For over 20 years, Cash Converters (ASX: CCV) has developed and refined its franchised store offering as an mature and stable worldwide retailer of second-hand goods, as well as a provider of financial services.
Cash Converters has recently rebranded its image and changed the look and feel of its stores to make itself more contemporary and appealing. There are over 130 franchised stores Australia-wide and more than 600 worldwide, and the company has recently opened an online shop.
A primary source of revenue for Cash Converters comes from personal loans and short-term cash advances. Over the last financial year, the personal loan book grew 35.4% to $91.5 million. Total numbers of cash advance customers increased a respectable 15.3% to 464,857.
On 1 March, the federal government enacted revised responsible lending legislation that has reduced outgoings against historic high levels over the past half year. Yet the organisation has shown more than once that it can overcome hurdles to achieve ever-increasing positive financials.
Cash Converters has other ventures that impressively add to the bottom line. One example is Carboodle — a car-leasing business for customers who don't have access to mainstream credit and who need a reliable car without the hassles and costs that come with ownership.
Carboodle showrooms have appeared in Sydney, Melbourne, Brisbane and Perth, with plans to open in Adelaide underway. Carboodle added around 5% group revenue and has the capacity to significantly add to Cash Converters' overall group revenue in FY14 and years to come.
The board of directors shows impressive longetivity, with three of five directors loyally serving 23, 18 and eight years respectively whilst steering the compnay through increasing year-on-year growth in revenue, EBITDA, and NPAT among other measures.
Despite a slump in recent weeks of the share price, for the last nine years the equity has appreciated an average compound growth of 37%. In the same time period, book value per share has achieved remarkable unbroken gains from 10 cents in 2005 to 57 cents at the end of financial year 2013.
In response to shareholder requests, Cash Converters has established a dividend reinvestment plan that allows shareholders to reinvest dividends in fully paid Cash Converters shares. The most recent fully franked dividend paid two cents per share, yet has on average increased every year since 2005.
Foolish takeaway
I personally own stock in this company. Despite the recently enacted micro-loan legislation for lenders, I believe Cash Converters is poised for increased expansion both locally and internationally.
