DALLAS, TX -- May 17th, 2023 -- International Personal Finance PLC (LSE: IPF): Stonegate Capital Partners initiates their coverage on International Personal Finance PLC. The full report can be accessed by clicking on the following link: https://stonegateinc.com/download/ipf-l-initiation-report/?wpdmdl=545&refresh=6463ef3b2e5f21684270907
COMPANY UPDATES
- Positive 1Q23 Trading Update: IPF ended a strong quarter with receivables up 15% year over year to £833M. Additionally customer growth was 2% up to 1.71M customers, not including the business operations in Finland and Spain. Annualized revenue yield was also strong, moving to 53.4% in 1Q23, up from 51.9% in 1Q22. Impairments remain in-line with expectations at 10.5%, in large part due to robust credit standards and despite the cost of living crisis. Lastly, the costs to income ratio is ahead of management plans, down to 58.8% in 1Q23. The Company remains on strong footing with £92M in liquidity available to meet funding requirements through 2024.
- Continued Expansion in Mexico: IPF continued its expansion into the Mexico Home Market by following the opening of the Tijuana branch in 2022 with the opening of the Tampico branch in March of 2023. There is optimism that the learning curve will be shallow as management has been deliberate in opening at a sustainable pace that is expected to lead to strong market penetration. This has resulted in a 7% year over year increase in lending for 1Q23, all served by the very critical first cohort of employees.
- Credit Card is Building Traction: The roll out of credit cards in Poland is on track with over 20,000 cards issued. The current estimate is that credit card penetration is at 10% of targets, with the pace of uptake expected to increase now that employees have been trained. It is expected that the full transition of the Polish market will be completed by the end of 2024.
- Digital Strength Remains: Digital saw positive momentum in all markets as demand remains strong leading to a 17% increase in customer lending up to £211M. Of note was the increase in customer numbers to 234,000 which is up 4% year over year. This is after excluding both the Finland and Spain markets as they are in collect out status.
- Reiterated Guidance: Given the strong performance in all three segments leading to results that are ahead of expectations, coupled with the lack of impact on demand from the rising cost of living crisis, management was comfortable reiterating their guidance. This guidance is headlined by modest receivable growth and continued transition in the Polish business to set the Company up for 15% to 20% RORE in 2025.
- Valuation: We use a DCF Analysis and a Comparison Analysis to frame valuation. For the comparison analysis we used a combination of P/E, P/TBV, and EV/EBT multiples to determine a valuation range for IPF. When we blend these multiple comparisons, in combination with our DCF analysis, we arrive at an average price range of £1.60 to £2.23 with a midpoint of £1.91.
About Stonegate
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking, equity research and capital raising for public and private companies.
