Shares in small loan company Money3 Corporation Limited (ASX: MNY) are on fire this morning after it released a huge full year result to 30 June 2016. Shares were up 10% at the time of writing, suggesting investors were impressed with what they saw.
Here are the big points to be aware of:
- Revenue for the year was up a huge 40% to $96 million
- Net Profit was $20 million, up from $13 million in the previous 12 months
- The company reported $27 million in cash, up from $12 million
- A fully franked dividend of 2.5cps was declared, compared to 2.75cps for the previous year. This takes the 12 month dividend to 5.25cps, a yield of 3.3%
- Bad debt expense up 79%
So what?
This was a huge result for the company and may have taken many investors by surprise. Money3 suffered a lot of share price uncertainty last year in response to regulatory questions over payday lenders and significant management changes, but today's results suggest that this is long behind them.
Shares have jumped almost 90% since the lows in December last year, and new CEO and Chairman Ray Malone and Managing Director Scott Baldwin have clearly put the ship back on course by shifting focus from contentious small-loans towards auto lending.
Branch lending grew moderately, but it was the online channel and broker lending that really took off. Online revenue more than doubled, while autoloans, which are mostly made through brokers, contributed the most to growth. They were up 40% over the prior year and made up over three-quarters of the company's gross loan book.
Now what?
In the short term Money3's loan growth trajectory is reported to remain strong. The company is targeting Net Profit After Tax of $26 million in FY17, growth of 30%, but this will include cost savings from branch closures.
Despite the increase in share price the company still sells for 14x earnings which looks reasonable given the expected growth to come in 2017 and so long as the company can keep bad debt expenses in line.
