Morses Club Share Discussion Threads

[blueliner] 29/4/2017 07:03

Thanks for the above, exposure is increasing.
I know it's early days but Dot Dot loans not coming up on a Google search. HAT my other in this sector appears on page 2.

[battlebus2] 28/4/2017 20:51

Morses Club (LON:MCL, 136.12p) – Buy

The UK's second largest home collected credit lender, yesterday released its preliminary results for the year ended 25 February 2017. These were broadly in line with Beaufort's expectations. Financial highlights included continued strong performance with revenue up 10% to £99.6m (FY16: £90.6m), along with net loan book growth of 8% to £61.2m (FY16: £56.8m). Impairments as a percentage of revenue for the period were 24.4% (FY16: 20.8%), comfortably within management's target range as customer numbers increased 9% to c.216,000 (FY16: c.198,000). Costs as a percentage of income declined to 56.9% (FY16: 58.9%), resulting in adjusted profit before tax increased to £17.7m (FY16: £16.8m), reported profit before tax £11.2m (FY16: £10.4m) and adjusted EPS of 10.8p (FY16: 10.2p) with Basic EPS at 6.6p (FY16: 6.1p). The Board proposed a final dividend of 4.3p (FY16: n/a).

Our view: Innovation remains the foundation of Morses Club growth. The continued evolution of new technology and capabilities to enhance customer and agent experience, increasing efficiency and improving service while embedding regulatory compliance remains key to its progress. Technological efficiencies are capable of delivering a 28% capacity increase in customer/manager ratio, while new products developed and introduced, including Morses Club Card (cashless lending) in April 2016 and Dot Dot Loans (online lending) in March 2017, enhances the increasing connected user experience and convenience. Meanwhile, regulatory burdens continue to force the consolidation of this highly fragmented industry; Morses took advantage by completing seven acquisitions with total gross receivables of £6.8m last year, while the strategic take-over of Shelby Finance Limited in January 2017 provided it with a FCA-approved platform for launch of Dot Dot Loans at significantly lower cost than through a bespoke IT build. The CEO confirms his Group has made a strong start to the current year in terms of both credit issued and customer numbers. Morses also has a significant pipeline of territory builds bringing high quality growth along with further attractive acquisition opportunities in the wider non-standard finance market. Such moves could potentially create a step improvement in the Group growth rate over the next two years, even if the bolting on of a significant batch of additional agents could impact short-term cost. Any squeeze in current year margins would, however, be more than compensated in the P&L just one further year out. Despite recent outperformance, the underlying quality of Group operations, together with the visibility they bring plus scenario for a period of accelerated operational expansion, are still not priced in. A pre-tax forecast of £19.5m for this year and £23.0m, placing the shares on earnings multiples of 10.9x and 9.1x

[battlebus2] 28/4/2017 16:45

Look at RFX projected 6% yield, also like NMD which although the dividend isn't near that it's rising and covered 5 times...

[battlebus2] 28/4/2017 10:19

Great thanks AISHAH.

[aishah] 28/4/2017 10:14

Beaufort retain BUY and 155p target.

[glasshalfull] 27/4/2017 16:56

I'm behind the curve today.

Excellent maiden results as anticipated following their positive trading update.

Numis have indeed raised from 130p TP to 149p & intimate that results were a little ahead of forecast. Importantly they are upgrading forecasts for this year & next on the back of results.

They say,

"Morses Club reported underlying pre-tax profit growth of 5% of £17.7m for the year to the end of February, 2% ahead of our forecast of £17.4m. Average receivables increased 6% and revenue increased by 10% as the group margin continued to expand. Morses Club is growing well and we believe there is an opportunity to significantly increase customer numbers through agent acquisition. This will drive increased agent cost, which will offset increased revenues this year before driving higher profitability next.

With a stronger growth outlook we are upgrading our Pre-tax profit forecasts by 1% this year to £19.3m from £19.1m and by 5% next year to £22.3m from £21.1m.

Consequently our target price increases to 149p from 130p.

Morses Club is being valued at 10.8x this year's earnings, 9.2x next and has an attractive 5.6% dividend yield, justifying a premium valuation to the specialist lenders sub-sector."

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Feel this has the hallmarks of being a long term holding for me.

Kind regards,
GHF

[masurenguy] 27/4/2017 16:30

Good, steady progress here. One of my smaller holdings.

[yump] 27/4/2017 16:29

Be nice to find that there's modest consistent share price growth + the divi. Ideal world etc.

[aishah] 27/4/2017 15:26

Numis today reaffirms its add investment rating on Morses Club Plc Ord Gbp0.01 (LON:MCL) and raised its price target to 149p (from 130p).

[aishah] 27/4/2017 09:34

Like the results - 4.3p divi coming our way.

Paul Smith, Chief Executive Officer of Morses Club, commented:
"I am pleased to report a strong set of full year results in our first year as a publicly listed company, reflecting continued successful delivery of our strategy. We have increased our customer numbers and built on our established market position, whilst remaining focused on high quality lending. We continue to invest in technology to support our strategic plan to offer customers a broader range of products and the ability to access credit more flexibly, as demonstrated by the launch of the Morses Club Card and Dot Dot Loans.

"The enhancements made to our technology platform have significantly improved the effectiveness and efficiency of our model, increasing managers' capacity to service more customers by 28%, unencumbered by time consuming paperwork and processes, whilst at the same time maintaining our high standards of customer satisfaction and embedding regulatory compliance.

"We remain confident in our outlook. We have made a strong start to the current year in terms of both credit issued and customer numbers. A significant pipeline of territory builds is bringing with it high quality growth, and we continue to see attractive acquisition opportunities in the wider non-standard finance market."

[battlebus2] 18/4/2017 18:00

Woodford increasing their holding by 6 million to hold over 7%

[yump] 13/4/2017 13:30

Bought a couple of chunks recently into a SIPP, so quite pleased with this. Hopefully the online developments will add a bit of future-proofing, as they say the younger population are more likely to use that, than door-to-door and given the bad press and stick handed out to some online lenders, MCL have a decent and 'clean' reputation.

Haven't researched that much... are the shares tightly held, as the movements seem quite dramatic ?

[battlebus2] 13/4/2017 12:36

Price firming up anyway 👍

[battlebus2] 13/4/2017 10:50

12 million shares changed hand today. Overhang cleared???

[battlebus2] 10/4/2017 15:57

Lol keep firing....

[speedsgh] 10/4/2017 15:44

And another 100,000 at 118p this morning. In danger of my powder running out! ;o)

[battlebus2] 05/4/2017 20:55

Yes spotted than speedsgh, would be good to see our seller finished, results only a matter of weeks away.

[speedsgh] 05/4/2017 20:28

Another 100k gone through at 118p this pm.

[aishah] 03/4/2017 14:43

150k cleared at 118p.

[aishah] 03/3/2017 10:23

Still here. Good precis from Numis. Online offering will be the next kicker here. Value will out eventually.
Beaufort Securities reiterate BUY and 155p target

[glasshalfull] 02/3/2017 16:01

Surprised by lack of posts on the back of today's trading update. Everyone sold out? A quiet bulletin board is usually a good sign in my book ; - )

Well today we have a positive trading update from MCL, with Numis indicating that their customer numbers & loan book are marginally ahead of forecasts.

Numis say,

"...pre-close statement to 25th February period end highlighted that their trading performance showed growth a little ahead of our expectations.

Total credit issued increased by 18% to £144m with customer numbers increasing by 9% to 216,000 against our forecast of a 5% increase to 208,000. The increase was attributable to new territory builds and acquisitions, the two core growth drivers within the home credit business model. The loan book increased by over 4% compared to our forecast for growth of a little over 2%.

Morses Club also stated that the proportion of loans attributable to highest tier customers has increased by 10% against last year which is in line with expectations. They have also guided that impairment was comfortably in line with their guidance range of 22-27% and our forecast for the year is 23%.

Morses Club is finalising plans for the launch of its new online installment lending product. This is the next step in the Company’s strategy of developing digital products to expand its core offering and target a wider range of customers across the UK non-standard credit market. Following this statement we are very confident in our forecasts for the year and we look forward to another good year of performance this year."

and

"...(Morses) has a progressive dividend policy with a pay-out ratio of approximately 60% providing a dividend yield of 4.7% this year and 5.4% next.

While a 29% ROE is amongst the best in the sector, Morses Club (uncharacteristically for a lender) achieves this with almost no leverage. Low leverage combined with high margins makes Morses a low risk lender."

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Look v good value to me on current year PER of 10.2 & offering a dividend yield of 6%.

I'll crawl back under my stone now...

Kind regards
GHF

[aishah] 14/2/2017 13:18

Morses Club PLC Q&A with Hardman & Co Analyst Mark Thomas (LON:MCL)

[nw99] 06/2/2017 11:33

When are the results ?

[aishah] 06/2/2017 09:35

Welcome aboard GHF. SCSW had this to say back in November:

Morses Club - Tailormade for consumer downturn

120.5p Epic code: MCL
(Sharewatch) Bears are having a field day in consumer shares so if we are heading to a period of choppy economic times, Morses Club (MCL; 120.5p), which provides unsecured short term loans ranging from £100 to £1,000 through Morses agents who visit a customer’s home and collect weekly or monthly repayments, looks tailormade. Although founded in the late 1800s, Morses in its current form emerged in 2009 when RCapital acquired the home collected credit (HCC) business of London Scottish Bank and merged it with Shopacheck, creating the second largest home collected credit business. The shares joined AIM following a placing at 108p in May, which left RCapital with 51%.
Most of us are fortunate enough to have access to mainstream banks but the reluctance by UK banks to lend to those with black marks on their credit file leaves 12m people who are “cash and credit constrained” and 3m turn to a HCC service regularly. Morses has a personalised service, including face-to-face interviews and takes each case on its merits, based on levels of income, assets and absence of county court judgements.
Morses Club has a fixed interest rate of 50% on a 20 week loan, 65% on a 33 week loan and 82% on a 52 week loan. It might look eyewatering but HCC became an FCA regulated space in 2014 and although payday lenders such as Wonga had price caps imposed, HCC was unaffected because the regulator decided that face-to-face lending allows a better assessment of lending versus remote loans.
There are currently 1,800 self-employed collection agents, undertaking collections across 207,000 households. Larger rival Provident Financial has 900,000 customers but Morses continues to add new agents from other HCC firms and pays them more (c.10% of the money they collect). New agents need to build a loan book from scratch, which penalises short run earnings but customers then use their services repeatedly.
To support growth, Morses has cut the duration and size of its loans, which is increasing the yield on the book. The average loan is £553 and 50% of loans have a term of 33 weeks, up from 38% a year ago. Second, Morses is launching its online offer shortly, which could deliver spectacular returns as there is a trend for customers to seek credit online, particularly amongst a more affluent and younger demographic. Third, increased regulation is weeding out weak players and Morse has completed six deals and added £7m of receivables this year. Despite that it has virtually no leverage.
Of course, HCC isn’t risk free. In H1, bad debts as a proportion of revenue was 22.5% but it still made a pretax return on receivables of 30.4%. The bad debt level was higher than the previous year when Morses had acquired fewer new customers (with the highest risk) and Panmure reckons underlying growth in profits is 23%. The eps forecast is 10.7p this year and 11.4p next. A director just bought 200,000 shares at 129.6p. Follow his lead. Buy.