Provident
Financial: Going
back a few years, some were predicting the decline of door-step lenders such as
Provident Financial. You have to take your hat off to them though. They have
launched new products to suit new technology and new customer requirements and
now they are set to benefit from the broom that is sweeping out the debris of
the disgraced payday lending market. They have even started to expand abroad
again having previously successfully floated off International Personal Finance
in 2007. Vanquis was set up in 2002, concentrating on credit cards with low
spending limits for those with impaired credit records and this now also takes
retail deposits. This is now being rolled out in Poland. More recently they set
up Satsuma, a short term on-line lender with APR’s in the hundreds not
thousands of percent. Meanwhile they still operate the old style door step
lending where competition is less since the emasculation of Cattle Holdings.
The other main strand is vehicle finance (Moneybarn) for those with impaired
credit histories.
The shares have done well in recent years and are now around
2050p. Digital Look cites consensus eps showing growth of 14% to 128p for this
year to 31st December, rising 15% to 148p next year, so a PE of 16x
dropping to 13.8x. Good cash generation means a high dividend payout, with
cover around 1.3x. Consensus dividend for this year is a rise of 12% to 98p and
then 15% to 113p, giving a yield of 4.8% rising to 5.5%. As the likes of Wonga
face their re-birth, the way ahead looks rosy for Provident Financial and on
these numbers, despite the good multi-year performance, it may not be too late
to buy. It is a strong hold at the very least.
(Neil Cumming, 20th October)
These comments are not a personal recommendation to deal. Any
investments can fall as well as rise in value, so you could get back less than
you invest. I may have a financial interest in some of the stocks written
about.
No comments:
Post a Comment