The Pioneer Credit Ltd (ASX: PNC) share price has rocketed up another 11.5% up in opening trade today, following a major jump yesterday after the company released its Q1 update.
The news yesterday sent the financial service provider's shares soaring to 60.5 cents, up 28.7% at market close. Let's see what has sent the Pioneer share price flying.
It's the kind of move that turns heads well beyond the usual ASX watchers. A 28% single-day jump in a small-cap can feel closer to an online casino real money play than to ordinary buy-and-hold investing, and momentum traders tend to pile in once a chart starts running like that. The difference here is that the catalyst is concrete rather than speculative — Pioneer has put out a Q1 update worth picking apart properly.
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Refinance process complete
Pioneer reported it completed the refinancing of its senior debt facility with The Carlye Group. The agreement will see Pioneer enter a new senior finance syndicate facility arranged by Nomura Australia Limited.
The funding solution will provide the company with the ability to further grow, purchasing new debt portfolios. The fully drawn facility is worth $169 million with an additional $20 million of undrawn funds available.
The company said it was currently exploring opportunities to reduce its cost of funding.
Trading update
For the period ending 30 September, Pioneer received $25.6 million in cash flow from customers. Cash outflows from operating activities stood at $16.9 million, which were in line with company expectations. A significant portion of these costs, $6.3 million, was paid to process the refinance of the senior debt facility.
Cash outflow from investing activities totalled $9.7 million, mostly comprising of purchased debt portfolios (PDP). PDP investment in the period was $10.6 million, with $1.1 million payable at the end of Q1.
Pioneer closed the quarter with a cash balance of $8.7 million.
COVID-19 response
As COVID-19 has caused challenging conditions, Pioneer advised it has provided a range of options to support its customers. Measures include payment holidays, interest rate deferrals, payment reductions and in some cases debt waivers.
Furthermore, Pioneer noted it has not credit-listed or defaulted any customer's credit file during the pandemic.
The company was recently rated as +13 on a rolling 6-month net promoter score (NPS). NPS is a way to indicate customer support and resolve of financial outcomes.
Liquidations
Pioneer's PDP liquidations were $25.3 million, making it a record amount over any previous first quarters.
The rate of liquidations corresponds to the solid growth in the payment arrangement portfolio, reaching $367 million for Q1. The company saw growth offset a reduction in the average payment instalments and lump sum settlements.
Customer portal
To increase consumer engagement, Pioneer is developing a digital platform that provides ease of the services offered. The portal accounts for 9% of customer payments across the business and is contributing to a reduction of operating costs.
The self-service platform continues to be refined, allowing greater management of a customer's account and payment options.
Outlook
Pioneer revealed it has a broad range of PDP purchasing opportunities, which it will apply an appropriate risk approach. Lower priced debt portfolio sales are anticipated to continue in the future, reflecting a change in customer circumstances.
Pioneer did not provide a guidance for the remainder of FY21.
