The Money3 Corporation Limited (ASX: MNY) share price is trading higher today following the release of the lender's half-year results. Impressive results have driven Money3 shares up 5.17% to $2.85.
Revenue and profit up
Money3 reported first-half normalised net profit after tax (NPAT) of $15.7 million, up 61.9%. The loan book has grown 48.8% since December 2018 to reach $426.7 million.
H1 FY20 revenue increased 55% over the prior corresponding period (pcp) to $62.7 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) came in 56.4% higher at $30.5 million.
Additionally, earnings per share (EPS) increased 31.3% over the pcp to 8.6 cents, and an interim dividend of 5 cents per share (fully franked) was declared.
Money3's business
Money3 operates in the consumer lending space providing personal loans up to $12,000 and car loans up to $50,000. Money3 acquired Go Car Finance in New Zealand in 2H19, expanding the company's geographic footprint.
The company reports that it has originated loans for over 500,000 customers with more than $1 billion lent since inception. In Australia, 1 in 500 vehicles have a current Money3 loan while in New Zealand, 1 in 800 vehicles have a current Go Car Finance loan.
Between FY15 and FY19, revenue grew at a compound annual growth rate (CAGR) of 25%, while EBITDA grew at 30%. Over the same period, the gross loan book grew at a CAGR of 28% with EPS growing at 21%.
Originations and bad debts
In H1 FY20, bad debts increased to $9.7 million from $7 million in the pcp, while the impairment allowance increased to $2.8 million from $0.8 million.
Loan originations in the first half of FY20 were $138 million, with Money3 forecasting $137 million in originations in the second half. This would bring total originations for FY20 to $275 million, well up on the $193 million in loans originated in FY19.
Money3 market
Money3 estimates the annual market for consumer vehicle financing in Australia is worth some $20 billion, with $6.3 billion attributed to used vehicle financing.
The company estimates it finances 3% of the used car market annually, with 4-5 million Australians either not serviced or excluded by traditional lenders. Go Car Finance estimates around 1 million New Zealanders are either not serviced or excluded by traditional lenders.
Outlook
Money3 is forecasting NPAT for FY20 from continuing operations of more than $30 million and statutory NPAT in excess of $32 million.
The company has $50 million in funding headroom and forecasts the gross loan book will grow to more than $475 million this financial year.
In addition, a 10 cent dividend is predicted for this financial year.
