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Share Name Share Symbol Market Type Share ISIN Share Description
Provident Financial Group LSE:PFG London Ordinary Share GB00B1Z4ST84 ORD 20 8/11P
  Price Change % Change Share Price Shares Traded Last Trade
  +0.60p +0.11% 528.00p 356,883 15:41:48
Bid Price Offer Price High Price Low Price Open Price
527.80p 528.60p 539.40p 523.00p 523.80p
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Nonequity Investment Instruments 1,196.30 -123.00 -90.70 1,868.3

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Provident Financial (PFG) Discussions and Chat

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Date Time Title Posts
15/8/201712:25good for a short on tonights PANORAMA?7
08/4/200509:24An expanding company13

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Provident Financial Daily Update: Provident Financial Group is listed in the Nonequity Investment Instruments sector of the London Stock Exchange with ticker PFG. The last closing price for Provident Financial was 527.40p.
Provident Financial Group has a 4 week average price of 504.20p and a 12 week average price of 500.40p.
The 1 year high share price is 1,100p while the 1 year low share price is currently 493.60p.
There are currently 353,853,690 shares in issue and the average daily traded volume is 2,033,442 shares. The market capitalisation of Provident Financial Group is £1,864,808,946.30.
fenners66: Have all the measures gotten worse since the first half ? In isolation that RNS did not read as bad as the share price suggests ..
dexdringle: Well, judging by the (lack of) share price reaction, the City obviously isn't wowed by it ! Never mind, at least we have the 'nominal' dividend to look forward to.....
topvest: Share price is poised to break up or down. Looks more like the latter, but let’s see. Watching myself.
umitw: I make the new diluted share price 741p at today's share price of 909p!Is this correct guys?
chucko1: Umitw, rather below 700p now. On an earlier post, I explained the calculation method. To update, suppose that the price pre-rights happens to be 900p. In this case, the ex-rights would theoretically be (900 + 17/24 x 315)/(1 + 17/24) = 657p. For each 1p that the share price moves, the ex-rights price moves by almost exactly 0.585p (or 1/(1+17/24). When I last wrote, the share price was around 1000p, but I wonder if some holders have been selling to finance a quite heavy rights entitlement. That’s what I would so were I a shareholder (I was a mere bondholder!).
nigelpm: Current total shares in issue : 148,233,503 Rights issue will increase by : 104,998,731 So post rights : 253,232,234 Current share price : c.£10 Market cap will be c.£2.5bn i.e. similar to when the the share price was £17 previously.
chucko1: Sippguru, that is quite an extreme statement! The repayment of the bonds need not come from cash flow now, as they would look to refinance the bonds upon maturity. Of course, that depends on there being willing bond buyers and these would be scarce in the event of perceived future insolvency. But for now, it is profits which may well be scarce and that is the reason for a 700p share price. The market is looking for a loss this FY followed by profits of reasonable magnitude thereafter. So long as the business model is thought to work, and it has done so for a century or so, just about any cash shortfall could be financed. In terms of the unknown scale of the FCA fine(s), I would say that the FCA is not in the habit of putting financial firms of reasonable standing out of business. Even the likes of Wonga were allowed to survive, although hopelessly diminished since they were nowhere near acceptable regulatory standards. PFG’s lending is far more “bank-likeR21; but were I a shareholder (I am not) I would be quite nervous about the capital hit that I might take from the forthcoming FCA pronouncements. This is why I prefer the bonds at an 8.5% yield for the next five years rather than perhaps far more upside from the shares, but with virtually no margin of safety. I own the 5.125% 2023 bonds priced around 85% but the ones referred to in the previous posts were the 8% 2019 and they are priced around 94.5% to yield about 11.5%. In the most recent market turmoil including the fears about a PFG rights issue, these bonds moved by no more than 1.5%.
umitw: PFG share price is a bit like Bitcoin! LOL
mj19: Should I buy Provident Financial plc after FCA investigation sends share price 13% lower?IS PROVIDENT FINANCIAL PLC (LON:PFG) (PFG.L) WORTH ADDING TO MY ISA?December 5, 2017 Robert Stephens General Shares 0Provident Financial plcProvident Financial plcThe share price of Provident Financial plc (LON:PFG) (PFG.L) has fallen by as much as 13% today after the company announced that the Financial Conduct Authority (FCA) has commenced an investigation into its Moneybarn division. The investigation is in relation to the processes applied to customer affordability assessments for vehicle finance, as well as the treatment of customers in financial difficulties.Since it was granted authorisation to conduct consumer credit activities in June 2016, Moneybarn has made a number of service improvements according to today's update. These include the way it deals with future loan terminations.Provident Financial intends to work collaboratively with the FCA to investigate the concerns which the regulator has. It is seeking to resolve any outstanding related issues as soon as possible.Obviously, today's news has hurt the Provident Financial share price significantly. In my view, it would not be surprising for investor sentiment to come under further pressure in the short term, as investors digest today's news.Already, the company's shares have fallen 73% since the start of the year after a major profit warning over the summer led to the resignation of the CEO and the withdrawal of a previously announced dividend.Since then, the company has put in place a new strategy for its troubled home credit division which seemed to be working well judging by the recent update released by the company. As well as this, a reorganised management team within the home credit division could prove to be a positive move in my opinion.However, with today's news of an FCA investigation, the outlook for the business seems to be challenging.It could deliver a successful turnaround and does appear to be cheap after its share price fall during the course of the year. But in my opinion, its risks and uncertainty remain high. Therefore, it's not a stock I'm looking to buy at this moment in time.
spob: Paul Scott Small Cap Value Report from yesterday Tuesday, Aug 22 2017 Good Evening, it's Paul here. Sorry my report is late today. Provident Financial (LON:PFG) Share price: 589.5p (down 66.2% today) No. shares: 148.2m Market cap: £873.6m Trading statement - this is such an interesting announcement that I feel obliged to mention it. This company is a UK sub-prime consumer lender. Its divisions include Vanquis Bank, the Consumer Credit Division (comprising Provident and Satsuma), and Moneybarn. Looking back to its 2016 results, the group made an adjusted profit of £334.1m, and paid 134.6p in dividends to shareholders. The share price was riding high, at about 3000p in late 2016. Compare that with today, at just 589.5p - that's a share price fall of about 80% this year. Its interesting how, when a share really collapses, there are often clear warning signs in previous announcements. That seems the case here. The most recent interim results were poor. They also contained worrying comments about several FCA reviews affecting the company. Also, disruption was reported from a change in the business model at the CCD - moving from self-employed, to employed operational staff. This was supposed to be a compelling change in business model. EDIT - a couple of brokers have flagged up that competitors are saying that large numbers of the best sales agents are jumping ship from PFG, to join competitors such as Morses, and NSF. This sounds ominous to me, and could mean that profits may not necessarily recover at PFG. Today's announcement has to be one of the worst profit warnings I've seen. The wheels seem to have completely come off at the CCD. This bit from today's announcement sounds awful; The rate of progress being made is too weak and the business is now falling a long way short of achieving these objectives. Collections performance and sales are both showing substantial underperformance against the comparable period in 2016. The routing and scheduling software deployed to direct the daily activities of CEMs has presented some early issues, primarily relating to the integrity of data, and the prescriptive nature of the new operating model has not allowed sufficient local autonomy to prioritise resource allocation during this period of recovery. Things don't get a lot worse than that. It sounds as if the new business model has been an unmitigated disaster. Unsurprisingly, the CEO has now gone. As a result of these problems, debtor collections have fallen a long way short; Collections performance is currently running at 57% versus 90% in 2016 and sales at some £9m per week lower than the comparative weeks in 2016. The extent of this underperformance and the elongated period of time required to return the performance of the business to acceptable levels invalidates previous guidance. The pre-exceptional loss of the business is now likely to be in a range of between £80m and £120m. It looks as if the customers are possibly taking advantage of the lender being in a shambles, to decline to repay their borrowings? This raises a big question mark over whether bad debt provisions are adequate? That's the inherent weakness with sub-prime lenders. They can report big profits for a while, then often it becomes clear that many debts have gone bad, and won't ever be collected. So a huge write-off then has to be done. That's the main reason why I would never invest in any sub-prime lender. Divisional profits - to get my head round the numbers, I've looked back at the 2016 results, and this shows the group's profitability as follows; Vanquis Bank £204.5m CCD £115.2m Moneybarn £31.1m Central costs -£16.7m As you can see, Vanquis was the biggest profit earner within the group. Interestingly, today's statement says that Vanquis is still trading alright; The trading performance of Vanquis Bank, Moneybarn and Satsuma remain in line with internal plans. Therefore I'm wondering if the problems are confined to the CCD part of the business, there could possibly be a value opportunity here? FCA investigation into ROP - this is the product from Vanquis Bank called Repayment Option Plan. New sales of this were suspended in Apr 2016. However, Vanquis is currently generating £70m in revenues from this product, which seems to have been sold between 1 April 2014 to 19 April 2016. EDIT - one broker suggests that the ROP product generates 20-25% of Vanquis's profits, this issue is of considerable significance. It's not clear what the outcome of this investigation will be. However, it sounds like there could be a risk of some kind of customer compensation liabilities, if the FCA decides that the product was flawed. Dividends - are off the table for the time being; In view of the substantial deterioration in the trading performance of the home credit business, together with the uncertainty created by the FCA's investigation at Vanquis Bank, the Board has determined that the group must protect its capital base and financial flexibility by withdrawing the interim dividend declared on 25 July 2017 and indicate that a full-year dividend is unlikely. Sounds sensible, in the circumstances. Will it go bust? That's the key question. I've looked back to the latest balance sheet, and it's actually not bad. You would expect this type of business to be groaning with bank debt. Its business model is to borrow cheaply, on a large scale, then lend very expensively, on a small scale, to people who are desperate, hence can be ripped off. The high customer default rate should in theory be more than covered by the huge profits made from customers who do repay their borrowings. In an economic downturn, customers often default en masse, and this type of business therefore often goes bust in a recession. We're not actually in a recession, although there's little doubt that household incomes are feeling the pinch somewhat right now. Interestingly, PFG had (relative to its receivables book) fairly low bank debt - a £450m syndicated bank facility. It seems to be mainly financed through taking retail deposits into Vanquis Bank - which was a larger figure of £941.2m at end Dec 2016. So Vanquis Bank looks a fairly ordinary savings & loans type of bank. Therefore, to my mind, the main risk to this group is if depositors are scared off, and withdraw their deposits. As we saw with Northern Rock, once such a bank run starts, it can't usually be stopped without a Government bailout. PFG looks much too small for a bailout (if needed), so who knows? EDIT - this risk may not be as bad as I feared. Apparently Vanquis takes term deposits (e.g. 1 -5 years). So that should limit the damage from depositors withdrawing funds. I think the key question is whether depositors can withdraw funds before the term has expired. Often that is possible, but carries an interest penalty. Therefore I think the ability of depositors to withdraw funds is an absolutely key question mark here. My opinion - this is one I'll be watching from now on. What interests me, is that the key value in the share seems to be Vanquis Bank. That doesn't seem to be affected by the problems in the CCD part of the business. Although if the FCA review goes badly, then more, potentially serious bad news could be on the way. I loathe this type of business. The way I see it, they prey on financially weak people, by offering loans to people who really shouldn't be borrowing at all - because they are poor. I have friends who have (stupidly) borrowed from Vanquis, and I ended up bailing them out, because the high interest charges compounded so rapidly, that my friends soon ended up being overwhelmed by what was initially only a small debt. So personally I have zero sympathy for shareholders here. As far as I am concerned, the losses that PFG shareholders have suffered here are a well-deserved punishment for trying to enrich themselves at the expense of the poorest people in society. I know some readers disagree with me on this, as we've discussed it here in previous reports. There are some good lessons from this situation; 1) Selling on the first profit warning is usually the best course of action, when it looks as if something serious, and structural is going wrong. Looking back, there were clear signs in Jun 2017 that something was going badly wrong at PFG, with the reorganisation of the CCD. 2) Management were clearly foolish to tamper with a previously highly profitable business model. So I'll certainly be wary in future, of any company where a big change in business model is being implemented. Do management have the skills to control, and change a business? Clearly in this case, no they didn't. 3) Regulatory risks - the FCA seem to be looking much more closely at businesses like this, which essentially rip-off the poorest consumers. So to my mind, sensible investors really should avoid any business which is over-charging the poorest part of society. The regulatory risks could blow up at any time. Who knows where & when the next mis-selling scandal will blow up? 4) Big dividend yields are often a signal from the market that something is going wrong - and those big divis may not be sustainable. So I would look very carefully indeed at any share where the divi yield is above say 6% - that seems to be roughly the cut-off point where we have to tread much more carefully. Stockopedia is showing an 8.16% forecast dividend yield as of last night, just before the profit warning. Such a figure is well into danger territory. Overall though, I think this share is probably too risky to have a punt on now, without doing a lot more research. Although I think the value in Vanquis could now be more than the entire group market cap, maybe? That depends on how much profit is derived from the ROP product, which is not disclosed in today's announcement. Also, would I really want to hold shares in an exploitative business like this? No. I see that Woodford funds own 19.9% of PFG. Another disaster for them. I do wonder how much real due diligence they're doing? If it's just a scatter-gun approach, with little original research, then investors can do that themselves, without needing a fund manager. 599c7b84d613aPFG_chart.PNG EDIT - my thanks to Clouds, who kindly flagged up Neil Woodford's blog, with his response to the PFG profit warning. He reckons it's ridiculously cheap now, and should recover. Hmmm... we all say that, don't we. Interesting to see that a top fund manager is suffering from the same behavioural biases that novice private investors are often criticised for - averaging down on losing positions. The trouble is, big funds with big positions, often can't sell, even if they want to. Plus, the moment an RNS comes out, showing a big fund manager selling, then confidence in the share slips further. It will be interesting to see whether Woodford recoups his client funds on this one, or not. It will also be interesting to see how long his blog will continue to allow comments, given how critical a lot of them are (understandably)!
Provident Financial share price data is direct from the London Stock Exchange
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