Emerging Companies: Money3 Corporation Limited (ASX: MNY)
Published 29-MAY-2014 00:00 A.M.
2 minute read
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Overview: Money3 Corporation Limited ("MNY", "the Company") is an Australia-based financial services company. It is engaged in providing specialized small cash loans, secured and unsecured personal loans, vehicle financing, car rental, cheque cashing, and international money transfer. Presently, it has a 69 branch network spread throughout Victoria, New South Wales, South Australia, Queensland, and Tasmania.
Catalysts: With its record 1H14 results, on the back of web store and broker network expansion and rationalization of branch network, MNY is poised to deliver yet another robust performance in 2H14 and higher earnings. Whilst its loan book expanded by 81% to $55million in 1H14, additional capital of $26million raised since the beginning of FY14, ensures strong lending capacity. Accessing debt facilities via unlisted bond issues worth $30million to fund loan books provides additional momentum. The pre-tax profit for 9M14 increased by 84% y/y to $6.8M and management’s guidance for FY14 pre-tax profit of $9M, looks attainable.
Hurdle: The recent 10% upward revision in ‘acceptable’ bad debt levels by the Company highlight risks of deteriorating credit quality. Bad debt as a percent of revenue rose from 8.8% in 1H12 to 13.8% in 1H14. Annual interest payment commitment of $2.7million, post completion of the unlisted bond issue, may put downward pressure on its operating margins.
Investment View: MNY offers profitable exposure to the under-serviced microfinance industry. We are attracted to its earnings growth trajectory and management interest in scale-up operations via organic growth and acquisitions. Whilst the review on consumer credit market legislation remains pending, MNY has transited well to the new regulatory environment and we initiate coverage with a ‘buy’ for its growth potential.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
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S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
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