Money3 Corporation Limited

ASX code: MNY investors.money3.com.au
Image shows a line graph with a title “Money 3 Corporations Limited.” Subtitles below the graph are ASX code: MNY and followed by a website: investors.money3.com.au. X-y line graph, in which x-axis shows years (2016--2019) and y-axis shows share values in dollars. The highest peak is seen in the year 2019 and the lowest peak is seen in the year before year 2016.
Share price ($)   2.29
12-month high ($)   2.38
12-month low ($)   1.50
Market capitalisation ($mn)   417.1
Price-to-NTA-per-share ratio   1.9
5-year share price return (% p.a.)   18.3
Dividend reinvestment plan   Yes
Sector: Financials Company Sector
Price/earnings ratio (times) 17.0 15.0
Dividend yield (%) 4.4 5.9

Melbourne-based moneylender Money3 was formally established in 2005 through the consolidation of nine separate loans businesses operating in Melbourne and Geelong. In 2019 it sold its online and branch-based small-loans business, and it now specialises in car loans of up to $35 000 and personal loans up to $12 000. It has entered the New Zealand car loans business with the acquisition of Go Car Finance.

Latest business results (June 2019, full year)

Money3 has reported success in its moves to become a specialist auto finance business, with revenues and profits up on a continuing business basis. It now segments its operations into two divisions, Broker (Australia) and International (New Zealand). The Broker division saw revenues up 15 per cent to $84.9 million, with profits at the EBITDA level rising 9 per cent to $49.9 million. The year-end loan book of $310 million was up 23 per cent from a year earlier. Go Car Finance, acquired in March 2019, contributed $6.8 million in revenues and $2.8 million in EBITDA, and boosted the year-end loan book by $63 million. In addition to these figures, the company reported sales and profits from its discontinued businesses.

Outlook

With its origins as a provider of short-term unsecured loans, also known as payday lending, Money3 had come under some government and social pressures, with questions raised about the ethics of its activities. Consequently, it has been working to transform itself into a diversified financial services company. In February 2019 it announced the $46 million sale, effective from May, of its short-term lending business, through a management buyout. This has transformed the company into a specialist provider of mainly car finance. The Australian market for consumer vehicle financing is estimated at around $20 billion annually, with $6.3 billion for used vehicles, and Money3 sees substantial scope for growth. It is investing in new digital systems to lower operating costs, and is introducing new products. It has established a new team that aims at lifting the number of returning customers. With the exit from the short-term loans business, the company's quality of earnings has been enhanced, and it expects that this will reduce its costs of funding. Nevertheless, it is vulnerable to any downturn in the economy, or to a rise in interest rates, which could lead to an increase in loan defaults. With the acquisition of Go Car Finance, for a price of up to NZ$24 million, it sees significant scope for growth in the buoyant New Zealand used car sector.

Year to 30 June 2018 2019
Revenues ($mn) 73.6 91.7
EBIT ($mn) 40.2 46.9
EBIT margin (%) 54.7 51.1
Profit before tax ($mn) 31.2 35.3
Profit after tax ($mn) 21.2 24.2
Earnings per share (c) 13.17 13.48
Cash flow per share (c) 13.33 13.82
Dividend (c) 9.5 10
  Percentage franked 100 100
Net tangible assets per share ($) 1.14 1.19
Interest cover (times) 4.4 4.1
Return on equity (%) 10.6 10.5
Debt-to-equity ratio (%) 23.5 41.4
Current ratio 19.4 12.8