Time Finance (LON:TIME) – The Growth Continues And Now With Extra Funding
I do not expect any fireworks at next Tuesday’s AGM being held at the Hilton Manchester Deansgate from this AIM listed independent specialist finance provider.
What I do expect though is some confirmation that the £53m capitalised group is still on track to record a near 25% increase in current year profitability.
The Business
Time Finance's purpose is to help UK businesses thrive and survive through the provision of flexible funding facilities.
It offers a multi-product range for SMEs concentrating on Asset, Loan and Invoice Finance.
While focussed on being an 'own-book' lender, the group does retain the ability to broke-on deals where appropriate, enabling it to optimise business levels through market and economic cycles.
CEO Ed Rimmer stated that:
"As we enter the final year of our four-year medium-term strategic plan, I am very encouraged that the first quarter of the new financial year continues to deliver increased growth in our lending book, our Net Tangible Assets, our Revenues and our Profit Before Tax.
The lending book has now seen consistent increases for thirteen consecutive quarters, reflecting the demand for our multi-product offering and the value placed on our first-class customer service by UK businesses seeking access to finance.
Pleasingly, our net arrears and net bad debt write-offs are well within our target ranges and underline our commitment to responsible and sustainable lending.
The Board, therefore, retains real confidence that the Group is positioned for further growth and will build increased value for its shareholders over time.
The continued strong performance highlights the benefits of the four-year plan we implemented in 2021.
With an eye firmly on the future and building on this momentum, management is focused on establishing a new medium-term strategy that will commence from June next year and guide the Company's next period of growth.
I look forward to updating our shareholders on that plan towards the end of this calendar year."
New Financing Facilities
At the start of this month the group announced that it had renewed and increased its back-to-back invoice finance funding facility with NatWest to £65m, with £55m fully committed and an additional £10m ‘Accordian’ element.
The Facility will be applied exclusively to lending to UK businesses and provides the Group's invoice finance business, Time Invoice Finance, with additional funding to meet continued demand from its growing number of SME clients.
CFO James Roberts stated that:
"I am delighted that the Group has further strengthened its long-standing relationship with NatWest which continues to thrive not just in our Invoice Finance division but also across the wider Group.
We have substantial funding facilities with ample headroom in place across all of our lending divisions.
The provision of these larger and more flexible facilities will contribute significantly to our growth strategy and provide additional funding solutions for UK businesses - for whom a flexible and dependable funding partner can make all the difference."
Broker’s View
Analyst Andrew Renton, at Cavendish Capital Markets, obviously likes the prospects for the group – at the end of last month he raised his Price Objective on the shares to 112p from 71p previously.
He noted that the momentum has continued into FY25E, and it remains on track to hit or exceed current expectations.
For the current year to end-May 2025, he estimates £34.5m (£33.2m) in total revenues, with adjusted pre-tax profits of £7.2m (£6.0m), generating 5.8p (4.9p) in earnings per share.
For the following year, he goes for £37.0m revenues, £8.3m profits and 6.8p earnings.
My View
On Thursday 1st August, when the group’s shares were trading at just 51.55p, I clearly stated that these shares should be trading a lot higher, especially considering its profit growth potential.
They subsequently touched 63.80p earlier this month, before easing back to 53p before recovering to the current 58porning Leo.
My opinion has not changed – these shares really are cheaply rated for such prospective improvements in business and profitability.
If there is not an AGM Trading Update (there was not one last year), then instead, I look forward to the group issuing one in December, ahead of its Interims being declared in January 2025.
Don’t wait for Time Finance to fall back much in price – you have to be in it to win it!
(Profile 23.12.20 @ 21.5p set a Target Price of 30p*)
(Profile 07.01.22 @ 23.5p set a Target Price of 30p*)
(Profile 20.11.23 @ 32.5p set a target Price of 40p*)
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