I read Peter's comment differently. He said "change funders" which I take to mean that the so called "mismatch" you have talked about is not unusual. But maybe I'm reading his comment wrong.
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Global Dairy Prices up 2.8%
That’s a good sign ......for the Heartland share price
That should settle the other Beagle's nerves. Maybe HGH is a takeover target ? https://www.stuff.co.nz/business/118...k-market-share
A merger between Kiwi Bank,TSB,SBS and perhaps The Co-Op Bank would make sense.
Can't see HGH being much interested,as they have too many of their own organic growth opportunities.
Kiwibank is 51% owned by NZ Post
NZ Post have no money and lots of it own issues
Kiwibank buying BNZ (or anything) as per that article is nonsense
Here is something not so good. Those residual Dairy farm loans may be difficult to quit. A market update from Keith Woodford
https://keithwoodford.wordpress.com/...nue/#more-2116
"None of the Big Four banks are interested in new dairy lending unless the investor has high equity. The related policy is that all banks now want repayments of principal whereas interest-only loans were the norm for many years. At least two of the Big Four banks are actively trying to reduce their exposure to New Zealand dairying."
Heartland crashing down to $1.84 at the market close, minus 2c for the day!
SNOOPY
Chatting with my client 'Johnny" just before Christmas he told me that he had just sent off a couple of truck loads of mature steers to the works which will result in a record ever price of more than $2,600 per head. He's been farming for more than 40 years and never seen prices that high.
A lot of HGH's lending is livestock finance so that's good.
Not that rosy .............NZ dairy farm sales plummet, prices weaken, despite firm outlook
https://www.nzherald.co.nz/business/...ectid=12295844
What!!!!sell...sell...sell..... anyway that was 2019...now is 2020..lol
YES off course I forgot last year ............now :scared:
I am not bringing up the plunging price of dairy farms in an attempt to start a run on Heartland shares. I am trying to show that this, combined with the Heartland Australia funding mismatch, poor cashflow (inherent in a growing Reverse Mortgage business) and the late business cycle's likely effect on second tier lenders are all reasons why Heartland should not trade a a premium to other banks. The big banks have their own problems, different to that of Heartland Bank. I think the whole sector should trade at a discount to the market - no exceptions!
SNOOPY
It already is Snoopy and always does. Forward PE of HGH is about 13.5 compared to the median for the market of 19 and average by market cap of about 30. That's plenty enough of a discount in my opinion.
If you want something new to worry about, start right here https://www.msn.com/en-nz/news/world...cid=spartandhp
We are getting close to dancing on the head of a pin Beagle. I think we both agree that there is a least one opportunity to invest in the finance sector in today's market. We have both bought into HGH this year. Whether one should continue to accumulate at a PE of 12 (HGH at $1.64) or a PE of 13.5 (HGH at $1.85) comes down to what yield you would see as acceptable to offset the inherent risk of the investment.
Given your raw PE figures for all Australasian banks, I would be inclined to accumulate ANZ and reduce HGH. Of course the problems at ANZ dwarf any problems at Heartland in dollar terms. But in proportion to the size of the bank I think the potential problems at Heartland are at least a match for those at ANZ. I don't see Heartland as any less risky than the other banks and I think it should be trading on a PE of 12. That is a fairly minor variation on your position in the big picture of things.
SNOOPY
The two beagles are almost in agreement. It is now time to send you to the Middle East and see what you can do there.
:lol: :lol:
Snoopy - I investing in HGH primarily for yield and growth in yield in the years ahead. Its the only bank here that pays fully imputed dividends and I believe they will continue to do so for the foreseeable future.
Quite apart from the massive issues yet to be resolved with Australian banks https://www.marketscreener.com/news/...nks--29752485/
including their substantial undercapitalisation of New Zealand operations, none of them provide meaningful imputation credits which means you're on the back foot (paws:) ) in regard to yield right from the get-go.
I'm comfortable with 7.5% gross yield in this ultra low interest rate environment which assumes no increase in the dividend for FY20 and I'm also comfortable with a PE of 13.5
Its difficult to find better value on the NZX than HGH at present.
In terms of the difference in PE's between HGH and ANZ its probably worth noting that according to average forecasts of analysts on market screener they are forecasting average growth in eps for HGH over the next 3 years of ~ 5% per annum and for ANZ ~ 4% per annum.