1pm Share Discussion Threads

[salpara111] 26/2/2016 12:48

Hmm,
I can exit for b/e again but feel that this is an unfair valuation given the growth I would expect it to be able to trade on a mid teens p/e multiple which would give you a share price of around 84p which is pretty close to WH Ireland estimate.
I guess I will hold for now and see if we get a decent bounce back

[graham1ty] 26/2/2016 11:25

Sorry Maiken, taken a day or two to get round to this. WHI forecasts are PTP next two years £3m then £4.2m giving eps of 4.9p then 6.3p. They have divis of 0.5p in 2016 and 0.7p in 2017. At today's 56p offered, that is a multiple of 11.4x the year we are in, falling to 8.9x next year.

If you private message me yr email address, I can forward the note to you

[maiken] 25/2/2016 12:59

Thanks Shanklin,would appreciate anything else you can tell us from W H Ireland note,especially forecasts for profits,divs etc.

[salpara111] 25/2/2016 09:48

I can only assume that there is a big seller in the background.
Profits have doubled over the last 2 years so there is no logic in the share price being lower than it was then.
The interest rate environment is very stable and no one is projecting it to rise over the next 12 months so I dont buy that argument.
I guess I will continue to hold as I am not ready to realise a substantial loss just yet!

[shanklin] 25/2/2016 08:21

FYI, WH Ireland issued a lengthy, and IMHO measured, broker note on 22-Feb-16 with a target price of 87p.

On the subject of bad debts, it states

"Bad debt provisions and write-offs as a percentage of the total lease portfolio have decreased further and are now well below management expectations."

Presumably broker forecasts will take account of management expectations rather than recent bad debt experience.

Cheers, Martin

[stegrego] 24/2/2016 21:14

Lot of people trying to second guess the price drop.

My guess is nothing is wrong at all, merely selling begets selling.

[shanklin] 24/2/2016 16:22

And soon, 2 plus 2 will equal 5... perhaps :-)

[cfro] 24/2/2016 16:14

I keep a watching brief here but no longer hold shares in 1pm.

Cant help but notice the fall today and especially after a presentation to investors.

As discussed above, i wonder if a few bad debts are beginning to creep in, although it might not be enough to really hurt the company.

One potential problem might be access to credit markets. I wonder how liquid these currently are and whether money is getting tighter?

[shanklin] 24/2/2016 14:27

I understand from a third party that yesterday's presentation went well. It was recorded so should be available, at least to ShareSoc members, at some point.

Cheers, Martin

P.S. I missed the bottom but did add a few just under 55p.

[salpara111] 24/2/2016 13:28

I don't often top up on an original investment but with profits having doubled over the last 2 years and trading on a p/e of about 10 I am sorely tempted.

[darlocst] 24/2/2016 10:20

Going by the share price the seminar went well then...

[webclick99] 24/2/2016 10:18

Just bought some more at 54.48!!!!

[holiday6] 23/2/2016 08:51

Thanks to all for your thoughts on this. Definitely on my watch list...

[sharesoc] 22/2/2016 16:28

Last chance to get registered for our seminar tomorrow! 1PM will be presenting at our growth company seminar in Altrincham near Manchester tomorrow. Get registered at:

[maiken] 19/2/2016 20:13

interesting points all well made.Thanks to you all.

[owenski] 19/2/2016 17:35

Hi, agree with Davidosh

One other thing to add, unlike a bank which tends to lend purely on profile scoring - ie; computer say yes - or no, 1PM tends to interview clients and obtain a more informed perspective as to the risk they are taking on, a truly personal service. This would underscore why delinquency is low.

The market 1PM operate in is SME, and from all I read, the demand for finance in this segment is still strong and banks are not stepping up probably because they've moved in the opposite direction from pre 2008, and are now so risk averse they have cut themselves out of a lucrative market.

IMO Regards

[davidosh] 19/2/2016 16:48

I think 1pm know how to cope and assess the risk to keep bad debts to an absolute minimum as they have been there before...Checkout how low they kept bad debt in 2008 at the peak of the last downturn and crisis in lending markets.

This was in the results seven years ago...

Operations Director Maria Hampton has assumed day-to-day control of delinquency management bringing to bear her extensive knowledge and expertise in this vital area. Through the tight credit control procedures already in place we have been able to work with and assist our clients who have a genuine payment problem and recover debts from those who are just looking for a reason not to pay.

In summary the company continues to focus on disciplined underwriting supported by a robust collection policy through these uncertain times.


Maybe you should use that as guidance for your fears on bad debt and do remember that these loans are spread across thousands of borrowers and although a few will inevitably get into difficulty at some point 95% or more never cause any problem at all.

[shanklin] 19/2/2016 16:19

As somebody who previously criticised the dividend, worth stating that with the company seemingly able to access all the funds it needs to grow, without further equity finance, I now feel rather more comfortable with the idea of paying a dividend. This was not the case when they were clearly struggling to raise funds to support growth.

Cheers, Martin

[kannerwas] 19/2/2016 16:11

Maiken, it's always a good idea to look at what could go wrong, and you do us all a service by doing so.

Just to put a figure on it, bad debts would have to rise to over 6% in a full year to reduce PBT to zero. That is based on a portfolio value of £57m, PBT of £1.66m for the half year, and the assumptions (a) that the co will do the same (bar bad debts) in H2 and (b) that bad debts flow straight through to the bottom line with no other financial consequences.

I think 6% would be a pretty extreme figure for any lender. I also think 1PM may be better placed than some lenders to avoid very serious bad debts: (a) lending in small amounts to a large number of borrowers, with (I think) no borrower owing more than 50k; (b) lending on the security of assets which it has legal ownership of itself (in the case of the leasing business). Also 1PM does not have the typical bank financing profile of short-term deposits financing long-term loans.

There was some discussion on this board a while back as to whether the company should be paying a dividend at all at its current stage of development. I am very glad that it does. I think the best indication a company can give of having its shareholders' interests at heart is to distribute some real money to them, and I think the dividend, though small, may bring shareholders on board who would not otherwise be there. It is only natural that the first dividend should have been small and I hope it will be progressively increased, though not faster than earnings.

As to acquisitions, I guess one can never rule out the possibility of management making a duff one. My sense is that, rightly or wrongly, the management here has a little work to do to win the full confidence of investors, and I suspect that the effect of this will be to put a brake on any acquisitive ambitions for the time being. Having supported two placings at 61p and 60p, I think investors will wish to see that last year's acquisition is a clear success, and will wish to see the share price well above that level, before they support another placing.

[maiken] 19/2/2016 10:26

I agree Kannerwas.Shares are priced for little or no growth but that's not the worst case scenario.In a substantial slowdown,eps could disappear and turn negative.
In a recession lenders disappear completely and not only those who fanny around in sub-prime mortgages.
Also eps is not the only criteria.On a div yield basis there is minimal support at these levels..unusual for a lender the bear might say.
And mgmt could make a duff acquisition.Does anyone know much about the new man at the top? Or is he unproven? The only certainty is that he will look to make acquisitions !
Just saying...and Holiday6 did ask.

[kannerwas] 19/2/2016 08:48

Bad debts would certainly increase in recessionary conditions, and I guess that fear explains why the shares have been so sharply derated over the past year or so. But surely that risk is now more-than-fully priced in; at the moment the shares are priced for little or no growth at all.

[shanklin] 19/2/2016 07:34

It seems highly unlikely, even if management maintains bad debt at current levels, that internal budgets and broker forecasts would be based on this. IMHO.

[maiken] 18/2/2016 17:57

holiday6,the big variable with any lender is bad debts.That has been the achilles heel of banks/lenders since the old king died.A lender expanding as rapidly as 1pm runs that risk doubly so and possibly triply so when expansion in this field comes via acquisitions.
Their current bad debt charge is very low at around 0.28% of loans so there's only one way it can go realistically. An increase to 1-2% and suddenly that double digit eps growth has vanished like scotch mist.
We could have a great run for years before the sh*t hits the fan of course.that's what I'm hoping...otherwise known as the 'greater fool theory'.

[salpara111] 18/2/2016 10:41

Pretty much back to break even for me now.
I can't see any reason for the share price weakness and we are now trading on a pe of about 10 which is pretty undemanding.
I guess I will continue to hold and hope for a change in sentiment

[webclick99] 18/2/2016 10:40

The current share price seems bonkers and doesn't even seem to consider the increased profits from their recent acquisition. Just bought some more.