https://static1.squarespace.com/stat...prospectus.pdf
During a recession they are floating a company which exclusively offers personal loans...
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https://static1.squarespace.com/stat...prospectus.pdf
During a recession they are floating a company which exclusively offers personal loans...
Indeed .. $3.75 NZ / $3.50 AU a shot for a piece Loss making Company not in short term
planning on paying a dividend ?
Page 98 - showing the Financial & forward nuts & bolts looks interesting
In particular - Impairment & expected Loss provision total in relation to Interest Revenue
At $3.75 a piece - one would have to be brave in current times - unless I'm missing something ;)
I'm leaning towards thanks but no thanks on this one, but may be wrong ..
I cant find an E.P.S ?
can anyone see this ?
my eyesight is not as good as it used to be and there are 236 pages ...
The 4 month forecast isnt loss projecting but annually their figure would represent about 3 million profit so I guess I just need to look at the capital structure and work it out myself...
We all know what may happen to forecasts if things turn to crap in OZ badly
This part interests me
"Dividend policy
The dividend policy of the Company is to reinvest all cash flows into the business to maximise its growth.
Accordingly, no dividends are expected to be paid in the near term following the Company’s listing on ASX."
On completion of offer there seem to be 100.9 Million shares on Issue:
"The Offer comprises an initial public offering of 26.4 million Shares
comprising 20.0 million New Shares and up to 6,428,572 Sale Shares
raising proceeds of up to A$92.5 million22 at the Offer Price of A$3.50
per Share.
The Offer is an invitation to apply for:
• 20.0 million New Shares offered by the Company to raise proceeds
of A$70.0 million; and
• up to 6,428,572 Sale Shares offered by SaleCo to raise proceeds
of A$22.5 million.
The Shares being offered under the Offer will represent 26% of the
Shares on issue at Completion.
The total number of Shares on issue at Completion will be 100.9 million
and all Shares on issue will rank equally with each other."
from Pt 1.8 of Offer Section
The total number of Shares on issue at Completion will be 100.9 millionand all Shares on issue will rank equally with each other.
so a 4 month estimated profit of 1.2 mill as per page 21 of the prospectus so thats about 1.2 cents every four months. 3.6c annualised, so thats a PE of about 100.
I always hate it when companies talk about the size of the sector they are entering as if that is a positive and as if it is relevant. Just because other people are selling widgets, or in this case originating loans, doesn't mean you can.
edit
thx ntx
and whoever started the thread spelt the name wrong so if they can fix it ...
Everything is better with an E including Harmoney.
A prospective PE of 100 in this sell down would suggest that the ideal time to get into this investment was earlier in the business development process when the capital invested was at a somewhat less lofty prospective PE ratio. Oh wait I did that. Heartland was in at the beginning and I am a Heartland shareholder! I think this float will be good for Heartland shareholders, once those Harmoney share escrow provisions expire.
SNOOPY
Hello Snoopy - I can see you again ;+)
Yes thats right and so am I a Heartland shareholder so I will just sit back on this one and enjoy.
Escrow release dates are staggered over 2021 (50% being 25% June and 25% end of calendar year), and the final 50% after results in Jun 2022 .
So payday comes pretty slowly.....
what multiple would you consider acceptable on this one ?
I saw somewhere in prospectus that IPO price is 3.5 times income
That applied to HGH would put them at $1.70 odd
Bear in mind that Companies Office filings suggest that some share parcels in Harmoney
near the entry point of Trade Me & after Heartland's initial investment were priced @ approx NZD 0.325c
back in 2014 / early 2015. If initial holders were selling down - then would they be getting their
initial ingoing back, or close to it fairly quickly?
See my post #13941 in the HGH thread -
https://www.sharetrader.co.nz/showth...ldings/page698
The additional over that is cream on the top for being on the Harmoney Share Register early
If I were Heartland, I would wait until June 2022 and sell the whole stake in one hit (if I was going to sell that is). That is still less than two years to wait.
Good question. Harmoney are in the process of transition from being a 'peer to peer lender' to a 'regular' finance company. The latter is apparently more profitable. So your prospective PE of 100 will shrink when all loans switch to 'wholesale funding'.Quote:
what multiple would you consider acceptable on this one ?
A premium PE would imply some underlying ongoing permanent advantage. In the case of Harmoney, they talk up their credit assessment methods. From the Prospectus p19:
-------
Credit assessment
Harmoney has invested in building (and continually improving) a proprietary credit scorecard to assess potential customers. The credit scorecard assesses both credit bureau data (positive and negative), and customer supplied information. The credit scorecard categorises customers across 25 credit grades in New Zealand, and 20 in Australia. From this, it is able to generate interest rates between 6.99 – 24.69% (New Zealand) per annum and 6.99 – 25.69% (Australia) per annum to optimise the risk‐return profile of loans within its loan book. The improved performance of this proprietary intellectual property over time is demonstrated through its increasing predictive accuracy. Harmoney has continuously refined its credit scorecard to ensure that Harmoney is able to make accurate real‐time decisions about approving and pricing lines of credit.
----------
They keep costs down by automating their debt collection tasks.
A further advantage Harmoney have is their partnership with Google. Google account holder behaviour is used to target prospective Harmoney customers. From AR2020 p25
"Harmoney also introduces its brand advertising to users whom Google has determined to have intent in the short‐term future to search for a personal loan. Google Smart Bidding accounted for approximately one third (35%) of new loan originations website traffic in New Zealand and Australia in FY20"
Again this process is automated.
From p42 we get more of an idea of the size and duration of loans that Harmoney is targetting:
-------
Personal loans in this segment of the market:
• are typically used by borrowers for purposes such as consolidating debt, financing home renovations, vehicle purchases or holidays, and funding other life events;
• are typically for principal amounts varying between $2,000 and $70,000 in New Zealand and A$2,000 and A$70,000 in Australia; and
• typically have maturities ranging from two to seven years.
The interest rates charged in the industry vary significantly depending on the credit profile of the borrower, and, for personal loans, whether the loan is secured or unsecured.
----------
A 7% interest rate secured loan is quite respectable. A 27% interest rate unsecured loan, you would hope for the sake of the borrower is short term (that interest bill would sting if the loan was for two years). p57 would suggest that most Harmoney lending is unsecured.
More information on typical Harmoney customers on p57
"Harmoney’s customers tend to hold stable incomes with over 70% having office, professional or trade occupations and are represented across multiple age ranges."
In summary, I think we are looking at high margin low running cost loans aimed at a demographic that should have relatively high paying jobs, giving a good chance of repayment. The prospectus reads in a very positive way. And if Harmoney can execute well, it may very well end up as a successful story. To me it does sound a little too good to be true though. There are plenty of other lenders, including Heartland, who would be very pleased to service the kind of customers that Harmoney is targetting directly. To me Harmoney's offering doesn't sound unique enough. Other lenders, like Heartland also claim fast digital platform approval of loans. I have no doubt that Google would been keen to market to their users to other financial institutions - not just Harmoney,
If Harmoney's proposed high profit margin can become reality, then due to the ability for other players to copy Harmoney's strategy, I still wouldn't invest with a long term PE of more than 15. That might correspond to a short term PE of 30 (reference: number pulled out of thin air). Nevertheless, I think Harmoney would have to put a lot more runs on the board before it could justify that IPO price. I would call this IPO speculative, with that next year's prospective PE of 100 in mind. Sometimes speculation pays off. But I am comfortable with Heartland managing 'my' investment in Harmoney for me, for now. I won't be seeking a direct stake,
SNOOPY
So it all boils down to the competitive advantage they can create and maintain through their proprietary Stellare system which will more accurately but very cheaply assess and rate borrowers. This will allow them to undercut competitors (esp bricks and mortars and people based models i.e. banks) on the proffered interest rates , and yet still enjoy profits and thus attract more repeat business and new customers.
Yes I agree Snoops, it does sound okay in the prospectus as a business model but I'm not bothered to take it any further, as someone said 'lending money at the beginning of a recession '???
That's it - I'm not sure about wanting a part of anything engaged in Retail Unsecured Lending over the ditch
after indications of the past trail of recent economic carnage in Aussie, which may or likely not improve.
My gut feeling is provisions & lending losses may well easily blow out badly - in excess of those in prospectus
as high as they are as % of Gross interest income
Being owed it is one thing, but getting it back yet another .. in expected recessionary times ;)
A myriad of other organisations are offering cheaper loan money - there is a large avalanche of
almost free Govt stimulus from Govt's trying rekindle their economies globally
There may still be a niche here. Financial commentator Bernard Hickey on the radio this morning was very adamant that in NZ, with their new Reserve Bank liquidity, the NZ banks have lent an extra $10b to the housing market since Covid-19, kept things steady in rural lending (I guess that is better than before when they were reducing their exposure) and pulled $4b of funding out of business (so where are businesses going to get their funding from?) Hickey didn't mention unsecured personal lending, which are higher up the risk scale. But the implication of what he said is that no bank would touch such lending. So if Harmoney's credit score says a customer is good for a 7% loan, this might be the time to lock them in as 'good customers'.
SNOOPY
The recent Harmoney IPO via Sharesies (presumably their broker allocation) saw scaling back to 70% of what was applied for
so must have seen fairly strong interest
The Harmoney appearance as a dual ASX/NZX listing soon could be interesting..
Good call on my part not to take part in this float. Harmoney has crashed from the $A3.50 offer price to a low $A3.15 on listing day. A recovery has set in and it is $A3.35 offer to buy, $A3.40 offer to sell as I write this. But all staggers have been slaughtered. Long term bargain entry price shareholders like Heartland showing a nice gain though, now confirmed by Mr Market,
SNOOPY
A bit of a SP bounce up to NZ 3.70 ; but still short of NZ IPO price
Throw out the anchors -- SP is slipping - finish today @ $3.50
Sinking like a rock -- $2.86 currently -- Market don't seem to like HMY ;)
Good grief .. now just a paltry $2.75 a shot for such a handsome offering .. ;)
Just a recent observation while doing some due diligence...
On 21 Dec there was high volume of 82416 shares traded, followed
On 22 Dec "Harmoney secures NZ$200m debt facility from M&G investments"
https://www.nzx.com/announcements/365521
SP immediately jumped from near bottom of $2.62 to recent high of $3.17
Does this transaction look highly suspicious to anyone else (insider trading?)
Where are our regulators?
Meantime the CEO seems to be whitewashing the company via its good news story in the Herald yesterday...
https://www.nzherald.co.nz/business/...BEABM4XTTDLRE/ Paywalled
Maybe I'm overthinking this?
I think this happens alot with company's on the sharemarket. Problem is if and I say IF they get caught they get a slap on the wrist compared to what they make out of these transactions The old saying is where there's smoke there's fire. That trade that went through before the announcement well that was a fire. Will the nzx (fire department) put it out. Probably not.
As the price went into free fall a few punters asked NZ Reg Co to investigate ...but they didn’t
Harmoney's post IPO share slump prompts investor call for price inquiry
https://www.nzherald.co.nz/personal-...ectid=12410246
Now suspicions when it goes up fast ....maybe just market volatility ;)
See (from that Herald article) Jarden had to play the old Chinese Wall trick
Harmoney's joint lead managers for the IPO were New Zealand investment bank Jarden and Australian firm Ord Minnett.
This week Jarden investment analysts released their first research report with a buy rating on the company and a 12-month target price of A$3.30 - A20c below its listing price.
A spokeswoman for Jarden emphasised its research was fully independent of its investment banking arm. The firm offered no comment when asked whether the IPO was over-priced, considering the now lower valuation from its retail analyst.
Share price back below $3
Probably drift back to the $2.70s from here
It needs a trading update. Share price is stuck in no mans land. Wandering around aimlessly. Or downhill.
I've got it on my watchlist but won't commit until I see the next numbers.
more downhill needed before it's time to be thinking about backing up the truck .. ;)
Update due in Feb for the 6 months end Dec.
Good grief .. $2.80 lowish milestone reached again must have some of the IPO chasers fair Har-Moaning about now .. ;)
Good update today. Shares are back up, but it is still a question of what the value of such a new listing with no NPAT is worth. However, the signs are encouraging.
https://moneyonline.cmail20.com/t/r-...n-odyfjlldh-y/ looking to be on the up
https://moneyonline.cmail20.com/t/r-...n-odyfjlldh-y/ looking to be on the up
Share price $2.40
Must be all time low
Down 30% from its highs a good effort
Maybe this about low as it goes
Lot of red days on this chart, all time low about 15 of the last 20 trading days. No sign of a bottom. Nasty curving down-trend line doesn't give confidence.
Lending money to people unsecured is a recipe for disaster regardless of the interest rate charged.
I think their business model is fundamentally flawed so wouldn't be an investor at any price.
The wonderful analysts probably need a new supply of magic dust to smoke
before the next rounding of mouthing it up commences .. ;)
Really? One of your fav's (Heartland) do unsecured lending up to $100k. Yes to businesses, but majority of them are small 'mum and dad' businesses. No financials required as well. So same as Harmony, the computer scores the application and gives a yes or no.
Harmony is miles ahead of the banks and finance companies by the looks of it- for personal loans. Their website and application process looks really good- i took the application process as far as i could before actually submitting it.
Harmony is 100% on my watch list. I just thank the share market gods that I didn't participate in the IPO as was fully invested elsewhere. Including at the time Heartland so felt I was invested anyway. And now with the shocking performance of the share price its hard to pick an entry point. Especially when looking at Baa Baa's graph, could well go below $2 :(
Pretty sure my client who borrowed $100K needed to submit the financials' I'd prepared for him for the last few years and had to sign a personal guarantee as well as fill out a full application including statement of financial position. He has a good house so if things go wrong its certain the personal guarantee will see HGH right. I will ask him more details next time we have a chat.
If I remember correctly this floated on a massive PE...what could possibly go wrong ;) and you mention the TA which looks absolutely horrendous.
Give it a few years and lets see if there's any profit in this business model. I am deeply skeptical.
Harmoney has to meet the CCCFA regulations so its the same. Full financial position entered into the application. And the borrower is guaranteeing the loan, i.e. personal guarantee. If they default goodbye their credit rating.
From what I can see Harmoney is going to beat the banks in the personal loan space. You can borrow much more, it's 100% online, quicker approvals. It's all going to come down to their credit scorecard. And whoever gets in first will have the best data.
I'm pretty sure ANZ is still manually assessing personal loans which is laughable, not to mention far more costly when compared to a computer.
The business model is robust. It's just a question of valuation. Of course it looks expensive, as they make no profit. As for TA, with 4 months data to work off, how meaningful is that approach? Audited accounts are due Early next week plus a forecast (there was only a 1 month forecast in the IPO) so more to work off. Maybe. But there's nothing wrong with the business model. Let's not forget either that the guys behind it have been there done that in the personal lending market in Oz.
The share price speaks for itself as the market values the company. Sentiment is not good, that can’t be ignored by an investor. There’s no point in saying fundamentals suggest such and such when the market says no. Like who would invest into a loss making company with share price performance that is so poor? I think it will go lower from here but am only an observer, no stake in this charade.
It all depends on the customer base you are attracting and often there is little to no visibility on this unless you are inside the outfit in question. Many years ago I worked in for one of the big banks in their credit card area. This is unsecured lending but it was very profitable business unit. In the right circumstances unsecured lending can work well.
Yes good points there too
Let's look at the presented figures from the same page:
(a) Impairment Expense:
FY 2018: $ 14.2 million
FY 2019: $ 17.4 million
FY 2020: $ 24.4 million
4 Mth to Oct 2019: $ 6.2 million
Forecast 4 Mth to Oct 2020 $ 6.1 million
(b) Movement in Expected Credit Loss provision:
FY 2018: $ 2.8 million
FY 2019: $ 3.9 million
FY 2020: $ 8.3 million
4 Mth to Oct 2019: $ 1.3 million
Forecast 4 Mth to Oct 2020 $ (1.3) million RECOVERY
These are all above the Line in arriving at previous NPAT figures ..
--
Major movements between the 2019 & 2020 Oct four month periods:
(rounded to 10th's of & millions)
Interest Income -2.4 million
Other Income -0.3 million
Total Income Reduction ( - 2.7 million)
Expenses:
Interest Expenses -1.3 million
Impairment expense - 0.1 million
Cr Loss Provision - 2.6 million
Marketing expense - 1.7 million
Sharebased expense + 0.5 million
Other expenses & rounding -0.2 million
PBT 2.7 million improvement
Tax - 0.8 million increase
NPAT 1.9 million improvement
what there are out there from retail are probably nursing fairly heavy red ink anyway & not looking at realising losses
- but hoping for better fortunes ..
In the same boat I'd probably not be too happy with $1.30 / share or roughly 1/3 of what I'd paid at IPO
now sitting out the back door .. ;)
I have some insights into their customer base as I was a retail investor (lender) through their platform starting December 2014 and invested in my last loan in March 2020. I invested in over 1,000 loans. Less than 2% of those loans were written off. Of the loans that are still active, only 2 are in arrears. So overall I feel they do a good job of assessing credit risk through their automated systems. Their assessment of credit risk certainly improved over time as it was mainly some of my early loans that were written off. After write offs and fees I was making around 12.5% per annum.
It is quite possible that Jun 30 2020 saw some hefty Covid 19 provisioning FY & the 4 months to 31 Oct 2020
then saw significant reversal to put provision movement into Recovery position (or Negative expense presented)
But that would be an extraordinary one off expense reversal IMO
I had quite a bit less than you , as I was slowly scaling up.
When they first started out there was a consistent large selection of loans to choose from. Admittedly some of them looked pretty dubious from a fact checking perspective.
In the end, it felt like they were shafting the retail investors, as the loan quality went downhill.
I still have a bit of money in there, making ~16% all up, which I was very happy with.
So IMO the model works when directly investing.
I was very disappointed when they dumped the retail investors.
I was very dubious about the shares though, so didn't invest. Thankfully....
Dont Heartland lend zillions through the Harmoney platform ....probably unsecured
For my money its very important to look at the full history of the company. Extrapolating out a theoretical surplus of $3.6m from those 4 months operations is definitely not something I would do in an attempt to build any sort of theoretical investment case, especially given my deep cynicism with materially different short term performance immediately before a float. There is a consistent pattern of full year losses there and they are audited figures.
As Baa Baa has observed, the trend is definitely not your friend. This is definitely not for me.
the curved down trend line on baabaa's chart seems to be getting steeper today
Agree -- the 4 months looks like a flash in the pan one off prior period recovery rather than consistent improve
Pre IPO - marketing well down & other costs
Following on even lower Interest Revenue & Expenses to follow
Growing the loan book must suggest some question on containing costs / risks / exposures etc too in changing times ?
Forgive me I have done very little research on this as I am not especially interested but just out of morbid curiosity what is their NTA ?
Proforma 30 June 2020 figures from Prospectus easiest to find here:
(Prospectus page 106)
No Intangibles by looks on proforma Balance sheet
Total proforma Equity $ 75.285 million
Shares on issue: (Note 7 - page 167)
After IPO issue of 20.0 m new = 100.9 million
NTA & similarly Net Assets / share roughly looks like 74.61 cps on prospectus proforma figures @ 30/6/20
Thanks. So if we apply a typical NTA approach, (let's face it earnings metrics don't work because there is no reliable track record of same), that our friend Winner likes to use to financial assets it should be about 1.3 - 1.5 times NTA so maybe $1 is fair value (if one believes their business model is sound, which quite clearly I don't).
Any way you slice and dice this, it looks like there was a LOT OF HYPE that went into this IPO.
CEO purchased 10,000 shares yesterday. Not a huge amount but a good sign?
There's always hype in any IPO. MFB anyone. I see Tracey Jones also bought 10,000 shares post result. Mind you they both probably sold some shares via exercised options at IPO. Follow the smart money they say. The result itself was a very good quality one. The big 4 increased their warehouse facility in AU and in NZ a second $200m facility was established. Other things to like are a record low 90day + arrears, new loan originations are up 100% in the first two weeks of the new proprietary software in the 3rd quarter, 2nd Q on 1st Q new loan origination were up 207%, momentum has continued into the 3rd Q), loan originations were ahead of prospectus forecasts. It proves their business model is very sound. What's not to like?
Tend to agree with you about their future ....should lead to solid performance going forward
A lot of the comments re awful financials pre IPO and lending unsecured to the down and outs is a recipe for disaster etc etc we’re probably unfounded and lacked objectivity
Hope they do well
Once lent through platform.
Heartland is a tiny bit player here, what about they take the aussies on at their own game and open for business on the west island. No need for physical branches, online banking and call centre
Has Heartland said anywhere what their intention is with their stake? 8.5% by memory
They can sell 25% of it in June. $231m market cap * 0.085 * 0.25= $4.9m could be sold.
They can sell 25% again end of Dec.
Potential for a bit of selling pressure because I see no reason why they should have capital in Harmoney when it could be put to better use in highly profitable reverse mortgage business unit.
The ROIC Heartland lends to Harmoney is unreal. Far better than reverse mortgages.
Yep I understand they are supporting the lending book with debt alongside the equity of course.
All numbers looking good latest quarter
The chart in announcement looks impressive
http://nzx-prod-s7fsd7f98s.s3-websit...506/344004.pdf
Looks really good. Just a question of valuation now.
If they write $1b a year in Aus probably worth $500m-$600m market cap
Just had a re-read of the recent announcement because I like this company and want to invest.. however noted that total loan originations for the group only increased 4% from Q2 to Q3. 4%??? Really?? Run rate is too slow!
NB. The company notes that Q2 is a peak qrt (presumable because it includes Nov/Dec i.e. Christmas months and holiday months so lots of loans for gifts, holidays, jet skies w/e). Still needs to be better than 4% qrt on qrt growth.
The book is $485m. Was sitting at $499m in FY20. So they still havnt recovered from turning the tap off during covid- a terrible move as it turned.
That graph they put up looks good and hence why it is on page 1 but the numbers are still average imo. These consumer loans roll off very quickly and need to be replaced at a ever increasing rate if you want to grow the book.
No wonder the SP is starting to look sick again with no more support in the $2.20's.
The SP will be at Beagle's $1 fair value soon enough unless they start to write decent volumes.
HMY broke under $2.20 today and on big volume of $2.7m!! A good days turnover is usually $100k..
VWAP is $2.05 so I am assuming it was a off market trade at this low level? Does anybody have any insight on this?
There are some small institutes selling off from IPO date and thus the SP keeps falling. I guess it is close to the end of sell off cycle based on the total shares they intend to sell. NZ herald premium has one article about the sell off before.
HMY narrowly meets expectations recently but not see any exceeding yet.
One billion Australian loan a year ambition, but just 10 million last month with the new platform launch, a big gap to catch up. It needs to show significant new loan acceleration month by month from now on to prove it can scale quickly in volume to meet its ambition.
It still has bright future but just need more proof on healthy growth (with good debt control).
It is a high risk IT growth stock, it is in high risk finance industry, it is an IPO stock with less than 1 year listing company experience. High risk means high return also.
My expectations for 1 year - down up to 20%, up 100% to 200% potential. A good bet at current SP.
Jeez down heaps today and just over 180
About 50% down from IPO price last November
Obviously unloved and unwanted
Will it stay this way forever?
Heartland said this today ..shouldn’t caused any panic
Harmoney’s transition of its funding model from a peer-to-peer off-balance sheet model to wholesale securitised on-balance sheet funding via warehouse structures is well advanced, and the transition of Heartland’s facilities with Harmoney is progressing well.
HMY shares in Aussie are trading at $1.52 which is about NZ$1.64. So could see further falls this week to catch up.
Am I the only one thinking this is way oversold?
Current valuation is $181m.
What cause sp down almost 12% today?
Maybe early stage investors who aren't escrowed. If there are any that is. I can't remember how all that worked in the IPO.
Further Risk in that any one of the dual economies may experience a downturn
Leverage that further with expansionary big loan facilities, a creep up in interim
in interest rates, more pain, more defaults & she could turn to dust faster..
Global economies are volatile, in places badly Covid affected & will remain so for some time
The work of just a few clueless idiots can also just as easily turn Covid Free territories
back into Lock-downs again as well ..
US Fed suggests the central Usury rates to be on the going upwards - which spins
into other economies globally one way or another, like it or not
HMY are new boys on the block - if you like learners in OZ - expect mistakes, Red
ink off the back of large leverage too to get there
If that should happen, dreams of any sort of dividend go out the window as well
I'm with the $1 a share posted earlier as being nearer Fair Value
Sorry .. difficult to get excited by this one & it's ambitious well leveraged
expansion forays over the ditch .. ;)
Sorry to all those out there riding in on the inflated IPO float costs, but she
just hasn't materially climbed out Red territory sufficiently/at all, barring
some mysterious favourable movements in Doubtfuls provisions to get there.. ;)
Interestingly HMY is to be included in the next MSCI index rebalancing at the end of this month. Given this stock is so illiquid I'd expect buying pressure will mean a bottom is in (for May anyway...).
What a disaster of an IPO.
Yeah, not much harmony, or money, just plenty of harm.
A story of big numbers
Like +800% and 100% CAGR
The value of a company is the value of the story
http://nzx-prod-s7fsd7f98s.s3-websit...109/345905.pdf
Not sure it is quite right to put out an announcement involving a comparison to a period impacted by a 1 in 100 year event and claiming this year's numbers are therefore a great success... but all about the headline, improving 'the story' and feeling good.
On a separate note, I'm still trying to figure out what makes HMY special as all I see is a finance company - it certainly isn't the first one to use fancy pictures and certain (selected) big numbers.
Aussie did $28m in new originations last qrt.
Based on April doing $11.5m you would think they will do say $35m in this qrt ending 30 June. That's qrt on qrt growth of 25%
Growth rates like that would mean they would hit their $1b in annual Aus loan originations within 2 and a bit years.
It will be interesting to see how the new scorecard goes in NZ when it is released.
The only thing to keep an eye on will be the arrears rate. If they stay low with the new scorecard then Harmoney will have a magic bullet and be ahead of the competition. With NIM of 10% its worth a look.
Disc. I bought a few last week
Most of the banks still use employees to do the credit risk assessment on personal loans. Then they have employees that generate loan documents and process them.
Harmoney have a scorecard (Libra 1.7) that does the credit assessment, i.e. a computer says yes or no. Harmoney computer then generates the loan documents for the customer to complete which are then submitted back to Harmoney online. Less friction. Less employee cost. Faster etc. Fintech some would say.
The value of Harmoney is in the data of their scorecard. After processing 1000's of 1000's of applications they can have a very good idea of the likelihood of a default from a non home owner, male, tradie, in his 20's vs a homeowner, female, office worker in her 30's. And price the loan 15% vs 8%.. you get the idea.
If Harmoney gets it right they will make lots of money and end up growing to a decent loan book size of $1b to $2b. This is when one of the main banks will want to buy them for their scorecard I am thinking.
It's the tech behind the loan originations this the point of difference. It leads to more and better quality loans, at lower cost. Their rivals can't match it.
Bang on Rawz
Okay, I wasn't really comparing Harmoney to a Bank... so what is the significant diffrentiater between Harmoney and other finance companies... say Latitude Financial, Liberty Financial, Pepper Money, Prospa Group (and the list goes on, but can start with those ones) - all of these ones are claiming they are a fintech (for part of their business/to some extent or another and do fancy stuff with computers to minimize expenses and improve their data score cards etc)
Latitude or GEM a good competitor. I am not sure about the others- they're more into mortgages but I get your point. I mention the banks because they own the market.
It's all going to come down to who can approve and drawdown the loans the quickest/ easiest with as little human interaction as possible and as little arrears as possible. That may seem simple or obvious but when you look at any company its often a bit of that.
Certainly this is far away from backing the truck up territory.. for me its about 2% of my portfolio. Imo its worth a look. Looking forward to the next qrt update.
Wow
I would not have thought announcing a 1% monthly growth in receivables from $485m to $490m would have caused a 16% increase in the share price (a circa $30m increase in market cap). If $37.8m of new loans does that, would have $30m caused declining receivables, or are they quoting loans granted but not drawn down?
How about further unwinding of Covid-19 Provisioning - was that separately disclosed in latest announcement
We know that brought things positive in earlier reports (just)
Lower borrowing costs maybe helping things on existing & expanding lending book ?
No indication of bottom line or guidance on forwards nuts & bolts financials in latest was there ?