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Brand CEO Alan Green talks markets, Amanda Staveley and Barclays (BARC), Wolseley (WOS), Non-Standard Finance (NSF) and Patisserie Holdings (CAKE) with Zak Mir on the TipTV finance show.
Brand CEO Alan Green discusses KAZ Minerals (KAZ), Tertiary Minerals (TYM) and Non-Standard Finance (NSF) on the VOX Markets podcast.
Brand CEO Alan Green discusses KAZ Minerals (KAZ), Tertiary Minerals (TYM) and Non-Standard Finance (NSF) with Justin Waite on the VOX Markets podcast. The interview starts at 36 minutes 54 seconds.
Buy Non-Standard Finance (NSF) says VectorVest. Despite solid progress, the growth opportunity is still in its infancy
UK-based Non-Standard Finance (NSF.L) specializes in the provision of non-standard consumer finance sector. NSF operates through four divisions: Central, Loans at Home, Everyday Loans and Trusttwo. Loans at Home provides home credit and serves approximately 98,000 customers, while Everyday Loans provides unsecured consumer loans on a face-to-face basis to approximately 37,000 customers from some 40 branches across the UK. Trusttwo provides guaranteed loans in non-standard finance sector, serving approximately 12 million UK adults who are not served by (or choose not to use) mainstream financial institutions.
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A solid set of FY results on March 3rd 2017, revealed normalized revenue, (including part contributions from acquisitions), of £81.1m (2015: £14.7m) and normalized operating profit of £13.8m (2015: loss of £0.5m). Strong loan book growth across all divisions since acquisitions resulted in a final dividend of 0.9p per share (2015: nil) making a total dividend for the year of 1.2p per share (2015: nil). NSF updated on trading again on May 9th 2017, and said trading performance since the results had been in line with management expectations. Loan book growth continued into Q2 at Everyday Loans, with twelve new branches planned for 2017, while Loans at Home saw steady improvement in the quality of its loan book.
NSF shares hit a year low of 50p in March 2017, at the time of the FY results, and at this point the numbers (outlined above) flagged up a series of indicators across VectorVest metrics. These included the VectorVest GRT (Earnings Growth Rate), which reflects one to three year forecasted earnings growth in percent per year, and currently shows forecasted GRT for NSF of 47.00%, which VectorVest considers to be excellent. Also the VST -Vector master indicator that ranks every stock in the VectorVest database, logs NSF at 1.40 – again excellent on a scale of 0.00 to 2.00. From a valuation standpoint, VectorVest logs a current rating of 116p per share, indicating NSF is significantly undervalued at its current 70.5p.
The chart of NSF is shown above. The green line study above the price reflects the VectorVest calculated value of the share while the blue line study shows earnings per share (EPS) growth over the past 9 months. The share charted a double bottom between January and April 2017. NSF.L then broke upwards through the high, between the lows, defining the double bottom formation. Since this break the share has retreated and tested the high of the double bottom which is bullish. Since this test the share has charted a symmetrical triangle continuation pattern and a break of this pattern (which looks imminent) should see the share move quickly to around 95p.
Summary: Up to March 2017, NSF had yet to show investors how well it had integrated acquisitions Loans at Home, Everyday Loans and Trusttwo. Normalized operating profits and revenues, and the dividend for the year showed the extent of the progress and the confidence of the management team in the business model, while the share price performance since the announcement clearly illustrates a consequential market re-rating in progress. Now, with the May trading statement providing evidence of further progress, VectorVest believes the growth opportunity at NSF is still in its infancy, and while not without an element of risk, rates the shares a BUY.
June 13th 2017
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South Africa-based social impact business Inqo Investments Ltd (INQO) joined ISDX on 30 November. Inqo was valued at £10.1m at the introduction price of 87p. On the first day of trading 550 shares were acquired at 90p each. The share price ended the week at 87.5p (85p/90p). Inqo seeks to invest in businesses that will help to bring benefits to the population in sub-Saharan Africa. There are currently two subsidiaries. Kuzuko Lodge runs a five-star eco-tourism business on the Kuzuko Game Reserve, where the 39,000 acres of land is owned by Inqo. There is also a 51% stake in Spekboom Trading, which is involved in spekboom reforestation of 500 acres of land and carbon sequestration. Executive chairman Dr Kim Tan owns 49.9% of the company and his salary is R240,000 a year. In the year to February 2015, Inqo made a pre-tax profit of R8.97m, on revenues of R11.25m while in the most recent six month period it lost money on revenues of R3.23m – although this is the low season. The figures include write backs of R15m last year and R1.02m in the six months to August 2015 that relate to renegotiated financial arrangements with the Development Bank of Southern Africa. If Inqo can pay back R15m of the outstanding loan of R29m by the end of April 2016 then the rest will be written off.
Property investor and agency Adalta Real (ADAP) plans to leave the ISDX Growth Market and consolidate its shares. The share price was unchanged at 0.875p (0.75p/1p) following this news and the company is valued at £180,000. At the end of September 2015, Adalta’s net liabilities were £165,000 and net debt was £162,000. Adalta needs a refinancing and that is part of the reason why it is leaving ISDX. There has also been little trading in the shares. Every 23,000 shares will be consolidated into one new share and the nominal value will be reduced. Fractional entitlements will be aggregated and sold to directors with investors with fractional entitlements receiving the net proceeds as long as it is at least £5. Trading is expected to stop on 30 December. JP Jenkins will provide a trading platform for the shares via its share matching service (www.jpjenkins.ltd.uk).
Property investor Ace Liberty & Stone (ALSP) chief executive Ismail Ghandour has acquired an additional 1.72 million shares at 3.5p each – a total cost of £60,000. This takes his stake in the property investor to 36.7 million shares (6.52% of Ace). Ace has issued 4.91 million shares at 2.75p each since the end of September. This has raised £135,000 for the company. At 3.75p (3.5p/4p) a share, Ace is valued at £21.1m.
Alternative funds provider GLI Finance Ltd (GLIF) wants to raise cash to pay off its loan facility that bears interest at 11% a year. At the end of September 2015, borrowings were £23m. A placing and open offer of 0.08498 of a 2020 zero dividend redeemable preference share -for-one share or existing 2019 zero dividend preference share could raise up to £40m at 100p each. The open offer closes on 18 December. The expected gross annual return for the 2020 zero dividend preference is 7.5% – at a redemption price of 143.563p each – and they will be quoted on the standard list. A convertible unsecured loan stock issue of up to £30m is also been considered.
Vet practices consolidator CVS (CVS) has acquired Albavet, which operates eleven vet practice sites, a buying group called Vetshare, which covers 500 surgeries in the UK, and a loss-making instrumentation business called VETisco. The business made an underlying pre-tax profit of £600,000 on revenues of £6.6m. CVS has also bought two pet crematoria in Durham and Scotland, which takes the total owned by the group to six. New bank facilities totalling £115m will help to finance these and other acquisitions. There is a fixed term loan of £67.5m repayable in November 2021 and a six year revolving credit facility of £47.5m that ends at the same date. There is also a £5m overdraft facility. Net debt was £46.2m at the end of June 2015 but there have been a number of acquisitions since then.
Naftna Industrija Srbije (NIS) has agreed to pay Falcon Oil & Gas (FOG) $3.7m following the early termination of their oilfield services contract. NIS had only drilled two of the agreed three wells at the relatively shallow Algyo play in the Mako Trough licence in Hungary. Falcon had cash of $9.84m and restricted cash of $2.3m at the end of September 2015.
Collagen Solutions (COS) reported a significant increase in interim revenues and a reduction in loss from £561,000 to £356,000.There is still £3.1m in the bank so Collagen Solutions still has plenty of cash to finance its expansion. The developer and manufacturer of medical grade collagen is expected to lose £1m in the full year and then move into profit in the year to March 2017. This could depend on the timing of contracts but it shows that Collagen Solutions is well on its way towards profit. a joint venture in China and exploitation of IP recently acquired with Chondromimetic are just two areas where additional progress could be made.
Standard listed Non-Standard Finance (NSF) is making its second acquisition following its flotation as a shell earlier this year. Non-Standard is buying Everyday Loans from Secure Trust for £235m in cash and shares. The company raised £102m at 100p a share when it floated in February and it subsequently completed the acquisition of Loansathome4u, the home credit division of S&U, for £82.5m in cash. The latest acquisition is being part-financed by a £160m placing and 59-for-33 open offer at 85p a share, which closes on 4 January. Everyday Loans has a branch network and its loan book is growing, reaching £102.3m at the end of June. It fits well with Loansathome4u.