Looked up Stock co (SCo) via website and Elders an report. SCo lends 100% finance for livestock and gets security over stock. That is the very high risk end of agric lending. They need to charge high int rate to offset risk. 2021 ELD an report says SCo had $100m loan book, p103 says ELD 30% equity was $10.8m 2020 ELD share of net profit was $(1.3m), 2021 equity was $10.9m profit $0.09m. So high risk low profit acquisition. HGH has also recently purchased Challenger Bank.
Interesting. Thanks for looking it up. Profit doesn't look great. With regard to the years you stated; 2021 and 2021. Should this be 2021 and 2020? Or 2022 and 2021?
Challenger Bank was (is?) part of a bigger financial services group which included insurance. The vendor is listed on the ASX under CGF. Not sure if this transaction has settled yet. It was announced in October 2022.
Interesting analysis of complicated co I have never heard of. Just wondering how the reverse mortgage loan book will impact on debt and equity into the future. Reverse mortgages are a drain on cashflow and seem to increase debt at the expense of equity % so is this offset by a high margin? Also interested to know more about Stock Co (guess I can look it up myself). Aus agricultural lending can be very high risk, that would change the risk profile of HGH.
This is quite an interesting article from the borrower's perspective on rural lending in Australia which seem to be creating difficulty for them. It was posted on a New Zealand stock forum.
Thank you. Yes, the interest rate on the reverse residential mortgages has been significantly higher than the rates on vanilla residential mortgages. The rate was 8.5% for the reverse mortgages when normal mortgages were a lot lower. Normal mortgages are written in New Zealand mainly by trading banks who do not touch reverse mortgages. Debt/equity will depend on how big a proportion of their total book reverse mortgages represent but it has been growing. I'm not familiar with agricultural lending in Australia. I limited the analysis to the basic recasting of the accounts pretty much. Cheers.
Looked up Stock co (SCo) via website and Elders an report. SCo lends 100% finance for livestock and gets security over stock. That is the very high risk end of agric lending. They need to charge high int rate to offset risk. 2021 ELD an report says SCo had $100m loan book, p103 says ELD 30% equity was $10.8m 2020 ELD share of net profit was $(1.3m), 2021 equity was $10.9m profit $0.09m. So high risk low profit acquisition. HGH has also recently purchased Challenger Bank.
Interesting. Thanks for looking it up. Profit doesn't look great. With regard to the years you stated; 2021 and 2021. Should this be 2021 and 2020? Or 2022 and 2021?
Challenger Bank was (is?) part of a bigger financial services group which included insurance. The vendor is listed on the ASX under CGF. Not sure if this transaction has settled yet. It was announced in October 2022.
Interesting analysis of complicated co I have never heard of. Just wondering how the reverse mortgage loan book will impact on debt and equity into the future. Reverse mortgages are a drain on cashflow and seem to increase debt at the expense of equity % so is this offset by a high margin? Also interested to know more about Stock Co (guess I can look it up myself). Aus agricultural lending can be very high risk, that would change the risk profile of HGH.
This is quite an interesting article from the borrower's perspective on rural lending in Australia which seem to be creating difficulty for them. It was posted on a New Zealand stock forum.
https://www.abc.net.au/news/2023-01-25/rising-interest-rates-hit-farmers-wanting-to-invest-in-capital/101867396
Thank you. Yes, the interest rate on the reverse residential mortgages has been significantly higher than the rates on vanilla residential mortgages. The rate was 8.5% for the reverse mortgages when normal mortgages were a lot lower. Normal mortgages are written in New Zealand mainly by trading banks who do not touch reverse mortgages. Debt/equity will depend on how big a proportion of their total book reverse mortgages represent but it has been growing. I'm not familiar with agricultural lending in Australia. I limited the analysis to the basic recasting of the accounts pretty much. Cheers.