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Why Money3 Corporation Limited shares rocketed 14% higher today

The Money3 Corporation Limited (ASX: MNY) share price has been amongst the best performers on the market on Monday with a huge jump higher.

At the time of writing the financial services provider’s shares are up 14% to a 52-week high of $1.91.

What happened?

This afternoon Money3 announced that it has secured a $150 million debt facility to be drawn in three tranches to fund the growth of its secured automotive receivables.

According to management, this has resolved a major legacy issue for the company and places it in an excellent position to grow strongly over the next three to five years.

The $150 million facility will consolidate all existing debt and provide an additional $70 million of funding above its existing facilities. Once fully deployed, the secured automotive loan book will be in excess of $430 million.

Should you invest?

I’ve been very impressed at the way the company has successfully transitioned away from payday loans to secured auto loans.

It was thanks largely to its auto loan business that the company delivered record full-year net profit after tax of $29.1 million in FY 2017. This was an impressive 44.5% increase year-on-year.

With this new debt facility now secured, I believe the company is well-positioned to continue its strong growth over the next few years.  Which could make it a bit of a bargain at just 10x trailing earnings.

I would suggest investors consider it ahead of industry peers Cash Converters International Ltd (ASX: CCV) and Thorn Group Ltd (ASX: TGA).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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