Shares in ASX financial stock Moneyme Ltd (ASX: MME) are down more than 40% over a 12-month period, but after solid growth in lending numbers, Morgans is predicting some serious upside.
Image source: Getty Images
Company closing in on profitability
Last week, Moneyme released its full-year financial results, which showed that the company's loan book increased by 34% to $2.08 billion, with record originations during the year, up 34% to $1.23 billion.
The company's normalised net loss narrowed to $4.1 million from $15.5 million the previous year. Pleasingly, the company actually made money in the second half, booking a $500,000 profit.
Moneyme said its proprietary AI product was now delivering benefits across credit decision-making, customer service, finance, marketing and creative production.
Moneyme Managing Director Clayton Howes said of the result:
FY26 marked an important inflection point for Moneyme. We demonstrated that our strategy is delivering, growing the loan book to more than $2bn while improving credit quality, strengthening margins and returning to positive Normalised NPAT in the second half. These results show the operating leverage in our business is beginning to emerge. The investments we've made over recent years in technology, AI, funding, and risk management are now translating into stronger earnings quality and improved returns as the business continues to scale.
Mr Howes said the company entered FY27 with multiple growth levers and a larger, higher quality loan book.
The company said on the outlook:
We provide guidance for FY27 on an average loan portfolio of ~$2.2bn, our Normalised NPAT is expected to result in a positive range between breakeven and $7m. The Group will continue to invest in AI, brand and marketing, product expansion and direct channel growth to increase scale and operating leverage. Credit cards and white-label partnerships are expected to contribute to the returns profile of the business when these portfolios scale.
Moneyme shares looking cheap broker says
In a note to clients, Morgans suggested Moneyme was well-positioned.
The broker said:
MME has delivered consistent book growth over the medium term and we believe its innovative product suite, targeting niche under-serviced markets, has the potential to further drive topline growth. Whilst now cash profitable, given the pivot of the business to a more normalised book growth rate, we note some near-term risks. We also note that the stock trades at a discount versus our valuation of $0.21 and hence we retain a SPECULATIVE BUY recommendation but flag some continued risks such as: 1) ongoing macro uncertainty/volatility; and 2) softening consumer demand and interest rate pressures more generally. As such, we note this is an investment for the more risk tolerant investor.
Moneyme shares are currently changing hands for 7.2 cents. The company is valued at $57.7 million.
