Hits: 8

5 May 2020

One PM – Update

Share Price 15.75p

Mkt cap £14m

Conflict Disclosure: No Holding

 

  • Update The company has been approved to be an accredited lender of CBILS to credit worthy SME’s on behalf of the government. One third of its 184 staff have been furpoughed, largely in the vehicle and property loans brokerage business, which account for less than 10% of PBT. 25% of borrowers, representing 15% of the loan book have requested payment holidays. Extra provisions will be made.

 

  • Valuation Net assets are £56m at 30 Nov 19 with an own book portfolio of £143m. Bad debts in H1 amounted to 2.2% of the total net portfolio, implying that impairment would need to reach c 30% for the NAV to reach the current share price.  Funding facilities at 30 November were £170m. Today the company reports that the company’s lenders continue to be unanimously supportive.

 

Conclusion This is the company whose loan book is seen to be most exposed to SME’s and consequently risky.  It looks like the company could navigate through this which would provide large upside but today visibility is low on the impairments which makes it hard to invest

15 January 2020

OnePM – H1 Results 

Share Price 37.5p

Mkt Cap £33m

Conflict Disclosure: No Holding

  • Update Revenue down 2.5% to £15.6m reflecting change in product mix. PBT down 22% to £3.2m. EPS down 14% to 2.7p. Net Assets up 4% to £56.1m. Loan book up 1% to £143.5m. Origination increased 87% of which 65% was brokered to other lenders. Bad debt provisions increased from 1.9% to 2.2% while investment in personnel and operations increased the cost base. Outlook refers to laying the foundations in a satisfactory H1 alongside opportunities for organic and strategic growth.
  • Estimates Full year PBT to May 20 is expected to be £7.6m which will need £4.4m in H2. This could be aggressive given the increase in costs.
  • Valuation PER 5.7 Yield 2.9%. 
  • Conclusion The shares are cheap but there is no catalyst here to change that. The shares are up from their lows of 24p last August and may tread water over the next 6 months.

26 November 2019

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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.

25 September 2019

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One PM – FY Results 

Share Price 30p

Mkt Cap £27m

Conflict Disclosure: No Holding

  • Results Revenue up 6% to £31.8m, PBT up 4% to £8.1m. EPS 6.6p. Loan book was down modestly at £141.7m as more new business was brokered. Net assets were £53.8m and net tangible assets £25.5m so ROE is 11.8% and ROTE is 24%. The loan book continues to perform well with net write offs of 0.5% of book and balance sheet provisions of 1.9% of book. Outlook confirms that investment will restrain profit growth in the current year and the group invests for its 5 year plan.
  • Estimates Forecasts anticipate a 7% reduction in EPS in the current year to 6.1p which looks in line with the guidance in the statement.
  • Valuation PER 4.8X, Yield 3%. The shares trade around tangible book value and have delivered 11.8% return on book.
  • Conclusion This is a very cheap share. The revenue yield in the average book is above 20% while the funding costs are 4%.  It is unusual to find such a high yielding book with such low impairments. If this is sustainable the share will do well for a patient investor but with a reduction in earnings this year there may be no hurry.

25 June 2019

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OnePM – Trading Update 

Share Price 42p

Mkt Cap £37m

Conflict disclosure: I Hold

  • Results – Revenue for the year to 31 May is expected to be £31m, an organic increase of 6% and PBT £8.2m, an organic increase of 4. %. EPS expected to be 6.6p, a modest 2% increase on the prior year’s 6.5p as deferred consideration shares were issued. Net assets £53m.  Write off were 1% and provisions increased from 1.5% to 1.9% of portfolio. The company announces some investment in personnel and It systems to invest in the platform to build the portfolio to £350m over the next few years.  The interim results in  January showed a portfolio of £126m
  • Estimates – The PBT of £8.2m looks a little shy of the £8.6m consensus while the investment in costs suggests a downgrade to May 20 PBT expectations of £9.7m
  • Valuation PER is 5X yield 2.6%.
  • Conclusion  An investment phase never excites the market which coupled with downgrades and modest organic growth is dull. But there aren’t many stocks on a PER as low as 5X.  The turnaround may take longer.

18 June 2019

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OnePM – Earnout 

Share Price 41p

Mkt Cap £36m

Conflict disclosure: I Hold

  • Statement – The invoice finance business “Positive Cashflow” has achieved its earnout targets a year ahead of schedule. In 2016 this invoice finance business made profits of £1.1m and the earnout was based on PBT growth targets. The payment of the earnout results in the issue of 2.5m shares at 60p according to the acquisition announcement in 2017.
  • Estimates – Forecasts look for a 9.3% revenue growth over the year to May 19 and 13% PBT growth to £8.6m which is EPS of 6.8p. Given Positive Cashflow is a year ahead one imagines the pressure on forecasts is on the upside.
  • Valuation – PER is 6X the year just ended and a yield of 2.2%. ROE is 13.9% and Price/NAV is 0.8 although price/NTAV is 1.8X
  • Conclusion – Sometimes a stock gets so cheap no one wants to own it. The market has decided that the money on acquisitions of 2-3 years ago was all wasted. This announcement suggests it wasn’t.  Perhaps it will be bid for but I suspect patient investors will get rewarded.

16 January 2019

One Pm – HY Results

Share Price 46p

Mkt Cap £40m

  • Results Revenue up 15% to £16m. Operating Profit up 14% to £4.1m. EPS up 12% to 3.6p.  Net assets up 5% to £51m while the loan book has grown 3% to £80.5m. Funding available of £169.5m. Bad debt provisions have been increased modestly from 1.8% to 2%. The outlook statement notes competitive markets and robust demand and is optimistic.
  • Estimates Trading is reported to be in line with expectations so no changes likely
  • Valuation The market cap of £40m is below the £51m NAV, although £27m of the NAV is goodwill. PER is 6X and yield 2.3%
  • Conclusion The shares have fallen 23% from the 60p high in September on sentiment.  Sentiment is really hurting the prices of these lenders bringing opportunity for some

4 December 2018

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One pm – Trading Update 

Share Price 42.5p

Mkt Cap £37m

  • Update  Trading is in line with expectations for the half year to November and the group expects to pay its maiden interim dividend which will be one third of the expected final dividend.
  • Estimates Forecasts look for 21% EPS growth for the year to May 2019 which is 7.55p per share
  • Valuation PER is 5.5X and yield 2.4%. The NAV per share is 56p on which the company produced a 16.7% ROE last year.
  • Conclusion A small cap lender can reach extremes of undervaluation. This has. 2X book value may be a normal valuation for a company producing a 17% ROE which is 112p per share, 163% above the current share price.

25 October 2018

One PM – AGM 

Share Price 47p

Mkt Cap £41m

·         Statement First four months trading is in line with expectations. The company reports robust demand across asset, vehicle, loan and invoice finance). In October strong trading has been maintained.

·         Estimates PBT is expected to increase 12% to £8.7m in the year to May 2019. 

·         Valuation PER is 6.3X and yield 1.8%. That’s an ROE of 11.6%. NAV at May 18 was £48m although £28m if this is intangible

·         Conclusion This is a value stock which if the loan book is as good as it looks will outperform substantially. A capital markets day to give some transparency on the loan book may well be helpful.