Dividend Capitalised Valuation: The Data: FY2017 perspective
Quote:
Originally Posted by
Snoopy
Note that the financial year starts on 1st July of the previous calendar year and ends on 30th June.
Year |
Dividends Paid 'per share' |
Significant Event During Year' |
FY2013 |
1.5cps(sp) + 2.0cps |
17th December 2012: Heartland becomes a bank |
FY2014 |
2.5cps + 2.5cps |
1st April 2014: Seniors 'Reverse Mortgage' Business Acquired |
FY2015 |
3.5cps + 3.0cps |
10th September 2014: invests in Harmony P2P startup |
|
|
28th October 2014: Credit rating upgraded from BBB- to BBB (Fitch Ratings) |
FY2016 |
4.5cps + 3.5cps |
FY2017([) |
5.0cps + 3.5cps(f) |
Average FY2015 to FY2017 inclusive |
7.66cps |
|
(f) indicates forecast result.
I have chosen to use the last three years of operation as indicative, as these years include the full contribution of the Reverse Mortgage Portfolio, a critical component of Heartland going forwards.
Year |
Dividends Paid 'per share' |
Significant Event During Year' |
FY2013 |
1.5cps(sp) + 2.0cps |
17th December 2012: Heartland becomes a bank |
FY2014 |
2.5cps + 2.5cps |
1st April 2014: Seniors 'Reverse Mortgage' Business Acquired |
FY2015 |
3.5cps + 3.0cps |
10th September 2014: invests in Harmony P2P startup |
|
|
28th October 2014: Credit rating upgraded from BBB- to BBB (Fitch Ratings) |
FY2016 |
4.5cps + 3.5cps |
FY2017 |
5.0cps + 3.5cps |
FY2018 |
5.5cps + 3.5cps |
Average FY2015 to FY2018 inclusive |
8.00cps |
|
I have chosen to use the last four years of operation as indicative, as these years include the full contribution of the Reverse Mortgage Portfolio, a critical component of Heartland going forwards.
SNOOPY
Dividend Capitalised Valuation: The Calculation: FY2017 perspective
Quote:
Originally Posted by
Snoopy
Plugging in a representative yield, one that represents the ups and downs of the banking cycle of Heartland in its current form, we can now arrive at our 'Capitalised Dividend Model' valuation
(Representative Dividend per Share) / (Acceptable Yield) = Share Price (an algebraic manipulation of: Dividend per Share / Share Price = Yield )
7.66c / 0.72 x 0.075 = $1.42
A reminder here that NTA was:
91cps
at balance date. This means my fair valuation is at a good premium to asset value, a credit to management from the rag tag of assets that they started with.
This $1.42 valuation is measured at the average point in the business cycle. One might argue that we are now riding high in the business cycle and that this $1.42 valuation is consequently too low given today's circumstances. I wouldn't argue with that. But, ever the bargain hound, neither would I look at buying any shares myself until that share price drifts down to that $1.42 level. Don't say that Snoopy didn't warn you!
Plugging in a representative yield, one that represents the ups and downs of the banking cycle of Heartland in its current form, we can now arrive at our 'Capitalised Dividend Model' valuation
(Representative Dividend per Share) / (Acceptable Gross Yield) = Share Price (an algebraic manipulation of: Dividend per Share / Share Price = Yield )
8.0c / 0.72 x 0.075 = $1.48
A reminder here that NTA was
($569.595m - $71.237m) / 516.684m = 96 cps
at balance date. This means my fair valuation is at a good premium to asset value, a credit to management from the rag tag of assets that they started with.
This $1.48 valuation is measured at the average point in the business cycle. One might argue that we are now riding high in the business cycle and that this $1.48 valuation is consequently too low given today's circumstances. I wouldn't argue with that. But, ever the bargain hound, neither would I look at buying any shares myself until that share price drifts down to that $1.48 level.
SNOOPY