Time Finance Share Price (TIME)

In case you missed our webinar with Time Finance plc #TIME, the recording can be found on our YouTube channel: https://www.youtube.com/watch?v=n-Lx8W2Hqo8

This RNS seems to be worth at least another million £ a year in profit. The last RNSs that increased expected profits saw the m/cap of the company go up by around 7x. A similar judgement on the improved financing deal would see a jump of around 20% today, and maybe more in the long term.

Should be a good day.

Update from Investor's Champion paid for tip site :-

HTtps://www.investorschampion.com/channel/blog/bonkers-bargains-1pm

Trading update for 9 months ended 29 February 2024 (26/03/24)

Continued strong demand from UK businesses for the Group's multi-product offering is driving further growth in own-book lending origination which has contributed to a record gross lending book of more than £190m at the end of February 2024. That’s the eleventh consecutive quarter of loan book growth for Time Finance.

For the 9 months revenue is up 20% to £24.0m and pre-tax profit 40% higher at £4.2m, surpassing the level achieved for the whole of the previous year. Revenue continues to be driven by strong growth in the larger-ticket, more secured lending areas of Invoice Finance and the 'Hard Asset' subset of Asset Finance.

Despite the very strong growth it is reassuring that net arrears remain unchanged at 6% of the gross lending book at 29 February 2024.

Net Tangible Assets at the period end rose 14% to £37.6m.

Full-year results are anticipated to be “at least in line with the market expectations” as upgraded on 5 March 2024.

Broker forecasts

Following the trading update covering the 9 months to the end of February (see above), the house broker upgraded forecasts for the year ending May 2024 for revenue by 2% to £31.5m, pre-tax profit by 6% to £5.7m and earnings per share by 6% to 4.6 pence (growth 31%).

For May 2025 forecasts remain for revenue of £33.1m, pre-tax profit to £6.3m and earnings per share of 5.1 pence (growth +11%).

As anticipated Time Finance appears to have ridden out the Covid storm through its multi-product lending offering and the flexibility of its business model.

With the significant government support packages no longer in place post-Covid, and with the ever-increasing economic challenges facing small businesses, access to finance will be a key priority for SMEs over the coming months and years.

Bonkers Bargain appeal

At the current share price of 39p (initially 17p) the market capitalisation is still a lowly c£36m, a c5% discount to net tangible assets at 29 February 2024 of £37.6m, which has also been subjected to meaningful provisions. Despite the strong share price performance over the past 12 months the PE multiple is a lowly 8.4x forecast earnings for the year to May 2024. Prior to the pandemic impacting returns, which pulled down earnings per share to 2.6p for the year ending May 2020, this business consistently delivered earnings of more than 6p and 6.8p in 2019 - net income of £6.35m. This equates to a normalised price earnings multiple of approx 6.5x.

While the shares have had a good run over recent months, they remain well down on previous highs and this business continues to look ridiculously cheap on many levels. The Group's multi-product tailored offering to UK SMEs, its own-book lending strategy and its quality of service have become ever more appreciated by introducers a

Agreed if the revenue for FY25 grows at just 10% to £34.6m and costs are held at 8%. PE at 39p = 6.8. Really cheap for a disciplined firm going for growth. I think given 16.8% and 14.3% growth in last 2 years 10% will be exceeded.

Its just a waiting game

An excellent 9 month update. Guidance is that trading will be "at least" in line with the upgraded expectations.

Cavendish have a 71p target here. They've raised their forecasts yet again, with PBT up 6% to £5.7m.

They now have an adjusted EPS of 4.9p to this May (up from 4.6p), rising to 5.4p EPS next year.

That's a P/E of 7.8 falling to 7.1.

In summary:

"Positive 3Q/24E Trading Update

Time has released a positive trading update for 3Q/24E revealing the 11th consecutive quarter of loan book growth to a new record of £190m (As at 3Q/23A: £157m). The loan book has reached this high following £66m (As at 3Q/23A: £53m) of new own-book lending in the 9-month period.

The growth has remained high quality, with the focus being on expanding the secured lending areas of Invoice Finance and Hard Asset Finance. The tilt towards secured lending has meant arrears have kept flat at 6% even as the book has grown substantially, and it is important to note that 6% arrears on a secured lending book is lower risk than 6% arrears on an unsecured book, given the recoverability rate of the loan is not captured in the statistic. Overall, revenues increased

20% to £24m (As at 3Q/23A: £20m) and plentiful operational gearing, aided by net interest margin discipline, pushed PBT up 40% to £4.2m (As at 3Q/23A: £3m).

In-line with management expectations, we have upgraded our FY24E revenue by 2% to £31.5m and upgraded our PBT by 6% to £5.7m. In terms of valuation, Time looks extremely cheap given it is trading on an FY25E basic P/E of just 7.7x and FY25E P/TNAV of 0.8x, despite over 20% ongoing earnings growth. We remain encouraged on Time’s outlook given it has achieved so much during a challenging period for the UK economy. The recent UK inflation figures and BOE commentary about imminent interest rate cuts bode well for continued expansion in Time’s loan book."