GEN - General Capital (was MyKRIS)

[percy]

http://nzx-prod-s7fsd7f98s.s3-websit...640/373866.pdf
pages 49 and 50.Credit Risk.

Note that is last years.
All ratios have further improved since then with the added capital coming from their recent placement.
So worthwhile reading their latest result.
http://nzx-prod-s7fsd7f98s.s3-websit...155/395377.pdf

[percy]

Annual Report.
http://nzx-prod-s7fsd7f98s.s3-websit...753/397280.pdf

[Fortunecookie]

Annual Report.
http://nzx-prod-s7fsd7f98s.s3-websit...753/397280.pdf

39% of the loan book consists of loans that are greater than $1mill. I think it is more commercial in nature than the rest of the metrics suggest. Also note over $3.5m over 120+days in arrears. Generally speaking there is a lag for the formalities of property law act(mortgagee sale) to take place. If you are not aware something to note.

[Rawz]

Loan book $109m
Arrears $13.5m

Arrears make up 12.4% of the loan book.

Thats the Rawz media click bait headline..

here is the story:

As at 31March 2023 the value of loan arrears increased to $13.52m (March 2022: $1.79m). These loan arrears include $4.06m of loans past due by greater than 90days (March 2022:$0.5m). A total of $5.5m of arrears was repaid after the reporting date. These repayments include $2.8m of the arrears past due by greater than 90days. There were no loan write-offs for the year ended 31 March 2023 (March 2022:$Nil). Note that loan receivables have increased by 36.6% for the year ended 31 March 2023.

[Fortunecookie]

Loan book $109m
Arrears $13.5m

Arrears make up 12.4% of the loan book.

Thats the Rawz media click bait headline..

here is the story:

As at 31March 2023 the value of loan arrears increased to $13.52m (March 2022: $1.79m). These loan arrears include $4.06m of loans past due by greater than 90days (March 2022:$0.5m). A total of $5.5m of arrears was repaid after the reporting date. These repayments include $2.8m of the arrears past due by greater than 90days. There were no loan write-offs for the year ended 31 March 2023 (March 2022:$Nil). Note that loan receivables have increased by 36.6% for the year ended 31 March 2023.

Thanks for pointing that out. I missed it.
I think there loan book is quite commercial in nature. I'm not too sure what they mean by vacant land. I initially thought it was developments that only considered land value as security. But it appears they have got a separate category for that.

Agree there hasn't been any write offs. But still in $1.2m in arrears over 90days. That's more than half of the np. But I accept they have increased their provisions for it. For a financial institution it is probably fairly priced at book value and 10 times earnings (add back goodwill).

[Rawz]

The arrears look out of control..

Resimac listed in the asx operate in the same space and are currently trading on a p/e of 4 with a 9% div yield.

[Fortunecookie]

The arrears look out of control.

Resimac listed in the asx operate in the same space and are currently trading on a p/e of 4 with a 9% div yield.

I find home loans to be a less riskier proposition. It's reliant on peoples income. I think Resimac are non bank, occupy the space behind the main banks. But Im noticing across the many different type of lenders , interest margin compression. But who knows have we hit peak rates and hopefully experience a minor impact to the economy. So situation may improve. Anyway that's a nice p/e.

[percy]

GEN lending/loans are "secured" lending,which is very different to "unsecured" lending.
There are no loan "write offs" ,and due process will see mortgagees sales before there are any write offs.
Write offs will occur should the sale of the property security fail to meet the amount GEN have lent on it.
From GEN's annual report page46.

"As at 31 March 2023 the Group’s loan advances are secured as follows: first mortgages 100% (March 2022: 100%), second mortgages 0.0% (March
2022: 0.0%). There were no unsecured loans as at 31 March 2023 (March 2022: none)."

[Rawz]

Percy, are you not worried by that huge arrears number?

[percy]

Percy, are you not worried by that huge arrears number?

No they will most probably be incurring compounding "penalty" interest.
GEN's business is short term bridging finance.[property]
As we know sometimes a short term investment turns out to take a bit longer to realise.
Shares are more able to be quickly sold than property.
A mortgagee property sale focusses every one's attention.