Momentum clearly building
In our Jan 21 initiation note Time to be rerated we suggested that Time’s results for H1 to 30 Nov 20 showed that a recovery from a Covid-induced slump in good quality lending demand and spike in bad debt provisions was well underway. In a corporate update released today Time has confirmed ongoing momentum of that recovery.Forbearance levels have reduced from the June 20 pandemic peak of £25m to under £2.5m on 31 Mar 21, with total arrears now below the 28 Feb 20 pre-Covid level. This has contributed to net tangible assets rising to £28.5m on 31 Mar 21 along with cash and equivalents increasing to £6m (31 May 20: £1.5m). The numbers are clearly moving in the right direction.
Time has also announced renewed funding facilities which total over £170m. This provides significant headroom to grow (£97m as at 30 Nov 20). Since our initiation note, Time has appointed Ed Rimmer as interim CEO. Ed has 20 years of commercial finance experience and was previously Time’s COO.
All of the above suggests that momentum is positive for the fundamentals of Time Finance. We also remind readers that Time looks undervalued with respect to peers. Its price-to-book ratio of 0.5 is far below the peer group median of 1.3 (the difference has in fact increased since our initiation note in January: 0.4 vs 1.0). There is potential for further rerating.
Arbuthnot Banking Group is primarily involved in banking and financial services. Co. is organized into three main operating segments: Retail banking (associate), which incorporates household cash management, personal lending and banking and insurance services; U.K. Private banking, which incorporates private banking, commercial banking and wealth management; and Group Centre, which is comprised in Co.'s Group Centre management. As of Dec 31 2016, Co.'s total assets were £1.27 billion.
PCF Group is an investment holding company. Co.'s wholly-owned subsidiary, PCF Bank Limited, has two operating divisions: Business Finance, which provides hire purchase and finance lease agreements to sole traders, partnerships and limited companies to help them acquire vehicles, plant and equipment; and Consumer Finance, which provides hire purchase and conditional sale agreements to retail customers to help them acquire vehicles. As of Sep 30 2017, Co. had total assets of £172.5 million.
1PM is engaged in providing financial services to U.K. businesses.
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