The FY’18 results delivered exactly what management promised. Loan origination was up 72%, revenue rose 78%, pre-tax profits increased 93%, while EPS grew 24%. The synergies from being a bigger group are emerging. Funding costs have fallen rapidly. Perhaps of greater importance, cross-group sales leads were £13m in 4Q FY’18. Not all will convert, but this represents nearly 10% of FY’18 origination. While we note a retiring director’s 6% stake may be viewed as a stock overhang, the implied May 2019 P/E of 6.7x and price to book of 0.9x, appears an anomaly given the downside risk highlighted in our sensitivity analyses.
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