margin in maturities and, unlike HNZ, they only give the contractual data for debt repayments, which probably over-estimates versus expected repayments. In addition, the PWF040 will come up for redemption in early October, taking nearly $100m of cash to redeem. I am not sure if any attempts are being made to see these funds re-invested in HNZ, but will likely represent a substantial cash drain. As it stands, PWF contractual maturities suggest that this can be more than covered from debt repayments/lending contraction. I'd be a bit sceptical in that regard - along with recognising the cost attached to a shrinking loan book. However, HNZ have also been flagging another bond issue that could have the potential to replace these deposits.
My view is that the cash reserves, new investments and bank facilities look more than adequate to replace likely redemptions in the face of the guarantee expiring, taking into account recent re-investment rates. Although it is possible to come up with scenarios in which this is not the case, in my assessment, those scenarios would have to be quite extreme, such as re-investments crashing to 30% in the last quarter, along with no new investments.
One major point to be made here - I take the view that the expiry of the govt guarantee should see the low point in depositor funds. After that, I presume that investors will see HNZ as having survived and confidence will gradually increase. Continued low interest rates elsewhere provides ongoing impetus for yield-starved investors to put aside any anxiety. Obviously if investor confidence and deposits were to shrivel further beyond year end, that would not be a good thing - but that is more an issue of ongoing profitability than liquidity.
That brings me back to Credit Risk. Asset Quality has to be the hardest thing to gauge. Overdues, impairments and write-offs combine to provide some insight. These appear to be stabiliising. Providing they do not increase again, it seems likely that HNZ will be profitable and equity will not be further eroded. If this is the case, then the level of HNZ equity looks to me to be able to support considerably higher levels of lending and subsequent profits.
Actually Snoopy, HNZ acquired very little in equity from the purchase of PGW - the asset price was based on adjust NTA, so in effect, they simply swapped cash on their books for some assets. As it happened, very few net assets - since they probably gave back over $95m in impaired assets and associated tax losses (I'm not sure if we received final figures on the transaction) and swapped cash for the remaining $7.5m. They then raised $58m of which about $55m went to pay off the ASB for exiting a risk-sharing arrangement. I doubt this was on PWF's balance sheet as a liability as would have been contingent I think, so that was a straight out give-away. In the end, HNZ ended up with $324m in equity vs the $296m they had at year end, so I am guessing that there were other parts to this transaction - e.g. some of those impaired loans given back to PGW might have already been provisioned and therefore not included in the original book value on which the transaction was based.
From the HNZ accounts, year end loan to equity was $1700m to $296m.
I just need to add some corrections to this post. The pro-forma equity for HNZ+PWF is $351m, the $324m is net tangible assets. It looks like the main transaction with PGW was neutral for company nta, but the overall equity was increased by the amount that went to ASB ($55m from equity raising) to purchase back the share of the loans under the risk-sharing agreement. It looks like they could have been purchased at a premium to book value under that agreement, as it appears intangibles must have risen from the $22m on the combined HNZ/PWF books to $27m in pro-forma.
The total depositors funds are now the HNZ depositors plus PWF depositors ($2.1bn). The total loans are the HNZ loans plus PWF loans, less $90m returned to PGW and plus $50-$55m purchased back from ASB risk-sharing facility (also $2.1b) plus any new lending since 30 June.
The total cash on book at year end was $340m plus a $280m undrawn bank facility for HNZ and presumably also the undrawn $100m bank facility for PWF. In addition, HNZ announcement in early August said that they were undertaking a further $100m of securitisation. Although they may have since re-loaned some of that funding, it does look as though they should have access to perhaps $750m of cash and funding facilities - enough to pay out one-third of the depositor base at a pinch without reducing lending.
I agree with that point re government funding. However, I haven't seen anyone on this forum proclaiming that Kiwibank is about to need more capital or in any trouble. As for asset quality, that was my point about overdues and impairments - yes they are higher in HNZ relative to loan book (as would be expected in a finance company), but relative to equity, they perhaps don't compare as unfavourably with Kiwibank as might have been expected.
Should also point out that PWF didn't look like a complete basket case given that their funding maturities had actually lengthened on prior year. I also seem to remember from looking in the past that they had quite a high proportion of deposits on call - that may be classed as less than 12 months maturity, but these aren't likely to be withdrawn en masse.
The bigger concern was probably more around asset quality and also funding the bond redemption. I suspect some of those maturing loans weren't likely to be repaid on time and the short term funding gap might have caused some hiccups. Also, ASB may have had dibs on some of the better loans under their risk-sharing agreement - I really haven't looked into that. Must have been very few options available to them, as it seems to me that they pretty much gave PWF away.
Suppose at the end of the day it is 'credit risk' being the issue - but more from a perspective of the future direction of the company.
Agree done a good job in bringing together the 3 entities into 1 and as such getting some critical mass. Also have some pretty big aspirations like 20% ROE (or was that Belg saying that was possible?)
The foundation of the business is 2 building societies and a more traditional finance company (Marac accounts looked pretty sick before the bailout and Southern Cross accounts show big losses the last 2 years and I didn't look at CBS)
HNZ wants to become a banK - to me a red flag when the businesses now the foundation of HNZ have been like SCBS says 'For 87 years, the Society has been helping New Zealanders to invest their savings and to purchase property.'. Yep simple model in taking peoples savings and invested wisely (with 1st mortgages) in mainly residential property. Suppose CBS was much rhe same and as percy reminds me marac has been a successful finance company for years. (Mind you SBS is an old fashioned building society with a banking license so maybe a model does work)
Call me old fashioned now but the way HNZ seems to be heading is far removed from what the platform businesses have based their success on. With growth and earnings aspirations like they seem to have the red flag is doing business a different way ... probably taking more risks (non traditional lending areas/ less security etc)
And I still think the finance head saying 'Heartland aims to encourage depositors by becoming a bank, reasoning that people are more relaxed about putting money in a bank than with a finance company' isn't a good look. Is this the only thing they have to engender investor confidence? Almost as bad as Hangover using Dougal to say how safe they were.
So at the end of day suppose credit risk is the issue ... probably not now (you never know as there is a lot of noise around the book) but what it might look like in a few years time, esp as they seem to be moving away from traditional old fashioned models that ahve been successful. They'll probably even up with a treasury dept trading in derivatives and the like with investors money before they lend it out.
Thanks Winner.
I'm still at a bit of a loss - you seem to suggest that they would be taking more risk by being a "bank" when I would have thought that could have meant they could take less risk. Surely that would mean they could go to mainstream lending rather than having to pick from those borrowers rejected by mainstream banks with lower cost of funds? The main reason I can see for becoming a bank is that banks (or at least the brokers who sell a large proportion of those loans) have weakened their lending criteria over the years and are now so undiscerning that they don't leave much in pickings for the traditional 2nd tier. After all, from what I can gather, the big 4 will lend me enough money to have me working until 75 while living off unsalted rice with no heating or phone in order to pay the mortgage - and that's presuming interest rates never go up.
Coincidentally, I was rung by Heartland today regarding a deposit due to mature for which I'd only recently posted off the form. This is not the place to go into details, but the calibre of that conversation was way, way beyond anything I've experienced since the good old days of telephone banking... not the "enter your pin" variety, but the days when one could ring the bank and they recognised your voice. If there isn't a place for this in the modern world, there is still a place for it in my sentiments.
[QUOTE=Lizard;.
Coincidentally, I was rung by Heartland today regarding a deposit due to mature for which I'd only recently posted off the form. This is not the place to go into details, but the calibre of that conversation was way, way beyond anything I've experienced since the good old days of telephone banking... not the "enter your pin" variety, but the days when one could ring the bank and they recognised your voice. If there isn't a place for this in the modern world, there is still a place for it in my sentiments.[/QUOTE]
I think this is most important.It confirms what my friend who went to the "investors' presentation" told me,"they are making sure they have their depositors on side."
Yes, normally I would be wary about being rung as it is generally an indicator of problems. However, we all know the liquidity crunch the expiry of the guarantee has the potential to cause, so, in this case, I just see it as being pro-active in reducing the volatility of the deposit base. I am reasonably confident that liquidity risk is now below the threshold that could topple them, but I think there are secondary goals for them here in terms of establishing a strong core depositor base and minimising the need to draw on bank facilities.
Everybody must be worried about rolling over money ... even Rabobank rang me the other day to make sure I kept on investing with them
Easiest way to ensure that i told him was to give some decent rates - ha ha
Rabodirect are paying 4% for new call money, for a limited time only, so they heeded your call Winner :D
Liz, my concerns on HNZ are general, not specific, and are based on my recent experiences gained from cleaning up the mess in a finance company. They will not be immune to credit deterioration, and in certain sectors this is very severe. This is now apparently hitting mainstream banks ( see the story on James Smith building, where ANZ had first mortgage, and will not recover all of their money) Deterioration is also becoming apparent in 'safe' lending areas such as plant and equipment, where cashflow to service these loans is the issue.
I also do not buy the story that they will get a banking license, but happy for them if they do.
Xerof what they did not tell you was they reduced the main interest rate a few days before to pay for it So if you have reasonably sized deposits with Rabo Bank you loose out very badly. If it was possible to close my account with them I would It Stinks Still waiting for an explanation of a Balls up they made in February.
Thanks for the thoughts, Xerof. Sounds like you have some useful insights, which are appreciated.
We should probably do some more calcs on the credit risk sometime. There is quite a bit of further write-down built into current price. But, as always with a high-leverage situation, the sensitivity analysis will throw up a big range of outcomes. So probably comes down to personal views on the odds and risk-return weighting to scenarios.
Up 3c today and looking stronger with good buying strength and few sellers. Probably too soon to say but SP may have turned the corner at last.
No reply percyQuote:
I think I would back the insiders. U2Balance?
He's making an observation percy, not a commitment......
with the key exception of adding to shareholder wealth as promised - this has gone one way all year, as has PGC, as has PGGWQuote:
Everything they have said they would do,they have done
Yes, with the key exception of adding to shareholder wealth. One would have thought that it would have followed.It has not.My experience of life/business is if you build good foundations you will have a good chance of success.HNZ have built solid foundations, so I would expect them to keep their promise of adding shareholder wealth.I remember reading Sir James Goldsmiths book Billionaire.He owned a business called Caversham Foods which took a number of years to produce good profits.He said he knew it would work because he had put in such good people to run it.HNZ have ticked all the boxes on the right path to success.
Looks as though we are "well positioned."
PS no surprises from Balance.!"
Percy well put. I agree. I know of one v lge holder in HNZ who has confidence as well . " the second tier finance
Sector has and is continuing to go through major reform for good reasons, but underlying there is a business.
It will take time and effort to rebuild under the new environment, price is only a match of willingly buyer and seller at the time, but that does not necessarily collate to the value proposition".
His words not mine!
There are some insiders one would back, eyes closed.
HNZ has an insider who is a severe liability - when he is ousted as a shareholder, that's the time to really load up.
Meanwhile, let the elephants fight.
Agree with your observation Balance, however, in my view there are two insiders that need to be cleared. One is a very recent and reluctant holder, who realised he had made an error of judgement even before the ink had dried. That parcel is an overhang to be cleared by distribution.
As for the second insider, well enough has been said already.........
SCF is not around any more to make some of the ridiculous loans that some of the South Islanders have been able to obtain to indulge in rampant property speculations.
A few are getting caught big time.
Will they survive?
Chalkie points out in the papers this morning that if the Baker St/ Kerr takeover of PGC goes ahead Kerr will contol 13-14% of Heartland .... maybe that is why PGC borrowed to get their new shares in the latest cap raising
Heck what a thought - Kerr having such a large say in HNZ
Today's close of 48 a new low since going alone
Even this must be a bit of a worry for the believers .... wonder how far it can actually drift down to
Owners looking after themselves>loss of confidence from investors>share price crash>owners buy them for cheap and take it private - is this what we are witnessing now?
Looks like Belgie's stop getting triggered by the 3:10pm seller. Probably only got another couple of mill to go, eh? :p
But yes, agree not looking good and plenty of time to fall further before they tell us all is going gangbusters at the agm.
If it's not worth close to NTA, then it is impossible to know what it is worth, as there is a presumption of impairments and/or future losses being built into value. Market wants clarity as to where it will end up and so that will take time.
GK telling his detractors to put up or shut up as there has been some serious big selling out of PGC and HNZ? He is now giving them a chance to get taken out at 33 cents in PGC, instead of him being squeezed out.
The battle lines are drawn - just sit back and watch the fun. Old money vs new old money.
So far, both sides have done badly!
https://www.nzx.com/companies/HNZ/announcements/215563
the plot thickens !!
This is an interesting statement:
Does that mean that the government provisions for EQC payments will shortly show up as coming off private sector debt? And will private sector debt be re-established to a greater or lesser extent once those home-owners begin to rebuild?Quote:
Consumer business performing well offsetting a sluggish mortgage market where EQC payments have resulted in a reduction in the mortgage book
I know the money-flow of Chch rebuild has been talked about often enough and will be drip-fed over longer than most might think likely, but I think we (as share investors) may still be underestimating its likely impact... and will likely one day under-estimate its cessation.
Another interesting comment:
That wouldn't need a mention if they didn't already have some clues and wish to divert further questions. So 80% chance it's not going to be an upgrade?Quote:
The forecast is in the process of being updated, further guidance will be provided once complete
I did go to the meeting yesterday. The business seems to be going ok. The Press report this morning is pretty accurate.
Some other intersting facts:
- Currently $500m liquidity including $150m in cash. Greenslade said that it is a bit high and that they are working hard to get the funds working.
- 97% of funds are now out of the Govt. Garantee.
- Bank Registration: They are now in engagement with the Reserve Bank.
- The equity ratio is very high @ 14%.
- The NTA post the PGF purchase is 84cps.
- The reinvestment rate is 74% which is above their target of 70%
At this stage all is going to plan.
Cheers
Thanks SCOTTY,it is always good to here from a fellow investor who went to the meeting.
Quote:
Originally Posted by Lizard;357226 19-Sep-11
Kiwibank could get asset sale cash - Key (Stuff)Quote:
Originally Posted by Lizard;357271 20-Sep-11
Reminder to self once again - "whenever you find yourself making a comparison with another business to justify a valuation, you are usually just proving that the other business is over-valued."
Interesting profit forecast - slight downgrade at $20-$22m NPAT, but sounds like the $6m deferred tax benefit is included in the forecast? Good to hear impairments are lower than forecast and higher than anticipated level of referrals from PGW.
Price has been plateauing here, so if there is any hint of volume building on the buy side, I would be interested in adding to my initial position. Although, while we all sit around the campfire, waiting to see if we get struck by fall-out from the sovereign debt meteorite or pass through the tail of another banking crisis comet, it seems prudent to watch a little longer...
Keep holding yourself at the ready lizard. !!!!!!
I thought the $6 mil would have been on top,so when I saw the announcement I thought it would be a profit upgrade,not a profit downgrade.!!!The impairments being down I take that they are taking few risks.Certainly trying to be a bank rather than a finance company.Maybe too careful,not wanting to miss out on bank licence. Hopefully laying good foundations for the future.Sitting on so much cash and liquidity does not earn profits,so once over Govt guarantee that cash /liquidity should be put to use.Still they are doing everything very carefully,moving forward as to plan,so shareholders will rewarded by having a very run company they can pride of ownership in.
Perc.
Was wondering whether to respond to lizards as I feel much the same.. So much happening global.. Have a few shillings ready to spend but feeling very wary..
To increase or not to increase.. That is the question..
Must admit that I think that the company is on the right track..
BUT... with all the shenanigans going on at PGC who have a finger in the HNZ pie..
Are they masters of their own destiny ??
I agree with you and Lizard,with so much happening global.Time to be very careful.Take your time deciding.
I am sure the shenanigans at PGC are very much at PGC.All the problem bits are at PGC.
As for PGC and GK influence at HNZ I am sure both Chairman Irvine and MD Greenslade will tell them to "clear off." They will not risk the bank licence.
GK and PGC will know that Irvine and Greenslade will add value to HNZ.HNZ is on the right track.Has not been the best of times to undertake creating a new bank,but they have done the hard yards.
So guys - excluding the deferred tax benefit is the forecast NPAT $14m-$16m as per Lizards question mark or is $26m-$28m as per Percy's thoughts
Downgrade or upgrade or just confusing
But then again if the $6m was included in the original guidance then it is about the satus quo and just a strom in a teacup
No, looks like you are right on that, Percy. From the Annual Report:
While yesterday's update certainly reads as though it IS included in the forecast (and to be booked in first half as part of the $9-$10m first half NPAT, thereby making underlying first half only $3-$4m).Quote:
We have set a profit target of $20m–$24m for the 2011–2012 financial year. Achieving that forecast will be dependent on our ability to meet our performance milestones and anticipate and quickly adapt to any major market events, needs and opportunities. By virtue of a law change, a one-off deferred tax benefit will be booked as an additional credit to NPAT for the 2011-2012 financial year. The amount of this credit is likely to be in the order of $5m to $6m. This credit will have a positive impact on the forecast.
On the positive side, I think this forecast is inclusive of their current view on likely impairments, which would mean equity should at least be heading upwards rather than eroding....Quote:
The impact on earnings has been offset by the previously announced one-off deferred tax benefit of $6m, and lower than expected operating costs and impairment expense to 31 October.
When the $20 - 24mil projection was made , there were 300m shares on issue. Since then PWF was purchased and another 88.7m shares issued. Now the profit forcast is reduced to $20 - 22m. On a projected earnings per share basis there is a definate drop in earnings!! This is with or without the tax credit which I don't think was included in the original projection.
On the other hand, you have to bear in mind that at 49cps, the market looks to be pricing in either further substantial losses or additional dilution in the future, given that NTA is around 85cps (sorry, can't find exact figure). The deferred tax credit still adds 1.5cps to NTA. Forecast of even $4m NPAT for half year will still add another cent, presuming they don't pay a dividend.
By the nature of finance capital, isn't it likely that an equilibrium has to be eventually reached in the world of finance where returns on equity at least match one year interest rates (and most likely carry a risk premium to it)? For that to happen, either we see profits at a level that the gap on NTA will also close (giving the double whammy to the share price) or we have to see losses and a reduction in NTA. While they post profits, no matter how small, then I am thinking the first scenario seems realistic (over, say, 3 years).
So we agree it is a pretty hefty profit downgrade then?
Meaning what? All is still on track but real success for this very well run business is just that bit further away
Market probably like it though .... don't hold on too much longer Lizard
Bit ominious -- decliners list (1st half hour) led by ALF PPL and HNZ .... rest of table in green as the worlds problems have all been fixed again
What elite company HNZ is in ........ but then they say one swallow doesn't make a summer or something like that
Phew ... relief all round I suppose ..... out of the red
Objective achieved .... press only reporting HNZ profit being 'pruned' from $24m to $20m-$22m .... pretty good result seeing how tough the business world is these days .... well done
Like the head finance man admitting that becoming a bank was only a marketing ploy suppose even financial updates are sort of marketing as well
[.... don't hold on too much longer Lizard[/QUOTE]
winner69.What do you mean.?Do you mean Lizard should sell? or do you mean lizard should buy.
Be careful other wise Lizard will think you still have "Bi-trendual tendencies."
I checked with Heartland today. They confirm that the forecast does include the one-off deferred tax benefit.
I was pretty disappointed with the way they handled that. I'm pretty nervous of any company that isn't straight-up in their announcements and reporting, and that one was a little on the borderline.... up until now, they've been pretty straight-up (with only a slight polish to the PWF acquisition outcomes).
Now I can understand, that given the fragile nature of a finance business at the moment, there would have to be a degree of caution - they probably couldn't risk the media jumping on the "downgrade" story too dramatically, especially given their business is now increasingly distanced from broker support and the associated "selling". We should all know by now how much of a "confidence" story finance is! (And the loss of broker support is more about incentives related to commission and regulation, than about sentiment).
But still counts as a strike.
"Three strikes and you're out" remains a good policy. (After that, "two years and a change of management" is the general rule before there's another chance...)
Surprised at the non reaction by the market to this latest guidance - though volume was quite high and the share price didn't go anywhere even though it was a good day for the market.
On 28/10 guidance still $20m-$24m (and if consitent to Annual Report excludes the deferred tax thing)
A month later an announcement after the market closes (and it wasn't even a Friday) says this is really $14m-$16m (exc deferred tax)
So over a month where has the $7m expected profit gone - 30% less - doesn't give much you the warm fuzzies they know what is really going on does it .... and Lizard talks about how important having confidence is
So $15m at this stage .... equity appears to be about $320m odd (if you can decipher an amended slide they put after the PWF deal was xompleted so may be completely wrong with this number) .... so ROE in the year after the year of transition is less than 5% .... who were touting 20% plus a while ago
Prob have not wasted my time going over the past few months presentations but all the pictures and pretty charts and what seems not so detailed commentaries just seem to confuse me.
No doubt they have a story to tell and they are doing a very good job in telling that story .... to have confidence in them as an investment I think you need to believe that story and go along for the journey .... but I sense that even the likes of Scotty is having some doubts
But it is disappointing to see that when the rubber meets the road the promises do not appear to being delivered ... at least this year
One last thought - the Annual Report guidance did not include the deferred tax thing but when they talked about it at the AGM it was included but they forgot to say so (at least in what was published) and then a month later did sort of say it was in the number and hoped nobody would notice .... ruins the story a bit eh
You guys have me interested but too much confusion and noise and things just don't seem to stack up for me to think this is cheap enough to put hard earnt cash into .... but will definitely include in the 2012 stock picking compo
Know I know Goff feels .... god bless him .... quoting out of context ..... first was 'dont hold on much longer from buying' (maybe the on should have been an off) .... which means buy buy now ,,,, and that is consistent with .... 'should be buying'
Bugger - being so misunderstood like Goff is even worse than being bi-trendual .... next you guys will be ganging up on me and saying which part of BUY don't you understand ..... maybe Winstone (now he has 7 mates with him) will have to come up with something like that when they hock off the SOEs
Please don't pick on me .... sob sob .... you have ruined my day .... even John Key spoke to me nicely earlier tonight as he was heading off to Shed 5
"killing you softly with their song"Quote:
No fear of that.
sorry for the plagiarism Roberta Flack.......
Xerof ... you should have plagiarised a few versus more
2nd and 3rd verses .... I wonder who HE is in this case .... whoever wtote this lyrics really perceptive eh
I heard he sang a good song,
I heard he had a style,
And so I came to see him and listen for a while
And there he was this young boy
Stranger to my eyes
I felt all flushed with fever
Embarrased by the crowd,
I felt he found my letters and read each one out loud,
I pray that he would finish
But he just kept right on Repeat chorus
I may not agree with the choice of song,but am pleased were are all singing together.!!!! lol.
Thinking of The Trogs 'So happy together."
The Turtles, if my memory serves me correctly, but percy, is this the relevant Heartland shareholders chorus?
I can't see me lovin' nobody but you
For all my life
When you're with me, baby the skies'll be blue
For all my life
:):)
The guys at HQ must be relieved big time that no serious damage done since the downgrade .... and note they are keeping a low profile at the mo .... all quiet on the western front they say
Heartland ‘Investment Grade’ Rating affirmed; Outlook improved to ‘Stable’
Posted: 7 December 2011
A small Christmas present for the faithful.Good to know they're working hard back at head office.
Patience, Belgarion.
Actually, if I had to make a T.A. call, I'd say this consolidation looks more likely to break to the downside. Though, overall (FA + TA), I'd just plump for a longer period of consolidation before an eventual turnaround...
Btw, I'm not sure where others find their freebie charts these days (FT has been short on NZ data lately), but Bigcharts thinks HNZ is Heinz... so need to revert to BSH.