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I know - also doesn't help that two of the four questions came from advisors/brokers to PFG.
Responses to all the questions didn't actually answer the question in hand. Just a load of waffle about 'mid-term' - unfortuanly they have been discussing the 'mid-term' for 3 years, and we have already arrived there! With only a lower share price to show for it.
My main takeaways were: 1) they have overprovisioned for prudence, so if the world doesn't come to an end there will be further upside to release to P&L and was alluded to this coulc ome by way of special dividend or share-buyback to increase existing shareholder value; 2) not sure about you Bigpunt, but LeMay's murmurings above 'non-organic' events and big opportunities on the horizon seemed to me to imply that given they have a significant amount of cash / cheap funding (whereas some competitors do not) there is scope for M&A activity. Personally I think this is the only way we see any realistic prospect of a share price starting with a £4 in the next 2 months as management alone clearly cannot deliver it. I hope one of the challenger banks gobbles them up - that was £4-5 a share on acquisition is completely reasonable given the loan book along accounts for majority of that value, so they'd be payng very little for the 'platform'. 3) general smoke and mirrors on the customer numbers and costs; 4) I found the credit ratings of the customers reassuring (increased from c800 to mid-900s over past 2 years) which suppost their stance that deliquencies are less likely.
Anyway. I'm praying someone acquires them who knows what they are doing.
Golly Theborn
Thanks a million for a most comprehensive review exposing the deficiencies in management reporting
I can only take comfort as I think you do that my layman’s interpretation is the SP appears to factor in the bad news and I’m holding for yield having a much bigger holding in value terms in Shell who announce results for Q2 tomorrow which offers a lower yield but that I suspect will be better so can if necessary offset my loss!
I’ve read with interest the notes about the presentation, in particular about slides that don’t cast which I’d be shot for in my former life as a management consultant and frankly I’d find that shocking for a company that was an unquoted SME let alone one listed on the stock exchange?
In a way I wish I could average down to get a better yield but there are material uncertainties in transparency that lead me to conclude the only option is to wait for full year results which may reduce some of those variables, in particular EPS and dividend policy. Thanks again and it’s good to see this BB come back to life after a long period of dormancy
I noted the dodged questions on costs.
The slide deck was completely rushed through and there were some slides e.g. slide 14 that they spent a long time on, but the damn slide doesn't even cast! Window dressing comes to mind
Only finance related share which has annouced results recently where share prices hasn't significantly bounced. Look at all the other banking / finance stocks announcing recently. PFG has panned.
On the call now, once again management dodging questions on giving actual numbers they may be held to in the future. Although they have just said that analyst profit forecasts in the market are still realistic.
https://research-centre.barclays.co.uk/shares/provident-financial/broker-views/broker-forecast/
38p EPS average target FY23.
Well, we have 12.7p of that half way thru. Cant see them hitting 25p EPS in H2.
I know, and I also know H2 is usually slightly better than H1. But if H1 EPS is 12.7p, then FY I'd aniticpate 25-30p maximum, when analysts where targeting nearly double that.
When I asked PFG a couple of months ago why they do not publish 'internal expectations' they suggested analyst estimates were a good guide as to internal expectations......well, they are way undershooting.
They are clearly making the point that analyst forecasts are a long way off. Let's see whether any of this is raised in the presentation
Theborn, remember you are quoting half year numbers i.e. 6 months. 12p doubled (and it is recognised they have a better H2) is pretty good for a business below 200p
Shares in FTSE 250-listed Provident were down 6.9% at 191.70 pence in London on Wednesday morning, making it the worst performing mid-cap stock in early trade.
REMINDER: MANAGEMENT ARE DELIGHTED!!
BRAVO!!!
*40p+ range on annual then I'd be buying.
That's my point. I was expecting EPS to be in the 20p+ range, not the 12p range. If it was then I'd be buying. As it stands, if 25p annual EPS is more realistic then on 8x it gives you £2. If EPS was more in the 20p+ range it would support a company valuation closer to £1bn. I will continue to hold my loss in the hope the management prove me wrong. Unfortunately I'm quickly losing faith.
I will be joining the results call in 15 mins. I'd advise any other shareholders on here who are getting fed up to go to the PFG shareholder section of their website and sign up now. It takes 30 seconds to do so and call starts at 10am.
Folks, if you think these are the results of a company worth £800m rather than £500m, why are you not delighted, and buying?
Hi Barrie
Yes, I've got a large holding myself at far higher average than current price. I was hoping these results would support a £4+ share price on a 8-10 multiple but these results put it more at £3. Still significantly undervalued but I'm mostly disappointed by management using their usual smoke and mirrors in the accounts. By this I mean: 1) referring to 'in line with internal expectations' but they never state what these expectations are in advance. As far as I can see, the only reason you don't disclose your internal expectations at the start of the year is because you know more than likely you won't achieve them, so can always use the excuse of 'in line'. In line with what?!?! It's infuriating. and 2) as bigpunt alludes to, lots of shuffling around of costs from individual business streams to central, then not disclosing the comparable to H1 21 - so you don't really know if individual biz streams profitability is better or worse than H1 21. Likewise applies to treatment of provisions. There is also a note about debt sales in car finance that doesn’t make much sense to me – its clearly in there as an audit disclosure requirement but done in a way that no investor will know what its referring to without asking the company. I’d also like some colour on customer numbers. Yes they’ve added >100,000 new ones, but impact is net flat. So if the 100,000 they’ve lost are legacy / higher risk clients, then this isn’t a bad thing. And at some point those older customers will be off the book fully and you’d expect net customer numbers to then increases steadily. But as they don’t disclose this, I don’t have a clue if this is a good result or a bad result!! I’ve previously shared the BOE consumer lending figures which samples the sector and I’d have expected a 10% growth from PFG based on this alone, so my gut feeling is they are falling behind competition.
I'm very annoyed as it’s an ongoing theme and points to an ongoing lack of transparency. That said, the accounts are audited so figures should be reliable, despite not knowing what their internal targets are and how these compare to prior reports following the changes to reporting policy.
On the plus side, if the PRA agree the proposal to fund the group with Vanquis deposits, this would have a materially positive impact on funding and NIM, I suspect. Also, the capital holdings and the continued move away from high-risk lending is a plus. Similarly, the reinstatement of dividends is helpful (even if below what I was hoping for) and current inflationary environment I don’t see as a risk to their current portfolio (and helpful they disclose their modelling assumptions on this, it gives comfort). Helpful also FCA investigation is closed and no further fines.
I’m disappointed, but could have been worse. Hopefully we see some broker notes at >£4 target. PFG – the only company to publish results that ‘delight’ management which can still see he share price tank from already historic lows. Bra
I suppose all things are relative and relatively speaking the results are better than PFG have been producing of late. It is probably where I would have 'guessed' they might be. They also seem to do better in the second half of the year. A hold for now.
The red flags for are me are
- ballooning central costs
- The 'Personal loan' section has yet to prove itself. Unless they are very very sure that it going to work out and can provide a clear explanation at their next Capital Markets day I'd like to seem them throttle back/back pedal in this area. It is dragging the results down the way CCD did before it.
Apologies. I am incorrect here... IPF divi isn't any better!
I've only had a cursory skim read of Interim Results, but seems okay. No alarm bells, credit card arm growing. Interim dividend. I'm also in IPF, who are offering a better dividend at a far lower SP. Also positive results.
Hi Theborn
Agree I was slightly disappointed by interim dividend albeit a full year payout of 15p is a yield of 7.5% based on 195p
I’m in at a much higher average so will have to hold at least until full year results are out to see clearer picture and impact of uncertainty on economy but looking at RNS it’s a lot to digest for my small brain so I’ll defer to your analysis and certainly the market isn’t reacting positively despite tone of management which appears contradictory to SP move :-(
Agree it is mostly positive. Concerned by the increase in central costs meaning it is harder to see exactly how the business is performing vs last year - they could have scheduled the costs but chose not to. Note 9 shows a deteriorating receivables book for Vehicle Finance but there is commentary to acknowledge that. I'm happy to see investment in the personal loans platform which will complete the repositioning of PFG away from the doorstep loans. I topped up this morning in early trading at 193p
Sorry guys but I'm very disappointed with these results. Management noting they are 'delighted' highlights even more how ignorant they are.
'in line with management expectations'. Well, unfortunately a 15p adjusted EPS is running 25% below analyst expectations for the full year. PBT for £54m running 20% below full year target.
Once again, in a booming and expanding market they've failed to increase the customer base in any notable way.
I think they are a disgrace and that's why share price has tanked.
Was anticipating c. 7p dividend to make >15p a realistic propsect come full year.
Seriously think some large shareholders need to step in and request a change. I can't keep doing this year after year and hoping for better.
Positive result, another dividend, the rest of the market on the up. But pfg back below £2. What have they got to do to get the price back up?
Good update and 5p interim div. No rise in customers unable to pay debts. Recovery going well
Hope it’s precautionary and not a leak but decent fall in price a day before results due??
So much for the run up pre results
Well GLA as if anything less than very positive news tomorrow these shares are worthless
Everything crossed there’s at least a bottom line profit
Fed up with endless stream of adjustments / exceptionals
Up 7 roll on 27th GLA