How committed Heartland are to this gas emmissioon stuff will show we hear that they reduced lending to 'dirty' industry sectors
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One wonders what might be irking investors ?
The red team dropping the sledgehammer on the real estate market affecting the economy ? Maybe ?
The RBNZ continuing with dividend restrictions at 50% until July 2022 ? Possible ?
I recently posted a comparison of the metrics of HGH v its peer group (see post #14476), and note that HGH's share price has declined a bit since then and therefore their comparative metrics are even more compelling. https://www.marketscreener.com/quote...44/financials/
Looking forward to FY22 (hard to believe we're in the final quarter of FY21 already) analysts are seeing eps of 15 cps so on $1.74 the forward FY22 PE is just 11.6 Its clear they can work around RBNZ dividend restrictions (recently paying a 4 cent interim dividend with full restrictions out of Australian profits) so now we're at 50% on locally sourced profits I foresee an interim dividend of about 5 cps this time next year and a final of about 6 cps for FY22 by which time RBNZ dividend restrictions should be lifted.
11 cps fully imputed = 11/0.72 = 15.28 cps gross and on $1.74 that's a gross forecast yield of 8.8%
I think we're in as least as good a position as the Australian economy with the chances of a recovery as the vaccination program is rolled out and business confidence is restored so i see the significant discount to its peer group as excessive. The metrics highlighted above are right at the most attractive end of the scale of what this company has traded at in many, many years.
The chart is a bit of a worry but this offers such a broad spectrum approach to investing in the economic recovery and has reasonable earnings growth prospects going forward together with trading on what ostensibly is a no growth forward metric that its a very easy stock to like even if holding at the moment feels like an exercise in how stoic one can remain.
Provided Cindy and the red team don't morph into absolute communists we should be all good.
From a Beagle post - Average PE of peer group 15.4 / HGH FY21 PE 12.5 -- conclusion HGH undervalued
Same peer group on a Price/Book Value basis - P/B of peer group 1.29 ? HGH P/B 1.37 - Conclusion HGH more than fairly valued.
Some will say earnings are key determinate of price (ie why PE is main driver) but if you throw ROE and retained %ages into the equations one might see why HGH tends to trade at a lower PE than its peers.
And then big is seen as better (less risky?) than small is often used a reason for multiple relativities - if only all things were equal
You continue to use NTA which really isn't the best measure in my opinion when HGH makes around double the net interest margin on its loans than its peer group. Capital ratio's are the only other variable. I will always believe its the earnings that really matter...it's my life's work. PE multiples are as you know also a function of expected growth rates going forward and HGH looks good on that score as well, relative to its peer group. Goes without saying HGH is the only bank that will give you full imputation credits with dividends too so has the highest gross yield by quite some margin.
All its peer group's performance's are inextricably tied to the economy and I reckon we're in at least as good shape as Australia provided your mate Cindy doesn't get any more radical for her comrades. I suspect that risk is what's been repriced into HGH shares in the last week and a half. Ouch. Grant and Cindy strike again.
Those relative PE ratios with OZ peers
Nothing seems to have changed over the last 5 years or so ...much to Jeff’s frustration
Must be something that causes it ...obviously not that high NIM margin
From Heartland 2014 ASM preso
I'm curious if there is a link between HGH SP and the property market. Do investors see a weaker property market giving rise to relatively lower security levels on reverse equity mortgages for HGH? (as in lower headroom) Would that explain a relatively weaker SP in light of the recent Government announcements?
Nah! It's something to do with shares I buy... kiss of death...
Rereading half yearly report " interest from leading agrigators regarding Australian reverse mortgage book " ....and also " growing aussie reverse mortgage organically and inorganiclly " does this mean someone buying the debt and giving heartland money up front and the inorganic growth mean buying other banks reverse mortgage portfolio...several banks that used to offer reverse mortgages but don't now ...with policies still on books and returns getting less and costs per customer climbing..( westpak) spring's to mind....announcement 2nd half of financial year..
The weakness is a bit of everything but I think the potentially slower economy is the most relevant. Just a headwind that the market hadn't thought about a month ago.
Sometimes I like to reread the source material others quote to get some context. If the reference is incorrect this becomes difficult. In fact the above quote is not from the half yearly report, because at the time of writing no such separately titled Half Year Report has been issued. I did find the above quote but it was in the 'Half Year Result Press Release' on page 8, which is a different document.
Likewise the above quote is from yet another document, the Half Yearly Presentation (not the Half Yearly Report) on Slide 27.
I would interpret 'Organic Growth' as the growth as a result of normal business operations. In the case of Reverse Mortgages it is not clear what this means. Because even if no new Reverse Mortgages are issued the compounding interest on the existing reverse mortgages will ensure that at least in the medium term the Reverse Mortgage business will continue to organically grow. Yet somehow I suspect organic growth would include the writing of new Reverse Mortgages through established distribution channels.
By 'Buying debt and giving Heartland money up front', I think you are referring the process of loan securitisation. I think that is different to 'Organic Growth'. Loan securitisation refers to the rejigging of the financing that supports a particularly 'grouped subset of the Heartland loan book', by selling that portion of the loan book on to a third party. However, although this can free up Heartland capital to pursue more 'organic growth' as a side effect, the process of securitising existing loans is not a growth strategy in itself.
I would say 'interest from leading aggregators' does refer to the loan securitisation process.
As for the inorganic growth mentioned, you might be onto something with that residual reverse mortgage loan portfolio at Westpac. Westpac seem to be taking every opportunity they can to simplify their business. Getting rid of a Reverse Mortgage Rump would certainly do that. I think it would be a very substantial acquisition for the thinly capitalised Heartland Australia though, even after several years of Westpac being inactive in the reverse mortgage market. There are smaller moribund reverse mortgages facilitators operating the the Australian market nevertheless. So you might be right, even if it isn't the Westpac reverse mortgage portfolio that is up for sale. Bear in mind though that the quote you referenced began 'Explore opportunities', which would suggest there is no imminent 'done deal'.
SNOOPY
Two weeks ago global dairy (WMP) prices fell after a good run up ....and in last 2 weeks after a good run up Heartland share price has fallen quite a bit (6%)
Last nights dairy auction saw prices ‘stabilise’
That’s good news
Haha, most entertaining thanks winner. I was not expecting a link between dairy farmers buying and selling HGH shares based on their milk price fortunes, but I have seen you mention this before. There is a website dedicated to spurious correlations: https://www.tylervigen.com/spurious-correlations. There is a 94.7% positive correlation between the number of people who die by getting tangled in their bedsheets with US per capita cheese consumption....!
Joking aside, you have me sufficiently curious that I am tempted to run some numbers on dairy prices versus HGH share price. Have you run the numbers on this to test the strength of the correlation?
For Ferg
Diary prices and GDP linked and Heartlands fortunes reliant on the prevailing economy conditions says Jeff
I haven’t updated Heartland share price / WMP correlation for a while as I don’t have access to GDT data and don’t fancy paying to do so.
Was a reasonable strong correlation ...maybe not the quantum but the direction (up/down) with lags of both was interesting.
Good news: Heartland now stands alone with the cheapest home loan rate in the market at 1.99% with its online offering (HSBC raised its rates from 1.99% to 2.25%)
now a significant quarter of a percent gap between heartland and everyone else now at 2.25-2.29%
https://www.interest.co.nz/personal-...fter-two-month
isnt it a bit like OCA not raising their prices enough?
discl
have some