The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
I would contend it's more investible now than at any time in the last ten years.
Looking for the wisdom of the forum. Some things I don't understand here. The price earnings ratio (p/e) is currently about 2. Typically you'd expect 8 to maybe 14 ish. The assets are about four times the totality of the share value, the company is expected to make a profit if not this year then next, they are re-pricing the interest rates on certain products UP not down as I wrongly surmised, but the price doesn't really move much. The complaints thing is a storm in a tea cup. (I know it's going to cost a few quid but they say they don't have a significant problem to worry about other than the cost of cases going to the ombudsman) What am I missing?
Yes, the whole business is targeted at the slightly sub-prime/adverse credit history market but the top end of bad credit if you see what I mean. That is a market that is according to Vanquis "under served", but not so under served that it's easy to grow your market share by the sounds of it! So under served they may possibly be, but obviously still a competitive market which brings into question how "under served" they are. On paper it sounds like a compelling business model but in practice this company's results demonstrate one difficulty after another. Just when you think the decks are cleared there is something else and what follows is another material step down in the share price, that never gets back to where it was for long enough to move on from there.
Also I read that they have already moved into second charges on property market so that also seems to marry up with what you've recommended previously.
Yes I have seen your posts and agree and disagree in roughly equal measure. The credit card has not been growing in numbers and you say it is the main business, but it still delivers a profit and that is the name of the game albeit not a growing profit which is what we'd prefer to see. Do you think it has a future with the proposed strategy which seems to be in line with your own thoughts? Can the new management deliver? If yes this is a bargain, if no....
I don't know what the rules are for what the rules are for what they can or can't comment on but the communication has been terrible. I guess they can't say what they expect before the 27th March ? This is basically a 'Houston we have a problem' message, you know yet another problem, a problem for which they have sketchily laid out a plan but a problem they must have foreseen a long time ago to have cut cost and commenced new products and a new strategy but just forgot to mention any of it to shareholders! How can you make investment decisions when they do that?
On the face of it the original company rns seemed to be saying we have a few short term issues with claims but we'll recover because most of those are spurious. But having read and re-read what the company said in totality this share price fall cannot just be down to that. So what is the problem and what is the market pricing in here? My view is that the company is saying it cannot grow its business charging what it charges at present. (Customer number history bears that out)That in order to grow the business it needs to be more competitive (ie charge lower rates of interest, thereby affecting it's annual income) and then increase its customer numbers (ie obtain a greater market share) to get profit back to where it was or better. The market does not know if that can be done and if not there is not really a business here because the overhead is quite high looking at it. The share price has been falling reasonable consistently for years and was at one point over £20 and is now less than 50 pence. The company mentions consensus estimates averaged out, but they are market estimates not its own and have been not very accurate in the past. What does materially lower mean in practice? We don't know. What does the company expect profit to be in 2024 and 2025? We don't know. Does it expect to make a profit? Will the company successfully increase its market share? We don't know. Too may unknowns, outcome uncertain future uncertain is my take. Happy to be shot down in flames if I've got this wrong in part or in whole, Wondering what the forum thinks?