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Why the Money3 share price rocketed 12% higher today

One of the best performers on the All Ordinaries (Index: ^AXAO) (ASX: XAO) on Monday has been the Money3 Corporation Limited (ASX: MNY) share price.

The auto loans credit specialist’s shares are up 9% to $2.12 in late morning trade. At one stage they were 12% higher at $2.17.

Why is the Money3 share price surging higher?

Today’s gain appears to be a combination of the release of a solid half year result and the conclusion of the Senate inquiry into credit and financial services targeted at Australians at risk of financial hardship.

The latter has sent the shares of Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) surging higher this morning as well.

The market appears to believe that the recommendations from the inquiry won’t have a negative impact on Money3.

What about its results?

In the first half of FY 2019 Money3 posted a record net profit after tax of $17.5 million, an increase of 13.3% over the prior corresponding period. Revenue came in 9.3% higher at $66 million.

The solid profit growth was driven by a 30% increase in Broker Division Loans Advanced to $87.1 million, a 24.4% increase in Broker Division Cash Collected to $92.8 million, and a 14.3% increase in its Gross Loan Book to $351.9 million.

Management also advised that it is on track to meet the low end of its full year net profit after tax guidance of $35 million to $36 million following the sale of its SACC lending operations.

Should you invest?

I thought this was a solid result from Money3, especially given the weakness in the automotive market which has hit the shares of Automotive Holdings Group Ltd (ASX: AHG) and Carsales.Com Ltd (ASX: CAR) hard over the last 12 months.

If it can build on this in the second half and into FY 2020, it could prove to be a good investment in the small cap space.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended carsales.com Limited. 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 Scott Phillips.

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