Shares in Plenti Group Limited (ASX: PLT) have had a great run lately, up 13% in the last 8 days. The Plenti Group share price was trading up 3.8% at $1.21 at yesterday's close.
Melbourne broker Shaw and Partners is bullish on the technology stock. We examine why below.
But first, a quick look at the company
Plenti is a technology-led consumer lending and investment company that has three revenue streams.
Firstly, it provides automotive lending for the hire or purchase of new vehicles. Secondly, it provides renewable energy lending for the purchase and installation of renewable energy products such as solar panels and batteries.
And finally, it also focuses on personal lending, providing fixed-term, unsecured, interest-bearing loans used for a wide variety of purposes.
Broker expects big things
Shaw and Partners is bullish on the Plenti Group share price, yesterday issuing a buy recommendation and a price target of $1.74.
"Plenti presents a compelling opportunity to invest in a fintech lender with a premium quality loan book," the broker said in its report to investors yesterday.
Shaw and Partners also pointed to favourable net interest margins (NIM) and high return on equity (ROE) metrics. A NIM is the difference between the interest income earned and the interest paid by the financial institution.
Further, the broker points to Plenti Group's diversified loan book approaching $1.0bn. The business posted record quarterly loan originations in each lending vertical, across automotive, renewable energy and personal loans. Its total loan portfolio increased to $615 million, 61% above the prior corresponding period.
Despite the positive reports, Shaw and Partners did warn of risk in the report.
Specifically, it sees Plenti's Venus Platform as technologically superior to other offerings in the fintech market. However, as technology evolves, this may not always be the case. "These changes may lead to a requirement for Plenti to redevelop its lending platform in order to remain competitive," the broker said.
With the Plenti Group share price currently at $1.21 and a price target at $1.74, the broker is tipping plenty of room for more growth in the company.
