London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I'm surprised that the sovereign wealth fund, which prides itself on its ESG stance, is invested in IPF but guess its pretty hard to spread a trillion dollars around the world. Below 3% now
Yeah the £45m should come in handy during the proceeds of restructuring of euro bond. I doubt they’ll use the money to pay divi at this time.....
I think if IPF can show similar numbers and a solid improvement in the August TU/H1 in a couple of weeks that would give a boost.
Amigo up 20% on the open. So that's PFG, Amigo and Arrow all up 20% on news this week. Holding onto the gains is another matter. IPF also was up 20% on the TU but quickly retraced. A lot of crazy spikes, gaps and retraces, good volatility for the bold trader (which I am not). It does feel like sentiment is starting to turn slowly.
What I liked was the safe bonus if they£45 million where ever it ends up it supports the business
Yeah. I am hoping for a decent result and March towards 100p....
Not strictly comparable to the IPF business but the 7.4% increase in impairment: revenue is relevant. It would be a pretty good result if IPF can deliver that
https://www.investegate.co.uk/amigo-holdings-plc--amgo-/rns/1st-quarter-results/202008280700053890X/
Good to see the sustained buying and rise the last few days. I'm shocked we're not in the 70s/80s with the news we've had but maybe that's do with Norges selling. Hopefully they're done so we can return to a fair level
Difficult to get a quote
Yeah and we could soon be in the 80s+
Im expecting good results the monthly updates have been solid. Todays PFG results where not good and it jumped up 20%
Yep both Arrow and PFG enjoying 20% rises on their HY results day.
NSF not so good with a 40% fall for their full year results a couple of months ago if i recollect.
Got a fxpo divi today, bought a few more in isa and then sipp went into here plus sold a few AGM at profit after a long slog and also into here, looks to be having a better day, interesting points around the other similar business that share 1/2 year today, couple weeks to go, actually interested in divi medium term but growth may be very good also, gla
Yes, they have been for ages.
Once they are out this will explode.
Still lots buying stthese prices to mop up shares.
Looks like it Ammu. Combined with very low volumes
Probably explains the weakness.
Good support at this level. it may consolidate between 61 - 63p til news.
We could soon back to 50s again
@yellowlorry normally I would be quite diligent in putting together the numbers and investment case for a new purchase but in this case I was pretty light touch given the uncertainty around the moving pieces. But simply when I look at the SP, the history and the various other metrics its just so beaten down its a great recovery play. I focused more on the net tangible asset position at December and worked from there. I rate management, they have done a pretty good job over the years despite being beset by challenges in what is a fairly loathed industry. You picked an interesting company to start your posting career!
@Bigbangs welcome aboard. It's not going to be easy and we could even see the 50s again. I think we have seen the worst of the virus so hopefully the economy begins to recover. If so there should be some decent gains to be had over the next 6 months.
Interims out today for PFG. The read through is on the UK consumer credit division, which saw an increase in its impairments (as % of revenue) from 34.1% to 44.7% compared to last year. The reduction in receivables stands out, a 25% reduction compared to last year as new business has been curtailed. Looks like the market is expecting the absolute worst and the SP is up 8% in the first 15 minutes.
http://tools.euroland.com/tools/Pressreleases/GetPressRelease/?ID=3806226&lang=en-GB&companycode=uk-pfg&v=
Thanks for taking time and effort to respond and helpful replies.
That’s good to put the collection rates into some form of rough impairment rate as I think I’ve found it hard to translate what an 80% or 92% collection rate means in practice.
Another qu, I’ve been struggling with is how much NAV will they erode by each month of low biz volumes? as they talked about 50 odd million of cost savings this year but Other Costs came to 387m last year so it feels like expenses are c30m a month (337m/12). Over last 4 months they’ve lent about 35 percent on average so am I right to sort of think that 20m is being eroded a month (30m * 65 percent of lending no longer get operating expense against it)? It will be lower than 20m as the old biz will earn out so their loan book won’t shrink 2/3rds overnight even if new biz does. It just makes me feel that they do need to ramp up lending soon.
Yes the whole long term of biz does hinge on being able to get the new Digital markets down to low impairments so they can grow Digital profitability. My sense that they were confident of achieving this as they have proven they can for the established Digital markets.
It’s definitely a share that requires patience and some belief that better days are ahead. I think the tax rebate, NAV etc underpin the current share price it’s just I think for the better days that lie ahead need to show the business has returned back to close to normal lending levels which I guess won’t fully happen until some point in 2021.
I have been watching for a while and decided to take a position today. I was attracted by the fundamentals, the £45m tax rebate and influenced by the recovery in 2009 as so ably reported by ragnorlothbrok. You may be interested that I had to pay over the ask other than the odd 10k, I had to buy in market size bites of 5000 - bodes well I suppose. ATB
Hi yellowlorry, I'll have a go at commenting on each item:
1. A lower collection rate will reduce cash flow and the net asset value as impairments rise from lower collectability. It won't put them out of business by any stretch but they are being more selective about new loans which will reduce profitability. As we are looking at ~90% collections performance, I would guess that we will see an increase in impairments up to 40% of revenue for the half year which will push the business into a loss.
2. Conditions were worse in the GFC but it's still early days. It took Hungary unemployment 2 years to ht its peak and then 3 years to fully recover. But the economic contraction from Covid has been deeper and the various furlough schemes are masking the true number so it may take a while for unemployment to bottom out. And yes the temporary restrictions in eastern Europe are no doubt impacting new business. With the caps much of the new business they were previously writing won’t be profitable but they are due to be lifted at the end of the year I believe
A second winter wave is a worry of course. Volatility is still elevated in the market in anticipation of a flare up so you need to be on your toes.
3. The digital business delivered a maiden profit last year but is likely to swing back into a loss for the half year. Established markets are performing well with impairments of 20% but with pretty low growth. New markets are taking some time to optimise the business model weighing up what rates to use, what the ideal balance is, who are the most creditworthy customers, and other loan terms. They seem very confident that they can bring that 65% impairment level down but that part of the business is delivering double digit growth so there will be a price to pay for that growth. And the improved performance of the business seems to indicate they are getting credit under control before they start to ramp up new lending.
Hope that helps!
Would recommend having a read through of the Arrow results today. What appears to be a very poor result with a loss being caused by impairments has been met with a 20% SP rise so not as bad as expected I'm assuming because free cash generation still seemed pretty healthy.
Arrow has a different business model with unsecured lending only comprising a part of their portfolio and thus a lower impairment ratio but there should be some read through to the IPF business.
https://www.arrowglobal.net/en/investors.html
Hi ranarlothbrok, top posting on IPF. A few thoughts/questions for you
1. If we for simple maths take collections at say 90 percent of pre covid and impairments were c30% then can we think of current impairment rate say 7 percent higher? (0.7 * 0.9 = 0.63 v 0.7 before). So a lower collection rate will impact profitability but is not going to put them out of business per se if it’s only temporary and not a new norm.
2. Seems like economic conditions were worse in GCF with unemployment at c10 percent in Poland v c5 percent now. It looks like lending was reduced a bit in GCF but not drastically v now where only 43% of pre covid. I just wonder whether the rate cap/moratorium in Poland and Hungary are driving the reduced lending much more than the economic conditions as I guess IPF don’t want to lend in a weaker environment currently and not get paid adequately for it that creates the caution in new biz volume levels perhaps. Some of it could be caution in case economic conditions worsening With second wave in winter. Does a second Winter wave worry you for IPF?
3. You mentioned the market is pricing in 60 percent impairment rate which is really high v high twenties percent at pre covid levels. Just looking at the IPF Digital new markets - that runs at a 60 percent impairment rate so it seems like that gives a feel of what 60 percent Impairment is like. My qu on this is how does it run so poorly - are they just getting poor customers to start with who sign up with little ability to repay and then they are blacklisted so impairments improve. They talk about continually refining to the process to get the impairment rate down. As I would have thought you could apply the same filters as other mature IPF Digital markets to only select creditworthy customers(?) so they don’t end up with a 60 percent impairment rate in new markets for
Digital.
Yes it can. The digital business is helping with growth into new markets but also will cannibalise non digital revenue. The company has guided that growth in digital and Mexico should offset the structural decline of Europe