Wisr outshines Cash Converters (ASX:CCV) share price on loan book updates

Cash Converters International Ltd (ASX: CCV) trading update gets outshined by Wisr's own trading update and increasing share price

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published April 14, 2021 5:04 pm AEST

The Cash Converters International Ltd (ASX: CCV) share price has laid flat for most of the day. The lack of movement follows the second-hand retailer and personal loan provider releasing its latest trading update for the third quarter. Coincidentally, Wisr Ltd (ASX: WZR) released its own quarterly update this morning which seems to have outshined Cash Converters results.

At the time of writing, the Cash Converters share price is 4.44% higher at 24 cents a share. Meanwhile, the Wisr share price is 6.7% higher to 24 cents a share.

asx share price rising represented by surprised investor with open mouth — Image source: Getty Images

Cash Converters third-quarter update

Continued momentum in the rebounding economy has been music to the lender's ears. Improved consumer confidence typically correlates with an increase in taking on various forms of debt. Whether that's home loans, vehicles, or personal loans. This is evident in Cashies' latest update, with Cash Converters managing director, Sam Budiselik commenting:

As observed in our H1 FY 2021 results our core business segments have continued to recover in-line with Australia's ongoing economic recovery. Our secured vehicle finance and pawnbroking products, alongside our unsecured personal loan products, continue to meet the credit demand among the millions of Australians excluded from the mainstream financial system. Meanwhile, our unique secondhand retail offering continues to appeal to value and environmentally conscious consumers.

The company reported momentum across all loan products, except for its vehicle financing business. This was due to an intentional decision to reposition the vehicle financing business. The impact on loan originations is expected to be short-lived. Following a refresh, the vehicle financing unit began recovering towards the end of the quarter.

On a positive note, the combined loan book experienced an 8% lift from the previous quarter. Medium amount credit contracts (MACCs) contributed substantially to the company's loan book growth, with a 26% increase to $38 million in value. Additionally, small amount credit contracts (SACCs) grew a further 10% to $63.1 million.

Cash Converters noted a deliberate shift away from SACCs being its biggest segment of loans, at 39% of the entire loan book. This is due to the ongoing review of legislation surrounding SACC. As a result, the company plans to continue decreasing its reliance on the SACC book.

Wisr steals the share price excitement

The lack of movement in Cash Converters could be attributed to Wisr releasing more impressive growth figures. The non-bank lender expanded its loan book significantly in the last quarter, increasing 17% to a total of $488.3 million. This compares to Cashies' increase of 8% to a total loan book value of $163.1 million.

In addition, Wisr really pushed the point that its grown loan originations for 19 quarters consecutively. Comparatively, Cash Converters has been on a bumpier ride. The company's loan book actually fell in value for the prior three quarters. That's right, Cash Converters broke a losing streak today — while Wisr extended a lengthy winning streak.

A bit of extra salt in the wound for Cash Converters… While its vehicle financing business is in decline, Wisr's vehicle product delivered growth ahead of expectations. In fact, Wisr added $21.9 million in secured vehicle loans, while Cashies lost $2.9 million.

Comparing performance

Both of these non-bank lenders have delivered outperformance compared to the S&P/ASX 200 Index (ASX: XJO) over the past year. However, Wisr takes the trophy — adding 81.5% to the Wisr share price in that timeframe. Lagging behind, Cash Converters delivered a 53.3% share price increase in the past 12 months.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.