Percy, you seem this before
https://vimeo.com/119552742?e=SWilso...5031&u=5572505
Is also linked from heartland website and labelled as NEW
Printable View
Percy, you seem this before
https://vimeo.com/119552742?e=SWilso...5031&u=5572505
Is also linked from heartland website and labelled as NEW
Last presentation had this as a strategic priority - "Focus on Sharemilkers enabling young NZ farmers commence dairy farming business"
Last accounts nearly 1/2 billion of exposure to agriculture. Outside of households/consumer the biggest portion of their loans, by far
With major concerns over the cash flows of dairy farmers with much reduced milk payments do we have a problem on our hand? Esp when Fed Farmers say it is the share milkers (and the young ones) that are at most risk.
Who are Heartland focusing on? Hmmmm
Jeff on EdisonTV. They obviously been to Heartland HQ
Maybe an upcoming Edison report and valuation coming up
Great news - if Edison true to form that will be $1.60 to $2.00
Pure conjecture but if true hopefully not a cynical bid to give the share price a boost
Yes Heartland will be working with sharemilkers while they work their way through difficult times.It will be in no ones interest for sharemilkers to "walk away."
Sharemilkers make up part of Heartland's agriculture exposure.A sharemilker's income comes totally from sharemilking,so it is very important that all parties work together carefully.Heartland have the opportunity to prove to these young farmers, that Heartland Bank cares for them,and make them customers for life.
Heartland's agriculture loans cover livestock ;sheep,cattle,etc] seasonal loans [crops,fruit,vegetables etc] ,equipment,and land,so I do not know how large the exposure to sharemilkers is.
It won't be just the sharemilkers who suffer, there is a lot of downstream farming activity directly related to dairy farm activity, run off farms, maize growers, silage growers, contractors and so on and on, Blockhead is normally doing 3-4 days a week working part time for a contractor here in Canterbury,....no work since Anzac day !
Chq books have been put under the mattress
If sharemilkers are cash strapped I'm sure they will require more loans for working capital - surely good for the banks.... (Banks are shops that sell debt?) As long as long term the milk price recovers and profitability increases (the low payout only lasts 1, 2 or 3 seasons. And it really depends on cost of production which is hugely variable between farms.
Winner, there is a taint to your recent posts on HNZ that suggests you are no longer a true believer. But this is nothing that a bit of re-education won't fix. The answer to your troubles is '4886', the universal answer. I am surprised that you have not memorized this thread post from PT which should allay any HNZ fears into the future.
-------
Histories are always written from a particular view-point usually to prove that particular view-point.
For the future:
There is ALWAYS Risk.
Much of it can be understood and quantified.
But there is always a possibility of a flock of Black Swans flying by and pooping on you.
Best Wishes
Paper Tiger
Disc: Still like the Risk/Reward ratio for HNZ - but that is just one view-point.
------
We all know the new 'Heartland' of New Zealand is Auckland. That is why Heartland have moved their headquarters there. The rural stench is no longer a problem up there, and the ventilation gets even better at the top of a glass tower. And when did you last see a black swan in New Zealand?
SNOOPY
P.S. If you don't mind me quoting your own advice back to you: "Believe the story"
3 story building at 35 Teed Street,Newmarket could never be called a "glass tower."
The lack of Black Swans in NZ, I put down to Blockhead and his mates shooting them.
Thanks for trying to comfort me Snoopy.
Yes, there is always risk and as PT much of it can be understood and quantified. Percy says no black swans left so we can even take that out of the equation.
A few months ago the Risk/Reward ratio was pretty good.
However recent developments suggest that Risk has increased. The factors I have mentioned and some of those things Roger has alluded to. So in my view risk up
Recent guidance implies growth has (temporarily? stagnated. The implication is that H1 earnings same as H2 and Q4 less than Q3. That's not growth. I am having doubts about 'believe the story'. So from a reward perspective the expected returns have diminished.
So Risk up and Reward down .....that ratio not so good as it was a few months ago.
Snoopy, you not suggesting I sit back, have faith in that the story will come true and just hope are you?
Very soothing words from Jeff while he paints the picture of his ideal personal loan customer, someone in their 30's e.t.c., all sounds robust and good BUT
These words are incongruous with their no wallet no worries marketing campaign using a young guy in his twenties who appears to be unable to find his wallet, much like my nephew would if I took him to the pub.
As mentioned before this sort of no deposit lending with no payments till 2016, ifinance lending targeting people coming off GE finance interest free terms along with lending through Harmoney which is mostly unsecured and the ongoing decline in the dairy sector payout in recent months has shifted the risk profile of the company at least in my eye's. Much of this sort of lending is the sort of thing that got a lot of finance companies into trouble during the GFC.
With the significant increase in world-wide dairy production there is no guarantee that what we have now is anything other than the new normal in which case a substantial proportion of HNZ's loans in the dairy sector are in serious trouble in due course in much the same way that small iron ore miners are in serious trouble if that commodity stays at its currently depressed level for several years. Many of their loans in this sector only have the cows themselves as security and who will want to buy them off the receiver if and when people are forced to liquidate some / all of their herd when returns are sub economic in much of this sector as a whole, (depending upon land fertility) e.t.c. ?
In my view events in 2015 have materially shifted the risk profile of HNZ and we are seeing that reflected in the SP. The type of new lending they are targeting makes me very tempted to review what an appropriate PE is for HNZ especially when the major Aussie banks aren't much more expensive on a relative PE basis. I had been using a 2015 of 13 which gave me fair value of $1.32- $1.33 based on consensus analyst forecasted EPS for FY15 of 10.2 cps.
Maybe given the risks a PE of 13 is no longer appropriate ?
The type of lending that got finance companies into trouble in GFC was property development lending.Companies like FPF and UDC who lent on consumer goods came through in good shape.The other parts of Marac came through GFC in good shape. Heartland are not lending on property development.So to compare today's lending to GFC is misleading.
With three quarters of the year's business already done, the projected profit of $48mil is not a big call.This works out to the eps of 10.2 that analysts are using.
It therefore comes down to projected growth for year 2016,and what you expect the fully imputed dividends to be,that will govern your acceptable PE ratio.
When comparing HNZ to the Aussie banks,keep in mind HNZ do not have the need to raise their capital requirements.HNZ is not exposed to the Australian problems,such as ;minning,manufacturing,retail,and over valued property markets.
Neither do HNZ have to rely on European wholesale funding.
I think the lists confirms ;
1] Not one of those companies were registered as a bank by The Reserve Bank of NZ,nor did they have to report to The Reserve Bank.
2]None of those companies were rated by a "recognised" rating agency.
3]None of those companies had an experienced banker on the board.
4] None of those companies had an experienced banker as CEO.
5]Most of those companies were run by people who 'had history".
6] None of them had proper risk/management systems.
7]Most of those companies had huge related party lending.
8]Comparing any or all of them to HNZ, is as I pointed out,not appropriate.
Roger, it is concerning that your confidence in Heartland is being tested, even waning when it is likely or even probable, that your confidence in conjunction with Percy late '14 and into summer this year, may have brought new money to the table. Possibly quite a lot of new money.
I was convinced at the time, made a modest gain, but exited when the weekly price descended below the weekly 14EMA, which it has again and now sits on the 100day EMA. Money flow has declined but is still positive, RSI is declining below 50 and the Slow STO has crossed down, from overbought. (TA talk, in english .. SP is weak and weakening).
It would be helpful I think if you crunched the numbers again and provided your revised assessment of the fundamentals. All the talk of fringe finance lending etc obviously hasn't helped the SP, for that I'm apologetic having participated, but in the overall scheme of things Heartland as you say may have shifted from growth+yield to yield only, and may be exposed to second tier lender variables and risks.
BAA
Roger was bullish last year, justifiably so, but no one should blame him for buying into HNZ.
So was winner bullish. My detailed financial forecast based on reasonable growth assumptions that essentially tied in company narrative and presentations was earnings of $51m to $53m. Roger was quoting similar numbers (maybe a fraction less)
Company says we need to accept $47m this year (maybe a bit higher). That implies they have stopped growing - like H2 will be the same as H1 and worse still Q4 will be less than Q4. That say growth has stagnated. Reasons still be disclosed
I agree with Roger, there appears to be higher risk around Heartland at the moment and the rewards don't look like they are going to be as good as I expected a while ago. Going from growth + yield to just yield lowers the reward side of he equation doesn't it. Not good if perceived risk is increasing.
We just have to wait closer to August before we'll find out what's happening. But the last announcement was might disappointing when you look at the rosy picture they were painting in previous presentations.
You should post an updated chart BaaBaa ...mine looks rather sad, yours might cheer me up
My daily chart may not cheer you up winner, the SP is below the linear regression channel median, below the 50EMA which has defined the recent trading range. If you want a boost though, it has also closed Friday above the daily 100EMA and bounced off (exactly!) the 50% Fib retracement from the move Jan'12.
Charts tell you precisely what you want them to.
BAAAttachment 7377
Hogwash.!!!!!!!!!!!!!!!!!!!!!!!!
If you overlay the charts of the Australian Banks,ANZ,CBA,NAB,WBC with HNZ's, you will see the concerns the market has with Australian Banks is rubbing off on HNZ.
Yet, as I keep pointing out Heartland does not have the Australian Banks' problems.
But wait there's more.
The best moving average I have found for HNZ is the 200 day EMA.A true friend.
Don't look now,but all the Australian Banks are under their 200 day EMA.!!!
However Heartland remains above theirs.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Hogwash or not Percy and with due respect, the souls who bought the story above the current share price are under water right now. This is not about whose right or wrong, it's about what is the best thing to do with your money if you are, in, or out, right now. If you advocate the 200EMA you're also saying it's OK if the holders lose another $0.19 (or thereabouts), because of what? All I'm saying is that Heartland has changed, it might not be a growth+yield story anymore, and I'd like you and Roger to put up a case, as there are attendant risks which might give cause for caution? That's not hogwash Percy, that's just putting it out there for discussion, you can't deny that Heartland SP has deteriorated and there is no telling where the floor is.
BAA
Go to the great advice KW gave about using TA to time entry/exits.
As a long term shareholder the 200 day EMA has proved the only reliable indicator to use.
Many on this thread brought in at 50cents,60 cents 70,cents,80 cents,90 cents,and have remained holders.
It would take a definite break of the 200 day EMA before I conceded the uptrend is broken.
I am sorry the only advice I can give to those who have brought in at higher prices, is to watch the 200 day EMA,currently $1.20,and remember "the story remains" intact.
The sp has been affected by the rub off of the Australian banks,yet HNZ are on track to met their guidance.As always, it is HNZ's projections that we should watch,keeping in mind HNZ's history of doing what they say they will do.
In August we will get the year's result.
The sp will be affected by a number of things.Lower earnings with lower forecast will bring the sp down.
Another acquisition,a further credit rating upgrade,or an increase in profit will drive the sp higher.
My experience is good companies surprise on the upside.
This might brighten up some folks' day. E&OE, and the flag could last a while. I still think there's a chance that gap will be filled at $1.18 level. But despite my flag-waving, think of this move as a healthy retracement after a strong run. Entirely natural market reaction, which can be seen on lots of stocks, bonds, FX, all day every day across the globe, on all timeframes. It depends how hard you look
Some buzz in the market that HNZ will need a capital raising to buy F&P Finance.
Short term negative but longer term, extremely positive.
The last acquisition not really eps accretive was it Percy. You been watching that video of Jeff too much and been brainwashed.
You mentioned HNZ share price following the Aussie banks down so its really just market sentiment putting pressure on the price, nothing the company is doing eh.
The market is a funny place eh. You never know what might happen next do you. Like who would ever had thought that in a few short months the HNZ share price could fall by 10% ......at the same time that Nuplex's share price goes up 25%.
Never mind .....just shows that HNZ could go up 25% pretty quickly to $1.60 plus ....I love flags
Yes mate as you suggest its probably time we had a look at the relative PE of HNZ compared to some of the Australian banks and see how they stack up.
Going off the 4 traders website the first thing I notice is there's only 3 analysts covering HNZ and consensus 2015 EPS is now 9.75 cents, previously 10.2 cps last time I looked. One of the brokers downgraded to under-perform in March and we've seen the SP correct materially since then. the other two brokers have HNZ as a Hold. Consensus EPS for 2016 is 10.4 cps.
Seeing as FY2015 is 11 months through its course I believe most astute investors will be looking to base investments on where they see EPS in FY16 and FY17.
In this regard I have zeroed in on FY16 as data is available from brokers for estimates and again off the www.4traders.com website I see based on FY16 consensus estimates and going off closing prices on Friday this week we have the following stocks on comparative multiples based on FY 16 of:-
HNZ 12.35
NAB 12.35, (this is not a typo the multiple is the same for HNZ)
WBC 13.13
ANZ 11.99
BEN 13.32
BOQ 12.94
Dairy in my view is to HNZ what iron ore is to the Australian banks. While I have the greatest respect for our dear friend Percy, there were many many consumer finance companies that collapsed in the GFC, most of which were not in that list I provided a link for recently and I have intimate knowledge of how one of them was behaving, (Geneva finance). HNZ's activities in the www.ifinance.co.nz, harmony and through lending like the aforementioned no wallet no worries campaign plays like a very bad groundhog day movie to me.
I think the current PE considering the risks have changed is about right. My gut feel is extra delinquencies in the riskier consumer finance sector they appear to be targeting as well as problem dairy loans will make net effective earnings growth more challenging. I think the brokers have this about right as a hold with a slight bias towards under-perform. In my view its become a yield story for the foreseeable future and I struggle to see the SP getting much northward traction this year. I guess a good and strong EPS accretive acquisition could change that, (risk to the upside) and likewise extra problems than currently foreseen with consumer and dairy loans could ameliorate consensus broker EPS growth forecast for 2016 and if especially bad could provide some EPS downside risk.
I think on balance its a hold for its good dividend yield and for growth in more favourable times ahead maybe FY2017 will see the dairy sector performing better but who would know, its a lottery really... In my view the SP could potentially track sideways for a considerable period of time and the chart quite obviously is suggesting there may be more downside risk.
This begs the question of how well we are being paid to wait ?
I'm forecasting total fully imputed divvy's this year of 7.5 cents, that's 10.42cps gross which @ $1.28 provides a 8.14% gross return which gives a reasonably supportive argument towards being on the right side of the ledger in terms of having your money as a shareholder with HNZ as opposed to earning ~ 4.5% on deposit :) Its also an attractive yield especially by virtue of its full imputation credits compared to the Australian banks.
Whether Australian banks have more headwinds than HNZ, who could reasonably say ?, but my gut tells me they face similar challenges, with quite obviously the Aussie banks under pressure to increase their capital ratio, which possibly gives those banks that haven't done so already, some specific downside risk ?
In terms of relative PE its perhaps worth noting the types of business the various banks do and the superior credit rating of the larger Aussie banks as well as their vastly longer track records.
On this basis you'd have to say the FY16 HNZ PE looks very fulsome as a ratio on a relative basis.
Hold an appropriate moderate allocation in anticipation of better economic times in the long run. FWIW that's what I'm doing at present. I mainly see it as a good yield story for the foreseeable future.
Hi Roger ,
While I can see the dairy sector being depressed for a while , I disagree with your comparison to finance companies .
From my understanding they loaned ( a lot of it inter company /related ) on undeveloped land . Brooklyn rise Wellington in one case , that massive hole North of Queenstown , bare sections at Jacks Point to name a few .
In most cases there was no interest being paid monthly on these loans as the developers had no cash flow . So the interest was capitalised ( not sure if that's the right word but I know you will understand what I'm saying ).
That was the undoing ....I mean how could you lose $ 500 Mio !!! Hanover .......
As for Dairy farmers you will know that the farming sector is / has been the backbone of the country . Most farmers are salt of the earth, hard working people . They are used to drought/ flood etc so good years bad years . So the dairy payout going South
will hurt them but they have cashflow and loans will get paid . Sure some might be stretched but with relatively low interest rates and an accommodative bank looking at helping farmers for the long term , I can't see this being a finance company debacle .
Where Heartland will go wrong is if they stray too far from their bread and butter/ traditional business. I know you have eluded to this re Harmony . I still scratch my head re SCF ( I always thought they had lent on SC farms/ stock ) After the Americas Cup
it was astounding to see all those bars on the waterfront go under and SCF as an interested party .
http://www.nzherald.co.nz/business/n...ectid=10670482
Here's a video of a chat with a heartland guy talking about equity release loans
http://www.interest.co.nz/business/7...finance-senior
A banker talking about being 'socially responsible' while screwing the oldies, he my man. Probably convinced himself that Heartland are doing this is a public service as well. Gives me the warm fuzzies
BAA mate, good on you for thanking Roger, but did you have to quote the whole post? Blocks the thread. Roger was unlikely to delete it. Cheers :)
I can't delete it now LOL. No intention to delete the truth as I see it, no matter how much of hard reality it contains. Maybe I should change my user name to "Reality Check" or a "Balanced Perspective". Most of my mates think I'm crazy getting less bullish on HNZ. Maybe I need to see a shrink to get over my hang-up's from the dozens of finance debacles of the GFC...who's right and who's wrong, only time will tell :) Market as a whole looks like tracking sideways and HNZ with it.
Apologies fair enough, that wasn't my intention, just habit.
Gentlemen and Ladies (maybe).
Lets not forget this stock had a 40% move a while back,I think the only reason it hasn't continued (yet) is that there hasn't been a new aquisition.
But if you are really concerned about where the shareprice is going,have a look at the weekly charts going back past 2012,you will see HNZ still in an upwards channel,just popping below the line of linear regression.
INMOP the weekly charts are more important than the daily,it gives great perspective as to what is happening and probably why.
PEG whichever way I look at it,even going down to a 15% growth rate,still looks very attractive.
lol, well, if you're getting all Fibby, I have found 61.8 to be more reliable, even 78.6. Those are retracement levels of course. Fibonacci extensions are interesting too (might find that 1.40 sat at a powerful extension level of the original move down 88 to 30's) I'm guessing 1.618% as not near a chart with the right tools atm
The slow grinding down of the HNZ share price is sure getting painful .... worse than going to the dentist .... hopefully not an extraction next week
But there's always a bright side - that being HNZ hasn't been this cheap for 4 months. It's sale time .... c'mon guys and gals roll up and get the bargain of the century. Probably never to be repeated prices .... the bargain of the century
Be in early ....plenty of sellers on the sideline but I think 125 is the lowest they want to go
Brave call(have you got a tardus:). $1.24 atm
Well, we've got the cartridge in the caulking gun... filling that $1.18 to $1.26 gap
Attachment 7390
Its all percy's fault mentioning the aussie banks
SMH say Banks sink ASX .....Banks are driving the losses as investors continue to take profits, or jump ship ahead of worst times to come, depending on your point of view
So in NZ it could be Heartland sinks NZX - is the story the same
But the bright side is that the sale is still on .... cheap shares and yes we are open tomorrow for you to pick up your bargain
Posted 28-02-2014.
Now we are seeing the Australian Banks having to raise capital to meet their new capital ratios.
No surprises there.!
Yet on 21/5/2015 Heartland stated " Heartland expects its NPAT for the year ended 30 June 2015 to be at the UPPER end of the previously advised NPAT range of $46mil -$48mil."
Just doing what they say they will do.
No surprises there.!
That's a truly depressing post of yours Percy, just as I was coming to terms with things and seeing he bright side.
You said the other day that HNZ is (rightly or wrongly) being tarred with the same brush as these Aussie banks and that is the reason why the HNZ share price is falling.
Does this mean that if things continue to get worse for the Aussies then HNZ will be rerated and won't trade at lofty multiples and we will see the share price continue to fall?
Doesn't look too good for the nextvyear or two does it?
No.Once the year end result is announced, the market will realise Heartland do not share the Aussie Banks problems [which could include the Auckland property sector,and even the odd dairy farm!!!].
I would expect the odd brighter analysts can already see the difference.
I am off course mindful that Heartland will give us another pleasant surprise before the result is announced late August,either with a great acquisition,or a further credit rating upgrade.
And singing "the piano hass been drrin king ;.... but not meee." hic
know when to hold emm ; no when to fold emmm ehh Rog
love tom waits music
Nice to see a solid first half from UDC.[Owned by ANZ Bank ]
Another very well run,and profitable business in the finance sector.
Always possible?
I think you have to expect the business will see saw between them.
Yet, there seems to be plenty of room for both in this sector.
Both have enjoyed years of success in this sector.
Going from remarks, both are confident of years to come.
I share their confidence.
This paragraph in this article caught my eye
http://www.interest.co.nz/rural-news...on-after-sixth
"The Financial Stability Report was silent on what action would the RBNZ take if it believed the dairying sector was becoming a threat to financial stability. But we think the most likely response is that the RBNZ would require banks to hold a larger capital buffer against their existing agricultural loans, to absorb an expected rise in defaults"
Of course the farmers would be paying for this in higher rates, couldn't expect shareholders to cover that could we.
Then again Heartland is already so over capitalised it won't affect them.
I think you must keep in mind Warren Buffett's quote;"when the tide goes out, we will see who is swimming naked."
The big losers in the dairy sector will most probably be the lenders who have lent on dairy farm conversions.I expect we will see some surprises,with 1st mortgages over land looking "at risk".
And yes some banks will have to shore up their capital.
As I have pointed out,and you noted the SMH article,the Aussie banks face challenges that are putting their share prices under pressure.
Heartland do not face these pressures,however they are suffering the "rub off"of investors avoiding, or leaving the sector.
With increasing profits,and dividends,Heartland will recover.Any acquisition, or credit rating upgrade will speed up the recovery.
HNZ is a seasonal business. I don't think their is much value comparing quarters in the same year. Better to compare q315 vs q314
Banking NPBT for 9mths to 31 march 15 43527
Banking NPBT for 9mths to 31 march 14 36980
Growth 17.7%
But maybe there has been a slowdown in the last 3 months?
Banking NPBT for 3mths to 31 march 15 15245
Banking NPBT for 3mths to 31 march 14 12891
Growth
18.2%
No slowdown. So if anything, the foot is going down on the accelerator over the last 3 months.
Given HNZ is now trading on a FY15 pe=12, and growth of 18%, I'm quite comfortable with valuation.
This analysis excludes the HER business as I don't have quarterly data for this. Remember, the HER business also includes some tax losses.
Noodles, maybe seasonal business but for several years any half year earnings have been more than previous half year
Have you ever tried a seasonally adjusted earnings series, interesting
Aussie banks have an enviable record of profit growth and have built their credibility over many decades through all sorts of economic conditions.
Yes the regulator wants them to recapitalise to international standard capital ratio's but they're not doing this to "stand still"
We're comparing PE ratio's because they're quite obviously the relevant comparisons. Consensus EPS forecast is 9.75 cps this year v 9.0 cps last year, hardly stellar growth and not especially inspiring compared to the Aussie banks.
Consensus EPS for 2016 is 10.4 cps so consensus implied growth in 2016 is 6.6%. Quite clearly I am more bearish on bad and doubtful debtors in FY16 and especially FY17 and doubt we'll see much EPS growth, if any.
Aussie banks have the runs on the board over a vastly greater timeframe than HNZ and also a much stronger credit rating and are operating in a lower risk sector than HNZ, (mining company loans excluded).
At the risk of sounding like a broken record, Dairy is potentially to HNZ what Iron ore is to the Aussie banks so to me its somewhat disingenuous to suggest HNZ doesn't face its own unique set of challenges of a very similar nature to the Australian entities. Selling Holden's to sharemilkers on no deposit no payment terms till 2016...they're good for it right ?
Stats NZ released the Building Activity Survey and headlined Non-residential activity down 1% - seasonally adjusted of course even though actual activity was up more than 10%
You pointed out heartland earnings are seasonal, I had never thought so.
Applying a basic seasonality factor based on half year earnings then Heartlands H2 earnings guidance of $23.5m (actual) is a seasonally adjusted 9% DOWN on previous half year .....even though 24% more than the same half year a year earlier in actual terms.
Load of **** eh .... Methinks heartland earnings aren't really seasonal and the fact that in the past H2 is higher than H2 is more to do with an underlying growth trend (not seasonal) which has now come to an end.
Whatever come August Jeff will be touting the huge growth achieved and saying well positioned for this to continue .....and hoping like hell H1 will be better than The current half year.
Share price cheap as eh ......if Roger used his graham formula and your 18% growth we would get $2 plus .....wouldn't we?
Have a nice chart showing thee seasonally adjusted earnings but cant load from a ipad
Was not me.!!!!!!!!!!!!!!!!!!!
Well we can't complain about liquidity.
Nearly 10mil shares traded today.
Big volume through went through from 4.30pm - around $10m traded.
Vast majority traded in big blocks at $1.22. It occurs to me there's some very smart minds at work at Quadrant private equity. You boys at Quadrant can feel free to flick me a PM if you want a Kiwi consultant on your team.
Possibly I have the wrong attitude.I don't often set target number of shares I want to hold.As you know my biggest mistake in the market has been selling down my Ebos stake over the years.I decided early last year to rectify that, and set a target number of Ebos shares I wanted to hold.At the same time I set a target figure I wanted to hold of Heartland shares.I achived both targets by selling a number of my spec Australian shares.For once I got my timing right.
Recently I set a modest target holding figure for SEK,which I have now achieved.
With EBO,HNZ,and SEK I have dividend reinvest.My wife takes the cash with her EBO and HNZ.I am not looking to buy any more shares of these companies.
With HNZ,should I need funds I would most probably sell the shares I receive with the DRP.
I have always found well managed companies surprise on the upside,so therefore I think I am "well positioned."
Another trip to church needed for me
I sold some of my heartland shares (hard far far too many) and moved some cash from one socially responsible company in Heartland to an even more socially responsible one in Restaurant Brands.
You would have been better off buying Air NZ shares as only an infinitesmal number of people will ever die in an air disaster compared to the multitudes whose death would have and will be largely influenced by their daily/weekly visits to KFC:eek2: PS- Those not in the know, winner has stated he would never buy airline shares because he couldnt live with himself if their was a plane crash.
Good day on the bourse today, Heartland didn't go down even though the Aussie banks took another pummelling.
That No More Gaps not working Xerof, what's up
1.22 low is filling the gap. Just need to squeeze the trigger a bit harder, or clean your nozzle of dry material:D
Basically what I've been saying for many weeks now.
http://www.nzherald.co.nz/business/n...ectid=11460713
I wonder about Fitch's comment about NZ banks having ample capacity to absorb impaired - loan levels similar to 2009-2010.Were they meaning NZ banks,or were they forgetting that the Australian banks need to shore up their capital?
Heartland with their "niche", "diversified" rural lending should not face the challenges the likes of the Australian Banks, such as BNZ ,whose rural exposure is mainly mortgage lending.
The article is not all doom and gloom
"Fitch said farmers were well placed to withstand weaker prices because of the substantial cash payout by Fonterra from the record 2013-2014 season.Smaller payouts this season were widely anticipated following last year's drop in global dairy prices, and farmers have generally used last season's high prices and dividends to pay down debt or invest, Fitch said."
It also points out that 25% of farmers would experience negative cashflow.
But clearly there will be pain, but what is not clear or quantifiable is the impact on HNZ. For instance, how many farmers will actually go under? Of the 25% mentioned above, how many will be able to extend their existing mortgage facilities? How many will be able to get loans from family? Will the RBNZ lower the OCR and mortgage rates drop. How low will the currency fall with RBNZ drops rates? If in fact a HNZ loan does go into default, how much will the security (cows or equipment) be worth when HNZ repossess?
Even after all these unknowns, rural lending only represents 17% of the HNZ loan book. And not all of that is dairy!
So even if the recent HNZ price weakness is due the dairy price, I think it is well and truly priced in.
The whole Banking sector has caught gravity, has had it for a few weeks. Some chart comparisons/overlays show in first few weeks there was only vague correlation with HNZ but as the Aussies/Kiwi banks began moving further down HNZ seems more tightly correlated. Perhaps HNZ may now be part of the broader de-risking going on in banking/finance generally? The HNZ daily price gap hasn't quite closed and it's correct, that HNZ showed fortitude when the big banks sold off Fri but the weekly chart tells a story with weekly 39EMA (approximates to the daily 200EMA) at around $1.20 now close at hand and below that some horizontal price support between $1.18 and $1.12, though the 200EMA traders would be out by then. Other chart indicators are weak/down and arguably not yet oversold. If the banking sector rout continues, HNZ may well drop with it. Thoughts?
Im thinking you are right re "broader derisking going on in banking....etc"
ASX down 4.8% this week ; worst in 3 years; lead by the banks
I think the market reacts to results.Should earnings meet or exceed management's and analysts projections,the share price usually goes up.Should the earnings be lower than expected the share price goes down.
Once we have Heartland's result in late August we can work out the ratios, ROE,EPS, PE,dividend,provisions, and hopefully we can get some idea of projected growth.
At this time I think we will see that Heartland are in better shape than the Australian banks,with better growth prospects,so I expect they will be rated differently.[positively].
We should note two weeks ago Heartland had 9 months trading under their belt and said they should be at the top end of their forecast.
The Australian Banks have shown remarkable strength,a huge capacity to grow and pay increasing dividends.They bounce back.
In 1991 Westpac had huge loses on commercial property.At one stage it looked like Kerry Packer would take them over at under $4.On Friday they were down to $31.19,so someone who brought in 1991 would be up 732% plus they would have enjoyed lovely dividends.
From 1991 the others were up as follows [does not include dividends] ANZ 917%,CBA 1076% and NAB 671%.
On 21st May Heartland announced their 9month result to 31st March.
So from 31st March to 21st May they had another 6 weeks trading.They would have had a fair idea how those 6 weeks had gone.Had they not gone well you would not announce expects;" npat to be upper end"!
Heartland's year ends 31st June.So from 21st May to end of June they had to guess how the next 6 weeks would go.
I would think that would have been a piece of cake.
I therefore think all the headlines of doom have been overdone as far as Heartland are concerned.
Spot on Percy, you are so so right.
So NPAT will be $47.0m to $47.9m. Nothing more, nothing less. Anything more they haven't really been upfront and telling porkies. So close to the end of the year they already knew the answer within a few bucks.
I think Roger highlighting dairy lending is relevant. He is not saying it might hurt heartland this year but has a genuine concern about the next year or so. Things slowly get worse.
I think taking the associated risks into account is wise. Ignoring the potential risk and not assessing its impact is folly. Your assessment no doubt will differ from Rogers
Doesn't heartland only use Fitch as its rating agency? They sacked the other one I think.
Methinks those comments from Fitch is a veiled warning to the likes of Heartland, probably reinforcing 'publicly' what has been said in private.
Noodles mentioned maybe OCR go down and lower interest rates will help stretch dairy farmers.
Bagrie from ANZ says a certainty next week, good old Cam (are ally good bloke).
That Herald piece said "Reserve Bank data show that floating-rate loans amounted to 72 per cent of total dairy lending in June 2014, up from 16 per cent in 2008"
That's good then, most dairy farmers (and every one else) will have heaps less interest to pay and the pressure is off. But then they will like all us moan like hell when inflation goes way over 3%
Conversely if interest rates go up life becomes tough for the stretched ones. Say a 1% point increase in rates would lead to roughly 15% more on the interest bill - heck reduced income and much higher outgoings.
Really tough for those 10% who have 33% of sector debt .....bet you they are the highly leveraged ones. (I won't mention farm prices)
Ignore the potential risks not assessing its impact is folly
All lending has associated risks.All banks take some "big hits".Nature of the beast.Over lending in any one sector,often leads to big loses for banks.
What we can learn from the history of the Australian banks,is their capacity to recover very quickly from "big hits".
I will point out again the challenges the Australian banks face;over valued property market,both Aussie and Auckland,mining,manufacturing,and retail, and in NZ their exposure to rural mortgages.Plus the fact they need to improve their capital ratios.Yet they will get over these hurdles quickly.
Heartland will take hits also.Nature of the beast as I have said.
Yet I feel the prospects for NZ banks is a lot better over the next two or three years than for the Australian banks.This is based on the economic forecast for NZ being so much better than the forecast for the Australian banks.Yet some NZ sectors will face challenges,
so I can see where Roger is coming from,yet with such a widespread diversified portfolio HNZ is "well positioned."
Me too.!!!
Then we can say we are "well positioned" to wait for the time we receive a $1 a year dividend.!! Bring it on.! lol.
I keep forgetting the huge dividends the Australian banks have paid over the years,but going back to basics we must remember, "it is better to own a bank,than have money in a bank."
I had forgot about Al Dunlap becoming involved .... Chainsaw Al
He had an inglorious ending to his career.
Best insult thrown at him was being voted 6th worst CEO of all time
All these good times even before Rogers time eh Percy ....ha ha
Not all bad mate. Many cutting back on cattle numbers and costs a bit during the dry season to relieve the cashflow, by taking advantage of high prices at the meatworks http://www.nzherald.co.nz/business/n...ectid=11461065