Another telling factor about the quality of NZ Finance is the very low level of bad debts.
Only $20,000 in four years! Cant see any downside in this IPO.
Badger I understand what you are saying here and I'm really only poking fun in a devil's advocate manner but when to all extents and purposes bads debts are zero then the downside actually can't get bigger!
The byline "Why did they bother" was the only negative comment. I liked the follow things;
1, The 3 directors are holding on to 85% of the company so they have an incentive to do well.
2, They have had amazing growth. But this is from a very small base so "amazing" growth won't continue. but it should still grow.
3, They lend to people who are rejected by banks because they don't have a nine-to-fiver. (I speak from personal experience, I get half my income from investments but this doesn't count for banks) These type of borrowers have to pay higher interest. All loans are secured against property.
4, Almost no bad debts.
\"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>
The information you have is not the information you want.
The information you want is not the information you need.
The information you need is not the information you can obtain.
The informaton you can obtain costs more than you want to pay.
They look like steady operators, with strong banking backgrounds who have gone out and started a finance co and lately purchased a mortgage broking business with the financial backing of Pat O'Connor who is a good guy and major shareholder. They have a niche. Skilled assessment of people that want to buy property but who dont fit the standard criterion yet may still be good credit risks .
Their assessment that they could make things happen has proved correct. As they have been historically successful and well run they are quite able to stand the scrutiny that listing would involve.Good growth and profits.
On the negative side. There are no barriers to entry by competitors.They are very small.Still only .39% of the market with receiveables of only 120 significant loans at about $300k each. Altho profitable they do not propose to pay any dividend for y/e 2005 and are looking for acquisitions with their profits in order to bulk up. For example they have just bought a mortgage broking business that is highly exposed to the property cycle.
I may be wrong but this whole business seems to be heavily exposed to the property market - for better so far. Look at the other threads to see ST views about rising interest rates and slowing down of growth in this sector. It has gone gangbusters for the last few years as has the general economy. Why wouldnt someone like NZF who has niche exposure to it not go well . Mortgage broking the same.
However a slow down in property cycle for the next few years is foreseeable and may slow down the growth and the profits. As there are no dividends paid, this may affect the SP as it has of mortgage brokers in Australia. NTA per share is only about 6-7 cents on a 30 c share so in the unlikely event that things do turn to custard and a receiver and his hungry staff get in you have no safety net.
Badger, you make a return on investment in this company in the next few years only if the Share price goes up. That makes it different from SFG and DFH where even if the share price doesnt go up you still get a good rate of return. What I am not sure about is whether or not the SP will go up and if it did will you be able to get enough of this very small shareoffer to make it worth taking the risk ?
K1wi....I would take a different view in that if the property market slows up there will be more opportunity for NZ Finance because the banks will get even harder to deal with.
ON the SP the directors retain around 75% of the company so it is tightly held. Tight scrip and growth normally translate to one direction for the share price...UP
\"The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.\" - <b>Adam Smith</b> - <i>The Wealth of Nations</i>
The information you have is not the information you want.
The information you want is not the information you need.
The information you need is not the information you can obtain.
The informaton you can obtain costs more than you want to pay.
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