Pcf Share Discussion Threads

[graham1ty] 16/3/2020 15:28

Hadn’t spotted that. What an odd time to go. PCF is growing fast ( almost exponentially). He has 1.3m options, out of the money now, but a fair exposure when the share price was 45p.

Those were the days.....45p.....aaghhhh

[123davidgwilym] 16/3/2020 15:06

I see the FD is leaving.

[graham1ty] 16/3/2020 14:51

And you can now buy 50,000 at 19p.

Why no Director buying ?

[graham1ty] 12/3/2020 15:54

Would love to see some Director buying. There was a strong statement, they are not in Close Period.

How about a show of confidence ? The Board was indignant about the “low” Placing price of 30p. At 25p they must be buyers ?

[cc2014] 12/3/2020 14:02

Sounds very odd. Which broker?

[geraldus] 08/3/2020 11:02

Just watched the AGM,what a hoot.Captain Scott entering stormy waters.Can't wait until June fort the next thrilling installment.

[graham1ty] 06/3/2020 18:52

Cracking good update. But Singers and Panmures just have no buyers. No one at all.

Despite Simon Thomson, the share price drifts. I know the market is rubbish, but for a quality, fast growing, prudent company like PCF, weakness in the share price should be an opportunity. It would take just one institution, and they could hoover up loose stock and could have picked up 1-2m shares by now. A reasonable holding.

[bramcych] 06/3/2020 08:27

Brilliant trading statement - this will zoom, with ST providing a massive boost next week.

[sev22] 02/3/2020 09:45

Just a reminder that PCF is one of Simon Thompson's 10 Bargain Shares for 2020 (write up below from three weeks ago).

These are massively under-valued, despite market conditions.

Aim-traded specialist bank PCF (PCF) made it into his 2018 Bargain Shares portfolio when the shares were priced at 27p, and they offer an even more attractive investment proposition now given the significant operational progress made by the company in the past two years.

Annual results released in early December revealed a 55 per cent hike in the company’s lending portfolio in the 12 months to 30 September 2019, almost hitting the board’s £350m lending target 12 months ahead of schedule. Importantly, an increasing proportion of new business originations are to prime borrowers, representing almost three-quarters of all new loans made in the 12-month trading period. This has helped to diversify the loan book, which is now spread across 21,250 customers, up from 17,000 customers at the same stage in 2018. A key driver in the improvement in the quality of PCF’s loan book has been the lower cost of funding provided by its banking licence.

PCF’s retail deposit base surged from £191m to £267m in the 2018-19 financial year, thus enabling PCF to recycle the low-cost funding – on average the bank’s 6,250 (4,500 in 2018) retail deposit customers earn an interest rate of 2.2 per cent on a deposit of £42,400 over a term of almost three years – into both business lending to small and medium-sized enterprises (SMEs), mainly for vehicles, plant and equipment, and consumer lending concentrated on nearly new and used carsImportantly, credit quality remains sound. Impairments remain unchanged at 0.8 per cent of receivable balances, a satisfactory level of write-downs at this point of the credit cycle after taking into account the accelerated portfolio growth rate. It’s worth noting, too, that PCF’s net interest margin (NIM) only dropped from 8.2 per cent to 7.8 per cent year on year even though there was a higher proportion of lower-margin and lower-risk prime lending in the mix.

Successfully diversifying lending lines:

PCF’s business finance loan portfolio has been the key driver of the growth, increasing from £121m to £178m last financial year. The fact that 71 per cent of all new business originations are from prime borrowers is reassuring, as is the move to diversify revenue streams. For instance, the autumn 2018 acquisition of Azule, a specialist funding provider to individuals and businesses in the broadcast and media industry, generates annual fee income of £1m through its hybrid brokerage and ‘own book’ business model. PCF has also dipped its toe into residential property bridging finance, making £14m of loans last financial year.

In consumer finance, PCF’s core used car market has been much more resilient to the weakening of consumer demand for cars, which has primarily hit new car sales. Around 96 per cent of lending here is on nearly new or used cars and PCF avoids taking on residual risk as it doesn’t offer a personal contract plan (PCP) product. The company’s success in consumer finance – the motor finance portfolio increased from £98m to £128m in the 2018-19 financial year – is in part due to a specialisation in niche, leisure vehicles such as horseboxes and motor homes, which helped boost consumer lending by 18 per cent to £73m in the latest 12-month trading period. The portfolio has a high customer retention rate, too, as 10 per cent of consumer finance volumes are derived from existing customers, implying a higher than average level of customer satisfaction.

Solid trading prospects:

Chief executive Scott Maybury, who has led the transformation of PCF, confirms that new business originations remain strong, and the company continues to maintain prudent underwriting standards, adopting a cautious risk appetite and offering customers sensible terms of business.

The board’s goal is to generate sustainable returns from a lending portfolio that has a wide spread of risk with a focus on having a greater proportion of prime quality customers. Though not sanguine about the economic outlook, the directors feel the company’s larger scale, agility and well-established business model provide them with confidence for the future.

They certainly have reason to feel this way as September was a record month for the company and the momentum continued in October. Also, SMEs are likely to feel more confident in their future capital investment plans when Brexit uncertainty recedes and the UK’s future trading arrangements with the EU are agreed. There is a real possibility that could happen later this year, thus unleashing pent-up loan demand and in turn underpinning the board’s next target of achieving a loan portfolio of £750m and return on equity of 15 per cent by September 2022.

Critically, PCF has the capital in place to fund lending growth towards that target. The company’s NAV increased by 38 per cent to £58.8m following a £10.75m equity raise last year, and PCF’s Common Equity Tier 1 Ratio (CET1) of 18 per cent is comfortably ahead of the banking regulator’s minimum requirement. The capital position has been supplemented with a new £15m Tier 2 capital facility which can be drawn as required.

Double-digit earnings growth being undervalued:

Not surprisingly, with impairments low and the quality of the loan book improving, PCF is seeing a step change in its profitability, driven by the operational leverage of the business as lending volumes ramp up at a faster rate than the company’s cost base.

Pre-tax profits surged by 54 per cent to £8m on revenue of £22.2m (2018: £14.7m) in the 12 months to 30 September 2019 to produce a post-tax return on equity of 12.6 per cent, ahead of the company’s medium-term target of 12.5 per cent. EPS surged by 35 per cent to 2.7p to support a 33 per cent hike in the dividend to 0.4p a share (ex-dividend date 19 March 2020).

Analyst Shailesh Raikundlia at house broker Panmure Gordon is pencilling in 31 per cent growth in current-year revenue and pre-tax profits to £29.2m and £10.5m, respectively, based on the loan book rising to £450m by September 2020. These forecasts assume that PCF’s administration costs increase from £12m to £15m, and net loss provisions rise from £2.2m to £3.7m, the net £4.5m rise in these costs being less than the estimated £7m increase in interest income and fees earned. This explains why pre-tax profit is forecast to rise from £8m to £10.5m. On this basis, expect 2020 EPS of 3.5p and a payout of 0.6p a share, implying the shares are being rated on a modest forward PE ratio of 9.5, and offer a prospective dividend yield of 1.8 per cent.

Trading on a current-year price-to-book value (PBV) of 1.3 times, I feel that the Brexit discount embedded in PCF’s modest valuation is set to unwind in the year ahead, driven by the ongoing strong operational performance and greater clarity on the UK’s departure from the EU. Offering almost 50 cent upside to my 50p fair value of the equity – equivalent to a September 2021 PBV of 1.6 times – and on a bargain rating of 0.6, PCF’s shares are worth buying.

[sev22] 28/2/2020 12:51

FYI transaction 31 was my purchase, shown as a sale.

[cc2014] 28/2/2020 10:33

I've sold out. Some on Tuesday but most of them yesterday. Nothing to do with PCF, more to do with risk management as I was overweight equities and small caps. I think PCF will still continue to out-perform.

Good luck all.

[graham1ty] 26/2/2020 09:02

And on cue, a buyer of 162,000

The question though is why they paid 36p ?????

Even if a broker had been quietly picking up any selling over a few days, their average this week would be closer to 34p ??

[graham1ty] 26/2/2020 08:31

32p bid.......

The chance for an institution to pick up decent volumes

Except it appears Shore Cap and Panmures have no buyers.....

[9degrees] 18/2/2020 16:40

just got advfn to update the financials page from 2018 !. have a look

[mark of the rushes] 18/2/2020 11:42

Great insight Graham, I wonder if our nomads are just comfortable living on easy street and picking up their overly generous fees.

[graham1ty] 18/2/2020 11:17

CC, I don’t think the instos mind particularly whether they are declared ( ie above 3%) or not. It is more about having a decent slug of shares. If you are a reasonable size fund, having just 3% ( ie about £2.7m worth) will make zippidy doo dah difference to your performance ( for a £500m Fund, that is 0.5%, so even if PCF doubles in value, the fund performance is only improved by 0.5%.

I am sure there have been instos who have said “when you can get us £10m, now we are talking. Anything below that is hardly worth our time: not because we do not like you, but because it will be meaningless in the overall size of our fund”.

I have been really disappointed in the brokers. When that last fund raising came round, they had arranged lots of meetings ( 17, if I recall) but not one was prepared to put their money where their mouth was. If just one insto had taken a big slug of the Placing, it would not have been done at such a discount.

There is no indication that Panmures or Shore Cap have a buyer in their back pocket. And that is a failure as a NOMAD. They should have persuaded one of the instos that PCF is good, and even if the order was “only buy when you get decent size, but generally at these levels, we will soak up any volume you see” then an insto could have picked up reasonable size. In my view, part of the NOMADs role is that if they get a seller, trying to sell, say, 500,000 they know immediately where to go without damaging the share price.

[cc2014] 18/2/2020 10:26

The institutions may not be intersted now but over my many years of investing I have learnt that when they change their mind they will be happy to pay twice the price it is now and buy in large volume. It happens over and over again and it never ceases to amaze me the poor decisions that are made on behalf of fund investors.

It's frustrating having to wait for whatever trigger comes along to change things. Would I be happy with the share price going up by 15% every year for the next 5 years? yes of course. Would I prefer it went up 50% by the end of the week? For sure.


I'm not sure I'm in agreement with you Graham on funds not being interested because they can't get a decent slice of shares. Most funds look to acquire something below the 3% level so they don't have to declare their movements. Often much lower, say 1%. Every time ST at IC tips this we see a million shares plus traded without any difficulty and it rarely moves the price more than 5% by the time it's settled down. If someone wanted 3million shares I'm pretty sure they could get them within a reasonable period of time at a reasonable price.


I think the issue is the long term holders you mention above are no more willing to sell them than we are for 35p. It's not enough to even make them bother to run it through their calculator, because they can see the undervaluation as we can and the growth that's already on it's way. At 50p they might see things differently, but only if the price gets to that by the end of the week. If it takes 2 years to get to 50p, PCF will have more growth and more ambition and holders will want a higher price.

It's self-perpetuating I know but until we get some long term instituational holders moving in we are going to be stuck with far too many PI's with short term time horizons who have come in on the back of ST. Tbh it's a good tip by him and some of the shareholders will be sticky but not enough of them.


The magic number everyone seems to talk about is £100m market cap. We appear to be at £89m today on a 2019 PER of 13.1. That's not so racy for a growth stock like this and when Scott and team deliver what's forecast this year, we should tip through that £100m barrier. Then we will find out if stocks really do re-rate above £100m market cap.

[graham1ty] 17/2/2020 19:36

The last two Holding statements are Somers and BCB. And those are March 2019, and July 2018. I cannot see another RNS from an institution in the last three years.

Yes, with the Somers/BCB holding being so large, the free float is tiny. But it would be good to see a proper institution buying into the story.

Have actually just reminded myself. With Somers/BCB on 62.7%, Hof Hoorneman on 9.22%, Beleggingsclub on 3.3%, and the Board holding 3.9m shares, another 1.6%, that is 76.8% tied up. The free float, from 250m shares is therefore only 23% or 58m shares. This is only about £20m.

One of the funding rounds has got to see a proper, large institution taking an interest. This would dilute Somers, which is one of the eventual aims. Ironically, it might actually reduce the % free float however........

[graham1ty] 17/2/2020 19:20

I have been told so many times that institutions are not interested as there is no volume. I would have hoped that all this selling would be bundled up by one of their brokers, and passed on. Could add up to 100,000 per day. And that is the start of reasonable volume

[cc2014] 17/2/2020 11:18

And there we go. A delayed 60k sell which has been holding the share price back. Imho that's a pretty decent price for 60k at 35.855p and well within the spread suggesting the MM are happy to take them at that price.

Trouble is if I was a betting man I'd say the seller hasn't finished yet. It doesn't look like he is in a particular hurry though and happy to release his holding without disturbing the share price.

[cc2014] 13/2/2020 11:36

I assume the pullback at the end of day was due to the 69k at 35.5p which went through at 35.5p and was presumably an hour or two delayed. The actual price being paid is creeping up again with buyers paying very nearly the full 36p so I'm guessing it's nearly been moved on by the MM now.

Hopefully it's just one seller and we won't see a repeat at the end of the day again.

[geraldus] 12/2/2020 16:33

Disappointing finish on solid buying.

[cc2014] 12/2/2020 10:39

Share price got a bit stuck yesterday and I'm beginning to think that large 356k trade at 36p must have been a sell as on the balance of likelyhood something has been holding the price back against a flow of constant buying. Also, if it was a buy I think someone would have had to pay more. They good a good price from the MM though looking at the time they must have placed the trade.

Looks like the share price is about to move up again. Buyers slowly having to pay a little more trade by trade. Fingers crossed

[lees65] 11/2/2020 11:39

Trading update on 6 March. That should hopefully allow a rerating upwards. Near term 50p target seems possible, after that its a small (market share 1/2%) growing company in a large market. Good short term and long term hold imo.

[dendria] 07/2/2020 07:50

Summary paragraph from ST:

'Trading on a current-year price-to-book value (PBV) of 1.3 times, I feel that the Brexit discount embedded in PCF’s modest valuation is set to unwind in the year ahead, driven by the ongoing strong operational performance and greater clarity on the UK’s departure from the EU. Offering almost 50 cent upside to my 50p fair value of the equity – equivalent to a September 2021 PBV of 1.6 times – and on a bargain rating of 0.6, PCF’s shares are worth buying.'

See the full write up in the IC.