Morses Club Share Discussion Threads

[andymunchkin] 07/12/2020 17:11

sellerAboot toKnockAgain

[andymunchkin] 07/12/2020 17:11

AISHAH3 Apr '17 - 13:43 - 35 of 505
0 0 0
150k cleared at 118p.
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battlebus25 Apr '17 - 19:55 - 37 of 505
0 0 0
Yes spotted than speedsgh, would be good to see our seller finished, results only a matter of weeks away.

[opaldouglas] 07/12/2020 16:02

Ptolemy, certainly from the HCC side MCL issue guidance of 21%-26% for impairment. See below from recent results.

“HCC gross profits before the Covid-19 adjustment increased to £64.7m (FY19: £62.4m), an increase of 3.7%. The gross profit percent increased to 54.2% from FY19 53.5%. Within the cost of sales, impairment before the Covid-19 adjustment
increased from 22.2% to 23.1%, with poorer loan performances identified across newer and more remote customers in the last few months of the year. However, the overall performance still sits comfortably within our guidance range of 21.0% to 26.0%. The increased impairment costs were more than offset by agent commission costs reducing
from 24.3% to 22.6%. This was as a result of there being no material territory
build subsidies in the year and the full year effect of the phasing out during
FY19 of the remaining commission protection arrangements to newer agents.”

I don’t think MCL use the local heavies to recoup monies in this day and age and rather target a specific customer base where they can reduce risk. From their presentation last week Paul confirmed they refuse circa 75% of applications.

You can look back through updates this year and see collections have been running at high 90's vs last year with the exception of March to June which ranged between 79% - 91%. Otherwise MCL have reported 97%, 93%, 96%. Clearly this is where the additional 5.2M impairment charge comes into play with the vast majority at the start of this financial year. I've based my forecasts on 97% collections for the last 4 months of the year from guidance released so far.

Don’t get me wrong MCL have still taken a hit this year with an additional 5.2M of impairment which is a large chunk of change but they can take this on and large digital loses when HCC is throwing so much cash off.

So.. unless MCL is providing fraudulent figures, customers in the main are still paying up. I actually think the saving grace here has been the governments furlough scheme, I'd imagine MCL would have been in a much worse place if this safety net had not been available for businesses and staff.

In answer to your main question if customers do default they have to go from sub prime lending to underground lending one would have thought and have their credit file destroyed in the process.

Only my humble thoughts, OD.

[sbb1x] 07/12/2020 15:57

40% upside to my short term target of70p

[sbb1x] 07/12/2020 15:44

Bought a few more at 48.81.Showing as a sell.

[ptolemy] 07/12/2020 15:41

I suppose my comment isn't even exclusively focused on Morse but rather everyone in this space. But it is such a simple question; 'How do you collet bad loans when you've gone digital and stopped door-step visits?'

I'll leave it there. I like everything else I see. Thanks for bringing it to my attention.

[sphere25] 07/12/2020 15:36

Simon Gordon,

That's intense!

Party at yours when times allow? You must be loaded to do that ;-)

But this is all part of the nature of our participation and psychology in markets. It is very hard sometimes to not gather around psychological marks when so many do it. The institutions programme algos around the likes of the 200 day moving averages and you hear so much technical commentary on such marks, it becomes perilous to ignore.

Clearly all this is a short term phenomenon. No harm in de-risking along the way too.

As always, just an opinion

[diku] 07/12/2020 15:22

Above 50p locked in...

[sphere25] 07/12/2020 14:42

Psychological marks in play again, 50p this time. Commented on them on the CTO board with it's struggle to get through £1 bringing out a barrage of sellers (anomalous volume) and now it looks like MCL is next to face the same hurdle.

Good to see profit taking along the way. It's interesting how we all congregate around these marks so I lobbed some with the herd.

Officially part of the herd now.

They made me do it! :-)

[simon gordon] 07/12/2020 13:09

Ptolemy,

Yes, they did take an £8m hit on rolling out digital loans.

He does say D2D has traded profitably through Covid.

Like you say, the big uncertainty is can they make digital profitable.

But as Opal has pointed out, D2D post Covid should get back to c.£15m PBT. Then it's a matter of whether they can make digital a goer. If they don't the share will probably go back to the old trading range. If they make it a success then it will break out.

If they totally screw up then they'll be like AMGO.

The key thing for MCL is that they have the profitable base of D2D to expand from. Turn that base more digital with more products and then go to the mass market.

The CEO is a bullish fellow and the CFO turnover is a big dark cloud. At least the old CFO, a non exec, came back during Covid. The BoD has a few chartered accountants. Hopefully, Hay Wain are on their game.

[sbb1x] 07/12/2020 12:51

Short term target 70p+Long term 270 - 370

[ptolemy] 07/12/2020 12:47

Simon,

Saw those, thanks. That's partly why I posted. I can't reconcile his super-bullish comments that customers are "Extra ordinary loyal" and "quality thresholds so high" with increasing bad debt. I'm really trying to understand the bad debt collection story if you move online.

[simon gordon] 07/12/2020 12:33

Ptolemy,

CEO gave video spiel on 17th July in which he described their lending during Covid:

Morses Club expects to build market share as credit market recovers says CEO




Here he is at last week's Proactive Investors forum:

Morses Club present at the Proactive One2One virtual investment forum

[ptolemy] 07/12/2020 12:13

I like to look openly at all the known risks. Would anyone like to comment on - "Impairment as a percentage of revenue for the period, before the Covid-19 adjustment of GBP1.7m, was 26.0% (FY19: 22.4%)"

Ok, it's growing fast but 1:4 borrowers aren't paying and I can't imagine it will improve short-term. It used to be the case that door-step lenders sent round the 'heavies' to retrieve loans if borrowers failed to repay. I wonder if that practice has ceased with the move on line? If so, their only recourse is to reduce the borrowers credit score but that doesn't get the money back. If there's no recourse, it invites people to borrow and not pay.

[sbb1x] 07/12/2020 11:48

Yeah anything from 270 - 370 imo.4 - 6 bagger from current level

[simon gordon] 07/12/2020 10:35

Amigo Loans floated in June 2018 at 275p, valued at £1.3b.

Share now 10p, valued at £46.4m.

At their peak to 03/19 they did £111m PBT.

Since then they've been hit with mis-selling.

It is this mass market which MCL seems to be going for.

MCL 52p, valued at £68m.

Now, if MCL could do £50m from digital and £18m from D2D and do it properly, with no mis-selling, then at a £68m PBT the share would probably be valued more toward a range of 300p to 400p.

This is possibly the opportunity, but they must do it professionally, not like Amigo or BrightHouse. That's why I'm a bit perplexed by the new CFO pick. You gotta be squeaky clean!

AIMHO

DYOR

[eggbaconandbubble] 07/12/2020 08:59

Albert, Pol is soon to be available again in pint bottles. The perfect size!
"A bottle shared at lunchtime and one each in the evening" - quote one W.S. Churchill

[sbb1x] 07/12/2020 08:32

Ask upped to 52p... seller most definitely cleared happy days ahead. 90p target lovely.

[albert arthur] 07/12/2020 01:53

Zak, calling 90p, my target is much higher:https://twitter.com/share_talk/status/1335615619824279557?s=21

[simon gordon] 06/12/2020 17:58

Opal,

I've sent you a private message, should be on your dashboard.

Cheers!

[albert arthur] 05/12/2020 21:12

I love Pol too. Gorgeous breads of the one. Have a good weekend.