Suggest you take it up with HGH and let us know how you get on.
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Who remembers "Spot" the Telecom Jack Russell terrier ? Little refresher here https://www.nzonscreen.com/title/spo...mmercials-1991
I've decided that for a small fee I will offer my Beagle services for more advertisements for HGH, (but I'm not jumping into any swimming pools and I can't promise not to eat any tasty pies lying around)
Now as silly as all this sounds...actually SPOT the telecom dog was a phenomenal marketing success for Telecom back in the day starring in 43 different commercials.
Wonder if HGH will follow suit with that Beagle ? Seems to be doing good for the share price already :)
What HGH need is a good sharp punchy name for their Beagle that really gets the message across. I think that name should be Buck, (apologies to the "Call of the Wild" producers, itself a great movie but I digress). Buck the Beagle could feature in their home equity release video's. A nice looking couple with their lovely Beagle...stay in your own home and enjoy Buck and all the comforts and benefits that confers :)
The Heartland Group NZX/ASX annual announcement of 17th September contains useful information as to how Heartland plans to manage liquidity.
From p3
"Most of Heartland’s customers have returned to pre-COVID-19 payment schedules. At 27 August 2020, 96% of Consumer loans and 98% of SME and Business loans were on usual (or pre-COVID-19) repayment schedules or had taken up Heartland Extend."
If we regard "Consumer Loans" as "Harmoney NZ", "Harmoney AU" and "Personal Loans" that adds to be a total of: $146m+ $54m+ $12m = $212m. So the amount of loans 'not on schedule' were:
0.04 x $212m = $8.5m
If we regard "SME and Business loans" as "Open for Business", "Business Intermediated" and "Business Relationship" that adds to a total of: $155m+$499m+$496m = $1,150m So the amount of loans 'not on schedule' were:
0.02 x $1,150m = $23m
Added together this is nearly 40% of forecast FY2021 profit. So despite the small percentages, we are not talking about trivial money. And remember these repayment wobbles do not include 'Heartland Extend', which are really debt payments temporarily forgiven because it is judged they will 'come right'.
Specifically on the subject of liquidity from p11:
"Heartland Bank’s focus is on the reduction of risk concentrations in its deposit book and shifting its deposit mix in favour of lower rate call deposits where Heartland is relatively underweight."
"risk concentrations in its deposit book" is an interesting phrase. This implies Heartland are concerned that the term deposits that Heartland are attracting do not match the terms on which Heartland wishes to on loan that money. In an interesting quirk of human behaviour, "call" accounts are actually quite sticky as most call depositors leave their money in those accounts for an extended period of time. So I read the Heartland quote as saying that they are looking to extend the length of the average term deposit.
"A strategy to shift funding away from short-term uncommitted sources in favour of committed wholesale lines." means that Heartland are looking towards giving certainty to their loan book by selling off 'chapters of the total loan book 'in the form of securitized loan packages (collections of "in kind loans" on sold to a buyer that has the capital resources to fund a loan 'chapter', but where Heartland offers a capital guarantee to the loan 'chapter' buyer).
"The innovative Australian reverse mortgage-backed syndicated loan securitisation transaction announced on 15 September 2020 (for $A142m) is funded by established offshore institutional investors. The first-of-its-kind transaction achieves another milestone in executing Heartland’s strategy to diversify type, source and tenor of its Australian funding and importantly evidences market liquidity to existing warehouse funders".
The Australian Reverse mortgage book $NZ957.5m at balance date. If you take as a conservative requirement that Heartland should hold 20% of the capital it loans out then the $142m new loan provides sufficient liquidity to cover a loans receivable balance of: $A142m / 0.2 = $A710m. I think that new loan facility is close to covering the entire Australian REM loan portfolio on its own., which combined with the already existing facilities:
"Other funding activity included:•execution and utilization of a new A$250 million reverse mortgage funding warehouse provided by a major Australian financial institution
•issuance of A$100 million new Medium Term Notes."
provides plenty of headroom for the growth of the Australian REM loan portfolio into the future.
But something is missing from this discussion. There are no estimate being released on the 'demand' side of loans going forwards. It is all very well signing up depositors willing to give you capital to loan out. But what if there are not enough people and businesses on the other side of the ledger that want money? Heartland would then have a lot of money to pay out in debenture interest without the corresponding income stream from the loan capital that would normally service that debt. This is the only year that Heartland has not mentioned the maturity profile of their 'account receivables' and that to me is a worry.
SNOOPY
Forsyth this morning saying HGH overvalued - 12 month price target of $1.35...
Come on TJ Frosyth broker is a crook .....can not be trusted...and everyone knows...
I've seen the report and couldn't disagree with it more. The company itself is forecasting $84m at the mid point of their forecast range which translates to earnings of 14.3 cps and yet Forbar are only estimating 10.5 cps, claiming we are in the heart of the storm. The average analyst view of market screener is here and shows earnings for FY21 or 13 cps rising to 14 and 15 cps in the following years. https://www.marketscreener.com/quote...44/financials/
Rather than me make aspersions on their analysts work I would rather simply highlight that its at a really substantial variation to the company's own forecast and the rest of the investment analyst community.
All that's left for me to add in this instance is that Forbar run a subsidiary company called Leveraged Equities that gives their clients the ability to short stocks. Maybe they are looking for more business with their subsidiary ?
My own view is that HGH is very cheap relative to the six Australian banks I follow all of which are trading in ostensibly the same environment as HGH.
After a sobering and expensive experience with brokers and their analysts in the early 90’s, I cut my own path, learnt basic FA and binged on TA. Owning a business for a while helped.
It’s worked pretty well so far. The only analysts you need imho are the generous collective members of ST. And the fortitude to make up your own mind and back your own research in your investing and trading. It’s also a lot more rewarding in many ways.
Disc own HGH and quietly accumulating these depressed prices.
Gltah.
Not sure jimdog31...I am not following ATM or Synlait closely at this stage.
Top rated US analyst who had won some professional award was on CNBC this morning saying the financials' are heavily undervalued as a sector. Being priced for Armageddon, worse than GFC and is not warranted. He also made the astute observation that financials' have the highest covid beta so on any good news regarding a vaccine we could see a substantial rerating of this sector.
On another topic, I was a client of Forbar for more than a decade and left them about 15 years ago. I found their research to be of inconsistent quality. Some of their analysts had good insights and others...not so good. I have cut a very similar path to you Baa Baa and agree 100% with your viewpoint expressed above.
I have also been accumulating HGH shares and I now have more than ever held previously. There's not much point having funds on term deposit is there so the benefits of investing on the right side of the ledger so too speak, have never been more clearly defined !
Thanks Beagle. I'm pretty sure they are - even with the latest ATM news they held very close to that target. They are also the crowd that are pushing a price target of $13 for PPH, so the spread of their targets are wildly inconsistent , too high and too low.
I think their Excel may be in need of an update. They are probably using the same guys that built the spreadsheet for COVID tracking in the UK.
Anyway I agree with you, most of HGH market segments are spread to diversify the risk IMO.
I remain disappointed but agree that the financial sector has been oversold and am currently in ANZ WBC and HGH
For this one, I'd really like to see some serious support kick in at 1.33 or thereabouts. Confluence of some useful moving averages around there on both the daily and the hourly.
Attachment 12031
Attachment 12032
https://www.nzx.com/announcements/361862
Heartland long-term rating affirmed, outlook remains stable
22 October 2020
Fitch Rating (Fitch) has affirmed the Long-Term Issuer Default Ratings (IDR) of Heartland Group Holdings Limited (NZX/ASX: HGH) (Heartland Group) and Heartland Bank Limited (NZX: HBL)
(Heartland Bank) at 'BBB' and the Long-Term IDR of Heartland Australia Group Pty Ltd (Heartland Australia) at 'BBB-'. The Outlooks remain Stable.
Heartland Bank remains one of just two Australasian banks to have no reduction or adverse change to its ratings or outlook despite the economic impacts of COVID-19 since January 2020.
Bloody good news!!