They are targeting 20% roe run rate in fy2025.
5c dividend in 2026?
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I wouldnt support a dividend payment but if they wanna give me money I wouldnt say no
Crikey..
Do not know why the share price has lifted,but about time.....lol.
Still way under for me but love to see it.
FEBRUARY 4, 2024
DATAROOM
Global investors sniffing around non-bank lenders
International private equity groups have been swooping on the Australian market of late, eager to understand the merits of buying a listed non-bank lender.
By BRIDGET CARTER
Or maybe someone's had a sneak peek at the earnings report coming out later this month percy.
This from For Bar this morning.
Harmoney Corp (HMY.AX) is Australasia's largest online direct personal lender. Its innovative online lending platform utilises comprehensive data insights, AI and machine learning to price and approve loans automatically, providing accessible and efficient financing at competitive rates. HMY's disruptive tech-driven platform, and its recently completed transition from a peer-to-peer platform to a diversified funding structure, position it well for growth as we approach an inflection point in the economic cycle, with interest rates set to decline. We expect HMY to capture market share from slow-moving and constrained incumbents in the significant ~A$159bn Australasian personal lending market, aided by the rollout of its Stellare® 2.0 lending platform opening new market segments and driving greater user conversion. Given its highly scalable tech platform, we are excited by the potential for HMY to generate significant operating leverage as it grows its loan book, driving the cost-to-income ratio down from an already impressive ~24% to ~17% by FY34. Near-term economic weakness presents a headwind for HMY, and we forecast a contraction in cash profit to A$0.9m in FY24 and a normalised loss of -A$3.3m (see Appendix 1: Explaining ‘normalised’ and ‘cash’ NPAT). However, we are attracted to the long-term growth potential and operating leverage opportunity, reflected in our spot valuation of A$1.27.
link
NZX Code HMY Share price A$0.59 Spot Valuation A$1.27 Risk rating High Issued shares 102.0m Market cap A$59.6m Avg daily turnover 37.1k (A$16k)
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Financials: Jun/ 23A 24E 25E 26E Rev (A$m) 105.5 123.2 135.4 156.1 NPAT* (A$m) 0.2 (3.3) 1.9 8.2 EPS* (Ac) 0.2 (3.2) 1.9 8.1 DPS (Ac) 0.0 0.0 0.0 0.0 Imputation (%) 0 0 0 0
*Based on normalised profits
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Valuation (x) 23A 24E 25E 26E PE n/a n/a 30.8 7.2 EV/EBIT n/a n/a n/a n/a EV/EBITDA n/a n/a n/a n/a Price / NTA 0.5 0.5 0.5 0.6 Cash div yld (%) 0.0 0.0 0.0 0.0 Gross div yld (%) 0.0 0.0 0.0 0.0
Laying the platform for the next stage of growth
Founded in NZ in 2013, HMY has since expanded into Australia and completed a transition to a diversified funding structure. Integrating technology into the direct-to-consumer model has streamlined processes, reduced operational costs, and driven efficiencies. Since its 2020 ASX IPO, HMY has grown its loan book to A$756m. With its funding model and next-generation lending platform, Stellare® 2.0, launching into the market, HMY is poised for continued growth over the next decade.
Navigating a path to best in sector returns after a challenging macroenvironment
HMY is on a trajectory of growth and increasing core profitability. However, rising interest rates have dampened borrower demand and a lift in incurred losses is likely to squeeze margins this year. Expansion of the loan book, technical innovation, and a discernible cost-to-income ratio reduction exemplify the company's drive for operational efficiency, sustainable long-term ROE, and growth.
$1.27 would be very nice
Are you saying it also might not :p to the moon?
Percy, were you meaning to post the Appendix 4D just published?
https://research.iress.com.au/IDS/ol...091850000&ppv=
Yes I was.Thanks for posting it.
Here is their result presentation.
https://cdn-api.markitdigital.com/ap...6305-2A1506899
Was stuck in meetings all morning but pleased to see positive news.
Did anyone attend the presentation?
Was there any further discussion around possible offerings? Referring to page 24
"New potential financial products (e.g. line of credit, credit cards, homeloans)"
https://www.sharetrader.co.nz/image/...AAAElFTkSuQmCC
Management seem to be running the business well. expenses are under control.
The book growth is moderated on purpose in these tough times.
Only another $100m or so book growth and profits will flow nicely.
IMO once rates start to fall and we get through the recession HMY should put the loan book growth boosters back on to get it over $1b. Dont worry about acquisition costs and the bottom line. Just keep growing.
I sold out at a big loss awhile ago but keen to get back on the train again one day. Maybe once i exit some FND at over $3sp i put some here :cool:
HMY and HUM together on watchlist ….must have forgotten to take HUM off
I always wonder who might get to $1 first …..if ever
HRM share price back down to 44 something
Struggles to stay over 50 cents eh
Last trade on NZX was 77 …….lots happened since
Volume is so small it moves around a lot. Anything close to 40c is exceptional buying I reckon
Quarterly results out
https://cdn-api.markitdigital.com/ap...1889-2A1520466
Looks all good. Still a battle with margins (NIM).
One to watch and pile into when rates start dropping?
I couldn't help myself yesterday and brought a few more But it could drop to 30cents. Hmy has a pattern of hitting a low point around 22nd June then a rise 1 month later. 3 years running. Will this year be any different 😁. This next results I'm really hoping will get things moving. I am down on this one but vista has certainly helped 😂
A pleasant surprise was GEN's General Capital result.
Both losses and arrears were well down.
Credit Losses 0.35% 0.70% -50%
Arrears 0.74% 11.61% -94%
Harmoney's update 1st May;
Credit loss % improves from first half 2024, down 10bps to 4.1%, as newer Australian
scorecard forms a larger percentage of the loan book.
I'm happy with what I got. For now...... 😁
Nztx. Come on you should know this company better. I don't see them ever paying a dividend. Keep reinvesting that money. Less money needed fro. The bank a greater return. You seem a little negative on this one. But it reached bottom. Just need ms to get off the floor and stay off. It's coming I'm telling you 😁.
Haven't seen rawz on here wonder if he still holding
I sold out to buy 2CC.
I still follow and read each update.
HMY need to make statutory NPATs in these dark days, thats the only way the market will get excited. Its hard for HMY because the customer acquisition costs are quite high, even though the repeat business is free, the market cant see past this.
One to watch
Fair enough.
I'm sitting on this one.
Taking my time on things a bit more these days. Vista was another good one when started getting into it in Jan 23. Watched it go up and down a few times before it really kicked into gear. Hmys certainly taking longer but I know it's coming.
Tend to agree, looks well placed to perform when rates start to decrease. Getting their marketing costs under control slowly and I think this will easily hit $1.00 again but I really think it may be the end of 2025. Have been accumulating over the last few months and now have a bag full so the waiting game commences.....
I made a post around beginning of June and realised my dates were out. Mid to end August we should see some good price action. Wholesale rates coming down and Harmony have started advertising again.
Looking for some good numbers next result 😁
Are you sure wholesale rates are coming down in Australia?
Bit of a line call I reckon. They tracking behind nz. I reckon at best Ozzie will hold rates next review.
On my watch list but wouldn’t be buying yet. Hold some via my small HGH holding I guess.
Still hanging in there on this one too, it might come right in the future but if not it will serve as a good reminder for me going forward.
I like their business model and their strong growth rate.
Outlook - Targeting 20% Cash RoE
https://cdn-api.markitdigital.com/ap...3c24897ef2837d
I'm going to make a big call on this one. I think by the end of August we will see 70cents a share.
All their metrics have been performing well
Costs reducing, Australia going very well. Defaults are low compared to other in the industry. Growth rate has been very satisfactory in the given environment. The next results will hopefully price me right.
Plus it's my last share to get off the ground this year. Vista being my best. 😊😊
Oh and yes listing at 3.55 was just plain ridiculous
Agree - very undervalued currently...
Yes, it seems a real headscratcher this one. They post relatively good results, and the market reaction is to yawn and let the share price dip even more. Frustrating enough for the holders, but must be even more so for the board.
TRIM CAPITAL: Initiation: New platform. New outlook
Read Trim Capital Group's research report on Harmoney (ASX: HMY), published on July 29th 2024.
Trim Capital Group is an independent Australian advisory and asset management firm specialising in corporate advisory, equities, and private lending.
Initiation: New platform. New outlook
Harmoney is a warehouse funded personal lender, distinct from incumbent
lenders by its 100% direct to consumer, highly automated digital platform, Stellare.
We initiate on Harmoney with a valuation of $1.42.
Key Takeaways
Proven and resilient business model: Demonstrating profitable growth on a cash
basis during the 4 consecutive half-years, while maintaining a 9-10% NIM (Net
Interest Margin) and 5-6% RAI Yield (Risk Adjusted Income / Average Gross Loans),
has evidenced that Harmoney’s model is resilient to tightening credit conditions.
Diversified funding with plentiful headroom: Harmoney has warehouse facilities
provided by 3 of the ‘Big 4’ banks with $246m in available funding, indicating the
capacity for a ~33% expansion from its 3Q24 ending loan book of $757m.
Solid balance sheet with no forecast equity raise: Harmoney finished 1H24 with
unrestricted cash on hand $20.7m and a $30m corporate debt facility with $7.5m
of undrawn financing to support growth expenses.
Earnings and Valuation
Valuation suggests 263% upside: Our primary valuation method is a general
residual income model, which we cross check with a theoretical book multiple.
Using a cost of equity of 11.75%, we initiate on Harmoney with a price of $1.42.
Approaching 20% Cash ROE run-rate in late FY25: Our forecasts are broadly
consistent with managements’ guidance of Harmoney nearing a 20% Cash ROE run-
rate in late FY25, with forecast generation of $8.1m in of Cash NPAT in FY26 and on,
on a stable $43m average equity driven by capital structure optimisation with
utilisation of the upsized corporate debt facility.
Investment Thesis
Peer leading Risk Adjusted Income (RAI): Automatically generated, personalised
risk-adjusted interest rates enable a peer leading RAI yield, despite having the
smallest loan book. We highlight this as a pivotal driver of forecast profitability.
Direct to consumer approach creates annuity income streams: Harmoney’s self-
service, automated platform creates recurring revenue streams once a customer is
acquired, with near zero acquisition costs for returning customers – who in 1H24
represented 32% of Australian originations and 57% of New Zealand originations.
Catalysts and Risks
Roll-out of Harmoney’s next gen proprietary lending platform: Harmoney
launched the 2nd generation of their platform in 1H23, with broader roll-out
continuing in FY25. We forecast this to accelerate growth and profitability via
enhanced customer experience, and the capability to launch new credit products.
Risk to the Investment Thesis: Being a finance company, Harmoney has a range of
risks applicable including macroeconomic conditions, liquidity and funding risks,
credit risk, fraud, cybersecurity, asset-liability mismatch and compliance risks.
Harmoney is a warehouse funded personal
lender, distinct from traditional non-bank
lenders by its 100% to consumer, digital
distribution model. Harmoney’s current
portfolio of credit products include
unsecured and secured personal loans up to
$70,000, for purposes including debt
consolidation, business loans, wedding
loans, medical expenses, holiday loans and
education loans.
https://www.harmoney.com.au/
Key Data
Valuation (A$) 1.42
Current Price (A$) 0.39
Market Cap (A$m) 38.7
30 Day Average Turnover (A$m) 0.01
Trim Capital forecasts
FY Year End 23A 24E 25E 26E
Cash NPAT (m) 4.7 1.0 2.9 8.1
EPS Cash (c) 4.7 1.0 2.8 7.9
EPS adj gwth 2593% -78% 172% 185%
Cash PE adj (x) 9.8 10.8 11.8 12.8
DPS (c) 0.0 0.0 0.0 0.0
Div yield (%) 0% 0% 0% 0%
Cash ROE (%) 8% 2% 6% 19%
PB (x) 0.7 0.8 0.9 0.9
12- Month Relative XAO Performance
Glen Wellham, Senior Analyst
glen.wellham@trimcapital.com.au
Isaac Meincke, Analyst
isaac.meincke@trimcapital.com.au
Double post
Well that's a great positive post. Thank you very much for spotting that.
Part of me wants to put more in but I've got alot already 😂 At the moment...... 😅
A couple of charts.On the yahoo chart the RSI loos positive.
https://yhoo.it/3Ypj9jH
https://stocknessmonster.com/charts/hmy.asx
The full report is available in the HMY investor centre. It has more spelling mistakes than my year three homework….
https://investorhub.harmoney.com.au/...ements/6482128
Here we go. 23rd August results out.
Just the announcement has created a small movement 😁
With interest rates starting to come down HMY looks primed to benefit
Share price up 23% in a week. Getting ready for Friday 😁
The Swedes liked the look of the bones of the LBY carcase .. could there be others sniffing around the sector ?
Who sells down the day before results!!!
I don't think we'll see much today other than more of the same (which is good) maybe in 25 or 26 we'll start to get going.
"exciting new partnership possibilities for the stellare platform"
The released result is largely over shadowed by large interest cost and slow growth, but heading into next year with lower interest cost and the roll out of Stellare 2.0 to increase growth, Harmoney is setting up 2025 to be a massive turnaround year and likely a massive cash NPAT.
Honestly in a little surprised by the reaction to the share price albeit only 17k has brought this back down.
I listened in to the presentation and looked over the results. Yeah some numbers wernt were I wanted them to be. The write down on stellerware 1.0 made the spreadsheet look a little worse for wear. Still looks good to me. Reminds me of when I was holding sky. Good results but share price didn't go anywhere for a long time. Till boom
Could they get the font any smaller on this little gem - FY24 excludes one off $9.5M non cash impairment......
They did signal a low growth rate whilst they bed in Stellar 2.0, they are primed to go now so tend to agree 2025 could by great :)
Cash NPAT$0.7m$4.7m(85%)
1.FY24 excludes one-off $9.5m non-cash impairment of intangible assets on decision to retire Stellare® 1.0.
Disappointing year. Margins getting crushed and basically no book growth resulting in cash profit way down.
Holders need to decide if they wait for stellare 2.0 roll out and hope to see huge book growth or if they say enough is enough and move funds to more productive stocks
https://stocknessmonster.com/announc...asx-2A1542759/
Operational Highlights:
• Stellare® 2.0 delivers +50% increase in Australian new customer originations in July 2024 compared with the same month last year, with July 2024 being the first month all marketing channels were directed to Stellare® 2.0.
• 90% of decisions fully automated in Stellare® 2.0, for fast, consistent decisioning.
• Stellare® 2.0 calibrates risk factors to individual applicants, delivering more, yet safer, offers.
• Arrears 10% lower on Stellare 2.0 compared with Stellare 1.0 over the same period.
• Strong revenue growth, up +15% on the prior corresponding period (“pcp”) to $123 million.
• Credit loss % improves from first half 2024, down 20bps to 4.0%, as newer Australian scorecard forms a larger proportion of the loan book.
• Cost to income continues to improve, down to 24% from an already low 28% in the pcp.
• Fifth consecutive half of both loan book growth and positive Cash NPAT, with Cash NPAT of $0.7 million even while transitioning platforms and navigating a higher interest rate environment.
• Stellare® 2.0 success has enabled Stellare® 1.0 retirement, resulting in one-off $9.5 million noncash impairment expense this year.
• Strong funding capacity for growth with $30 million corporate debt facility, of which $7.5 million remains undrawn, $20.6 million of unrestricted cash on hand, an Asset Backed Securitisation program in Australia and New Zealand, and warehouses from 3 of the “big-4” Australian banks with $181 million existing growth capacity.
Financial HighlightsFY24 FY23 Change (pcp)
Loan book $758m $744m +2%
Revenue $123m $107m +15%
Net interest income % 8.8% 10.2% (4Q24 new business 9.6% (80bps))
Risk adjusted income % 4.8%6.3% (4Q24 new business 6.0% (120bps))
Acquisition costs $10.6m $12.3m (14%)
Cost to income % 24% 28% (400bps)
Statutory NPAT $(13.2m) $(7.6m) (74%)
Statutory NPAT (normalised) $(3.7m) $(7.6m) 51%
Cash NPAT $0.7m $4.7m (85%)
No problem, I plan to go into a lot more detail once I have more time to compare all the numbers, but very impressed with the initial figures that have come out of the roll out of Stellare 2.0, very excited about what new partnerships they have coming out and the outlook looks very bright.
Looking forward to seeing your numbers SB. You have been getting a lot right lately so your numbers will be valued.
The outlook statement will need to improve dramatically throughout the year to drive sp appreciation. What they have given us is hmmmm, not very inspiring.
The below is kind of just stating the obvious. Cash NPAT growth??? From new base of $700k. Okay not hard.
20% cash return on equity run rate. Easy when equity drops $17m thanks to the huge statutory losses.
Outlook FY25
• 1H25 completion of Stellare® 2.0 rollout in both countries to set up for significant loan book growth in 2H25 and beyond
• Net interest margin returning to 9% in 2H25
• Cash NPAT growth
• 20% Cash Return on Equity run rate in 2H25
I am going to have a guess and say cash profit next year will be $5m-$6m if stellare 2.0 really rips, NIM improves and no large jump in write offs due to worsening economy in NZ/AUS
Did anyone listen in to the presentation.....
I had someone turn up for a meeting 10minutes into question time. Just wondering if there were any questions regarding the share price. Or can I relisten to the presentation
I listened, the message was this was the worst it gets in a cycle and they are still making progress and okay numbers. They indicated they had strong indications of improvements ahead and my quote above they mentioned future partnerships ahead but was too early to give any specific details.
Addressable market A$150 billion ...and thats just Australia
That's a lot of opportunity
FY24 results
Interest revenue increase 15%, while interest cost increased 40% Clearly when that happens its going to be hard to make a profit especially when older loans were made when loan cost were cheaper. With FY24 spent focused on developing Stellare 2.0 growth was reduced as well, but all this changes going into the next financial year.
Fy25 Estimate
My FY25 estimates are based on stats generated during from their July release of Stellare 2.0 and expense ratios from Fy24. With the average loan at $20,000, they did 650 new loans in July 2023, but with Stellare 2.0 increasing the amount of loans approved in July 2024 the number of loans increased by 650 additional loans with a 50% increase on loan value for that month.
That suggest under Stellare 2.0 that the average loan generated will be smaller loans with an average value of $10,000. Additional loan value generated a month will be $6.5m or $78m a year in Australia.
Assuming NZ can do 20% of that in additional loans since NZ’s implementation comes later and the population is smaller, then that would be $15.6m
Additional loan value generated with Stellare 2.0
Australia: $78m
NZ: $15.6m
Total: $93.6m
Loan book at the end of 30th June 2024 was $758m
Loan book growth, if we assume added 2% on original volume would be $15m added to the loan book
Total loan book for FY25: $758m + $93.6m + $15m = $866.6m 14.3% increase
Interest income: $140.3m
Interest cost: -$59.4m (using a 0.5% reduction on their current interest cost)
Credit loss at 4%: -$34.6m
Customer acquisition cost: -11m
Operating expenses at -$25m
Cash NPAT $10.3m
Potential that partnership opportunities may increase loans
Thanks silver. In all honesty this result was alot lower than my expectations.
Seeing your numbers would be right up there at amazing. If they can achieve half of that I'd be happy. So guidence for me would be half of what yourve supplied to 3/4s of your figure. Your figure would be super top and would push the share price up to $1.50 by October 2025.
But as always. It take a big fund to push the share price upwards regardless of how good it is. NZME, Sky, vista. No matter how good the results are it take a fund with alot of money to finally show it's potential.
SB your numbers do look very super duper top to me.
HMY have guided 20% cash ROE only for the second half of FY25.
So assume they do really well in the first half and get 15% ROE and 20% ROE for the second the blended is 17.5% (i think this is a stretch). This would equal cash npat of $6.4m.
Your $10.3m cash npat is a ROE of 28.3%
And this assumes no more stat losses dragging down avg equity further. Which with your $10m cash npat would push ROE over 30%
It would be the top end based on ROE of 20%, though theres always room for out performance as you will have seen with 2CC and Tower profit upgrades in the past. My estimates are based off their July data, the rest of the year might be better or worse. Theres no knowing how Stellare 2.0 could perform going forward and whether they plan to spend more on marketing or not. I will revise my numbers when more financial data is released.
Some holders have given up it seems?
Need to wait until nov for Q1 trading update for new SP direction. Hopefully Q1 update is a goodie and shows huge originations on strong NIM.
Interesting report. thanks for sharing.
Trim capital get a theoretical book multiple of 6.6x. Hmmmmm
Theoretical Book Multiple Valuation
We cross-check our primary valuation with an analysis of a theoretical book multiple. With Harmoney’s medium term ROE target of 20%, we can use this to ascertain what theoretical book multiple the company will trade at if it achieves this target (which we think is probable and in line with our forecasts).
One key shortcoming with this method is that it requires an assumed dividend payout ratio, as the theoretical multiple calculation can become undefined if no dividend payout ratio is assumed.
For the purposes of this valuation, we assume a 50% dividend payout ratio, despite Harmoney currently seeking to retain all its earnings to support future growth.This method suggests that with a 11.50% cost of equity, 20% ROE and 50% retained earnings, the appropriate theoretical book multiple that Harmoney should trade on is 6.67x, which applied to its current book value of 35cps would suggest a valuation of $2.36
looking likely 2 be a stellare performance on the cards Rawz