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Housing Finance: HFCK a diamond in the rough
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guru267
#21 Posted : Sunday, June 17, 2012 5:47:25 AM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
mwekez@ji wrote:
This year, interest rates have screwed banks so let us project a modest 40% growth.


HFCK EPS grew only 11% in q1 2012 so how is a 40% growth projection for the full year modest in anyway??

KCB EPS grew 35% in q1 2012 therefore i expect 30% growth for the full year.. Thats what i call modest..

Banks usually have similar growth throughout the year so if i were you I would be projecting 8-12% growth for HFCKs full year..
Mark 12:29
Deuteronomy 4:16
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VituVingiSana
#22 Posted : Sunday, June 17, 2012 11:25:05 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,356
Location: Nairobi
mwekez@ji wrote:
Simplified wrote:
Applause a high of 16.50 today... and the trek up has just started...I wonder if 19 will print.Got 85% of my portfolio on this one


Drool This counter traded at 30 bob last year. Its highly undervalued and full of potential
And KQ traded at 140/- at some point.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#23 Posted : Sunday, June 17, 2012 11:28:16 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,356
Location: Nairobi
guru267 wrote:
mwekez@ji wrote:
This year, interest rates have screwed banks so let us project a modest 40% growth.


HFCK EPS grew only 11% in q1 2012 so how is a 40% growth projection for the full year modest in anyway??

KCB EPS grew 35% in q1 2012 therefore i expect 30% growth for the full year.. Thats what i call modest..

Banks usually have similar growth throughout the year so if i were you I would be projecting 8-12% growth for HFCKs full year..
Excluding a takeover by Equity... I see 30 as a stretch.

HFCK has expensive deposits [small retail base] unlike Equity or BBK. The high borrowing rates will decrease the Net Interest Margin for HFCK.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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mwekez@ji
#24 Posted : Sunday, June 17, 2012 12:01:00 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
VituVingiSana wrote:
guru267 wrote:
mwekez@ji wrote:
This year, interest rates have screwed banks so let us project a modest 40% growth.


HFCK EPS grew only 11% in q1 2012 so how is a 40% growth projection for the full year modest in anyway??

KCB EPS grew 35% in q1 2012 therefore i expect 30% growth for the full year.. Thats what i call modest..

Banks usually have similar growth throughout the year so if i were you I would be projecting 8-12% growth for HFCKs full year..
Excluding a takeover by Equity... I see 30 as a stretch.

HFCK has expensive deposits [small retail base] unlike Equity or BBK. The high borrowing rates will decrease the Net Interest Margin for HFCK.


Projecting can be quite subjective. For instance, I do not expect HF to replicate the Q1 growth all year round. Q1 could be similar with Q2 because not much has changed in economics of banking but i expect H2 to be different.

That said, Even if we we to project HF will grow by the VERY modest 10% this whole year, we get:

Forward EPS; 2.97
Forward P/E at the price of KES 16.5; 5.5

At the price of KES 30, we would still get a fair P/E of 10.1
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Cde Monomotapa
#25 Posted : Sunday, June 17, 2012 12:33:02 PM
Rank: Chief

Joined: 1/13/2011
Posts: 5,964
Interesting.
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Cde Monomotapa
#26 Posted : Sunday, June 17, 2012 1:07:11 PM
Rank: Chief

Joined: 1/13/2011
Posts: 5,964
Dear Kenyans, do contribute toward #BRINGZACKBACKHOME. In the longrun, it'll create Medical Tourism revenues for the country! #SocioCapital
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guru267
#27 Posted : Sunday, June 17, 2012 5:24:34 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
mwekez@ji wrote:
That said, Even if we we to project HF will grow by the VERY modest 10% this whole year, we get:

Forward EPS; 2.97
Forward P/E at the price of KES 16.5; 5.5

At the price of KES 30, we would still get a fair P/E of 10.1


KCB projects a 40% growth in EPS in 2012..

Forward EPS is 5.2
Forward P/E is 4.3 at 23bob
At 55bob PE will be 10.1
Mark 12:29
Deuteronomy 4:16
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VituVingiSana
#28 Posted : Sunday, June 17, 2012 9:05:41 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,356
Location: Nairobi
mwekez@ji wrote:
VituVingiSana wrote:
guru267 wrote:
mwekez@ji wrote:
This year, interest rates have screwed banks so let us project a modest 40% growth.


HFCK EPS grew only 11% in q1 2012 so how is a 40% growth projection for the full year modest in anyway??

KCB EPS grew 35% in q1 2012 therefore i expect 30% growth for the full year.. Thats what i call modest..

Banks usually have similar growth throughout the year so if i were you I would be projecting 8-12% growth for HFCKs full year..
Excluding a takeover by Equity... I see 30 as a stretch.

HFCK has expensive deposits [small retail base] unlike Equity or BBK. The high borrowing rates will decrease the Net Interest Margin for HFCK.


Projecting can be quite subjective. For instance, I do not expect HF to replicate the Q1 growth all year round. Q1 could be similar with Q2 because not much has changed in economics of banking but i expect H2 to be different.

That said, Even if we we to project HF will grow by the VERY modest 10% this whole year, we get:

Forward EPS; 2.97
Forward P/E at the price of KES 16.5; 5.5

At the price of KES 30, we would still get a fair P/E of 10.1
Then why not buy Equity or DTBK or Co-op? The growth rates & diverse business are much better. Also I think lower PERs.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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guru267
#29 Posted : Sunday, June 17, 2012 9:47:10 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
VituVingiSana wrote:
mwekez@ji wrote:
VituVingiSana wrote:
guru267 wrote:
mwekez@ji wrote:
This year, interest rates have screwed banks so let us project a modest 40% growth.


HFCK EPS grew only 11% in q1 2012 so how is a 40% growth projection for the full year modest in anyway??

KCB EPS grew 35% in q1 2012 therefore i expect 30% growth for the full year.. Thats what i call modest..

Banks usually have similar growth throughout the year so if i were you I would be projecting 8-12% growth for HFCKs full year..
Excluding a takeover by Equity... I see 30 as a stretch.

HFCK has expensive deposits [small retail base] unlike Equity or BBK. The high borrowing rates will decrease the Net Interest Margin for HFCK.


Projecting can be quite subjective. For instance, I do not expect HF to replicate the Q1 growth all year round. Q1 could be similar with Q2 because not much has changed in economics of banking but i expect H2 to be different.

That said, Even if we we to project HF will grow by the VERY modest 10% this whole year, we get:

Forward EPS; 2.97
Forward P/E at the price of KES 16.5; 5.5

At the price of KES 30, we would still get a fair P/E of 10.1
Then why not buy Equity or DTBK or Co-op? The growth rates & diverse business are much better. Also I think lower PERs.


@VVS none of the banks youve mentioned above have much exposure to the mortgage biz in their own capacity (including equity bank) ..

You seem to have conveniently left out KCB from your list.. Any reason why?? Because i know you have talked of scandals rocking the company but dont you think these are in the past with the current turnaround strategy??
Mark 12:29
Deuteronomy 4:16
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the deal
#30 Posted : Sunday, June 17, 2012 9:49:37 PM
Rank: Elder

Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Where is the margin of safety in all this? You can't talk Mr Graham or Mr Buffet if you can't incorporate the margin of safety in your analysis.
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