quote:
Originally posted by Skelessi
Enigmna, sorry I didn't get back to you earlier, but I have been out of town. To answer your question, I think the attributes of SCF as a potential investment are very sucinctly summed up by Chris Lee who is a pre-eminent and well researched sharebroker on the Kapiti Coast. I trust he will not mind me quoting him. He says:
The best of the finance companies in New Zealand, without much argument from any analysts or commentators, are UDC Finance and South Canterbury Finance.
They share a genuinely long heritage, they have substantial capital, they lend at rates comparable with the trading banks, they are profitable, and they have knowledgeable management and directors.
The best of the finance companies in New Zealand, without much argument from any analysts or commentators, are UDC Finance and South Canterbury Finance.
They share a genuinely long heritage, they have substantial capital, they lend at rates comparable with the trading banks, they are profitable, and they have knowledgeable management and directors.
SCF lends across all the sectors, its bad debt level is low, its margins fair, and thus from its billion dollar of assets, it produces a tax-paid profit of around $25 million, a 2.5% margin. By comparison, Provincial Finance last year produced the same sort of profit from a $250 million book, suggesting an effective tax-paid margin of 10.0%.
SCF's best known figure is Allan Hubbard, a legend in the town, driving a very old, olive green VW Beetle, spurning toys like cell phones, reaching his office each day before dawn, and reading all the mail, the better to stay informed.
He still signs every debenture certificate and there are 700 issued each week.
But SCF also has competent staff, headed by CEO, Lachie McLeod, once a Super 12 referee and once Westpac's South Island head of rural lending, and it has other very experienced, down-to-earth directors and management.
McLeod is a quiet, fit young man (40s, I guess) who heads a structure that has several wholly-owned companies in cities like Palmerston North, Dunedin, Auckland and Hamilton, each named by their geographic base.
The company's funding manager is Kevin Gloag, probably the most experienced and respected funding manager in the industry, himself once a Highlanders rugby coach.
South Canterbury Finance prides itself as having no frills, just a successful business, built on competent, normal people, confidently performing their duties knowing that if the company ever needed more capital, either Allan Hubbard would write a cheque, or any number of institutions would take up a share opportunity.
As its owner is 77, there must be a fair chance that some of the company will be floated, perhaps this year.
If that occurs, the queue for shares will stretch way past Ashburton and Oamaru, and I will be part of it.
Chris Lee has done extensive research into the finance company sector and his weekly articles (not always complimentary) may be read on his website at <
www.chrislee.co.nz> They are usually most informative and interesting.
Reply With Quote
Bookmarks