Orchard Funding Share Discussion Threads

[topvest] 02/2/2024 09:41

A couple of thoughts. The revenue will presumably only disappear once the policies expire and so the loss of income is not immediate. Its the insurance company that sells the GAP insurance so they are the ones that are potentially on the hook for regulatory action. Most reputable insurance companies don't sell it - I know as I have shopped around for GAP insurance on an expensive car in 2023.
The issue appears to be that £10m+ of the lending book is running off quickly and can't be replaced so this will offset any growth elsewhere in the business. Share price hammered today, but seems a tad overdone.

I see that the CBG share price is still getting hammered - they are into this and motor finance DCRs. There has also been talk of regulatory action over insurance premium finance in general (i.e. why should you pay more for monthly insurance)? I think the FCA are losing the plot to be honest. The insurance business has worked this way for hundreds of years - i.e. you pay the premium up front. If you can't afford to you should pay more. That's how insurance companies earn a return.

[davidosh] 02/2/2024 09:33

Presumably the commission seeking dealer says take out GAP insurance with a provider of such and when the punter says they cannot afford it...Orchard are suggested as an instalment option.

I do not think Orchard have any risk of legal action but clearly losing business if this was 20% of loan book.

[cockerhoop] 02/2/2024 09:08

From FCA report in Sept 23 - it is a pretty outrageous product that consumers shouldn't be bounced into.


'According to FCA data, for GAP insurance only 6% of the amount customers pay in premiums is paid out in claims. The FCA has seen examples of some firms paying out up to 70% of the value of insurance premiums in commission to parties in the distribution chain, such as motor dealerships.'

[florence141414] 02/2/2024 09:05

Call me crazy but I might be convincing myself to buy back in to orchard.

They have an 18m net loan book. 5m market cap.

I don’t believe they are the ones that sold the car insurance to the end user. They just lend the money to the insurer/car dealer who makes the agreement with their customers.

The way Amigo/Morses went broke was because the regulations came with a slew of justified legal claims the payments for which overwhelmed them.

If orchard are not on the hook for the legal claims then yes their business is screwed going forward but their assets should be safe from the claimants.

There is obviously more risk in that the next letter from the FCA could make everyone withdraw their regular insurance cost spreading products which would wipeout just about all of Orchard’s business

The key for me is who is on the hook when the claims come around

[davidosh] 02/2/2024 08:59

97peter said... Things will be different in 2024, spoke to Ravi about IR and communications with PI’s. Enjoy the rest of the year with Orch, get in now while it’s at 33p, as I honestly believe as a medium to long term investment and income return and growth there are few better shares and company!! Hargreaves and Interactive think so as have quite a few shares!!

I am not sure what your motives are but were you aware of this risk to 20% of the business?

[tiswas] 02/2/2024 08:57

Anyone have access to the Liberum note?

[konradpuss] 02/2/2024 08:50

Whoops! The discount to NAV just got bigger.

Now where is Peter when you need him to 'hoover up' these shares?

[playful] 02/2/2024 08:46

That made me smile 😊

[konradpuss] 02/2/2024 08:44

David, it was/is at a stonking discount to NAV. This allows, in my humble, for the bad news.

[davidosh] 02/2/2024 08:31

Can anyone direct me to where the company highlighted this FCA investigation as a specific risk to 20% of their business?

Is there not a knock on risk that banks will pull their funding?

Now we know why the share price has been so weak..

My investment here based on growth with a high yield has become a declining business model with a 60% capital loss...ouch !

[playful] 02/2/2024 07:54

Seems they want the product out of the control of the car dealership but have no intension to ban the product.

[cwa1] 02/2/2024 07:08

Ugly...



Trading Update



Orchard Funding Group PLC ("Orchard", the "Group" or "Company"), the finance group which specialises in insurance premium finance and the professions funding market, provides notification that following the conclusions of a recent FCA review, a number of insurers are withdrawing products from the guaranteed asset protection ("GAP") insurance market. GAP insurance is sold as an add-on to motor insurance, covering the difference between a vehicle's purchase price and its current market value.



As over 20% of the Group's assets finance GAP insurance products (as at 31 December 2023, unaudited), the withdrawal of these insurance products is likely to have a material adverse impact on the Company's financial results over the current financial year. The Group will provide further updates as appropriate in due course, as it continues to assess the impact of GAP insurance product withdrawals and works to redeploy these assets.

[97peter] 26/1/2024 18:06

Konradpuss - Were and on what sites, BB’s or elsewhere do you get the inclination that Orchard are short of funds, made 1.6 million profit each year for last 3 years! Or where they could go private or be bought?? Do you know something we don ‘t? Plus are you really worried or only have a small stake and just stirring?

[cwa1] 26/1/2024 10:41

Indeed, in at ii too. Happy days!

[konradpuss] 26/1/2024 10:28

Phew! they are not broke!

[cowie19] 26/1/2024 10:22

Divi in my IG account this morning

[97peter] 26/1/2024 10:01

II - Interactive Investor monies in just now, great broker and great prices on SIPP.

[cwa1] 26/1/2024 08:06

Anyone up for a game of "which broker coughs up the dividend first AND last"?

Just checked ii and there's nothing there yet, so the field is still open to all runners and riders for first payment...

[97peter] 25/1/2024 16:28

Konradpuss and Davidosh - Replies:
Ravi is probably looking to do a Mello in May this year! He has said that he is looking at the IR on his website and also that clients and profits as stated in AGM are good.
Plus why did none of you join AGM and ask questions? It lasted only 15 minutes online!
In response to your lists:
> This is medium to long term investment not 1-2 years!
> There are better opportunities in the market short term.
> Buybacks would benefit who?
> The AGM divi dates was not handled well.
> De-listing why? Ravi and family do hold 59%+ of the company, not an issue?
> Investor presentations? Why do them if nothing new? Plus did Mello in 2022. Probably do another Mello in May if news and or new products, clients?
> Don’t know which forecasts and drop in profits you have read Davidosh?
> why are research notes important to you?
> The large seller - playful announced on a RNSand TR1 that they had reduced by 1%. No big news?
> I share your lack of comms and have raised this with Ravi. It is a small company, plus IR needs to be better and Ravi is focused and working on this element.
I hope all who read this should watch the Mello from 2023, should DYOR and look at what has been written and researched what has been done at ORCH and then will see other than a few minor IR issues and drop in so, which is market wide. This is a strong robust company with a great outlook for growth medium to long term.
I am a shareholder and believe strongly in ORCH!!

[konradpuss] 25/1/2024 14:44

David, I think you should add that there is value almost everywhere in the market. Look at the buy backs.

It's just that there are better opportunities elsewhere (perhaps) so poor old Orchard is being overlooked.

My big negative is the .ock up in respect of the dividend payment date.

[davidosh] 25/1/2024 14:25

ORCH is now yielding almost 10% so what is allowing this to fall rather than investors buying up the stock?

I will throw in the negatives and see if any of you want to add to them and then lets list the positives.

BEAR points.

1. Large dominant family/founder holding so now it is very small in market cap the options are limited. Fear of a delisting maybe?

2. Communication and investor relations have been lacking. No presentations in 2023

3. No research notes out there.

4. Forecasts suggest fall in revenues and profits

5. Investors fear recession and possible headaches for banks and finance providers.

6. The largest external shareholder has been selling. Is there more to come?

7. Investors writing here and shareholders appear frustrated.

Any more? I intend to ask Ravi to provide his answers to these

[34adsaddsa] 25/1/2024 11:15

Thanks for answering my question.

[davidosh] 25/1/2024 10:40

checkers2....that story is ten years old and not the same person as our Ravi, thankfully.

This is the landlord in the story...

[fozzie] 25/1/2024 09:11

'I honestly believe as a medium to long term investment and income return and growth there are few better shares' I don't disagree with you Peter but Ravi has to get the IR part of this right. He either does it himself or employs someone competent to do it for him, it's not difficult! The difficult bit is running a successful company and he is doing that pretty well but communication is king.