What I don’t understand is why they keep asking for more money. Why don’t they just pay a lower dividend and put the rest towards “growth”
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What I don’t understand is why they keep asking for more money. Why don’t they just pay a lower dividend and put the rest towards “growth”
Anyone else find it interesting that they're doing another capital raise after doing one earlier in the year and $100m capital notes issue as well.
Just saying that's a lot of capital to raise. I guess its all good and going off recent information reverse capital mortgages which are high margin are growing very strongly and have to be funded. I suspect regular capital raises will be a feature going forward.
Been running my own figures and I can't see where the "strong" growth is.
Sure 12% growth sounds nice on the prior three month period (Q1 2017) but as any of us more experienced investors do, we dig down a little further to identify the only earnings figure that matters to us shareholders.....Earnings per share (EPS). Now this rights issue will be the fourth dilutionary event this calendar year (with the SPP and two DRP's) all of which have given the company addition funding to grow on behalf of the shareholders.
I'll share my figures to illustrate:
1st Qrt 2017, NPAT $14.3m on 485.47m shares, = EPS of 2.95c
1st Qrt 2018, NPAT $16m on 522.65m shares, = EPS of 3.06c
Actual prior calendar period EPS growth rate of 3.7%
As you can see this is a way away from a "strong" growth rate.
Plus this being the second capital raising this year, shareholders should ask themselves if they are now actually funding the company's growth out of their own pockets?
I've been in this one long term, since it had the BSH ticker. It's been a great investment.
Rather than just take 1 quarter in this and last year, I prefer longer term view and looking back to say 2014 as an example, EPS has grown from 9c to 12c (expected), dividends from 6c to 9c and SP from 85c to 190c. Throughout, the company has done what they said they would do and are actively broadening the business in innovative ways, mostly online, without direct competition with the Big Four.
I see no reason at this stage to dampen my enthusiasm for HBL as a long term investment and core of my portfolio.
From www.4-traders.com
.....................2015....2016....2017....2018. ...2019.....2020.
divie................7.5......8.5........9.......9 .53......10.1......10.6
eps.................10........11........12.......1 2.9.....13.9.......14.5
Not only are we seeing an increasing dividend and eps growth, we are also seeing ROE and ROA increasing yearly, on the larger capital.
Good post and fair comment but just a couple of notes of caution might be appropriate for new investors buying at the current $1.90 price.
1. I kicked off my investment in HBL about that time at about 85 cps after the credit rating upgrade and despite sitting out two years when the dairy price collapse posed excessive perceived risks to me and missing 17 cps of the SP gain its been an extremely rewarding investment BUT...to be fair we have seen a substantial expansion of the HBL's PE over that timeframe and their PE now exceeds all the big Australian banks as well as Bendigo Bank (BEN) and Bank of Queensland (BOQ) and I think it could be unwise to predicate any further or new investment on an expectation that the PE ratio will continue to expand.
2. Dairy prices have been softening to a fair degree lately and I would hate to see the dairy industry come in for another crisis so soon after the last one as many farmers are already encumbered with substantial extra legacy debt issues from the last one.
Like any other business there are risks faced by this one. For what its worth I see the shares as fair - fully priced at the current level with future capital gains dependent on EPS growth.
Agree with you on all counts there as I was holding from day 1 as well.
The company has executed on everything they have said and in my opinion is one of the better ones on the NZX. I'm just looking at the numbers, and they show me that EPS growth is between 3-4% on a rolling 12 month basis.
Plus looking ahead at the current forecast FY18 NPAT of $68m (upper range) and post Rights issue and DRP, total issued capital approx 564.7m shares (est).
We have FY18 EPS of 12.04cps (FY17 EPS was 11.76cps), so forecast EPS growth rate of 2.4%.
This is just how I choose to look at the HBL story, each to their own and I respect that :-)
And if we accept that your viewpoint has some validity, (and I do) that puts their EPS growth rate smack bang in the middle of the range of the major Aussie banks which are on a materially cheaper PE. FWIW I will continue to hold my moderate position and am happy to buy more at $1.70, not at $1.90.