RHG - RHG Limited

[ROE]

Re: RHG - Rams Home Loans

Don't forget it might still need that 140 million to cover liabilities elsewhere. The question remains: can anybody still place a valuation on RHG's balance sheet?

Well assuming Westpac grab got RHG franchise for $140M ..
$136M will be wiped off RAMS corporate debt, that leave 4M in the coffer
with the loan book of 14bn and provided they don't go belly up RHG worth at least 40 cents, and you sure to get your money back at 35 cents in dividend
if the company trades well into the future.

that how I got into RHG at 32 cents, it seem crazy to most people at the time but I believe if it trades below 35 cent well in my opinion this stock is under value and the only reason the share price go so low is all the institution are offloading it creating lot down ward pressure on the price.
Now that all the institution is gone, there wont be the same massive effect

I would said the same for CDR trading below 70 cents and given uncertainty in CDR and no one know what will happen I'm happy to make the same decision in another time in another place.

 

[BHP]

Re: RHG - Rams Home Loans

Don't forget it might still need that 140 million to cover liabilities elsewhere. The question remains: can anybody still place a valuation on RHG's balance sheet?

I am a newbie so not able to value the balance sheet.

What I do know is a friend who used to work for a mortgate broker that they get 0.5% commission for bringing the lender a customer and 0.2% trailing commission.

So for a Bank or other lender to get $14 Billion in new business they would currently pay:

$14 Billion @ 0.5% = $70 Mill Sign on fee
$14 Billion @ 0.2% = $28 Mill trailing commission.

thats $98 Mill or 27 cents per share. Really though 3 years of trailing commission would be more like it which takes it up to 43 cents per share.

The $140 Mill from Westac would cover their debt so no extra value there unless someone else bids higher (still possible).

The buyer would get alot of new customers they could bundle with the home loan (credit cards, insurance, car loans .....) which is worth something.

Rams could always just increase the rates it charges. People will either pay up or refinance (and pay a juicy break fee).

Anyway thats my attempt to put some numbers to it.

I bought a small parcel at 30 cents today as it started goin back up.

See how it goes.....

 

[Awesomandy]

Re: RHG - Rams Home Loans

I bought a small parcel at 30 cents today as it started goin back up.

See how it goes.....

It has gone up 25% today, which I think is a little bit surprising given the latest US events.

Either way, it's an interesting one to watch.

 

[ROE]

Re: RHG - Rams Home Loans

You beat me to posting by a few seconds roland.

I think 27c last night was rock bottom, hence the bounce and the change in sentiment, maybe even a gap up
in the morning, but early days yet 4 me.

ROE will be happy wherever he is...?????

SevenFX

I'm always happy making an inform investment decision and if I make a mistake well at least I gather all the information I can and resign to the fact the market is smarter than I am ....
I dont go into RHG just for the hell of it I did some calculation and go over and over again and I come up with anything below 35 cents is a good buy

I take a punt because there will be always risk that I cannot account for and there is every possibility it could go under and I face capital lost but that part of risk and reward thing.

I do the same thing over again for any other stocks

I'm not bailing out of RHG just yet because I think there are value left in it .. .. I have a figure in my head when I will bail

 

[saichuen]

Re: RHG - Rams Home Loans

I'm still a little confused here perhaps. Let's say if the Westpac deal gone through, that would leave RAMS only with the loan book and no potential of writing any new loans, right?. This essentially means there won't probably be any growth in the future. For this, is there a reason to buy into RAMS now?

 

[ROE]

Re: RHG - Rams Home Loans

I'm still a little confused here perhaps. Let's say if the Westpac deal gone through, that would leave RAMS only with the loan book and no potential of writing any new loans, right?. This essentially means there won't probably be any growth in the future. For this, is there a reason to buy into RAMS now?

Fairly easy calculation but by now mean perfect or 100% correct..
this is a bit of art and science.

with the loan book left, even if there is no prospect for grow it still earn you
dividends and this may reduce over time when people paid out their loan but you are talking about 25-30 years loan that could potential deliver you a double digit dividends for at least 10-15 years.

so if you buy them cheap for instance 30 cents or 32 or 27 cents even, you get your money back in a no time and then ripped the future dividends. Price is the most important factor buying this stock based on those calculations.

on other bright side someone (a bank?) may buy out the loan book to get those existing clients and then refinance and sell them other products
like investment loans when they half way paid off their loan etc..

Think outside the square

that is pretty much my logic to get into it not because I'm a trader or chart readers

PS: I be voting against westpac if I still hold because I think it's a cheap deal and Westpac getting a bargain ....
how much does it cost Westpac to fit out 90 stores with Customers and a decent name ? a lot more than 140M I think

and with Australian Strong economy powering at the back I don't think RHG will have problem with funding and with people like citi want to start buying these mortgages debt to create liquidity it's all good news for RHG ...
A couple weeks ago I think otherwise because of the subprime stuff but as each week go by a little more information pop out that pain a little brighter future for RHG.

 

[roland]

Re: RHG - Rams Home Loans

Looks like the market has taken the Westpac deal well. Up 5% already. Any thoughts on the upside value?

 

[ROE]

Re: RHG - Rams Home Loans

Now is a good time for someone to go in and trump Westpac offer as Westpac done all the hard work and verified RHG books look good

 

[SevenFX]

Re: RHG - Rams Home Loans

Now is a good time for someone to go in and trump Westpac offer as Westpac done all the hard work and verified RHG books look good

Perhaps give someone at McQuarrie a ring.... LOL :

$$$ ROE is in the money... $$$

Looks like she retouching the days highs..touch wood

Good Luck

 

[Pager]

Re: RHG - Rams Home Loans

Sold my 2000 parcel at 36 cents today bought at 32 cents, made a profit of $80 minus brokerage .

Its anyones bet as to what happens next, good luck to everyone else who still holds, you will either do very nicely or see your hard earned get flushed.

 

[roland]

Re: RHG - Rams Home Loans

Sold my 4000 at .37. bought at .305 - I'm happy enough with that......but then again, wait until it's .80 and see how happy I'll be

 

[krisbarry]

Re: RHG - Rams Home Loans

Does the threat of possibly up to 3 more interest rate rises over the coming to 12 months hinder the share price?

Only specualtion, but the media suggest 0.75 basis point rise is on the cards

 

[roland]

Re: RHG - Rams Home Loans

Does the threat of possibly up to 3 more interest rate rises over the coming to 12 months hinder the share price?

Only specualtion, but the media suggest 0.75 basis point rise is on the cards

Not sure, I suspect it would depend if you were to look at the assets being the loans or the value of the security for the loans. I suspect it is way undervalued right now.

 

[jkool]

Re: RHG - Rams Home Loans

Does the threat of possibly up to 3 more interest rate rises over the coming to 12 months hinder the share price?

Only specualtion, but the media suggest 0.75 basis point rise is on the cards

I do not think OZ interest rises would have much of an impact to RHG profits as I would suspect for them to be passed onto the customers pretty much instantly. As long as RHG keeps its buy / sale interest margin same the outlook for profits (and future of the company) should not change much from where we stand today.

However it seems that most of the finance for RHG loans is sourced from US ie. with US interest rates lower than here I may even see an interest rise in OZ a moderately good news for RHG's profits.

But than there is this whole "US credit crunch" saga which I do not really comprehend that much. Anyone cares to explain?

Cheers

 

[ROE]

Re: RHG - Rams Home Loans

Does the threat of possibly up to 3 more interest rate rises over the coming to 12 months hinder the share price?

Only specualtion, but the media suggest 0.75 basis point rise is on the cards

This information doesn't bother me as these are all speculations and there is no real evident or concrete information to support a 100% certainty. It can go in any direction.

This information I can take into account but it's not the basis I would use to buy or sell something until such time it became apparent.

This information is just as good as prediction of bull/bear market or correction in the market.

 

[ROE]

Re: RHG - Rams Home Loans

Sold my 4000 at .37. bought at .305 - I'm happy enough with that......but then again, wait until it's .80 and see how happy I'll be

Still hold I'm not really worry about the share price movement in a short term
but up is always better than down and it give you an option to get out without capital lost but If RAMS can trades well into the future and offer me double digit dividends for many years to come I'm more content with it and if it go too far up to a point where I see a benefit of selling out rather than getting the dividends I will and it not at that point yet

you nervous punters all sold out *joking*

 

[ROE]

Re: RHG - Rams Home Loans

I do not think OZ interest rises would have much of an impact to RHG profits as I would suspect for them to be passed onto the customers pretty much instantly. As long as RHG keeps its buy / sale interest margin same the outlook for profits (and future of the company) should not change much from where we stand today.

However it seems that most of the finance for RHG loans is sourced from US ie. with US interest rates lower than here I may even see an interest rise in OZ a moderately good news for RHG's profits.

But than there is this whole "US credit crunch" saga which I do not really comprehend that much. Anyone cares to explain?

Cheers

Do a google on XCP extendible commercial paper, understand that and you understand RAMS 6.4Bn problem and it doesn't sound as scary as people made it out to be

a quick run down US credit crunch is essentially in the instrument called collateralized debt obligations (CDO) again a google here will be better than myself repeating all the same stuff.

they essential package these mortgages debt and sell it to who ever want it and pass on the debt obligation, so the buyers wear the risk
and it pass around like hot potatoes..no longer my problem, it's your now.
and when people cant afford to pay back their mortgage it could end up
to the dudes some where in Australia/Europe who bought it and they wear the bad debt

that how Mac Bank Fortress Fund got burned here , they expose to this stuff ..

 

[BSD]

Re: RHG - Rams Home Loans

Dividends???

The value in this play is its value to a well financed white knight.

As a going concern under the current business model, the value is positive at best - but to a superior funded company, the loan book (and future) could be worth well in excess of current prices.

 

[YELNATS]

Re: RHG - Rams Home Loans

I do not think OZ interest rises would have much of an impact to RHG profits as I would suspect for them to be passed onto the customers pretty much instantly.

This presumably would depend on the extent that existing customers have taken out fixed interest rate loans with RAMS. Do we have any idea what percentage of the RAMS loan book is at fixed interest rates, at what weighted average interest rate and for what remaining weighted average period?

[/QUOTE]
However it seems that most of the finance for RHG loans is sourced from US ie. with US interest rates lower than here I may even see an interest rise in OZ a moderately good news for RHG's profits.
Cheers[/QUOTE]

This benefit may be moderated by further strengthening of the A$ vis-a-vis the US$ which could result from any increasing difference in interest rates between Australia and the US.

 

[roland]

Re: RHG - Rams Home Loans

There is no doubt in my mind that RAMS is a great buy at this price. I sold because I have played this on short term percentage target. I think that there is enough volume and daily transients to play short term percentages without much risk of being caught holding a dead stock.

Just my chosen trading style for this stock.

I would agree with sentiment that RAMS is also to be considered for long term gain - hey Westpac thinks so too....