RHG - RHG Limited

[saichuen]

Re: RHG - Rams Home Loans

Rams is down substanially on this news 18% .. what do people think the effect will be .. I might buy some

It all depends on your appetite for risk I guess. At the rate this is going, I would only be buying if I'm prepared to lose all and will be holding for short term position as well.

Happy trading!

 

[ROE]

Re: RHG - Rams Home Loans

I think RAMS are in deep sh*t and the management knows it, because if no one is willing to fund their 6.4 Billion short term debt, well investors will want their 6.4 Billion back at some stage. How are they going to repay???

 

[Rainmaker2000]

Re: RHG - Rams Home Loans

This is really a situation of specialised knowledge of the 'wholesale' debt and warehouse markets (which I don't have enough of..hehe)......the fact that RAMS would do this deal which effectives ceases RAMS as a business shows that they are indeed in deep sh**....the neglected to inform investors properly however.......in the wholesale market, its not true to say that investors will want their money paid back and RAMS won't be able to pay them......the fact is that the wholesale markets, if you want, can be a revolving door of debt if one needs that facility....even with the liquidity crisis RAMS paper still found a home.......albeit at a much higher interest rate.........that's what this is really about, at what cost will their debt be taken......obviously they think the rate on their new debt and the old stuff cycling around renders their current business model( relying just on wholesale debt) unworkable........that would seem a cautious stance since many lenders work off the wholesale debt markets...why can't they get a banking licence and just start taking retail deposits....surely they have some lead time since the debt can keep cycling round and as they have said, "this financial year remains on prospectus with next years dropping slightly". That does not sound like a business without options.....

 

[ROE]

Re: RHG - Rams Home Loans

I went through the prospectus for RAMS again and found it has 136Mil debt on their book, that mean if Westpac offer them 140Mil, that will cancel out their debt and all they left with is 14bn loan book which I'm unsure how much money they going make if their refinance rate increase.

I come to the conclusion get RAMS if you can tolerate risk and worse case you will lose your capital.

 

[ta2693]

Re: RHG - Rams Home Loans

I went through the prospectus for RAMS again and found it has 136Mil debt on their book, that mean if Westpac offer them 140Mil, that will cancel out their debt and all they left with is 14bn loan book which I'm unsure how much money they going make if their refinance rate increase.

I come to the conclusion get RAMS if you can tolerate risk and worse case you will lose your capital.

I am in. I know it is a falling dragger. But I ask my self who on the hell whould buy RMS from 48c to 54c? Everybody know RHG is in big trouble. Who would want it after two big falling day? I decide to stand with bold guys this time.
I am prepared to lose half of my fund in this.

 

[ta2693]

Re: RHG - Rams Home Loans

Besides I think if RHG is in so big trouble as everyone on street believe. Why S&P and Moody give AAA rate on RHG's bond? Anyway RHG has 16 years history and should know what they are doing. Do not follow me unless you are as crazy as me.

 

[Lachlan6]

Re: RHG - Rams Home Loans

The market obviously was very turned off by the recent news relating WBC. The chart is showing a very bearish descending triangle pattern. I certainly would think that even lower levels will occur here and would expect a possible rise back to the $0.69 level, before another run lower (but may expect even lower levels first, who knows). Regardless, RHG is certainly on my watchlist for a potential reversal in the future, however this would seem like some time away.

 

[saichuen]

Re: RHG - Rams Home Loans

...why can't they get a banking licence and just start taking retail deposits....surely they have some lead time since the debt can keep cycling round and as they have said, "this financial year remains on prospectus with next years dropping slightly". That does not sound like a business without options.....

Given their current situation, would you open an account and bank your money with them if they do actually provide retail banking facilities?

That said, what's going to happen to those existing RAM borrowers if RAMS does actually default? I can't really imagine these borrowers losing their property. It will simply be bad. Perhaps a 'bailout' from the Reserve Bank or even a takeover from another bank instead? I feel the latter is probably more likely.

My 2cents worth.

 

[krisbarry]

Re: RHG - Rams Home Loans

What a filthy mess this has turned out to be...from the moment RHG listed it has been a complete an utter disaster. I was even tempted today to buy some shares at 50 cents, but in all honesty the chart says it all.

I might pick some up next year at 5 cents...looks like another LVL or VLL situation.

The housing market is stuffed on every level...ACR went down, Fincorp went down, Westpoint went down...

I say sell and cut your losses!

 

[Kremmen]

The market obviously was very turned off by the recent news relating WBC. The chart is showing a very bearish descending triangle pattern.

True, but mostly in the 75c-$1 range. And most sharemarket reactions are over-reactions. Yesterday and today's volumes are a herd in panic. It's almost certainly an over-reaction, but the interesting questions are when will the bottom come and what is a realistic value of the shares. ... Neither of which are easy to answer.

 

[Rainmaker2000]

Re: RHG - Rams Home Loans

You seem a brave man ta2693.....there is no doubt dramatic trading potential here....you might just want to consider what type of risk you are willing to take.....personally, I don't have any problem with high risk stuff if it stacks up but its important that its the right risk......in this case, RAMS has the obvious business risks which you might take a punt on but consider this.......are you willing to throw cash on the line when its probable that management has lied to the market and to you.....its fine to take risks you know about but would you ever throw money in front of dishonest management........I would very, very rarely, usually only when management also holds a massive part of the company so 'you are in the same boat.'......In this case management is happy to endorse the low ball offer from WBC and shift their offices from the sinking RAM to WBC....they seem pretty content with that.......The low ball offer may actually backfire though as it leaves a lot of value for another player like ANZ or my bet, BOQ to enter the fray.......and the perfect storm scenario is that the market is actually pricing in WBC offer being accepted which means that an offer for the whole RAM could be pitched around $1....

 

[skating101]

Re: RHG - Rams Home Loans

how much is the existing loan book worth, that the question. westpac will take the rest of it (its a good franchise) and then the only this your left with is a loan book, and no future development. Rams SP is going to sink before it reaches the SP that the loan book is worth

 

[wayneL]

Re: RHG - Rams Home Loans

That said, what's going to happen to those existing RAM borrowers if RAMS does actually default? I can't really imagine these borrowers losing their property. It will simply be bad. Perhaps a 'bailout' from the Reserve Bank or even a takeover from another bank instead? I feel the latter is probably more likely.

Another institution(s) will simply purchase the debt (usually at a significant discount). Borrowers will simply be mortgaged to NAB(or whoever) instead of RAMs.

 

[Judd]

Re: RHG - Rams Home Loans

Basically, if the Westpac scenario goes ahead, then RAMS is a closed fund in run-off mode with no new money going in. Administration costs get relatively expensive down stream compared with the fees generated on the mortgages.

STC has posted the most sensible thing I have ever seen him write, i.e. "I say sell and cut your losses!"

 

[krisbarry]

Re: RHG - Rams Home Loans

.

STC has posted the most sensible thing I have ever seen him write, i.e. "I say sell and cut your losses!"

lol, I thought that what I had written would get the moderators of ASF all katty and ban me for downramping or fine me 2 points.

Geeez, its amazing how you can downramp and get away with it

I have just been exposed, NOT!

Wouldn't touch this stock in a psychotic fit, I am just so over all these b_ull crappy real estate/home loan/retirement villages/property stocks going under!

Sell the lot of them and pile all your money into resources and keep the Chinese happy

 

[nioka]

Re: RHG - Rams Home Loans

Interesting speculative opportunity here. At current price the market cap would be around $170m with the Westpac offer of $140m. That leaves a value of $30m. Assuming the debt is offset with existing Rams loans which are mostly covered with property values that seems good value to me. I'm expecting a better offer to be made topping the Westpac one. This could prompt Westpac to increase theirs. If I was a holder, and I'm not, I dont think I would sell yet.

 

[krisbarry]

Re: RHG - Rams Home Loans

...and following on from that last post I am sick to death of reading all these experts in finance compaines and brokers recommending these garbage stocks.

Merrly Lynch was the last example and should be shot down for their recommendation for this to run up to $1.20!

 

[ROE]

Re: RHG - Rams Home Loans

Another institution(s) will simply purchase the debt (usually at a significant discount). Borrowers will simply be mortgaged to NAB(or whoever) instead of RAMs.

Who would buy their debt when there is no one willing to lend them the money? and most bank wouldn't touch that loan book of 14bn.

Mortgage debt is a dirty word right now ... and the US sub-prime, the worse is yet to come.

Westpac is the only interest party right now and even them don't want to touch that loan book

 

[ta2693]

Re: RHG - Rams Home Loans

It seems everyone believes RHG has to end its business. I think they stand a chance to keep going. They have operated their business for 16 years by now. Why they have to fail this time? Why S&P and Moody rank this bonds AAA? I am prepared to lose to my stop loss point which is 46c.

 

[adobee]

Re: RHG - Rams Home Loans

Lucky I didnt buy any yesterday.. maybe tomorrow maybe not..
The question I think is what is the net present value (NPV) of it's exsisting loan book if the sale clears all there debt and leaves them with some cash or if they are still left with debt on loans on houses not worth the loan amount..

I cant believe rams has copped it so hard but we havent seen other banks and lenders coping it yet.,.. I think there are alot of people hiding there pain..