By Dan Stratful (AFA)
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Thursday 28th June 2012 |
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Heartland (NZX: HNZ ) intends to become the only New Zealand operated, controlled and managed bank listed on the NZX and the approval of its banking licence application would be a huge positive for the stock.
In the meantime, HNZ reported a maiden profit in the year ending 30 June 2011 (FY11) despite incurring a number of significant one-off costs. FY11 net profit came in at $7.1 million after the inclusion of several one-off costs totaling $6.8 million.
In the first half to 31 December 2011 (1H) it reported a net profit of $9.8 million compared to its guidance of $9 - $10 million and it reported that it is well positioned to grow earnings for the full year. During the 1H its credit rating outlook was also revised from ‘Negative' to ‘Stable' and it also completed the acquisition of PGG Wrightson Finance.
HNZ is locally funded so it is not directly exposed to the volatile offshore funding markets which could experience complications if Eurozone sovereign debt problems worsen.
Full year net profit for the year to 30 June 2012 is expected to be between $20 - $22 million and HNZ may suit speculators prepared to bet that its banking licence application will eventually be approved.
HNZ, which has been the subject of a under-arm / low ball offer from Australian company Stock & Share Trading for 30c and 33c per HNZ share, has reminded its shareholders that both offers are well below the market price of 52c.
Consolidation in the financial services industry continues, and HNZ is a possible target, not now but in the distant future. The granting of a banking licence (if any) would be a huge catalyst for the stock.
About Heartland:
Heartland's origins stretch back to 1875 with the inception of Ashburton Permanent Building & Investment Society, which subsequently merged with SMC Building Society and Loan & Building Society to become CBS Canterbury. In January 2011 HNZ was formed after the merger between CBS Canterbury, MARAC and Southern Cross Building Society and HNZ listed on the NZX in February 2011 with a net tangible asset backing of 88c per share.
Status: SPECULATIVE BUY
HNZ's shares today traded at 52c.
Disclaimer
In accordance with the Financial Advisers Act 2008 ("the Act") Sharechat is "Class Advice" and any advice or recommendations contained on this webpage is not "Personalised Advice" as defined by the Act. This means Sharechat does not take into account an investor's particular financial position, financial needs, financial goals, risk profile or asset allocation. Investor's who require "Personalised Advice" should contact an Authorised Financial Adviser (AFA).
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