Cherrs Winner69. Has small holding but it is for my son higher education fund. so will keep it long term. Thanks
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let me think on this unsolicited offer. $1.40 paid over 10 years, that's $0.14 per year. For which I lose $0.08 per year in missed dividends, and no longer own the shares.
Do I want to sell my HBL shares for $0.80 and take 10 years to receive that money?
Ummmmmm. Give me 10 years to think about it. :mad ;:
Beware:
HBL
09/06/2016 08:30
GENERAL
NOT PRICE SENSITIVE
REL: 0830 HRS Heartland Bank Limited
GENERAL: HBL: Warning on Unsolicited Offers from Acasta Limited
NZX Release
Warning on Unsolicited Offers from Acasta Limited
9 June 2016
Heartland Bank Limited (Heartland) (NZX: HBL) has received a notice from
Acasta Limited (Acasta) that it intends to make unsolicited offers to
purchase Heartland shares from certain Heartland shareholders.
If you were to accept that offer, you would be swapping your Heartland shares
for an unsecured debt from Acasta which would be payable over 10 years from
30 June 2017. No information has been provided to us about Acasta's ability
to fund such a debt obligation and you would be running the risk that Acasta
may default in payment during the 10 year period.
The offer by Acasta is at a price ($1.40 per share) which on its face is
above the current market price of Heartland's shares (which was $1.28 at the
close of trading on 8 June 2016). However, in the detailed terms and
conditions of the offer, the total amount of the offer is proposed to be paid
in 10 instalments over 10 years from 30 June 2017, which has the effect of
making the offer only worth approximately $1.07 per share.
Shareholders who accept the offer from Acasta will not be entitled to any
dividends during the 10 year period - they will be foregone to Acasta. By
way of example, if the offer was made this time last year and you accepted
that offer, you would not have received Heartland's last two fully imputed
dividends totalling 8c per share. For further information on what this means
for you, we recommend you consult your financial adviser.
The sole director and ultimate shareholder of Acasta is John Armour who has
been involved in similar unsolicited offers to shareholders of Heartland and
other NZX-listed issuers.
Should any shareholder receive an unsolicited offer, Heartland strongly
recommends seeking independent financial advice and checking the current
market price for Heartland shares at www.nzx.com/companies/Heartland.
In view of the limited tools available to regulators to protect shareholders
from these unsolicited offers, Heartland has also established a Share Sale
Plan (Plan) offering shareholders who hold not more than 10,000 Heartland
shares (Eligible Shareholders) the opportunity to sell their shares at the
then current market price. If an Eligible Shareholder chooses to participate
in the Plan, Heartland will facilitate the on-market sale of their Heartland
shares through a broker and will pay the brokerage fees associated with the
trade. A copy of the Share Sale Plan Document will be mailed to Eligible
Shareholders, and will be available on Heartland's website
http://shareholders.heartland.co.nz/.
Should you receive an unsolicited offer from Acasta and are contemplating the
sale of your Heartland shares, Heartland strongly recommends that you
consider taking advantage of the Plan if you are an Eligible Shareholder.
Participation in the Plan will ensure you receive a market price on the day
of sale for your Heartland shares. As noted above, the value of the offer by
Acasta is substantially below the current market price, so it is almost
certain that you would receive more money selling your Heartland shares under
the Plan.
Heartland is also sending the attached letter to shareholders today.
If you would like confirmation as to whether any other correspondence
received is an official Heartland communication, or whether an offer to buy
your shares has the support of your Board, you can contact Heartland's
company secretary by email (Anna-Lisa.Strain@heartland.co.nz) or by phone (09
927 9151).
- Ends -
Anybody able to enlighten me on who JOHN ARMOUR is aside from being sole director of Acasta Ltd
I think Heartland are "well positioned" ;), and the price offered (and the terms!) do not even remotely take into account HBL's potential
Embedded in my copy of the article of the Sky/Vodafone marriage in the Herald this morning was an advert for Heartland Bank (usually it is some airline or other):
http://i7.photobucket.com/albums/y26...andBankUsa.png
which I clicked on, and then I choked on my morning bowl of milk and tuna as I realised that they may be more than one Heartland Bank in the world!
Heartland Bank: "Where Banking Feels Good" :p
Best Wishes
Paper Tiger
If there are any useful metrics that can be pulled from this sort of data then the important one is the ratio of 'Total Provision for Impaired Assets' to 'Gross Financial Receivables'.
That is to say how much you are going to lose related to how much you lent.
It may provide interest to some to compare 'Total Impaired Assets' to 'Gross Financial Receivables'.
There is insufficient years of history to attempt to trending the data.
What should really matter, to be blunt, is too make as much real profit as possible without it all blowing up.
So the aim is not to minimise the provision for impaired assets/impaired asset expense per se but to achieve the greatest sustainable difference between interest earned and impaired asset expense.
Or to put it simply maximise the reward to risk ratio/minimise the risk to reward ratio.
And so far Heartland have been doing an excellent job of achieving this and appear to have what it takes to continue.
Time to drink the tea, clean the teeth and put the tablet away.
Best Wishes
Paper Tiger
As usual, Do Your Own Research.
I hope you slept well PT, and trust that Snoopy just might agree with you on point 5&6.
I'm only a small holder of HBL yet I appreciate you both running your experienced eyes over their figures. What I like about HBL is its willingness to explore non-traditional lending opportunities and niche markets, and as table 3 shows, they seem to be doing their best to minimise the risk on their loan books.
Paper Tiger.At the end of the day some/a lot of impairements,past dues and overdues finally become bad debts.And as you rightly point out the
ratio of bad debts to total loans is what we must watch.The above table clearly shows they are reducing.,as is the cost to income ratio.With Heartland Bank developing more online products, such as "open for business", and more online channels, the cost to income ratio will further decrease,while the net interest margin will further increase.
The Key Financial/Operational Metrics prove Heartland Bank are oncourse to be the best bank,not the biggest.
Yes, I also appreciate the above metrics very much... and on that basis, I think it is fair to say, Heartland are "well positioned" ;)
The 'Total Provision for Impaired Assets' is already regarded as lost, from a bank management perspective. This is not to say that everything accounted for in the impairment provision will be lost. For example TNR in their last half yearly result wrote back part of their impairment provision. But it does mean that Heartland are managing their business assuming, for now, that the 'Total Provision for Impaired Assets' is lost.
'Gross Financial Receivables' is a figure of receivables before the impairment provisions are deducted. I would argue that because Heartland are managing their receivables assuming the 'Total Provision for Impaired Assets' is already dead money, the most useful figure for comparisons is the 'Total Financial Recivables' (with impairments already deducted). Personally I find the phrase 'Total Financial Recivables' ambiguous. So I have chosen to call 'Total Financial Recivables' 'Net Financial Receivables' ('Net' implies something has been subtracted from a higher total). This is why I have used 'Net Financial Receivables' for my calculated comparisons.
A problem is bank balance dates provide a snapshot of what is happening. But a 'snapshot of impaired assets' is just that. Impaired assets are dynamic and changing. From an investment perspective I want to know what will happen in the future.
Generally loans do not go bad overnight. A loan is always good when it is first agreed to. Then something might happen that causes the bank to 'monitor' that loan. An inkling that the loan has become 'substandard' might lead to it being seen as 'doubtful'. Things become more serious when 'doubtful' turns to 'at risk of loss' and finally the worst loans actually 'default'.
The 'default' loans always make headlines. But from a bank managment perspective it is the 'doubtful' and 'at risk of loss' loans that IMO are the best indicators of the risk going forwards. If a loan is already in default there is very little bank management can do at that late stage! This is why I am much more interested in the 'stressed' loan balance' that is left on the books rather than the 'impairment' already off the books. 'Stressed loan' is not a definitive accounting term. But from a Heartland perspective I define a stressed loans as (see note 19 of AR2015):
(At least 90 days past Due)
plus (Individually Impaired)
plus (Restructured Assets)
less (Provision for Impairment)
Consequently I believe my previously published comparison chart is the best way to assess the 'stressed loan' situation.
Four years worth of data is not ideal. I prefer to work on data that at least covers a business cycle, and that means a minimum of five years. But four years worth of data, with Heartland in some semblence of the form it is in today, is all we have. So that is all we can work with. I don't think there is sufficient 'lack of data' to just ignore it and give up.Quote:
There is insufficient years of history to attempt to trending the data.
SNOOPY
I think that PT has put succinctly the issue I have been waffling around on this thread for some time now.
The choice of the phrase 'real profit' is particularly insightful and something I agree with. So what is 'real profit'?
'Real profit' is in practice lumpy. But banks can see individual large loans and classes of small loans going bad before those loans actually go bad. So banks create impairment provisions. Impairment provisions allow a bank to smooth profits over different time periods. Ultimately all such smoothing comes out in the wash. Impairment provisions are not something I have a problem with in general.
But what happens if the annual top up of the 'impairment bucket' is more than matched by the 'actual loss' drain hole at the bottom? Eventually your impairment loan bucket will be empty. And if the 'impairment bucket' bcomes empty, that means that your 'declared profit'', with impairment provisions carefully deducted, was not 'real'.
In this case though, I am not considering the 'impairment bucket' directly. I am considering the 'stressed loan bucket' which I am claiming is the best indicator of what will happen to the actual 'impairment bucket' in the future.
The nub of the issue: My table of the 'stressed asset trend' vs 'impaired loan expense' does not show an empty bucket. But it does show the hole in the bottom of the bucket is leaking at a rate that is not being matched by the annual 'top ups'.
The next task then, is to quantify the 'net leak' so we can arrive at Heartland's 'real profit'.
SNOOPY
Well HBL won the race against ARV, $1.30 and increasing ;)... but in my book "everyone's a winner" :t_up: (lately...)
All the musings about metrics on ST are clearly stimulating the market. SP up to 129....and plenty of buyers wanting more shares than sellers appear keen to part with. Might even close at 130 today.
Keep up the good work Snoopy, Percy, TJ, PT et al!
Today I sold some of my "low conviction" Australian shares, and have recycled some of the funds into my" high conviction" Heartland Bank.
Paid $1.30 for HBL,which will bring my average cost well up.HBL was already my largest holding..
Hey nextbigthing Heartland back to $1.30 again.
Of course it will push on to $1.60 this time, won't it?
Most have forgotten it was $1.40 odd just over a year ago - so a bit if a way to go yet before we can call them a real winner - but a good recovery story eh
Jeez , 2 Authors on one thread, at this rate HBL thread could soon be looking like a best selling Blockbuster , but that's all good and so is the SP.
Snoopy I really, really feel that you are barking up the wrong tree so to speak and that your understanding of this area is sufficiently deficient that you can not see that it is askew.
Please, please do some research into the area of impairment for financial assets before embarking on the Heartland, or anybody else's accounts.
You know my PM link.
But it is 'up to you' as my parents would say.
Best Wishes
Paper Tiger
I Have Been In You Sheik Yerbouti; after all its FRIDAY:)
An it sure was fine!
Well Acasta Limited thinks so too. Just received an unsolicited offer by them to buy all my shares at $1.40! The catch is, they will pay it in 10 instalments over 10 years (simply 10% every year until its paid), I'll of course lose the right to any dividends over this period, as I no longer own the shares and by the way there is something called inflation that I 'should' consider also.
Anyone else received this once in a lifetime offer?! :t_down:
This has already been quite well mentioned/discussed on the forum, I believe someone worked it out to be $1.07 in "today's" prices... they are hoping several hundred uninformed heartland shareholders who may only hold a couple hundred or couple thousand shares will sell and thing "gee I thought they were 90 cents, $1.40 sounds great!!!" Not sure how many small shareholders will fall for it, especially with the 10 year installments and the fact you won't get any dividends... and we're at $1.40 right now! :t_up: (if you include next 2 dividend payment estimates which I think will amount to around 9 cents)
Ah but what a cunning plan! We give them our shares and they pay you back with the dividends you would have received.
I know there are some realllly stupid and gullible people around, but surely even the most gullible person would check the current market price before selling anything? The only thing I can think of is that they're hoping people will miss the 10-year thing - I didn't receive the offer, was it in small print or something?
https://www.nzx.com/companies/HBL/announcements/283700
More information for those who are interested
I like the idea that was thrown around last time there was a low ball offer like this - everybody takes the postage paid envelope and fills it with newspaper, completely unrelated paperwork or pictures of cats etc and sends it back. That way they end up with a very large postage bill and a lot of time wasted sorting these letters, hopefully convincing them not to bother doing it again. Or better yet, fill the form out with completely wrong details sending them on a completely unproductive wild goose chase.
Agree on that strategy NB. Sadly there are some SH that fall for these scams and these guys have been making millions by running them. It is a shame it can not be stopped somehow but so fa publicly shaming them and responding to them with rubbish to increase their work and costs, is all we can do.
Hi guys, is anyone an interest.co.nz member and has access to this subscriber-only article they could share on the web somehow? Thanks!
http://www.interest.co.nz/business/8...d-says-reverse
I got the offer letter the other day. The information is clearly stated in the letter, so it doesn't seem like a scam. I honestly don't know why anyone would accept the offer though, it clearly states the difference between the offer price and market price (at time of printing), and the fact that it will be paid over 10 years. It's a cheeky offer, but there's nothing deceptive about it. Possibly it's a very basic intelligence test, and those that accept it fail?
If the article lives up to the headline given it by interest.co.nz, one might ask why it was not covered by an HBL announcement to the market:
Heartland Bank CFO details how any big purchase such as UDC could be funded, says reverse mortgage book picking up momentum
If HBL could pick up UDC it would be an amazing purchase for them,but I seriously doubt with the competition out there that they would pay enough for it.Plus I think ANZ just toying with the marketplace to see what they MAY be able to get for it,I don't know whether they would seriously let it go.
Then there's MTF...
But.. They could sell for short term profit and start another finance company...
HBL CEO Jeff Greenslade was on the board of UDC.A couple of senior HBL staff members are ex UDC.So HBL know UDC.UDC would be a great fit with HBL.HBL would have to raise capital to buy UDC,,while they could buy MTF with their existing surplus capital.
REL is just another sector HBL are doing well in.I believe new online "open for business" is tracking very well too.Concentrating on new channels customers want will see more customer driven product being offered.The momentum is building.
I don't know where the sp will be at Christmas,but with "consensus forecast of 9 cents fully imputed in year 2017", I know future growing dividends will go down very nicely every Christmas.
If we go back to the 2/6/2016 Heartland presentation we can see why this momentum is building.
page 6 Heartland Strategy.
Priorities;
Market leadership in digital distribution and digital marketing, to deliver a radically better customer experience based on ease and speed.
Strong systems infrastructures to support Heartland's ambition for growth.
And I seriously doubt that ANZ is just toying with the marketplace here. Esanda, the (much bigger) Australian equivalent of UDC was "let go" recently in what was a clear indication of ANZ's intentions regarding finance company subsidiaries. Certainly, they will be in no hurry if offers don't meet their expectations but a full price from HBL, or others, would see a deal made. IMO.
Not quite a murder, but certainly a 'Where did the money go?' mystery, now revised and updated into a less than exciting second edition!
Date 'Stressed' Loans on the books (X) Net Financial Receivables (Impairments deducted) (Y) (X)/(Y) Impaired Asset Expense (V) Write Off (W) Gross Financial Receivables (Z) (V)/(Z) (W)/(Z) EOHY2012 $87.728m $2,075.211m 4.23% $1.854m $13.823m $2,104.591m 0.09% 0.66% EO2HY2012 $90.489m $2,078.276m 4.35% $3.788m $3.993m $2,105.702m 0.18% 0.19% EOHY2013 $80.383m $2,044.793m 3.93% $5.254m $4.824m $2,072.270m 0.25% 0.23% EO2HY2013 $48.975m $2,010.393m 2.43% $17.313m $8.836m $2,060.867m 0.84% 0.43% EOHY2014 $42.498m $1,905.850m 2.23% $3.325m $19.046m $1,940.064m 0.17% 0.98% EO2HY2014 $41.354m $2,566.039m 1.59% $2.570m $19.472m $2,631.754m 0.10% 0.74% EOHY2015 $33.469m $2,722.433m 1.23% $5.102m $1.426m $2,749.232m 0.19% 0.05% EO2HY2015 $32.824m $2,862.070m 1.15% $7.003m $3.465m $2,893.724m 0.24% 0.12% EOHY2016 $29.147m $2,928.601m 1.00% $5.610m $14.272m $2,951.075m 0.19% 0.48% Total $51.819m $89.157m Average 0.25% 0.43%
I have made this tale less exciting by slowing down the story. It is now told exclusively in bite sized half yearly chunks.
Critically acclaimed by two well known Heartlanders
Percy: "This is the story that no-one wanted to hear, let alone rehear."
Paper Tiger: "Conceived at the bottom of a P G Wodehouse pond. Should have remained there."
Lot's of numbers here. So what does it all mean?
SNOOPY
Just to confuse readers, I will start in the middle of the story and ask them to look at column V and column W.
Column V is a measure of what management decide they want to do to adjust the size of the impaired balance bucket, to keep things running smoothly.
Column W is a measure over the same period of what is leaking out of the impaired balance bucket, actual loans written off over that period.
We can expect Column W to be far more lumpy that Column V. This is because actual right offs and the timing of those would not be expected to follow a regular pattern. OTOH taking a longer timeframe and a portfolio view of the loans, we might expect the proportion of loans that become impaired to converge around a steady figure. The impairment provisions are there to bring everything back to this management predicted 'steady state':
Smaller adjustments are needed on average, than actual write offs over the same period.
So if this is what we might expect, what do the numbers actually tell us?
On a half yearly period basis, what I see is pretty much what I expect. But the two totals tell a different story.
Over time I would expect the impairment expenses (what is adding to the bucket) and the write off expenses (what is leaking out of the bucket) to balance out. That doesn't seem to be happening here though. This sort of imbalance can happen over the short to medium term with a healthy total impairment provision (big bucket size). However, over the longer term even the biggest bucket will run dry.
Normalising the results tell a similar story. In proportional terms too, a lot more is flowing out of the impairment bucket than is flowing into it. There are at least a couple of different ways to explain this:
1/ The quality of loans could be getting ever increasingly better.
2/ The annual loan provisioning on average is being underdone, and consequently profit on average is being overstated.
Depending on whether you are a 'fan' or not, that will decide which explanation you choose to accept.
SNOOPY
Our second comparison is between two buckets that have little directly in common. "Stressed Loans" is one of those statistics that I have made up. Making up a statistic can be useful. Because if I am measuring something that management don't measure, it is very unlikely that management will be trying to manipulate it.
"Stressed loans" are a wider collection of problem loans that specifically exclude the impairment provision. All the actual "write offs" come out of the impairment provision. So there is no particular reason for a "stressed loan" measure should correlate with a "write off" measure in any particular period.
Longer term, you might expect that impaired loans arise out of stressed loans. So you might expect some correlation in the "normalised" trend X/Y vs W/Z.
Now X/Y shows a beautifully monotonic reducing proportion, down to a mere 1% at the latest reporting period. The trend for W/Z is less clear, as might be expected from the more highly expected volatility. W/Z numbers tend to be less than X/Y values. That is also expected, because you wouldn't expect all the stressed loans to turn into write off amounts. Many of those stressed loans would eventually recover or at least be eased off the books with no loss for Heartland.
With X/Y representing 'Normalised Stressed Loan Percentage" and W/Z representing "Normalised Write Off Percentage", a table compiled from the above table might make things clearer.
Date Normalised Stressed Loan Percentage (J) Normalised Write Off Loan Percentage (K) (K)/(J) EOHY2012 4.23% 0.66% 16% EO2HY2012 4.35% 0.19% 4.4% EOHY2013 3.93% 0.23% 5.9% EO2HY2013 2.43% 0.43% 18% EOHY2014 2.23% 0.98% 44% EO2HY2014 1.59% 0.74% 47% EOHY2015 1.23% 0.05% 4% EO2HY2015 1.15% 0.12% 10% EOHY2016 1.00% 0.48% 48%
The table above shows that in general, the actual half yearly right offs (a yes/no decision by management) is looking higher as a proportion of stressed loans (a management qualitative decision). If there were more stressed loans then this broad trend would not be apparent. So even looking outside of the impaired loan box, it seems that the stressed loans are unexpectedly lower than they should be. One conclusion from this is that there is a culture of systematic underestimation of risk that is progressing right through the Heartland loan book. Is this an imminent problem for Heartland? No. But once again the comparative trend implies that declared profits on average are higher than they should be.
SNOOPY
After all said and done there has been more said than done.
The answer you are looking for is;
Bad debt ratio.2012 0.5%..2013 0.04%.2014 0.03% and 2015 0.02%..It is clear the ratio is reducing,which is very positive..
A postscript ,
While bad debt ratio has been decreasing The Net Interest Margin has been increasing.
NIM ratio.2012 4.0%.2013 4.2%.2014 4.2%,2015 4.4%.Fantastic.
Makes me look forward with a sense of excitement to the 2016 result which will be announced late August.Just over two months away.
Be careful your book is not out of date before you finish it.!.lol.
The above is from p8 in the June 2nd shareholder presentation Percy. The small print foot note gives more information you should consider.
"(1) Bad debt ratio includes: Impaired asset expense and Decrease in fair value of investment properties; 2013 added back change in strategy provisions ($18.0m)"
Look at note 19e in the annual report Percy (AR2015). The impaired asset expense comes from there. This figure is actually a judgement from management. It bears little relation to the actual write off of bad debts in each year. Management can manipulate this "Impaired Asset Expense" figure within certain boundaries to present a picture they want shareholders to see.
SNOOPY
As do every bank in Australasia.
They all have their accountants audited .I can't remember any of them having them qualified.
Investors and shareholders do have "the peace of mind security" in knowing all banks in NZ have to report quarterly to The Reserve Bank of New Zealand,are monitored by rating agencies,KMPG and brokerage houses.
Well I'm calling out the figures that you have transcribed from the Heartland presentation Percy as being ten times less that Heartland said! I have also redone my own calculated figures on an annual basis so you can see how they match up with Heartland's claims:
FY2012 FY2013 FY2014 FY2015 Bad Debt Ratio (Heartland) 0.5% 0.4% 0.3% 0.2% Actual Write Off Ratio (Snoopy) 0.84% 0.66% 1.46% 0.17%
Now you could say that even my actual write off ratio is showing a favourable trend, if you take out the FY2014 blip. But we already have a high figure for HY2016 (not shown in my annual chart) which will see my 'downward trend' well and truly broken once the FY2016 results come in.
I am not accusing Heartland of putting out 'wrong' figures. I am sure they are satisfying all their legal requirements as regards reserve bank compliance. I am saying that selecting the figures they have, and massaging out one off property losses in 2013, such that bad debts are apparently on a steady downward trend is a disingenuous presentation of the facts.
There is no reserve bank requirement to present the multi year table they did, for reserve bank reporting purposes. And if they produce the same table incorporating FY2016 results for this year's results presentation, I think it will show the downward trend in bad debts - in the most general sense- has well and truly ceased, if it ever existed.
SNOOPY
Take your concerns up with HBL's auditors.
Snoopy,
I really enjoy reading your posts as it is always important to consider alternative or critical points of view. My summation of Heartland would be as follows (disc: I'm an ex-banker)...
- the company in its present state represents something of a roll-up with the mergers and acquisitions that have occurred over the past 5 years. This clouds the trend analysis and there is no doubt they have neutralised several areas of weakness in property and the loan book but there will likely be some pockets of weakness they are still carrying.
- in my view management have done a sound job tidying up the loan books and growing new business lines and this has been rewarded with increased profits, dividends and a rising share price.
- however, in the next downturn there will definitely be some skeletons in the closet. It is natural for management to underestimate provisioning if there is a sharp recession but remember economists have predicted 9 of the last 3 recessions and Australian and NZ bank management generally overestimate provisioning across the cycle and are only caught out in a late 80's bubble (BNZ) or severe recession (1991-92).
- the equation to consider is overall loan quality across the book keeping in mind the NIM is 4%+. Heartland should suffer higher loan write-offs than the main banks due to the nature of there lending book. All of this can be factored into the price one pays for the stock. My personal opinion is $1.20 or thereabouts compensates for the risks around loan quality given their capital position and profit generating ability. Of course a sharp recession would probably see the share price back to $0.70-0.80 maybe if it started now but if its another 5 years away that's 5 years of 9-10cps dividends and a share price that might be retreating from $1.50+
As they say timing is everything and who knows when the next economy wide recession will be (as opposed to just dairy)
Motor Trade Finance has rejected all offers from parties looking to acquire all or part of their business,saying they undervalued the business.
Interesting?
Phrase attributed to the Nobel-winning economist Paul Samuelson in the 60's when he quipped that the stock market had “predicted nine out of the last five recessions,” .......and since then the phrase is often used to to disparage the predictive power of markets (and economists)
The source of course:) NZX website go to NZDX where MTF is listed and made the announcement MTF Market testing process concludes
A bit of selling today...maybe snoopy scared them off?
no MTF buy out means HBL share buy back is back on the table?
Good job snoopy...you got what u wish for....
Even if ANZ is seriously selling UDC, not sure if HBL really wants to go down the path of massive capital raise to do this kind of takeover considering its current level of excessive capital and the market value of UDC.
Maybe it is more realistic for HBL to look for an MTF alternative other than UDC?
I think this is the right way to look at things Arbroath.
Some here think my presence on this thread is to cut down Heartland at every announcement. But actually I am trying to get a good measure on any announcement hype. Then once I get a value on the hype, I can make an adjustment to the declared profit numbers. Once I have a measure of "Snoopy adjusted underlying profit" (SAUP), then I can make a decision on the value of an investment in Heartland at this time. You say that $1.20 is a sufficient discount to compensate for all the risks, and this is your considered view. Fair enough.
My measure of 'profit overhype' , I measure from the difference between the 'impaired asset expense' and the 'loans written off' over a longer period. We have representative results for four years or so now.
'Total impaired asset expense' - 'Total loans written off'
= $37.338m - $51.819m = -$14.481m over 4.5 years (pre tax)
This represents an annual profit adjustment of:
-$14.481m / 4.5 = -$3.218m /year (pre tax)
Post tax this will reduce NPAT by
-$3.218m x 0.72= -$2.317m per year
So at last we are in a position to look at the Heartland 'SAUP"!
SNOOPY
FY2012 FY2013 FY2014 FY2015 FY2016(f) NPAT (Heartland Adjusted) $14.006m $24.408m $36.039m $48.163m $55m Snoopy Additional Annual Impairment Adjustment -$2.317m -$2.317m -$2.317m -$2.317m -$2.317m Heartland SAUP $11.689m $22.181m $33.722m $45.846m $52.683m
Note: Heartland's own adjusted profits from declared results are calculated as follows:
2012: $22.606m - $9.6m = $14.006m
2013: $6.912m + 0.72($18.0m+$6.1m+$0.2m) = $24.408m
-----
No. shares on issue 476.5m (5th April 2016)
=> Historical eps = $45.846m / 476.5m = 9.6cps
Share price $1.26 (23rd June)
=> Historical PE valuation = 126/9.6 = 13.0
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No. shares on issue 476.5m (5th April 2016)
=> Forecast eps = $52.683m / 476.5m = 11.0cps
Share price $1.26 (23rd June)
=> Forecast PE valuation = 126/11.0 = 11.4
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In this current market that $1.26 closing price looks about right. Not cheap but neither is it expensive.
I like to buy banks on a PE of about 10. So my target investment price for Heartland is around $1.10. Personally, I am not interested in investment above that price level. But if I held already, I probably wouldn't sell at $1.26.
SNOOPY
[QUOTE=Snoopy;625664].
Some here think my presence on this thread is to cut down Heartland at every announcement.
Well Snoopy go back over 4 years,and history would show people who thought that were right..
HNZ will not get a banking licence.
HNZ do not have enough capital.
HNZ will need to raise capital.
HNZ will not realise the legacy property.
HNZ will not be able to pay dividends.
The list goes on and on.
We have been lucky to have had posters such as Sparky the Clown,and Paper Tiger to correct your mistakes.You have wasted a lot of their time.
In the meantime Heartland Bank keep delivering on what they say they will do.
I am still puzzled by the timing of the issuing of Heartland's bank licence. Reserve Bank rules clearly state that three years of trading history is required. Heartland did not have this when granted their banking licence. The banking licence was granted by Graeme Wheeler, within weeks of the new Reserve Bank governor taking up office. I still think Wheeler came into his office, saw a pile of forms in his "in tray" and just signed them off! He didn't want to rock the boat during his first few days on the job you see...... But that's just my story!
The above three are tied together. That Heartland were able to reduce their non core property portfolio so well was due to the rampant property market. If the property market had not gone so well, they may have indeed needed more capital.Quote:
HNZ do not have enough capital.
HNZ will need to raise capital.
HNZ will not realise the legacy property.
If you are raising capital, it does not make sense to pay taxable dividends at the same time. I think all my comments made sense in context at the time I wrote them.Quote:
HNZ will not be able to pay dividends.
SNOOPY
I was sitting in front of the Corona late one balmy evening , picking my nose , just kicking the sh?t around; having just completed reading the last chapter of the “Never Ending Story”, Snoopy’s latest Tome about the famous in New Ziland little Heartland Bank.
When a thought occured , is this a glass half full scenario? No came the reply , the glass is only half full because you keep topping it up with whisky , it’s really leaking like a sieve , just like that worm eaten hulk you call a boat.
Yeah, what can I say, what with the downturn in pirating it does’nt pay as well as it used to and to earn a mouldy crust I had to turn my hand to something/no anything else????????
Whilst glancing at the latest Wormwood Scrubs Digest, I spied thru the monocle over my good eyepatch a tasty little position available for a freelance journalist at the local office of the esteemed “Shaggers Gazette” .
Aha, that’s the post for a man of my many unaccomplished talents I thought. So to make a short story long, here I sit reviewing Snoopy’s new unabridged pecial collectors/investors wordy masterpiece what he has writ the “Never Ending Story” for that well respected pillar of modern literary publishing the “Shaggers Gazette”.
Bloody good mate, wildly inaccurate but filled with spicy innuendo, meatballs and lashings of gravy and bacon, jargonistic/hedonistic claptrap but brilliantly conceived and executed all the same and sure to be another best seller and favorite at the little Heartland Bank Xmas barbeque and I’m sure a shoo in for a Pulitzer/book club daily award.
So there you have it Snoopy, well done , just don’t let this high praise go to your head, or anywhere else on your personage. And don’t spend all of the $5 voucher on booze and broads.
NEWSFLASH SNOOPY WINS BOOK OF THE DAY PRIZE
[QUOTE=Snoopy;625669]I am still puzzled by the timing of the issuing of Heartland's bank licence. Reserve Bank rules clearly state that three years of trading history is required. Heartland did not have this when granted their banking licence. The banking licence was granted by Graeme Wheeler, within weeks of the new Reserve Bank governor taking up office. I still think Wheeler came into his office, saw a pile of forms in his "in tray" and just signed them off! He didn't want to rock the boat during his first few days on the job you see...... But that's just my story!
Heartland had been negotiating with The Reserve Bank for a considerable time.They knew what The Reserve Bank required from them.They were audited and audited and audited to make sure they complied with everything The Reserve Bank required of them.
They announced they were applying for a bank licence. I believe the way it works is you don't apply until The Reserve Bank tells you.
Heartland Chairman told shareholders at the agm they had applied for it and would get.I posted this information at the time,you may recall.
Your comments on Graeme Wheeler "just signing a pile of papers" don't make your story any more convincing.?
[QUOTE=percy;625682]Percy I appreciate your stamina with this debate. But I think people making comments like Snoopy has above should be directed a long way back on this thread to try to understand it better. But hang on, he was already commenting on it back then !!! It is not what we should be discussing today with Heartland. I'm more interested in whether we will get MTF or not or Heartland Directors down the track have been right to stick to their published view of not paying too much for any acquisitions
[QUOTE=iceman;625684]In post # 7797 Snoopy said,"Some here think my presence on this thread is to cut down Heartland at every announcement."
I only pointed out that history over the past 4 years would confirm that this was in fact the case,and gave some examples.
As far as MTF is concerned Heartland have been turned down because they are not prepared to pay too much.So as always they are doing what they say they will do.
Hi Snoopy. I'm puzzled by your statement that the RBNZ requires three years' trading history before considering granting a banking licence. Where in the Act or the RB's published "requirements" do I find this?
This is the link to the Reserve Bank's:
"Application for Status as a Registered Bank"
http://www.rbnz.govt.nz/-/media/Rese...ok/3564868.pdf
Look at clause 10c. The 'parent company' at that time was the listed Heartland, because this was before the merger of what would become 'Heartland Bank' to listed Heartland.
SNOOPY
Thanks, Snoopy.
"Financial accounts for the parent company or bank for the last three years."
A matter of interpretation of "parent company", I guess!
Heartland formed on 7th January 2011, with the combination of CBS Canterbury, MARAC and Southern Cross Building Society. First balance date was 30th June 2011. First full year balance date was 30th June 2012. Graeme Wheeler takes top job at the Reserve Bank on 26th September 2012. Heartland becomes a registered bank on 17th December 2012. So final Heartland approval must have been underway as Wheeler was walking in the door.
Three years previous results must have come from FY2012, FY2011 and FY2010 (YE 30th June 2010, before Heartland existed). All I can say is the reserve bank must have been particularly generous in their interpretation of what Heartland was. They must have regarded "CBS Canterbury" as Heartland in drag!
SNOOPY
Market seems to have understood what Snoopy was saying about Heartland and rerating them as a consequence.
Share price below the 100MA and 200MA at the moment - TA signals could signal more of a sell off.
Next week could be interesting.
I think you are correct.
The correlation between Heartland's fall of 4.8% has affect ANZ down 4.9% today,and Westpac down 4.5% .
As I think he holds ANZ you could say he has shot himself in the foot.!!!..
That should be good for at least another two chapters in his book?.lol..
Lol, what a load of nonsense. :t_down:
Conveniently you're ignoring Brexit Day on a crusade to discredit. Almost everything is down today, especially banks, and the 4.76% HBL collapse to $1.20 is below the 200MA at $1.23. In fact even without Brexit, HBL is in a confirmed long term down trend after failing June 14 at the long term declining price trend line and fell below the short term rising support trend line from Feb'16. Now because of Brexit it's just hurting more, so let's see if some tasty morsels are offered up around long support between $1.09 and $1.06.
Brexit puts significant pressure on the European banking system and by extension the worldwide banking system. In a risk averse market it seems quite logical to me that banks with a credit rating toward the lower end of the invest grade spectrum would get hit the hardest. Some of the other large NZX falls are much more difficult to understand.
So on your judgement ANZ is at the lowest end because it fell 4.9% today ,and Westpac is at the highest because it only only fell 4.5%!!!!!!!!!!!!!!!!.Heartland fell 4.8% so is better than ANZ,but not as good as Westpac?.
Maybe the fact ANZ has the largest exposure to the Auckland property market has added to their woes...lol.
Think ASB has the largest exposure to the Auck market Percy ..., always seemed to be a bit like AMI & CHCH to me .....