Morningstar

Helia Group Ltd HLI

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Stock XASX Rating as of
A$4.04 −0.03 (0.74%)
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As of Delayed Price Closed

Company Report

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Helia Is Generating Strong Returns and Is Well-Capitalized, but Higher Claims Are Likely

Nathan Zaia

Helia, formerly known as Genworth, has a long history of providing mortgage insurance to lenders in Australia but has only been listed on the ASX since May 2014. Global US-based insurer Genworth Financial listed it and completely sold out in 2021. We think it is likely Helia will find it challenging to grow its lender's mortgage insurance business in the face of increased competition. We believe the entrance of Arch Capital Group, and increasing tendency of lenders to self-insure, will see Helia cede further share over time.

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Price vs Fair Value

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HLI is trading at a 557% premium.
Price
A$4.04
Fair Value
A$4.00
Uncertainty
Very High
1-Star Price
A$7.00
5-Star Price
A$6.00
Economic Moat
Kxxb
Capital Allocation
Gxwpjclh

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$4.07
Day Range
A$4.01–4.08
52-Week Range
A$3.32–4.87
Bid/Ask
A$4.04 / A$4.05
Market Cap
A$1.15 Bil
Volume/Avg
903,173 / 829,577

Key Statistics

Price/Earnings (Normalized)
5.60
Price/Sales
2.64
Dividend Yield (Trailing)
7.43%
Dividend Yield (Forward)
7.43%
Total Yield
15.94%

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
Website
https://www.helia.com.au

Competitors

Valuation

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Metric
HLI
IAG
SUN
Price/Earnings (Normalized)
 5.6020.2523.24
Price/Book Value
 1.102.641.65
Price/Sales
 2.641.161.71
Price/Cash Flow
 38.9010.239.74
Price/Earnings
HLI
IAG
SUN

Financial Strength

Metric
HLI
IAG
SUN
Quick Ratio
 ———
Current Ratio
 ———
Interest Coverage
 3.229.063.61
Quick Ratio
No chart available

Profitability

Metric
HLI
IAG
SUN
Return on Assets (Normalized)
 4.49%3.17%1.00%
Return on Equity (Normalized)
 12.66%13.61%8.23%
Return on Invested Capital (Normalized)
 11.49%10.41%1.41%
Return on Assets
HLI
IAG
SUN

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