HMY - Harmoney Corp Limited

[thegreatestben]

Despite having seen the ads on TV, I never knew about the P2P lending until I read about it here. I know I'm only 1 person but maybe it's not a big factor? Instead when I see the ads on TV I immediately think budget/cheap.

Sounds like the same issue but for different reasons. Although I'd guess most users on this forum may not be the type to use the services of HMY so perhaps a good thing that the ads don't appeal. We probably need a broker to put out the word that HMY is a top pick - worked for HGH recently!

[Muse]

Assuming the business can get to $1 billion in average receivables by 30 June 2025 and it can scale the way management have guided (producing $45m in cash EBITDA) it should produce around $30m in NPAT in that financial year. You can take your pick on the appropriate historic or prospective PE multiple to apply, but at least you have an NPAT figure to work with, which will help the market sharpen its views on value. Investors dont have a current or near term npat to work with and the SP has consolidated at the 1.85 level so perhaps investors are waiting for a confirmed uptrend to buy into. The SHAZ are still upset HMY abanonded the p2p model and over the post IPO performance, and Aussie has fintech fatigue, which in the absence of near term earnings makes pricing or rerating this thing difficult. None the less, time and NPAT should solve those issues.

[Ferg]

I wonder if the "Cash NPAT" is a bit of a red herring....? They take out share based compensation, borrower rebates & depreciation. I can't get the numbers to work to get to $30m cash NPAT in FY25. Running a "traditional" P&L on the back of a fag packet, I get the following:

Attachment 13422

Assumed NIM at 7% is maintained and NIM is based on average of loan book at start of FY and end of FY, $1b loan book at FY25, opex reduces by FY21 IPO costs $3m for FY22, thereafter is +$1m p.a., tax at 29% being half NZ and half Oz

"Indirect opex" per the press release is not all of the opex when I peruse their last AR.

This gives NPAT $14m in FY25. To get to cash NPAT we add back say $10m being shares compensation $4m, depreciation $1m & borrower rebates $4m (plus inflation to get to $10m) that gives an after tax impact of ~$7m and "cash NPAT" of $19m.

What have I missed?

Edit: the SP is a "forecast" based on a price of $1.80 and adding 10% compounding p.a. for the time value of money plus a guesstimated risk premium. Is indicative only. FY21 numbers are per the AR.

[Ferg]

Just had a thought given NIM is traditionally calculated off average of the loan book at the start and of the year per my BOFP forecast....if I extend this out one more year where there is $1b loan book at the start of the year, then we can see cash NPAT of $30m 1 year later in FY26.

Attachment 13423

[clearasmud]

you know i've never actually done that before - how do you actually do it? go to the registry or write to the company secretary?

Ring the registry you want to transfer to and they will email you a form.

[Rawz]

What an amazing result released the other day. I was in Wellywood for work over the last couple of days so had to rely on trusty old sharetrader to dissect the half year results. Very much enjoyed reading everyone's posts, including the posts wondering why on earth Mr Market hasnt pushed this bad boy over 2 bucks by now. Oh well, just have to be patient.

If it wasn't for omicron HMY would have updated their FY22 guidance, because I cant see how they wont easily beat it. I am thinking the loan book will be $600m by next quarter! And be close to $650m by FY22. Revenue will be over $97m

I base this mostly on continued aussie book growth. I see the aus book growing like this:

Q1 au$20m (actual)
Q2 au$30m (actual)
Q3 au$35m (estimate)
Q4 au$42m (estimate)

Aus book ends FY22 at au$262m.

NZ book growth slower at:

Q1 nz$-2m (actual)
Q2 nz$7m (actual)
Q3 nz$5m (estimate)
Q4 nz$7m (estimate)

NZ book ends FY22 at nz$375m.

As long as there are no lockdowns it should get there.

Its going to be exciting watching the aus numbers. As a percentage of market it is tiny, should at least be 5x the NZ book, i.e. $1.8b. Such a long run-way of growth ahead of it.

90 days arrears down again. The system works. Book is growing rapidly and arrears falling. Excellent.

[Monarch]

What do you make of the total AU originations
Dec 21 90.5
Jun 21 60.2
Dec 20 20.5

In both % terms and absolute terms, the rate of origination growth declined Jun 21 to Dec 21 (~30) compared to Dec 20 to Jun 21 (~40). It will be interesting to see if they can prevent further declines in this growth rate. I'm still quite on the fence about this one, just concerned that failure to grow the loan book whilst keeping costs low and nim high would render this stock very worthless. Souring economic fortunes certainly will make it harder for them to achieve their goals.

If we make some guesses about the average loan term it is probably possible to estimate the maximum loan book sustainable given a certain origination rate. Maybe I'll give it a try another day, sounds like an excel escapade.

[winner69]

Just had a thought given NIM is traditionally calculated off average of the loan book at the start and of the year per my BOFP forecast....if I extend this out one more year where there is $1b loan book at the start of the year, then we can see cash NPAT of $30m 1 year later in FY26.

Attachment 13423

Even if Revenue is only $300m in 2025 that should result in a share price over $13 at 4 times revenues

That’s what growth plus a bit of rerating will give you

Cool stuff

[Rawz]

What do you make of the total AU originations
Dec 21 90.5
Jun 21 60.2
Dec 20 20.5

In both % terms and absolute terms, the rate of origination growth declined Jun 21 to Dec 21 (~30) compared to Dec 20 to Jun 21 (~40). It will be interesting to see if they can prevent further declines in this growth rate. I'm still quite on the fence about this one, just concerned that failure to grow the loan book whilst keeping costs low and nim high would render this stock very worthless. Souring economic fortunes certainly will make it harder for them to achieve their goals.

If we make some guesses about the average loan term it is probably possible to estimate the maximum loan book sustainable given a certain origination rate. Maybe I'll give it a try another day, sounds like an excel escapade.

Q1 Aus originations were lite for some reason. So HY22 only $90.5m in new originations. However Aus quarterly originations have a CAGR of 27.5%. Last qrt grew 28%. Once the 3r's kick in which should really be felt FY23 the numbers will be even better.

The avg loan term was 57 months FY18, 56 months FY19, 57 months FY20. I dont have FY21 (maybe it wasnt in the AR) but looks steady at 56-57 months. If i was to have a guess at how long the loan actually runs for i would say 42-44 months before it is paid in full via early repayment.

About 22% of the book is repaid every quarter. I.e. $125m last qrt. HMY wrote $165m in originations to grow the book $40m last qrt. Consumer lending/ asset finance lending you write sh!t loads of new business all the time and sh!t loads of the book drops off all the time- just through loan amortization and early repayment. The one thing I know from experience is there is a never ending conveyor belt of consumers wanting finance.... we are many many many years away from the point were we hope HMY just grows the book in line or slightly above inflation like the big banks..

If you are thinking about getting on board as an investor for me the first decision you need to make is if you believe in their direct to consumer model with their stellare software that integrates with google. I am a believer and think it is scalable globally (or wherever google dominate). It is a big market out there and lots of competition but so far HMY is doing good. I did read this morning that one of the big US banks flagged 8% increase in expenses because they were spending an extra $12bill to take on all the fintechs. $12b is a lot of firepower, they should do themselves a favor and just buy HMY for $400m. shareholders would sadly accept for a quick buck ay

[Muse]

Q1 Aus originations were lite for some reason. So HY22 only $90.5m in new originations. However Aus quarterly originations have a CAGR of 27.5%. Last qrt grew 28%. Once the 3r's kick in which should really be felt FY23 the numbers will be even better.

The avg loan term was 57 months FY18, 56 months FY19, 57 months FY20. I dont have FY21 (maybe it wasnt in the AR) but looks steady at 56-57 months. If i was to have a guess at how long the loan actually runs for i would say 42-44 months before it is paid in full via early repayment.

About 22% of the book is repaid every quarter. I.e. $125m last qrt. HMY wrote $165m in originations to grow the book $40m last qrt. Consumer lending/ asset finance lending you write sh!t loads of new business all the time and sh!t loads of the book drops off all the time- just through loan amortization and early repayment. The one thing I know from experience is there is a never ending conveyor belt of consumers wanting finance.... we are many many many years away from the point were we hope HMY just grows the book in line or slightly above inflation like the big banks..

If you are thinking about getting on board as an investor for me the first decision you need to make is if you believe in their direct to consumer model with their stellare software that integrates with google. I am a believer and think it is scalable globally (or wherever google dominate). It is a big market out there and lots of competition but so far HMY is doing good. I did read this morning that one of the big US banks flagged 8% increase in expenses because they were spending an extra $12bill to take on all the fintechs. $12b is a lot of firepower, they should do themselves a favor and just buy HMY for $400m. shareholders would sadly accept for a quick buck ay

good work as always rawz