Orchard Funding Share Discussion Threads

[97peter] 03/2/2024 19:25

Konradpuss- So are you invested or just here to wind up some on BB. ??
Have a great weekend thinking we only do premium insurance!

[konradpuss] 03/2/2024 13:52

From the last Report & Account.

Our Business Model

'Our core business remains providing credit to businesses and consumers to enable them to spread the cost of their insurance premiums, professional fees or other fees'.

Just for Peter.

[97peter] 03/2/2024 13:29

Konradpuss- Are you for real? Are you invested here? Or just joshing??
If you are invested and don’t understand the Orchard model? I.e. that the Golf club, the private school, the solicitors, the accountants whose clients take membership, school fees, court and solicitor costs, accountant costs on tick so to speak! It is the golf clubs and solicitors who are the guarantors so a win win for Orchard as if a client defaults the club or solicitor pays!!
Wise up!

[konradpuss] 03/2/2024 10:48

Peter, hold on, are you sure golf club fees are a good idea?

If Mr.Joe Punter pays for his golf club membership via an Orchard loan. Four months in Joe decides golf 'is a ruin of a good walk' he then stops playing and paying.

I bet the golf club will not stop the membership and refund the eight months.

Orchard then must go after Joe who might have left the country.

In the case of an insurance premium if Joe does not pay, Orchard just cancel the policy and eventually receive a refund of what remains.

Ergo insurance not golf!

I will also now ponder private school fees which I will probably conclude are much the same as loans for golf club subs.

[rackersthedon] 03/2/2024 10:18

Why anyone would own this is beyond me. One look at the 3 year chart is all you need to steer clear.

[97peter] 03/2/2024 09:22

Konradpuss - Orch provides quite a few loans to Golf Clubs and Private schools and is increasing and very profitable! This will recover and all pan out over the next 4-6 months! Recovery yes back to 38p.
As for a Mello yes I have asked for Ravi to do May 2024. Plus he is fully onboard with sorting IR.

[my retirement fund] 02/2/2024 23:09

Just looking at my riser and fallers lists at close and see some strange movement here.So what's going on here then, all out fraud or just some other dodgy AIM misdemeaner?

[gradodd1] 02/2/2024 19:41

Uncertainty and risk aren't the same thing. Admittedly, I know as little as everyone else about how this ultimately impacts profitability in the near-term. However, even a cursory glance at the financials will tell you that Orchard aren't going bust. The nature of the business model is such that those loan assets can be redeployed elsewhere (perhaps not at the same returns). Also, if you'd been missold GAP insurance, who would you blame? The person who earned the fat commission, not Orchard.

[konradpuss] 02/2/2024 19:27

David, who made the big profits? The insurer. I rest my case.

[cowie19] 02/2/2024 19:17

Took a small hit today on my holding but remain fully invested. Lots to clarify here.

[davidosh] 02/2/2024 19:01

Konradpuss...It is all a bit murky though is it not?

These policies are being sold at point of sale with only one insurer option and finance provider so in my view a commission is very likely paid to the dealers to sell those products.

If shopping around they are much cheaper from other providers so the FCA wants to see open competition. Are customers told that commissions are being paid?

I think it is going to be very grey before we get clear sky here. Ravi needs to communicate and regain confidence back from investors. The FCA investigation and implications here must have been known.

[konradpuss] 02/2/2024 18:17

Thinking this through, I think the redress will not land at the door of Orchard. It will be the insurance company who wrote the policy.

I think even the commissions paid are safe. I might be wrong, however Orchard were only funding the premium, they had no 'skin in the game' on the sometimes massive underwriting profits.

[playful] 02/2/2024 17:36

I agree its the static market we need to redirect those funds into.

[konradpuss] 02/2/2024 17:23

Peter, I prefer the company stays away from property bridging loans.

I like static home financing.

As to golf clubs, I suggest Ravi buys his own clubs.

[97peter] 02/2/2024 17:13

Of the 520,000 shares traded on LSE there were 330,000 approx buys!!! Over reaction!!
Shorters and MM’s making a killing! On speculation and lack of clarity from FCA!!!

[97peter] 02/2/2024 17:09

Massive, massive overreaction!!! Opportunity to get in cheap to a superb company and share! The monies allocated to cover GAP, will now be put into Golf clubs, private schools and more bridging loans and in 7-8 months we will all look back in surprise! The FCA again badly handling things and announcements without clarity, strategy or a road map for dealing with it!!! The only way is up from Monday!!

[gradodd1] 02/2/2024 16:16

The FCA have specifically come out and said that they don't intend to ban GAP insurance completely. Seems wildly unlikely that Orchard would be embroiled in paying out years of customer redress obligations. I might be wrong, but that scenario seems a remote possibility considering they weren't actually selling any insurance in the first place and weren't receiving any commissions (PPI loans were thrown back at the banks due to the massive commissions they received). The more likely scenario is that revenues take a hit, but those assets can be reallocated...

[davidosh] 02/2/2024 16:12

I tend to agree...the legal and compensation issues and whether Orchard will be dragged in and need to pay back the GAP policies they have been linked to are now at the forefront and may take a long time to resolve.

Earnings are certain to fall from here and could end up with losses in the worst case scenario. I also worry about how the banks will look at this. Renewing the bank borrowings may be a challenge

[34adsaddsa] 02/2/2024 15:51

The shares are where they are because of Orchard's potential customer redress obligations stretching back years.

Nothing else matters. Profit for this year, price/book etc. are all irrelevant.

[gradodd1] 02/2/2024 15:37

Seems a bit of an overreaction based on the fundamentals...

Last year, Orchard had c. £51m of average interest earning assets. They earned c. £4.9m of net interest income off that (9.5%).

Assume they lose the full 20% of GAP assets. Interest earning assets fall to £41m. Also assume NIM falls to 5% from 9.5%. That gives net interest income of £2.1m.

PBT to NII was c. 45% last year - assume if falls to 40% from some fixed cost absorption on a lower loan book. That gives me £0.82m in PBT.

At the current market cap of £5.5m, that's a price/PBT of 6.7... Orchard has £35m in external loans due last year. Loan assets would still be £41m + £2.5m in cash.

The price as of today implies the business is worse than dead even in a close to worst case scenario (neglecting legal question).

[97peter] 02/2/2024 14:02

Already loading up at 23 and 24p a share massive!!

[konradpuss] 02/2/2024 13:48

Peter, an optimist to the last.

I think I need to contemplate this before 'steaming in'.

After you Peter.

[97peter] 02/2/2024 13:29

Davidosh- Orch will obviously use the 20% stake in GAP and use it elsewhere! A bit of of overreaction! Good time to buy, as can be seen by 60% of shares traded on LSE today are buys!

[cc2014] 02/2/2024 12:41

Thanks I get it. Sometimes I forget everyone but me buys cars on finance.

[34adsaddsa] 02/2/2024 12:34

Where are you imagining the £500 at the beginning of the policy comes from?