International Personal F... Share Discussion Threads

[casholaa] 30/8/2023 15:45

Going ex-Div tomorrow I think

[popit] 25/8/2023 18:38

FreddyBruce

Thanks for the figures

So if you think IPF is good value, what do you think of Vanquis?

It is about the same market cap as IPF now but it has twice the receivables at about £2 billion and it looks even better value than IPF

On Market Screener

The forecast PE for Vanquis is 2.5 in 2025 and 17% dividend
And forecast PE for IPF is 4 in 2025 and 10% dividend

Vanquis is mid cost credit and near prime now and so all the sub prime has gone and all the claims companies have gone

I think Vanquis and IPF are both good value, but I think Vanquis is better value at the present time

Have you looked at the figures for Vanquis?

Do you have your own estimates for Vanquis?

[freddybruce] 25/8/2023 10:01

@Popit.
Straight forward. I've taken net shareholder's equity: currently £463m forecast to grow to £550m (my forecast) by the end of 2025. Reasonable given the 40%-45% dividend payout ratio.
And then applied 15% - 20% ROE. That gets you my EPS and Dividend numbers.

IPF currently has siginificantly more equity than it needs: Equity to receivables of c.50% (current) vs 40% (required). This leaves room for IPF to support receivables growth in Mexico and IPF Digital and in Poland (following transformation), which in turns delivers underlying revenue growth and generates scale to reduce the cost-income ratio to c.50%.

Two of the divisions (Mexico and European Credit) are already delivering c.20% RORE (ROE based on their "Required" equity). So, given the growth opportunities, I think achieving 20% ROE by 2025 is quite reasonable for the business as a whole.

[popit] 19/8/2023 21:58

FreddyBruce

Where are you getting your forecast figures from?

You said that this implies eps in 2025 of 36p-48p and dividend of 16p-22p and a dividend yield of between 13% and 18%

Have you just made the figures up?

These figures are completely out of line with the forecast figures for IPF on Market Screener

hxxps://www.marketscreener.com/quote/stock/INTERNATIONAL-PERSONAL-FI-4007183/finances/

It shows forecast eps of 18p in 2023, 21p in 2024, 28p in 2025
And forecast dividend of 10p, 11p, and 12p in 2025

The forecast eps for Vanquis is 42p in 2025
And the forecast dividend for Vanquis is 18p in 2025

hxxps://www.marketscreener.com/quote/stock/VANQUIS-BANKING-GROUP-PLC-9590111/finances/

So with the Vanquis share price now lower than IPF, Vanquis seems to offer a far better investment with a forecast PE of 2.5 in 2025, and a forecast dividend of nearly 17% in 2025

The forecast PE for IPF is over 4 in 2025, and a forecast dividend of 10% in 2025

So they both look like that they may be good investments, but Vanquis looks much better value than IPF now

[hamhamham1] 14/8/2023 08:38

Nice open today

[simon2huk] 08/8/2023 16:30

@badtime - the Fitch rating for the bonds is BB- which puts them in junk territory. This is down to the risks of sub-prime credit associated with actual / possible recession and the legislative and ESG risks to the business model (that pretty much finished the UK business a few years ago, for example). That said, I like them.

[freddybruce] 08/8/2023 12:35

I am a fan of IPF stock. Here is why.
Management expects ROE to be 15%-20% by 2025 and dividend payout to be c. 45%.
This implies eps in 2025 of 36p-48p and dividend of 16p-22p: a dividend yield of between 13% and 18%.
With 45% dividend payout it leaves 55% of net income to support growth. At 20% ROE this implies EPS and dividend growth of >10%.
This increase in profit (and ROE) is supported by: strong growth potential in Mexico, Poland (post transformation with new credit card product) and IPF digital; and improvement in the cost income ratio to management forecast of c.50% from 57% today

[freddybruce] 08/8/2023 12:33

Poland transformation is proving to be going better than anticipated. Management stated at year end 2022 that they expected a £20m hit to profit in both 2023 and 2024. Revised at Q1 to £15m and revised again at H1 to the less specific statement “we expect our growth to be more modest for the year as a whole and returs to moderate ...”. Consensus PBT for 2023 has as a result increased from £56.8m to £70.3m.

[badtime] 05/8/2023 21:27

Why is that bond seemingly cheap for that yield

[nikesh] 04/8/2023 21:44

My thoughts:
Have been a holder and sold out recently as the forecast for the next year is lower profits before growing again. Current yield is 9.4p /121p (taken off the upcoming divi)=7.5%
There are risks with the business plans so a 7.5% yield for me isn’t good enough with interest rates where they are. We could get another 20%upside short term. Am buying the ipf3 bond for now as its a 12% yield.

[casholaa] 04/8/2023 11:40

Fair enough, but, there's a decent divi. No point in dwelling on the share price if the shares were just going to sit in your account for a divi.

[wad collector] 04/8/2023 09:58

It is difficult to compare the company from a decade ago in a different economic environment and very different interest rates.
It would be great if the share price repeated its 2013 performance and hit £6 but somehow I doubt it!
Sadly my average buy price is about 250p from holding Provident Financial for the last 25 years or so. It is hard to follow the exact prices with the company split and various renamings. Like many PIs, I failed to cut my losses and kept holding when the price fell. IPF is certainly performing better than it's previous sister Vanquis. Yep I hold them too and they are worth 6% of what I bought them for!

[wad collector] 01/8/2023 15:03

Wouldn't say that if you had held these long term!

[casholaa] 01/8/2023 14:06

There are some great shares out there, like this one and I can't help that I've been wasting my time elsewhere taking positions in 'popular' and 'aim' shares.... Doh doh doh doh...

[ingham87] 01/8/2023 13:18

An excellent, stellar, solid company. One we should champion more

[hamhamham1] 01/8/2023 09:30

Now 124p, exactly a 10% return if get back to 12.4p divi again. GLA.

[hamhamham1] 01/8/2023 08:01

Oct 2019 4.6p
Apr 2019 7.8p
Oct 2018 4.6p
May 2018 7.8p
Oct 2017 4.6p
May 2017 7.8p
Oct 2016 4.6p
May 2016 7.8p
Oct 2015 4.6p
May 2015 7.8p

Etc

[hamhamham1] 01/8/2023 07:53

I think we are heading back to the traditional 4.6p interim and 7.8p final, so my target annual divi over next year or two is 12.4p

[nikesh] 01/8/2023 07:46

Just under 10p annual dividend. 8.6%yield. Not bad. Well below NAV. Interesting to see what the market reaction will be

[hamhamham1] 01/8/2023 07:25

Gerard Ryan, Chief Executive Officer at IPF commented:

"Our focus on helping more people access affordable credit and excellent execution of our strategy delivered good growth and a strong set of financial results of which we are very proud. Notwithstanding the negative impacts of high inflation, all three divisions delivered great performances and we increased receivables by 10%, credit quality remained good and profit before tax was up 12% to £37.8m. We made significant progress with the rollout of our new credit card in Poland and further strong growth in Mexico through both our face-to-face and digital channels.

Our half-year results reflect the collective efforts of the whole IPF team, and I would like to thank my colleagues for all of their hard work and commitment to our customers and the communities we serve. The Board is pleased to declare an increase in the interim dividend of 15% to 3.1 pence per share, which is fully supported by our strong trading performance and the Group's robust balance sheet."

[hamhamham1] 01/8/2023 07:05

A 10% share price rise would be nice today ;)

[hamhamham1] 01/8/2023 07:05

FIRST-HALF PERFORMANCE AHEAD OF PLAN
Key highlights

Strong first-half performance and increased interim dividend·

Reported profit before tax up 12% to £37.8m (H1-22: £33.8m), ahead of internal plans.

Interim dividend increased by 15% to 3.1p per share (H1-22: 2.7p), in line with our stated dividend policy of paying 33% of the prior full-year dividend in the first half.

Excellent operational execution delivered continued growth and good credit quality

Closing net receivables of £893m, up 10% year on year (at CER), with all three divisions delivering strong performances.

Actions to improve Group returns continue to be successful:

- Revenue yield strengthened to 54.2% (H1-22: 49.8%).

- Repayment performance remains robust, with the impairment rate of 11.4% (H1-22: 7.5%) being in line with expectations as rates normalise following Covid-19.

- Further reduction in the cost-income ratio to 57.4% (H1-22: 65.0%) delivered through rigorous focus on cost efficiency.

Robust funding position and balance sheet to fund growth.

Successfully extended £39m of debt facilities in the first half and, together with advisors, exploring options to refinance the Group's Eurobond.

Headroom on funding facilities of £84m, together with strong cash flow generation, supports the Group's growth plans into the third quarter of 2024.

Equity to receivables ratio at 51.8% (H1-22: 52.4%) underpins the Group's growth plans and progressive dividend policy.

Strategy to take advantage of substantial and sustainable long-term opportunities being executed effectively
·
Rollout of credit cards in Poland progressing well with 53,000 cards issued, and customers recognising and using the extra utility of the new product.
·
Mexico expansion strategy on track, with overall customer numbers in our home credit and digital divisions approaching 800,000.