News

  • Augmentun Fintech has delayed its results pending the launch of Zopa as a bank. The company’s holding in Zopa was valued at £21.9m at March 2019, some 17% of NAV.  Excluding Zopa a £10.6m NAV uplift (8.3%) is expected over the 6 months to September. The shares trade at an 8% discount to this.
  • Draper Esprit announces a 12% increase in gross portfolio value in 6 months to September.NAV was up 10% to £571m. Shares trade at a 4% discount.

OnePM – New Funding Facilities

Share Price 32p

Mkt Cap £29m

Conflict Disclosure: No Holding

  • Funding The £7.5m medium term note has been extended to £25m. The price isn’t disclosed although I recall it being in the region of 7.5%. A further £5m has been negotiated on the block discounting facility.
  • Estimates Current year estimates to May 2020 are based on a £11.5m increase in the loan book. The company reports robust demand for funding and it may be it is growing its loan book faster.
  • Valuation PER 4.9X Yield 3.4%. Price/book 0.6X but Price/NTAV 1.2X. ROE is 12.5%.
  • Conclusion  The shares have actually increased by c 28% in the last 3 months. Just possibly the market may start to believe the model is sustainable.  The shares could double from here if the company continues to deliver.

Paragon Banking Group Plc  – FY Results

Share Price 503p

Mkt Cap £1.29bn

Conflict Disclosure: No Holding

  • Results Lending was up 8.5% to £2.3bn which increased the loan book by a modest 0.5% to £12.2bn. NIM improved modestly to 229bps while cost of risk increased from 6bps to 7bps and the cost income ration increased from 40.6% to 42.1%. PBT was consequently up 5% to £164.4m while the CET1 ratio was 13.7%. Dividend up 9.3% to 21.2p. The outlook refers to profitability and future earnings strength but does no anticipate significant expansion of lending volumes in the year ahead in buy to let while no new deals have been completed at Idem Capital in the last year. Commercial lending is only 12% of the loan book.
  • Estimates PBT is politely ahead of consensus and a 4% PBT increase is anticipated in the year ahead to £171.1m
  • Valuation PER is 10.4X and yield 4.1%. ROE 12.5% and Price/book 1.2X.
  • Conclusion The company is looking ex growth at this stage of the cycle, so the only reason to own the stock is valuation. The shares are up 28% in the last 3 months on the back of the markets new found interest in value stocks. Looks like a time to take profits.

jeremy@charltonillingworth.co.uk