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Orchard Funding Share Discussion Threads
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|Keeping a low profile this company. I've doubled-up.
Key points, both pro's and cons:
1. Disappointment after last year's profit warning still hanging over the shares. They have binned their advisor and appointed another with more realistic expectations (probably taken the view that it is better to have lower expectations and out-perform rather than making the same mistake again).
2. Think the prospects look good medium term though, so good time to buy on a 2 year view?
3. Stockopedia rank is very low, but its distorted by the cash outflow common to many banking stocks as they grow their debtor book. The score for banking stocks is just not valid.
4. Low risk lender - never, yes never, had a default (or an overdue).
5. Lots of market share to go for as miles behind the two market leaders. Are they a nimbler competitor?
6. Fin tech Orchard Lending Club launch not factored into the rating - could be a winner and seems to have started well and getting traction on deposits which will give them another funding source.
7. Ravi Takhar looks an "intelligent fanatic" - get in early!
8. Company is illiquid and not particularly well owned by institutions. Always good news for multi-bag gains a few years out.
9. July 2017 expectations have been wound right back to 20% growth on the base year. Looks pretty easy to beat given the Q4 lending book was up 22% and sales momentum is only just starting to get going following recent appointments.
10. Downside is that the price is likely to take a year or two to recover fully from the disappointment of not getting anywhere near the original 2016 expectations.
11. Share price is not incredibly cheap at 14 time forward earnings, 3% yield and a 50% premium on net asset value.
12 Finally their margins have dramatically improved given their ability to source lower cost funding.
Overall, for me its a potential multi-bagger over 5 years. Could go a little lower in the short term. Reasonable margin of safety as net assets are about 58p (i.e. 35% downside). Well positioned to do well in the medium term. Happy to hold long-term and see how they do. It seems to me that they are quite well positioned to build a £100m business over that time period with steady growth using their conservative funding model.|
|Yes, disappointing update today. Nevertheless, looks to have good growth prospects when the new business comes on tap. Like the low risk business model. May look to add a few more, but will probably await the year-end results first.|
|"Yes, H1 numbers nothing to get too excited about, but the business looks a good medium term growth stock to me. Can see it doing very well indeed."
|Yes, H1 numbers nothing to get too excited about, but the business looks a good medium term growth stock to me. Can see it doing very well indeed.|
|Read Panmure's note on Orchard Funding Group (ORCH), out this morning, by visiting hxxps://www.research-tree.com/companies/uk/investment_platforms_%26_services/orchard_funding_group_plc …
“Prospects are larger than envisaged and taking longer. No change to numbers implies a significant amount of lending shortly to be deployed. New opportunities also add to the prospects and a banking licence application is now being prepared... The company is expected to achieve an 18% ROE in the year to July 16 and a 29% ROE in the year to July 17. 1.9X book value is considerably below all the peer group… The company has made significant progress in H1 which isn’t evident yet in the numbers. The prospects are larger than originally anticipated and have taken longer to deliver. The valuation fails to reflect the significant growth…”|
|I thought that I would start a thread for this niche lender. Came across this recently and thought it looked an interesting proposition. Key attributes are:
- a committed CEO who is not overpaid and founded the company;
- an IPO that made sense in relation to reducing the funding cost;
- 2 in-house subsidiaries - Bexhill and Orchard;
- virtually no default risk on insurance fees and professional fees funding;
- a large target market; and
- in-house systems developed.
Looks a nice little company that has been overlooked to date. Couldn't find anything negative to be honest. Taken an initial position.
QVM score on Stockopedia is also 86 which is pretty good.|
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