Financial Services

Plenti Group delivers FY22 cash net profit

Wed 18 May 22, 2:44pm (AEST)
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Key Points

  • Plenti delivered a full year cash net profit after tax of $500,000
  • The stock’s is down -24.89% over the last 12 months
  • Forager Fund believes investor fear is now overdone

Plenti Group (ASX: PLT) received some welcome relief from its rapid descent -35% lower this calendar year, with the share price up 3.40% around noon, after the small-cap online lender posted an annual $0.5m cash net profit (after tax) and second half cash profit of $2.7m.

The result follows a significant loss in September, due to higher-than-expected credit loss impairments.

Today’s result adds some credence to a recent note by Forager Fund within which the fund manager inferred that the Plenti, along with other stocks in this space, were now looking seriously oversold.

The stock’s -24.89% fall within the last 12 months exceeds falls on the S&P/ASX All Technology Index of -16.65% over the same period.

Forager noted that while “healthy scepticism is warranted”… the fear is overdone.”

What does Plenti do?

As a technology-led consumer lending and investment business, Plenti seeks to provide borrowers with efficient, simple and competitive loans, delivered via simple digital experiences. 

The company offers loan products in three core verticals of the Australian credit industry: automotive lending, renewable energy lending and personal lending.

Loan book exceeds $1bn

In addition to outperforming prospectus targets, the company also manage to expand its loan book, which boosted the $1bn milestone in November, to $1.3bn.

Management reaffirmed its commitment to hitting $5bn in loans by 2025.

Other noteworthy milestones announced today included

  • Interest revenue reached $87.3m in the year, up 72%

  • Materially reduction in cost-to-income ratios across the business

  • Funding sources diversified

  • Loan book up 111% year-on-year

  • Record quarterly loan originations of $321.9m, 87%  above the previous period

  • New monthly record of $124.6m in loan originations was achieved in March

Management notes despite its branching out into automotive lending, the company had improved the credit profile of its customers by 17 points on the Equifax scale.

Technology advantages & operational efficiencies

Over the year ahead, Plenti plans to extend its product and technology advantages over other lenders and drive new loan originations and operational efficiencies.

Management noted that inaugural renewable energy and personal loan asset-backed securities (ABS) issued substantially reduced funding costs across $280m of receivables.

Management also expects cash profits to increase in the coming year, weighted towards the second half.

What’s in store

Plenti expects borrower rates to continue to increase over coming months as the market adjusts to higher funding costs.

A recently entered corporate debt facility agreement, linked to the size of Plenti’s securitised loan portfolio, allows the company to access more capital in-line with loan book growth and was initially drawn to $18m.

Commenting on today’s update, Plenti’s CEO Daniel Foggo reminded investors of the company’s focus on leveraging proprietary technology to execute product innovation and efficiency initiatives, “whilst continuing to profitably take market share in each of our three key lending verticals.”

Consensus does not cover this stock.

Based on Morningstar’s fair value of $1.53, the stock appears to be undervalued.

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Plenti Group share price movement over 12 months

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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