Pioneer Credit Reported Half-Year Results; Stock Plummeted Over 28%

Pioneer Credit Reported Half-Year Results; Stock Plummeted Over 28%

Pioneer Credit Limited (ASX: PNC) is based out of Perth and provides financial services in Australia and New Zealand. Its services include acquisition and servicing unsecured retail debt portfolios; brokered personal loans, home loans and small business loans; as well as introducing and issuing retail credit products.

On February 25th, 2019, the company announced its results to the market for the half year ended December 31st, 2018, that were slightly below expectations following which Pioneer’s share price plummeted on the stock market. Pioneer has a market capitalisation of AUD 194.63 million and ~63.19 million outstanding shares.

At the time of market session on Tuesday, February 26th, at 02:20 PM AEST, the PNC stock was trading at AUD 2.200, nosediving 28.571% indicating an intra-day loss of AUD 0.880. Besides, the stock price is closed to its 52-week low of AUD 2.170, as recorded. Despite the sudden plunge, it has generated a positive YTD return of 9.61% as on 25 February 2019.

As per the half-year (H1 FY2019) results, the company posted revenues from ordinary activities at $ 40.28 million, up by 9.40% on the prior corresponding period (Half year ended December 31st, 2017: H1 FY2018). The Net profit after taxation for the period attributable to members was valued at $5.45 million, quite low as compared to H1 FY2018, reflecting a 32.74% decline, primarily due to high borrowing costs with respect to the medium-term note, employee expenses and increased depreciation and amortisation from technology improvements deployed in FY2018, that are expected to deliver good returns in the time to come.

The EBITDA was posted at $ 24.3 million, indicating a broadly steady figure with respect to H1 FY2018.The company also managed its capital well and remained appropriately funded during the period, as it increased its facility with its banking syndicate by $ 10 million and extended the term of the syndicate facility to March 2020. The capacity of the facility as at December 31st, 2018, was $ 20.3 million. In addition, a fully franked interim dividend has been declared at 4.31 cents per share and scheduled to be paid on April 26th, 2019.

Liquidations of purchased debt portfolios was at $ 50.5 million, up 9.6% on the prior period’s record of $ 46.1 million but lower than the anticipated figure. This is because the company continued to develop and invest in its operational strategies that were tested in H1 FY2019 that had a negative impact of $ 4.5 million in deferred liquidations. However, the company expects to recover these expenses in subsequent periods beginning H2 FY2019.

The company also experienced delays in acquiring from existing vendors as they were influenced by external factors which in turn led to the lowest proportion of investment ever at $ 31.4 million in H1 FY2019 and the lowest investment price in three years. Yet, the full year guidance of $ 80 million remains unchanged.

With the execution of ongoing tactical improvement initiatives, the company expects to achieve its market guidance for the whole FY2019 as PDP liquidations of at least $ 120 million, EBITDA of at least $ 65 million and NPAT to be around $ 20 million.


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