A cartoon from interest.co.nz yesterday (bastardised of course)
http://www.interest.co.nz/opinion/73...out-why-it-the
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A cartoon from interest.co.nz yesterday (bastardised of course)
http://www.interest.co.nz/opinion/73...out-why-it-the
One of the features of the recent profit announcements of the big 4 banks increased profitability in nz was their being able to reduce impairment provisions, ie less bad and overdue debt.
Jeez, I hadn't factored that sort of stuff in to my Hnz profit forecast for this year
Heartland sure is in a sweet spot at the moment
Sure are mate. Its been a big 3 weeks since the ASM with the SP up from $1.01 to $1.10. Market is starting to wake up to the official forecast being VERY conservative.
KCF010 - Here's an example of what HNZ could do to bolster its ROE. Kiwibank issued capital notes that I presume meet the Reserve Bank's requirements for capital at 6.61%.
The current super low interest rate environment provides an ideal opportunity for HNZ to follow suit. Note this $100m tranche issued at 6.61% currently trades at well under 6%.
Looking through the NZDX market this morning there's nothing of substance there paying more than 6% so I reckon they could get a long term issue away, say $100m at very close to 6% and then do a buy-back of shares !! Get on to it I reckon.
P.S. Yes, confirmed to meet Basel 111 capital requirements, currently trading at only 5.75%.
Percy, you know management well, do you want to get on to sending them an e.mail and suggesting this.
Here's the original media release
HNZ don't need to re-invent the wheel here, just copy it at say 6.25% and I reckon a $100m offer would fly out the door.Quote:
GENERAL: KCF: Kiwi Capital Funding Limited announces Capital Note offer 08:57a.m.
KCF
05/05/2014 08:57
GENERAL
REL: 0857 HRS Kiwi Capital Funding Limited
GENERAL: KCF: Kiwi Capital Funding Limited announces Capital Note offer
MEDIA RELEASE
5 May 2014
KIWI CAPITAL FUNDING LIMITED ANNOUNCES CAPITAL NOTE OFFER
Kiwi Capital Funding Limited (KCFL) has today announced an offer of up to
$100 million of unsecured subordinated Capital Notes to the New Zealand
public. Proceeds of the offer of Capital Notes will be used to invest in
convertible subordinated bonds to be issued by Kiwibank (a related company of
KCFL), which will help Kiwibank meet its regulatory capital requirements
under the Reserve Bank's Basel III framework.
The Capital Notes have a maturity date of 15 July 2024 but may be called, if
certain conditions are met, by KCFL from 15 July 2019 and earlier for tax or
regulatory reasons. The Capital Notes have a credit rating of BB+ from
Standard & Poor's, reflecting their subordination and loss absorption
features.
Interest is scheduled to be paid semi-annually on the Capital Notes.* The
Margin and interest rate for the first five years until 15 July 2019 will be
set following a bookbuild on Wednesday 14 May 2014 and announced on or before
the Opening Date.
The Offer is expected to open on Thursday 15 May 2014 and close on Tuesday 3
June 2014 at 5pm. Interested investors should contact one of the Joint Lead
Managers to the offer (listed below) or their usual financial adviser to
request a copy of KCFL's Investment Statement for the Capital Notes.
Kiwibank has a higher credit rating and an implied govt guarantee (despite explicit statements from the govt) but I do agree. As their credit rating improves, as it has been, their cost of funds should drop, increasing their returns.
I must have missed something?
Heartland pay under 5% for deposits.
They have a very high equity ratio.
They talk of a possible return of capital or a buy back.
So appear they do not require further capital.
HOWEVER I do expect they will renew or replace MTFHCs[perpetual bonds] when they takeover Motor Trade Finance.!!!! lol.
Keeping a high capital ratio is important for an ever improving credit rating. One way of doing this is by issuing capital notes like Kiwibank's offer which is rated as capital in terms of the reserve banks capital adequacy ratio is concerned.
Issue capital notes at 6.25%, buy back 100m of shares and bingo you get a huge bounce in EPS in the remaining shares :) This sort of transaction would be seriously EPS accretive OR they could use some of the capital raised through the capital notes issue to fund other EPS accretive acquisitions or a combination of both.
One fly in the ointment as Harvey has pointed out is Kiwibank have a higher credit rating which enabled them to get this capital note issue filled. Perhaps HNZ needs to pay a little more than 6.61% or given that the Kiwibank issue now trades at 5.75% perhaps a capital notes issue at around 6.25-6.50% is now plausible ?
That Q1 disclosure thing put out this morning indicates healthy interest margins continue, maybe even higher than last year.
And they say home equity release Q1 profit after tax $1.2m - annual run rate $5m. But need to pump it up a bit for the acquisition to become eps accretive as promised and to get that 10% on the extra equity
Home equity release contributed $1.2m in Q1 ....lets say at least $5m for year
HNZ made $36m last ( little bit from her stuff) so adding the $5m to that gives $41m base for FY15
They try to kid us profit will be $42m ....so they only going to make $1m more in real terms
Done more than that in first quarter ....means going backwards for rest of year
Looks like a sell or that Jeff is really really having us all on.
You may wish to sell,
however I find myself
"well positioned." !!!! lol.
I'm "well positioned" now too :) No interest in selling. Relax W69, they'll be $1.20 soon enough and then $1.30 and so on.
I did say at least $5m .....of course it will be more.
Besides all these back of an envelope calculations my bible is a full blown financial model with lots of stuff in it.
In that I have her contributing $8m ...and that's allowing for millions of marketing money
Makes a mockery o heir $42m guidance. My fear is that they may be managing to that.
And I sold a 100K due to being over weight at 8??. cents. Grrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr...
Still " Well positioned " though percy :-))))))
Always sleep with one eye open like Dolphins :sneaky2:
Hey Roger - you said HNZ should be on a PE of 12 to 13 .... so lets say 12.6 to split the difference
FY15 guidance $42m is 9.0 cents a share
PE 12.6 gives share price of $1.14
Nearly there
OMG....wtf is going on with HNZ
Well up the losers board .....not as bad as Mowbrays or Cavalier but jeez worse than Pumpkin Patch
And closing week n Nelson is a bad omen .....cricket world in mourning (RIP Phil) .....and Blackcaps up against it paying Pakistan.
Did HNZ go ex divie or something
It is no longer a case of "the end is nigh",it has happened!!!! lol.
Unusual volatility in HNZ last two days. Up 3 down 4. It got a bit ahead of itself that's all W69. Don't forget it was only $1.06 last week. No cause for concern.
Sticking with my $1.20 core valuation by mid 2015 (10 cents EPS x PE of 12), with all the risk to the upside with possible EPS accretive acquisition(s).
Not the only one to get ahead of itself and a good clip around the ears, see RYM and KIP SP drops today.
After he distress and anxiety of last Friday when the HNZ shareprice collapsed to 110 I have taken the advice of Mr Taleb who pointed out that the more you look at the prices there will be just as many distressing moments as joyous moments, so only look at once a week or month
Has it stopped free falling yet?
I know cheating but took HNZ off the watchlist for a while
UDC making heaps
http://www.interest.co.nz/business/7...y-sector-and-n
Best bits -
Price told interest.co.nz UDC's strong lending growth has continued into its new financial year.
UDC's cost to income ratio fell to 27.3% from 31.6% the previous year with costs up 1%.
So for HNZ growth, better interest margins, making more with little extra costs PLUS $6m from HER will take 2014 earnings of $36 m to $42m .....yeah right .....closer to $50m surely
Thanks for the link Winner69.
I have found how UDC does is a good indicator as to how Heartland is/are performing.
Yes the $42mil is certainly looking a "very modest" target.
The last three broker's research I have seen have had a target price/ valuation of $1.00 for Heartland,yet the sp is tracking at around $1.10 to $1.15 .????
Whether brokers will update their research before the half year result,which is due at the end of February,or not, we will have to wait and see?
On the charts the sp is well above the 50day EMA $1.04,and the 200 day EMA 96 cents,so the strong uptrend is confirmed.
Just a reminder that I posted a while back with a Reuters link to confirm. Average analysts 2015 forecast is for EPS of 9.95 cps which equates to $47m. Its common knowledge that the official guidance of $42 - $45m is extremely conservative and most of the analysts are well and truly on to it. Since the ASM at the end of October the SP is up from $1.00 to $1.15 which is a very strong move in just over 1 month reflecting the strong start to the year Q1 of $11m and the market recognition forecasting is too low. I expect an official upgrade when they release H1 results. We are well positioned :)
Roger - do you think they are a takeover target?
More questions for Roger.
I read AMP want to get into banking.The banks are selling insurance related products,so AMP see owning a bank, giving them the right channels for their insurance products.
The question Roger,do you think AMP should start a "greenfields" bank, or would they be better off buying Heartland Bank?
And if so,what do you think would be a fair price for them to pay?
Shell rumoured to be looking at having a crack at BP and with record low rates for M&A funding so anything is possible.
I don't see any competition issues for the regulator with the number of registered banks in N.Z. now and certainly HNZ's fundamentals and the synergies an acquirer could bring to bear make it a highly attractive opportunity that would almost certainly be EPS accretive to another bank.
Share register is fairly open
1 Harrogate Trustee Limited 44,378,352 9.58% 2 Brett Wilson & Stephen Gunning 43,000,000 9.28% 3 Accident Compensation Corporation 34,106,452 7.36% 4 Oceania & Eastern Limited 12,289,728 2.65% 5 Cogent Nominees Limited 11,623,439 2.51% 6 Philip Maurice Carter 9,500,000 2.05 7 FNZ Custodians Limited 8,604,368 1.86 8 HSBC Nominees (New Zealand) Limited 7,953,205 1.72 9 New Zealand Permanent Trustees Limited 7,100,000 1.53 10 Leveraged Equities Finance Limited 6,898,066 1.49 11 National Nominees New Zealand Limited 6,203,882 1.34 12 JPMORGAN Chase Bank 6,139,591 1.33 13 Investment Custodial Services Limited 5,912,329 1.28 14 New Zealand Superannuation Fund Nominees Limited 5,441,482 1.17 15 Citibank Nominees (NZ) Limited 5,364,331 1.16 16 Heartland Trust 5,108,707 1.1 17 Tea Custodians Limited 5,082,064 1.1 18 Investment Custodial Services Limited 4,982,396 1.08 19 Jarden Custodians Limited 4,500,000 0.97 20 Forsyth Barr Custodians Limited 3,827,915 0.83 TOTAL FOR TOP 20 HOLDERS 238,016,307 51.38
Sorry if this cut and paste from the annual report doesn't come out in the right format, hope you get the general idea.
Mate I was hoping you'd field the first question not add to it lol. With the recent entry by the Chineese bank and them looking to build business i'd say there's little doubt AMP would be better to buy HNZ. There would be good synergies between the two organisations and excellent opportunities to cross sell products and services.
I think an acquirer could try and make a case at around $1.40 - $1.50 equating to a 2015 PE of 14-15. I probably wouldn't sell but you never know they might be able to get significant traction at that level.
I really hope this doesn't happen as I see really good things in the years ahead for HNZ and would FAR rather have this as a core part of my long term portfolio than take a quick buck after HNZ being bought out by a greedy foreign owned bank. The other thing to keep in mind is how long before it gets into that price range without a takeover offer ? If they come out with a 2016 forecast of 12 cps or thereabouts late next year after the 2015 highly successful result you've only got to expand the PE to 12.5 to see a price at potentially the top end of that range this time next year. (12 cents x 12.5 PE = $1.50). I'd far rather see HNZ do the acquiring :)
Thank you for your well thought out reply.
Like you I have made Heartland a large % of my portfolio.
I am proud to have shares in a NZ owned and operated bank that will benefit New Zealanders,and like you would rather see HNZ doing the acquiring. .
Well I am still enjoying "the best job" in NZ,have had another great year,and looking forward to next year,with a good amount of books already invoiced for February..
However, age must be catching up with me.I forgot my bank customer ID number and could not sign in.Spent 10 minutes looking up old diaries,but could not find it written down anywhere.A trip to the loo cleared the mind, and the number came back to me.Have written it down somewhere ,I think? lol.
I know there are millions of neurons in our guts, but...
You need a sense of humour around here luv otherwise you're bound to get ratty, pardon the pun :)
http://www.nbr.co.nz/article/failed-...0Last%2520Call
... I think I read about the case already earlier and from memory the 2.4M have been already in the "impaired" basket. However reading this article it sounds like they can completely write it off.
Creditors are owed $3.4 million, which receivers – who found stock and invoices had been overstated – say will not be paid. Secured creditor Heartland Bank, through its subsidiary Marac Finance, is still owed $2.376 million. Inland Revenue is owed $85,000 and Customs is owed $16,000.
Just wondering - is the business environment already that bad that Heartland (or Marac) have a need to deal with (and lose money of) such "colourful" personalities?
The way the Rubicon and Tenon shareprices have gone ballistic since the head honchos have said the market just doesnt just reflect the real value in the shareprice I think Jeff should come and say the same about Heartland
Problem the longer he sticks with his ridiculous $42m guidance it is a bit hard for him to tell the market they are stupid - but just imagine if he did come out this week and said 'half year is looking like $24m so we really need to say $42m is ridiculous and the full year will be in the $50m to $48m range'
That'll put a rocket under the shareprice.
But I am only dreaming ......if they have $42m in ther heads $42m it is and we will manage. To that number
Any concerns about the lending these guys are doing in the used vehicle market through their I-Finance arm? A few colleagues in this arena are amazed at what these guys are approving and wondering if it will come back to bite them in 6 - 12 months....
Wow that came out of left field and waaay offf topic. Opening a can of worms there mate but thats for another thread.
Simon ambles into Jeff's office
Here's the numbers to the end of November Jeff
Good, what they look like Simon
Friggen good Jeff (no girls at Heartland so he can swear when excited)
How good then Simon
Well Jeff, bottom line running at $4m a month and what's friggen exciting is each month is better than the month before.
SIMON, thats not good news. I promised $42m for the year and quick sums says 12 times 4 is $46m (that is what years of experience in banking teaches you)
But that's the numbers Jeff
Well Simon, do something about them. Play around with the provisions, change the discount rates on some of your valuation models. Just do something - $20m for half year it has to be. No more no less. Get that Simon.
But Jeff, I have already friggen done that and its still friggen $4m a month, like friggen $20m for 5 months (see Simon is a bean counter and can do simple sums)
What do I do then Simon?
Probably best to keep your mouth shut Jeff
But then again Jeff there's talk of us being taken over. A guy called Tim suggested AMP need us to fulfil their friggen wet dreams. What a laugh - dreamers eh
So Simon, wouldn't a real high share price put them off even thinking about taking us over (as Jeff quickly switches into strategic thinking mode)
Sure friggen would Jeff. Would need to pay heaps more then
OK Simon, I'll think I'll come out and announce an earnings upgrade - let's say $48m to $50m.
And Jeff if those friggen dreamers AMP come up with an offer we still enough in the bottom drawer to do another upgrade ans say the offer Is just friggen opportunistic.
Good thinking, Simon. I always knew you accountant guys were always conservative and had heaps stashed away for a when needed.
And Jeff, don't forget the huge payouts we get if taken over. That's a friggen incentive in its own right eh Jeff (total speculation that bit)
I hope Jeffs maths is better than that. 12 x 4 is 48. Not 46.
It's even worse (better?) than they think!
+ EPS accretive acquisition(s). I wonder what happens to the SP when that big seller gets tired of flopping up 100K parcel's on the sell side at $1.15 or runs out of shares or when they go away for a holiday at Christmas:t_up:
So we're all agreed then, $1.30 by the end of the month :D
Maybe you didn't see Roger's reply to Janner, in Roger's own words, "Constructive, intelligent and on topic posts are appreciated by all, on the other hand..." Roger's reply definitely came into 'the other hand' bracket. Someone must have suggested he delete it, but it was read by some. It was the type of post ST can do without, with a poor choice of words at the end. Summed up, it was arrogant.
Two bucks a piece and they can have mine :)
Why not round it up to $3.00
In all seriousness though - Could be a goer for AMP - depends on how much they are prepared to pay, still must be a lot cheaper than starting from scratch.
Agreed and seriously they could have a go at $1.50 or thereabouts and make a case that on a 2015 PE of 16 times the official mid-point of forecast range which equates to 9.33 cents per share that's a more fulsome PE than most of the regional banks in Australia and also the major banks. Jeff would then need to come clean with how well the company is presently trading and update 2015 guidance...it would make for a good scrap that's for sure, (not that I'm wishing for it to happen), as by my reckoning once 2016 guidance comes out late next year it'll be within a bulls roar of $1.50 anyway and heading towards $2.00 sometime in 2016 or 2017. Why give those future potential gains to AMP ? In the news it looks like the big Aussie banks are in the gun for some really serious capital raising. Cap rates are too low at around 8.3% on average, no problem with HNZ at 14% :)
http://www.smh.com.au/business/banks...07-1221dd.html
Seller side looking pretty thin
Percy, Winner69 and I could list some at $2.00 and give AMP a target to hit. I did, just for fun :D
I bought 12,000 at 1.15 from the sale of some chorus shares. I'm easily led ;)
I had someone say to me the other day "why didn't I buy @ 82 like I was going to?"
I then retorted with "why didn't I hold on past 75!!!"
Too young and dumb still, maybe one day I'll learn that Buffett is rich for a reason.
Guessing all you oldies need Depends on the Xmas list thid year eh? "Well positioned" you certainly are!
Congrats all ;)
So many happy campers! Don't we usually get the tail of a cyclone about now?
http://seniorshousing.co.nz/core/rev...ady-decline-2/
we will only get wet not blown away.
The reverse mortgage sector has been in decline since GFC.Lack of funding,and lack of major reputable lenders slowed the sector down.
Funding and reputable lenders are now returning to the sector.We are seeing the likes of ASB,SBS and Heartland offering reverse mortgages.
We know it is in Governments' interest to keep "oldies" in their own home,mainly for their health,so govt depts. are offering more help and services to achieve this.
The fast growing aging population means Reverse Equity Loans [REL] business will grow accordingly.
I don't think many "well positioned" Sharetraders will ever need a REL.However, it is disappointing to see just how many people reach retirement age with either a mortgage and no savings,or mortgage free and no savings.So there will be growing demand for RELs [reverse equity loans].
Whatever is on your Christmas menu I hope you and your family enjoy it.
I have tried to make my picks for next year's competition easy for you to beat. !!! lol
Just popped in to say that I am as happy as with HNZ and just regret only buying lots at 55c, 70c, ....
Best Wishes
Paper Tiger
Simon and Jeff at work ....this weeks announcement all ready to go
An impressive November for HNZ, though the price chart is now well over-bought, with price rising against declining volume, this rally is thinning out. An interesting pattern has also emerged during 2014, where the breakouts (up) have on each occasion retraced fully before resuming the up trend.
The current rally could of course continue as there is a massive gap to fill back up to the breakdown in 2010 and HNZ is in clear air at these prices. If not, support at $1.13, $1.1 and $1.04 may present good buying or accumulation opportunity. Breakdown below $1.04 appears unlikely.
Attachment 6580
No question there's been a big run-up since ASM on 31 October but that's what happens when they announce a Q1 of $11m and it becomes obvious to even "blind freddy" their official 2015 forecast is extremely conservative.
Technically it may be in slightly over-bought territory, I would concede that as the run up has been very fast but fundamentally on a 2015 PE of only 11.6 times at $1.16, (consensus average analyst EPS is 9.95 cps) I think its arguably the best value stock on the NZX when viewed in the context of their track record, past growth and future growth prospects. I'll buy-up large on any meaningful pull-back. I think astute investors have been getting themselves "well positioned" for 2015 and beyond.
W69 will be happy with the announcement of a female Director that appears well qualified for the task.
Yep, some directors will try and tell you they like to be truly independent by not owning any shares. This rubbish never washes with me because I truly believe that the vast majority of people act in their own best interests and its always best if directors have a meaningful stake so they're effectively paddling their own canoe for the benifet of the rest of us...(i.e. interests properly aligned not just turning up for a directors cheque each month.) I hope she buys some more to keep up with Percy and I :)
Percy, maybe Jane is just a plain Jane .....might use Deborah round her beloved ones
Hope the old boys who have done this 'excellent job in laying the foundations' don't now just hold back and rest on their laurels. Guidance of $42m suggests they might be.
A good women hopefully will stir them up a bit
Pro-merit.
Heartland might have made an appointment based on chromosomes rather than quality.
Gender should be irrelevant.
I hope the new appointee makes a contribution proportionate to her knowledge and experience of banking.
I'm sure Jane will add value to Board activities
Its not just commercial and banking experience that is important it is the new and different perspectives and insights from a market/consumer/customer point of view that can be of real value as they set future strategy.
Besides law, accounting and all those things I see Jane's resume says she is an expert on company valuations. Maybe she did her homework and worked out that HNZ is really worth $1.50 so I better be part of that.....with the rider that '$1,50 without me but with a bit of extra diversity of thought that I bring that $1.50 is really $1.75'
She bought HNZ shares - maybe we can agree that's a good thing.
Meantime, HNZ is dropped from my stockpicking contest team. Off the bench comes HBY, and this fine looking board http://www.hellabyholdings.co.nz/Board.php
A jet plane says HBY outperforms HNZ in 2015.
I thought you were going to point me to this impressive looking Board that seems to do bloody well and has shareholders interests at heart ....but thy cant even keep their website running
https://www.nzog.com/
Completely agree. Because to say otherwise is to say that Women aren't as good as men.
The only exception would be where a womans unique skills/knowledge/experience would be beneficial (ie. for a womans clothing company).
So we can all assume that Jane had the filled the required skill/knowledge/experience that the board was looking for which in HNZ case, would have absolutely nothing to do with being female.
Apparently Jeff has already left the building for the Christmas break
So no profit upgrade until late January then
Maybe I have it all wrong and the lack of people wanting to borrow is inhibiting growth with the result that $42m is going to be it for the year. Bugger
Anyway all the best for the Festive season Jeff ..... come back refreshed in case you have to face up to grumpy shareholders in the new year
Don't worry mate. A bit of consolidation after a 15% run-up to $1.15 in one and a half months since the ASM is a healthy thing. VWAP basically $1.14 today, some silly mug chucked a few thousand out at the close at $1.13...probably because they were mid-way through Xmas shopping and realised their credit card would be declined if they didn't top it up before Xmas LOL.
We are well positioned for 2015 :t_up:
Do you think Jane will be putting in extra hours over the break, or is it enough that she is a woman?
Do you have an updated fair value for us Percy? I believe your last one was around 1.14?