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Helia Group Ltd HLI

Morningstar Rating
A$4.12 +0.01 (0.12%)
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Company Report

Helia: Mixed Update as Demand and Claims Costs Stay Low

Helia’s performance continues to be defined by weak demand for lenders' mortgage insurance and very low levels of claims. First-quarter 2024 premiums of AUD 38.4 million fell 25% from the previous corresponding period, and we estimate down 12% on fourth quarter 2023. The federal government home guarantee scheme and less demand for high loan/value ratio loans in a higher rate environment are the key drivers. Helia also called out Commonwealth Bank, Helia’s largest customer, insuring fewer of its high loan/value ratio loans. The ability for Helia to offset reduced volumes or higher claims on Commonwealth Bank loans over the medium term will be challenging, given how much business the bank brings to Helia.

Price vs Fair Value

HLI is trading at a 159% premium.
Price
A$4.11
Fair Value
A$8.00
Uncertainty
Very High
1-Star Price
A$2.00
5-Star Price
A$6.00
Economic Moat
Bpf
Capital Allocation
Lryqfyf

Bulls Say, Bears Say

Bulls

Fiscal and monetary stimulus cushions an economic downturn in Australia, resulting in a rise in delinquencies but allows Helia to generate excess returns on equity.

Bears

Weaker economic conditions may result in a housing downturn, leading to a jump in claims and lower levels of insurance written.

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Trading Information

Previous Close Price
A$4.11
Day Range
A$4.104.18
52-Week Range
A$3.184.89
Bid/Ask
A$4.11 / A$4.12
Market Cap
A$1.20 Bil
Volume/Avg
349,310 / 1.3 Mil

Key Statistics

Price/Earnings (Normalized)
5.37
Price/Sales
2.54
Dividend Yield (Trailing)
7.06%
Dividend Yield (Forward)
7.30%
Total Yield
20.08%

Company Profile

Helia listed on the Australian Securities Exchange in 2014 after its US-based parent, Genworth Financial (NYSE: GNW), sold down its stake. It has since exited. With a history spanning over 50 years, Helia is a provider of lenders' mortgage insurance, or LMI, in Australia. In Australia, LMI is predominantly purchased on loans with a loan/value ratio, or LVR, above 80%. LMI protects a lender against a potential loss (gap) between the outstanding loan amount and sale proceeds on a delinquent loan property. LMI does not protect the borrower, however the premium is paid by the borrower. It’s regulated by the Australian Prudential Regulation Authority, or APRA, which requires it to meet minimum regulatory capital requirements.
Sector
Financial Services
Industry
Insurance - Specialty
Stock Style Box
Small Value
Total Number of Employees
232

Competitors

Valuation

Metric
HLI
QBE
SUN
Price/Earnings (Normalized)
5.3712.5517.24
Price/Book Value
1.091.801.50
Price/Sales
2.540.781.53
Price/Cash Flow
11.59
Price/Earnings
HLI
QBE
SUN

Financial Strength

Metric
HLI
QBE
SUN
Quick Ratio
Current Ratio
Interest Coverage
3.848.920.08
Quick Ratio
No chart available

Profitability

Metric
HLI
QBE
SUN
Return on Assets (Normalized)
7.48%3.09%1.07%
Return on Equity (Normalized)
20.22%14.62%8.88%
Return on Invested Capital (Normalized)
18.35%12.33%0.17%
Return on Assets
HLI
QBE
SUN
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