28.02.2025
At one time yesterday the shares of Time Finance (LON:TIME) fell to a low point of 47p, which was some 20p below their level of just a month ago.
Generally, the market has been somewhat jittery in the last few days, so a quick rumour and a few sellers can cause flash dives in share prices.
That could well be what was behind the fall.
They closed last at 55p after a massive 4.2m shares were traded on the day, which was nearly 17 times the normal daily average of 252,499 being dealt.
Shrewd Market Move
Seasoned hands came to the fore at midday yesterday, with the company issuing a Notice of Trading Update, which helped to stymie the fall and witnessed speedy punters taking a rapid position in the fallen stock.
Proudly declaring that the group’s Full Year Results are now expected to be ahead of previous market estimates.
The AIM-listed independent specialist finance provider announced that it had continued to enjoy positive trading momentum throughout the first nine months of the 2024/25 financial year, while confirming that it will provide its planned Q3 Trading Update on Tuesday 25th March.
The group’s positive momentum in its year-to-date includes record revenues, fifteen consecutive quarters of lending book growth, and with arrears remaining well-controlled.
Accordingly, the group’s Management is confident that performance for FY25 will be ahead of current market expectations.
Those market estimates had been raised just three months ago.
Following the continued strong performance, the company guided that its Revenue and Profit Before Tax for the current year to end-May, are now expected to not be less than £36.0m and £7.5m respectively.
The Business
The group provides financial products and services to consumers and businesses in the UK.
The company operates through Asset Finance and Invoice Finance segments.
Its offerings include Asset Finance and Invoice Finance with lending proposals originated through various channels, such as finance brokers and other professional firms, equipment vendors, suppliers and dealers, and direct from borrowers.
Asset Finance enables investment in vital equipment or refinancing existing assets, its business products consist of hire purchase, finance lease, and asset-based lending.
Invoice Finance helps in improving the cashflow of the customer's business, it provides funding and offers an optional credit control service, where it manages a tailored collections process on the customer's behalf.
It offers business loans secured against collateral and secured loans on a short or long-term basis, with monthly repayments, while it also offers commercial loans.
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.
The Equity
There are some 92.51m shares in issue.
The larger holders include Arena Investors (19.92%), GPIM Ltd (17.97%), Hargreaves Lansdown Asset Management (8.88%), Lombard Odier Asset Management (3.30%), IG Markets (2.16%), HSBC Global Asset Management (0.46%), KW Investment Management (0.40%), Jarvis Investment Management (0.22%), HSBC Bank Market Maker (0.21%) and JM Finn (0.20%).
A Broker’s View
Analyst Andrew Renton, at Cavendish Capital Markets, has a Price Objective of 112p on the group’s shares.
Prior to yesterday’s announcement, for the year to end-May 2025 he had estimates that the group’s revenues would increase to £35.1m (£33.2m), with adjusted pre-tax profits of £7.5m (£6.0m), generating earnings of 6.1p (4.9p) per share.
His coming year estimates for 2026 are for £37.0m revenues, £8.3m profits and 6.8p per share in earnings.
Renton’s note on the group highlights a continuation of its strong performance.
My View
At times certain market situations shout out at you – and yesterday Time Finance was one such situation.
With its shares down to a mere 47p at one stage they were a screaming Buy.
That rapidly issued Company Press Release of a Trading Update was both necessary and impactive.
The subsequent dealing volumes spoke loudly of what had just occurred, with the shares actually closing at 55p, with some 4.2m traded.
After Director-buying yesterday the shares are improving this morning, now 56.50p.
If you don’t know by now – I will reiterate that I am a long-time fan of the company and its business model and I continue to rate its shares as totally under-rated.
(Profile 23.12.20 @ 21.50p set a Target Price of 30p*)
(Profile 07.01.22 @ 23.50p set a Target Price of 30p*)
(Profile 20.11.23 @ 32.50p set a Target Price of 40p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication.)
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