COG Financial Services expects 25% boost in 1H22 net profit

COG Financial Services (ASX:COG) on Thursday (20 January) said its net profit after tax (NPATA) attributable to shareholders is expected to jump 25% in 1H22 compared to the previous corresponding period.

As per the company's unaudited 1H22 trading results, the financial services firm is expected to report a NPATA of AU$10.5 million as against AU$8.4 million reported for the year ago period. This amount excludes government subsidies received in 1H22.

In FY21, the company reported a NPATA of AU$25.39 million as against AU$12.14 million in FY20. However, due to abnormal expenses of AU$42.78 million, its reported net profit after abnormal items stood at negative AU$26.378 million.

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Profit from its finance broking and aggregation business rose 19% to AU$6.9 million in the first half of FY22 as compared to AU$5.8 million clocked in the previous year. However, profit from its lending business declined 17.40 per cent annually to AU$3.8 million, compared to AU$4.6 million last year.

On 1 November 2021, COG announced the completion of a capital raise which was used to increase its stake in two of its existing subsidiaries. The company said, in the two months--November and December--the NPATA contribution from that acquisition amounted to AU$0.3 million.

"If they (NPATA contribution from the acquisition) had been included for the full period (as they will be for next half) then the result for 1H22 would have been $11.2m being a 11% increase on the prior comparable period or a 33% increase if government subsidies are ignored. As COG has done over the last six years, we will continue to consider acquisitions that fit our strategic direction and will be earnings and EPS accretive,” said Andrew Bennett, CEO, COG.

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COG Financial Services share price

Over the last three years, COG has reported strong revenue growth; though on a net basis, it reported losses due to abnormal items.

In FY21, the company reported a NPATA of AU$25.39 million as against AU$12.14 million in FY20. However, due to abnormal expenses of AU$42.78 million, its reported net profit after abnormal items stood at negative AU$26.378 million.

At the time of writing this article, COG shares were unchanged at AU$1.44 apiece on the ASX. However, in the last one year, the stock has delivered a return of 87%. Going by the stock price performance, it seems like the street is optimistic about its future EPS (Earnings Per Share) growth.

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